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Accuracy • Independence • Integrity

September 24, 2017   |   Ithaca, NY

News

Postal Service struggles under crippling deficit

Update — 4 p.m. Nov. 3 

The U.S. Senate introduced a bill on Wednesday that would give the U.S. Postal Service about $7 billion to help pay their current debt.

The bipartisan bill, proposed by Sen. Thomas Carper, D-Del., and Susan Collins, R-Maine, would refund money the Postal Service has overpaid into federal worker retirement accounts.

The bill would also override the 2006 PAEA law payment schedule, which requires a yearly $5.5 billion pre-payment for future retiree benefits. It also requires two years of studies before ending Saturday mail delivery.

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The United States Postal Service carries hundreds of thousands of letters and packages every day, but it is carrying a heavier weight as well — a massive deficit which has the agency considering massive changes.

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From left, freshman Scott Watson speaks with Cheryl Christopher, post office assistant, about mailing in the Phillips Hall post office. Kristina Stockburger/The Ithacan

There has been an ongoing debate as to how to solve the postal service’s deficit problem. In 2006, under the Postal Accountability and Enhancement Act, Congress mandated the USPS to not only pay current retiree health benefits, but to also start pre-paying retiree health benefits to the government for a 75-year period over a 10-year period. No other government agency is required to do so.

Its profits have been declining since. Total mail volume has decreased 46 billion pieces in the last five years, also contributing to the deficit

Until 2006, the postal service operated under a “pay as you go” model for its benefits payment plan. Now, the USPS must make yearly payments of roughly $5.5 billion to set aside money for future retirees. With close to 600,000 employees and a $70 billion annual budget, the USPS is the largest retail structure in the United States.

Currently, a $5.5 billion payment to the government, originally due Sept. 30, is now due Nov. 18.

Dave Partenheimer, director of media relations for USPS, said the agency is doing all it can to reduce costs. It is considering closing thousands of post offices and laying off workers. Partenheimer said they also need action from Congress to switch to five-day delivery, since by law the Postal Service is mandated to deliver six days a week.

Five-day delivery weeks would save the USPS $3.1 billion each year, Partenheimer said.

“To become profitable again, we need a more flexible business model that allows us to respond more quickly and better to changes in the marketplace,” he said.

But Sally Davidow, spokeswoman for the American Postal Workers Union, said she doesn’t believe the proposed measures will work effectively. She said using funds from other overpaid accounts for the health benefits pre-payment would be a better solution.

“If you cut thousands upon thousands of post offices and slow mail service significantly, which is what they’re proposing, you’re going to drive business away. You’re not going to build business,” Davidow said.

While no post offices in Ithaca are scheduled to close, the decision to close processing facilities could still affect deliveries in
the area.

At Ithaca College, the campus post office located in Phillips Hall is considered a contract station, Karen Serbonich, director of mail services, said. They follow the same regulations as any other post office, but are still employed by the college.

“All of those worries, ‘This is closing’ and ‘That is closing,’ that’s not going to affect us at all,” she said.

Serbonich said the only issue she has noticed lately has been slower delivery when it comes to priority mail packages.

“Normally priority mail should come in two to three days, and sometimes we’re seeing it take four or five days,” she said. “We’re wondering if it might end up being part of all this consolidation.”

Last year the USPS lost $8.5 billion. Partenheimer said they will again have a multi-billion dollar loss, meaning they will most likely default on the Nov. 18 payment.

“Default just means we can’t make that payment, but we can still pay our employees and our suppliers,” he said.

The USPS does not receive tax dollars for its operations. All of its funds come from the sale of postage products and services.

In July, the USPS announced a study of 3,700 post offices for consolidation, 23 of which are located in western New York. Karen Mazurkiewicz, spokeswoman for the United States Postal Service in western New York, said the Postal Service is focusing more on selling products where customers already shop, like grocery stores. The USPS is also proposing to close mail processing centers in Amsterdam, Binghamton and Buffalo.

The Postal Service delivered 6 million fewer pieces of mail in 2010 than in 2009. Mazurkiewicz said the biggest volume of mail to deteriorate is single-piece first class mail — traditional letters.

“First class mail has always pulled the weight of the revenue for the Postal Service,” she said. “That’s no longer our primary bread and butter, so how do we configure ourselves to be a postal service of the future?”

Mazurkiewicz said she has high hopes the system will be fixed soon.

“We’re not going away anytime soon,” Mazurkiewicz said. “Just because it’s different doesn’t mean it’s less. It just means people are going to be interfacing with their postal service in a whole different way.”