So How Much Is the FERS Surplus?

To borrow a saying often attributed to Yogi Berra, “It’s tough to make predictions, especially about the future.” Whenever people make estimates about liabilities for long- term expenses, such as pension and retiree health payments, they’re making predictions about the future. The problem is that predictions are based on the present, and the present is always changing.


The Costs, Should They be a-Changin’?

As the Postal Service struggles to survive, it needs to take a good look at the financial health of its products. However, ascertaining the financial health of a product line requires an accurate estimate of the cost of providing that product. The Postal Service is moving into an increasingly data-driven future; thus, the timeliness and accuracy of cost measurement will continue to grow in importance. The Postal Service has not changed its cost system fundamentally in many years, though it updates significant inputs annually.


Postal Service Revenue: What Should be Done?

Much emphasis has been placed on reducing the Postal Service’s costs in response to its financial crisis. Yet financial viability could come in the form of a balanced approach that both reduces costs and increases revenue. How would a smart business respond to declines in its major products? Would it raise prices where possible in stagnant areas and invest the proceeds into existing or new growth areas? Would it selectively discount products to grow volume in price sensitive segments?


Operations and Finance – Allies or Foes?

Let’s take a simplistic view of the Postal Service by dividing it into two groups: Operations and Finance. Operations’ main concern is to make sure mail is delivered and other services are rendered to satisfy customers’ needs. On the other hand, Finance’s responsibility is to ensure that all the information stemming from the Operations side is captured for billing/payment and financial statement reporting purposes. After all, the Postal Service needs to be paid for their good work, doesn’t it?


Too Much Management Turnover?

[dropcap style="font-size: 60px; color: #9b9b9b;"] T [/dropcap]he Postal Accountability and Enhancement Act of 2006 requires the Postal Service to comply with specific sections of the Sarbanes Oxley Act of 2002 (SOX). Among other financial reporting requirements, SOX mandates internal control compliance – making sure that financial transactions are reasonably and fairly presented in the accounting records - and places the responsibility on postal management.


Revenue Protection


The Postal Service does not receive tax dollars to sustain its operations, but relies on accurate postage payments for support. While the vast majority of the Postal Service’s customers pay the full cost of mailing, revenue loss, otherwise known as revenue leakage, can occur when individual or business customers don’t pay the appropriate postage for their mailings.
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A Lower Volume Postal Service?

The U.S. Postal Service is used to delivering large amounts of mail. Last year, it delivered more than 177 billion pieces. More mail pieces are sent per person in the United States than almost anywhere else in the world. But mail volume has been declining. How will the Postal Service change if volumes continue to fall? Is the Postal Service even financially sustainable at lower volume levels?

The Office of Inspector General (OIG) asked the George Mason University School of Public Policy (GMU) to find out. The results of GMU’s work appear in a paper released today on our website.


New Business Mail Acceptance and Verification Process — Friend or Foe?

The Sarbanes-Oxley (SOX) Act of 2002 grew out of large corporate financial scandals. SOX aims to improve corporate governance and enhance the accuracy of financial reporting. While compliance is required by the Postal Act of 2006, the Postal Service believes it is a great way to make its business stronger. SOX helps target areas of improvement and strengthen financial accounting, making the Postal Service a better business. As a result, the Postal Service designed and implemented new business mail acceptance procedures and requirements in an effort to comply with SOX.


Is the Price Right?

The Postal Accountability and Enhancement Act of 2006 (PAEA) ushered in a new regulatory structure for the U.S. Postal Service. One key element was a price cap on market dominant products. (Most of the Postal Service's products are market dominant.) This means that price increases for market dominant products are capped by the rate of inflation as measured by the Consumer Price Index (CPI).


Should the Postal Service request financial relief from the $6.8 billion FERS surplus?

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.