• on Feb 22nd, 2012 in Strategy & Public Policy | 36 comments

    If you pay any attention at all to legislative efforts to address the Postal Service’s financial crisis, you’ll soon hear the phrase, “budget score.” Someone will say that a bill has a high score or a low score. But what is a budget score? What is the score for?

    Budget scoring is part of a broader process to keep federal spending in check. The Congressional Budget Office (CBO) assigns scores to bills to show how they will affect the federal budget deficit. (Unlike most sports, a high budget score is usually considered bad.) Even though Congress placed the Postal Service off budget in 1989 and the Postal Service does not receive federal money for operations, the Postal Service often gets caught up in budget scoring concerns for two reasons: The first is off-budget spending is included in the overall measure of the budget called the unified budget. The second is that the Postal Service is required to pay in funds for pensions and retiree health benefits to certain on-budget accounts.

    The OIG described the history of the Postal Service’s entanglements with federal budget concerns in the 2009 white paper, Federal Budget Treatment of the Postal Service. The paper showed how these entanglements stymied the ability to enact postal legislation – even legislation that would return the Postal Service’s overpayments.

    In a new paper released today, Budget Enforcement Procedures and the Postal Service, the OIG updates budget events since the 2009 paper and places budget scoring and the federal budget treatment of the Postal Service within the context of the federal budget process.

    Most of the Postal Service’s operational spending is off budget and not subject to the federal budget process. The OIG argued in 2009 that the Postal Service’s retiree benefit accounts should also be off budget and disentangled from the federal budget. Until that happens, however, it is important that the Postal Service and its stakeholders understand how the budget process and budget enforcement work. This paper attempts to explain these processes and how they can affect legislation.

    What do you think about budget scoring and the Postal Service? Comment below.

    This blog is hosted by the OIG’s Risk Analysis Research Center.

  • on Feb 13th, 2012 in Strategy & Public Policy | 12 comments

    According to the Postal Service, greater use of electronic communication continues to drive customers away from using First-Class Mail®. Instead of buying stamps, many customers pay bills online, send ‘e-invitations’ to friends and family, and simply press “Send” when they want to communicate. These shifting customer habits will continue to speed the migration away from traditional First-Class Mail. According to the Postal Service, First-Class Mail has dropped 25 percent and single-piece First-Class Mail – letters bearing postal stamps – has declined 36 percent in the past 5 years.

    Postal Service customers and others have complained that the planned consolidations and the elimination of overnight service standards will adversely affect them. On the other hand, the Postal Service claims that these consolidations are financially necessary and create a delivery network that more accurately reflects the current volume of mail.

    1. What are your thoughts on the consolidations? 2. How will the elimination of overnight service standards affect you? This topic is hosted by the OIG’s Planning, Innovation and Optimization Directorate. NOTE: An audit report, U.S. Postal Service Presents Network Optimization Initiative, shall be issued in tandem with this blog.
  • on Jan 30th, 2012 in Strategy & Public Policy | 2 comments
    As America was expanding in the 1780s, the founding fathers realized that open access to secure and private communication among its dispersed citizens was critical to forming political groups and holding free elections without fear of retribution. The U.S. Constitution empowered Congress “to establish post offices and post roads,” the most common form of telecommunication (communication over a distance) in 1789. The founding fathers provided the necessary infrastructure to “bind” the growing nation together through communication and commerce. Thereby, the Post Office Department (now the U. S. Postal Service) was born.

    In the late 1800s, the U.S. Supreme Court, in a case involving conflicting interest between two electric telegraph companies, stated a broad interpretation of Congress’ constitutional postal powers:

    “…The powers thus granted are not confined to the instrumentalities of commerce, or the postal service known or in use when the Constitution was adopted, but they keep pace with the progress of the country, and adapt themselves to the new developments of time and circumstances. They extend from the horse with its rider to the stage coach, from the sailing vessel to the steamboat, from the coach and the steamboat to the railroad, and from the railroad to the telegraph, as these new agencies are successively brought into use to meet the demands of increasing population and wealth.” (PENSACOLA TEL. CO. V. WESTERN UNION TEL. CO., 96 U. S. 1 (1877))

    The Postal Service has modernized many times over, moving well beyond manually sorting letters and delivery mail via horse-riders. Today, however, people, government, and businesses are transitioning to using the Internet to communicate, because of lower cost and nearly instant delivery. Yet, the Internet lacks privacy and security in digital communications and transactions. In addition, Internet access is too expensive or merely unavailable for many elderly or poor citizens. While free markets excel at many things, enforcing privacy and security or providing access to disadvantaged groups have not been among the core responsibilities of the market. In America, these have historically been the duties of its representative government.

    America’s requirements for a secure national communications system have evolved since the Constitution was drafted, but the fundamental need for such a system seems to remain. Does America need secure universal digital postal services as much today as it needed traditional mail in the past? What do you think?

    This blog is hosted by the OIG’s Risk Analysis Research Center.