It’s no secret the Postal Service is in a financial crisis after a $3.8 billion loss in 2009, and a projected $7 billion loss for 2010 after approximately $4 billion in cost reductions. In January 2010, the OIG reported that the Postal Service had been overcharged for FERS’s sister retirement plan, the Civil Service Retirement System or CSRS, by $75 billion. There is a complication that may reduce the FERS surplus in the future. President Obama recently signed a bill granting credit for unused sick leave for FERS retirees. The exact effect on the pension liability is unknown, but it doesn’t take an actuary to understand that it creates an additional future obligation. If the Postal Service has met its current financial obligations for FERS, should it be relieved of its future contributions? What do you think? This topic is hosted by the OIG’s Office of Audit Financial Reporting team.
on May 3rd, 2010
| 11 comments
The Federal Employees’ Retirement System (FERS) is one of the retirement programs of the U.S. government, and benefits are extended to U.S. Postal Service employees. FERS is administered by the Office of Personnel Management (OPM). Congress established the guidelines for OPM to set contribution rates and can alter them by passing new law or amending an existing law. Postal Service employees who began their careers after December 31, 1983, are automatically enrolled in the FERS. For Postal Service employees, a majority of FERS funding is accomplished through Postal Service contributions. The rest is paid by postal employees. During fiscal year 2009, the Postal Service contributed $3 billion to FERS or 11.2 percent of the salaries for FERS employees. As of September 30, 2009, the Postal Service reported a fully funded FERS pension plan that exceeds liabilities by $6.8 billion.
on Apr 26th, 2010
| 195 comments
The debate about the Postal Service’s future is heating up and Pushing the Envelope is interested in your views. Last week the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security held a hearing on the Future of the Postal Service. The week before there was a hearing in the House on the Postal Service’s financial crisis and future viability, and on April 12, the Government Accountability Office issued a report laying out the strategies and options to maintain the Postal Service’s viability. Some of the strategies under discussion include: • Ending Saturday delivery. • Reducing the size of the workforce. • Making postal employees pay the same share of health and life insurance premiums that other federal employees pay. • Generating revenue through new products. • Allowing the Postal Service more pricing freedom. • Restructuring the Postal Service’s network of mail processing facilities. • Moving retail services from Post Offices to alternative access options. One item that is generating a great deal of discussion is whether the large payments the Postal Service must make for retiree health benefits should be restructured. One option is to give back some of the excess pension funding and allow the Postal Service to use these funds for other purposes. In January, the Office of Inspector General for the Postal Service issued a report that found the Postal Service had been overcharged $75 billion for its pension obligations from 1971 to 2009 because of an inequitable method of calculating the size of those obligations. Adding to this inequity is the fact that the Postal Service is currently required to fund 100 percent of its retiree health and pension obligations. Very few in private industry do this, and the rest of the federal government’s pension funding level is only 41 percent. In addition, the OIG believes that the forecast of the Postal Service’s future retiree health care costs is too high. Fixing these issues could save the Postal Service $7 billion a year. What do you think? Which strategies will be most useful to the Postal Service? Should the mix of strategies include cutting delivery service?This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).
on Apr 12th, 2010
in Post Offices & Retail Network
| 40 comments
The Postal Service is required by law to “provide, reliable, and efficient services to patrons in all areas and shall render postal services to all communities.” Consequently, the Postal Service has the largest retail presence in America with more than 32,000 leased or owned facilities located across the country. Today, alternate access channels are widely available. Customers can purchase stamps and access services at the Postal Service’s website www.usps.com, self-serve kiosks, grocery stores, retail outlets, and privately-operated shipper locations. Meanwhile, in the past decade, business and household mailers have increasingly turned to electronic media to transmit correspondence that was formerly sent through the postal system. In addition, a weakened economy has resulted in declining mail volume and revenue. The combination of the availability of alternative access and declining revenue requires the Postal Service to re-evaluate its retail network to eliminate growing excess capacity, reduce costs, and improve efficiency. In May 2009, the Postal Service began a national initiative, known as retail optimization, to consolidate its retail stations and branches in urban and suburban areas. Unlike some other retailers, the Postal Service can’t close their stores without generating public reaction. Closing just a small percentage of postal facilities can affect thousands of people and communities and is often questioned by those communities involved. As a result, there is a need for the Postal Service to work with stakeholders to balance their interests and optimize resources. This topic is hosted by the OIG’s Network Optimization Team.