• on Mar 2nd, 2009 in Pricing & Rates | 5 comments

    Have you ever wondered why the Postal Service offers free rates for the blind, balloting materials for overseas voters, and items sent by some consular officials? Or why it offers reduced rates to qualified nonprofit organizations, election officials, local newspapers, and publishers of educational material? It is because Congress mandates that the Postal Service provide free or reduced rates to these mailers and then appropriates money to reimburse the Postal Service for the revenue “forgone.”

    Initially, Congress reimbursed the Postal Service for all types of reduced rate mail. Over the years, as rates increased and the number and size of nonprofit organizations grew, the revenue forgone appropriation more than doubled from $441 million in fiscal year (FY) 1972 to $970 million in FY 1985. The increase spurred a debate about who should bear the cost of reduced rates: taxpayers or other mailers. To address these concerns as well as other matters, the Congress passed the Revenue Forgone Reform Act of 1993. Under the Act, the annual appropriation for free postage for the blind, overseas absentee balloting materials, and consular officials continued; however, new appropriations for reduced rate mail stopped. The Act required nonprofit mailers to cover more institutional or overhead cost and shifted the rest of these costs to other mailers.

    Currently, nonprofit mailers that use Standard Mail pay approximately 60 percent of commercial Standard Mail regular rates. The remaining share is absorbed within rates charged to other mailers. Congress continues to reimburse the Postal Service for revenue forgone for free mail, but the amount appropriated is usually less than the Postal Service requests. For example, although the Postal Service requested $124 million in FY 2008 to cover the costs of revenue forgone, free mail and adjustments from previous years, it received only about $89 million.

    What do you think are some of the pros and cons of offering free or reduced rates to certain organizations? Tell us what you think.

  • on Feb 23rd, 2009 in OIG | 27 comments

    The Postal Service funds workers’ compensation benefits for employees who sustain job-related injuries. In FY 2008, the Postal Service incurred over $1.2 billion in workers' compensation expenses. In addition, the Postal Service estimated its liability for future workers’ compensation costs at nearly $8 billion. The U.S. Department of Labor’s Office of Workers’ Compensation Programs (OWCP) administers the workers’ compensation program and then bills the Postal Service for reimbursement. While the Office of Inspector General (OIG) recognizes that fraudulent workers’ compensation claims make up a small percentage of the total claims, the OIG commits significant resources toward identifying claimants who defraud the system. In FY 2008, OIG investigations saved the Postal Service more than $197 million in future workers’ compensation costs, and the OIG arrested 51 individuals for workers’ compensation fraud. The following example highlights one of our recent successes.

    On October 2, 2008, a former Postal Service mail processing clerk from Montana was convicted in U.S. District Court on four counts of fraud following a 3-day trial in Billings, Montana. This former postal clerk had not worked since December 1986 and had received more than $650,000 in workers’ compensation payments since that time. She considered herself so disabled that she could not even “bend over to cut her toenails.” During a month-long surveillance in the fall of 2006, OIG agents saw a much more active woman as they videotaped her using a chain saw and wood splitter, unloading 10-foot logs from her pickup, and stacking large chunks of wood. (See above for some of the video footage.) On January 21, 2009, Chief U.S. District Court Judge Richard Cebull ruled that the former clerk is suffering from a mental disorder and committed her to a federal medical center for up to 20 years. This successful investigation saved the Postal Service approximately $781,000 in future workers’ compensation payments. Do you have any suggestions for preventing workers’ compensation fraud?

  • on Feb 17th, 2009 in Ideas Worth Exploring | 22 comments
    The Postal Service requires full addresses on most mail, but this creates unnecessary complications for small local businesses such as pizza parlors and dry cleaners that simply want to send a flyer to every address in the surrounding area. It would be much easier for them to bring a stack of unaddressed mail pieces to the Postal Service and let the Postal Service deliver one to each address.

    The Postal Service previously worked on a concept called Neighborhood Mail to meet this need. Using Neighborhood Mail, a business could send unaddressed mail to potential customers in the community it serves. The Postal Service would tell the business how many pieces were necessary to cover the delivery area and charge it for delivery. Such a service is not unusual. Many postal services in other countries offer unaddressed mail service.

    Neighborhood Mail, however, has its opponents. Newspapers, which compete with mail for local advertising, opposed the development of the Neighborhood Mail concept in the past. Neighborhood Mail would also compete with mail consolidators and alternate delivery providers which currently help small businesses deliver information to the community. In addition, unaddressed mail could raise environmental concerns, so the Postal Service might want to offer households the ability to opt out of receiving Neighborhood Mail.

    What do you think about Neighborhood Mail? Are there other services the Postal Service could introduce to help local communities?

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