To understand the postal system’s dire financial straits takes some history. Should You Save For College If President Biden Makes It Free? Even though Trump’s allies sold the voter fraud conceit to him to explain his loss of the popular vote in 2016, the issues the USPS faces are far older and deeper than the current tsuris. NEW YORK, NEW YORK - AUGUST 05: A United States Postal Service (USPS) mail box stands in Manhattan ... [+] on August 05, 2020 in New York City. The Postal Service, unfortunately, has been at or near its credit limit for years, and much of that borrowing went to cover ongoing operating costs. Source: Government Accountability Office, Continuing Financial Challenges and the Need for Postal Reform, GAO-16-651T. The only silver lining is that the loss was below the red-ink tsunami of $15.9 billion in 2012. $67.8 B. The United States Postal Service (USPS), the nation’s national mail carrier service, is under increased scrutiny from politicians who are warning that the agency is not prepared to handle the tens of millions of mail-in ballots which are expected to be sent for the November election. That means all pension obligations including those from when the person was in the military and not a postal worker. As planned, the Postal Service reduced its debt level during 2019 by $2.2 billion, finishing the year with $11.0 billion in debt outstanding. For example, USPS’s workers’ compensation charge was $3.5 billion last year — much higher than usual due to a change in the way this expense is computed. As previously reported, AG Herring will face … The big example is pre-funding pensions, something that many have heard of at this point. Washington Postal Scene by Bill McAllister. Even this was minor, though, in comparison to the treatment by elected officials who saddled the agency with “debt and financial disadvantage,” according to an email exchange I had with Philip F. Rubio, a former USPS letter carrier and now a professor of history at North Carolina A&T State University. Chart 5. Share. (Photo by Spencer Platt/Getty Images). That's about how long the postal service has faced declining mail volumes and a growing mountain of debt. The whole result is a USPS that can’t meet its artificial obligations and so is constantly on the look for federal loans to make up the amounts, taken by the federal government for pension funds for people who don’t exist and then spent elsewhere. It couldn’t move beyond letter and package delivery, although at one point there was a postal banking system that helped low-income and rural people. The new USPS still had to provide uniform service and pricing. Running an enterprise of this scale necessitates borrowing money to invest in new equipment and technologies. This is exactly what has been happening to the Postal Service for years. IT’S NOT THE INTERNET It’s a business network. Virginia AG Mark Herring reportedly will seek a third term as AG and not run for governor as previously reported. But it has in recent years failed to pay towards its retiree health benefits obligations. Washington, D.C. 20005, Video: Florida Republicans prepare to challenge election results, Rod Arquette Show Daily Rundown – Monday, January 4, 2021, Podcast: What Do We Do About Tech Censorship? (AP Photo) The United States Postal Service (USPS) lost $5.5 billion last year. Postal Service (USPS) ran a deficit of $3.9 billion. $65.2 B. President Trump in recent weeks has called the Postal Service "a joke" as the agency is experiences delays in mail delivery due to the coronavirus pandemic and financial pressures. Postal Facts 2020 provides the public with information about the Postal Service. Opinions expressed by Forbes Contributors are their own. In FY 2019, the USPS saw a decline of 2.6 percent in total volume of mail and package deliveries. Tweet . According to Rubio: “Funds are instead being diverted [by Congress] to help pay down the national debt.” The federal government takes the pre-funding and then spends it elsewhere, because it can always cover pension obligations down the line. Package volume continued to increase, but only by 0.3 percent. Ultimately, much of it comes down to a scheme that was a subsidy for the Department of Defense—responsible, by the way, for 18% of all on-budget spending in the 2019 fiscal year. According to its FY2018 Annual Report to Congress, it operates [6] “34,700 Post Offices and [has] 58,000 retail partners and other access points, more than 232,000 delivery vehicles, and 8,500 pieces of automated processing equipment. This is a crisis for an agency whose business model all but ensures that its costs will rise annually. Total mail and package volume declined by 3.8 billion pieces or 2.6%. Its two-day on-time service dropped from 94% to 88.2% from 2019 to 2020. It is very difficult to stay in business when costs exceed revenues. These five charts depict the immensity of USPS’s financial challenges. Ultimately, much of it comes down to a scheme that was a subsidy for the Department of Defense—responsible, by the way, for 18% of all on-budget spending in the 2019 fiscal year. Freelance business, economics, finance, and tech journalist. Net income or loss from ... restructuring of short-term debt to long-term debt in FY 2019 led to a $3.1 billion decrease in current liabilities, the only such decrease since FY 2010. USPS’s Costs Regularly Outstrip Its Revenues ($Billions). with Canyon Brimhall. That is largely driven by the diminishing First-Class Mail service, which shrank by 3.1 percent. The agency is also carrying $11 billion in debt and has more than $120 billion in funded pension and health liabilities. Source: Government Accountability Office, “Unsustainable Finances Need to Be Addressed,” GAO-18-602. (Photo by Spencer Platt/Getty Images), EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, 7 Costly Scams For Americans To Avoid In The New Year, Healthcare And Childcare FSA Fix For 2021, Finally, Why The Ultra Wealthy Are Anxious About The Georgia Runoff Election. The USPS announced in its fourth quarter financial statement that in FY 2019, it ran an $8.8 billion deficit, a 125 percent increase compared to FY 2018. USPS’s pension obligations remain about $21 billion short of full funding. That is an immense sum, particularly for an organization that shows little capacity to generate the revenues required to fund itself. USPS’s Retiree Health Benefits Will Go Bankrupt. Check out our various publications and manuals to learn more about what the Postal Service can do for you. The agency added $7.3 billion in debt in fiscal 2019 related to the retiree … Postal Service has hit its $15 billion debt limit and can't borrow anymore from the U.S. Treasury. Except, when you look at the history and basic business math, it’s hard to argue with. Source: The R Street Institute from USPS annual report data. Controllable loss for the year was $3.4 billion, an increase of $1.5 billion compared to the prior year. It was a way to offload big expenses from federal responsibility to the new agency. The U.S. Government Accountability Office reported in 2019 that USPS’s total debt, $143 billion, is more than double its annual revenue from stamps, shipping orders and mailing. The U.S. If Dems Take Georgia Here’s How $2000 Stimulus Checks Could Play Out, Here’s What The New Round Of PPP Loans Means For Black-Owned Businesses, UK Judge’s Decision To Not Extradite Julian Assange Influenced By Conditions In US Bureau Of Prisons, What The Stimulus Package Means For Your Student Loans, you’d be struck by lightning or attacked by a shark, Trump’s allies sold the voter fraud conceit to him, 44% of the 2020 federal discretionary budget, postal system’s dire financial straits takes some history. As stated in GAO’s 2019 High-Risk update, USPS faces financial challenges that include the following: Poor financial situation: USPS’s overall financial condition is deteriorating and unsustainable. That is the eighth annual loss in a row and the third-highest ever. Chart 4. But the new USPS became responsible for the ongoing increased pension benefits. The United States Postal Service (USPS), the nation’s national mail carrier service, is under increased scrutiny from politicians who are warning that the agency is not prepared to handle the tens of millions of mail-in ballots which are expected to be sent for the November election. The U.S. Post Office owes $100 Billion in benefits to its workers/retirees but doesn’t have the money. You don’t require full funding in advance, including pensions for people who haven’t been born, let alone hired, unless you want to make it difficult to run the organization. Postal Service (USPS) recently closed its books for the 2019 fiscal year, and things aren’t looking so good as it heads into 2020.USPS has a whopping $120 billion in pension and other post-employment unfunded liabilities.That’s an amount equal to the GDP of Ukraine. A major strike by postal workers in 1970 over wages and benefits, even though the law didn’t allow this, started a series of monetary dominoes. During the quarter, three-to-five day on-time service dropped from 87.8% in 2019 to 72.1% in 2020. Use our quick tools to find locations, calculate prices, look up a … The Postal Service has reported its financial results for fiscal 2019 (Oct. 1, 2018-Sept. 30, 2019). The net loss for the year was $8.8 billion, an increase in net loss of $4.9 billion … Through FY 2019, the USPS’s operating deficit was nearly $75 billion and, according to the Government Accountability Office (GAO), has long-term unfunded liabilities of $161 billion. Whether the 116th Congress will take up postal reform is far from clear. The U.S. The Postal Service has reported its financial results for fiscal 2019’s third quarter (April 1-June 30). The agency has reduced its staff count, mostly by not replacing retirees, and has trimmed the number of post offices. This depresses the post’s revenue, forcing it to take on more debt, which in turn puts it under greater financial pressure. President Trump in recent weeks has called the Postal Service "a joke" as the agency is experiences delays in mail delivery due to the coronavirus pandemic and financial pressures. Chart 1. Postal Service saw a slight increase in package volume for fiscal 2019, after its first quarterly decline in years during Q3, as the agency is being challenged by Amazon and FedEx rerouting packages to their own networks. 1212 New York Ave. It’s the engine of e-commerce. The Postal Service was designed to be a self-funding agency. The Postal Service said it reduced its debt level during 2019 by $2.2 billion, finishing the year with $11 billion in debt outstanding. The debt it carried jumped from $7 billion in 2008 to $10 billion in 2009. The burden will fall on the House’s Oversight and Government Reform Committee and the Senate’s Homeland Security Committee. It was 44% of the 2020 federal discretionary budget. This is false; the USPS had a net loss of $8.8 billion in 2019, and its total liabilities exceed $97 billion, according to official disclosures. For the convenience of timekeepers, each biweekly pay period appears as two separate weeks, with the beginning and ending dates indicated for each week. USPS reports [4] that it expects costs to continue to rise: “Compensation and benefits expenses are planned to increase by $1.1 billion in FY2019, due to wage increases by $0.6 billion resulting from contractual general increases and cost-of-living adjustments.” The agency also expects its transportation and retiree health benefits expenses to increase by $1 billion. April/May/June 2019. If banks couldn’t be bothered with them, postal banking, with branches everywhere, was available. The Postal Service reported a loss of $2.7 billion for the fiscal year that ended Sept. 30. The following chart lists the 2019 pay periods. Total revenue was $17.1 billion, essentially flat from the same period one year earlier. Would Stimulus Payments Have Been Bigger If Trump And Democrats Called Them Tax Relief? © 2021 Forbes Media LLC. The Postal Service presently does have $10 billion in cash, so it certainly can minimally service its debt. As planned, the Postal Service reduced its debt level during 2019 by $2.2 billion, finishing the year with $11.0 billion in debt outstanding. Pension funds get invested to grow over time so they can meet obligations. The Postal Service has a total debt of around $120 billion, according to the Government Accountability Office (GAO). USPS cut 4.3 million work hours in the last three quarters of fiscal 2019 through attrition and a reduction in overtime. USPS cut 4.3 million work hours in the last three quarters of fiscal 2019 through attrition and a reduction in overtime. When you were, say, 25, would you expect in ten years to have put aside full retirement savings for yourself and your children and maybe even grandchildren? My credits include Fortune, the Wall Street Journal, the New York Times Magazine, Zenger News, NBC News, CBS Moneywatch, Technology Review, The Fiscal Times, and Inc. Get my free newsletter at https://eriksherman.substack.com. Only Congress can rescue the agency. Postal Service (USPS) currently owes $99.8 billion in benefit payments to its current and retired workers but does not have the money, and if Congress does not act to fix the problem, the Postal Service may have to “implement contingency plans to ensure that mail delivery continues,” according to a new report by the Government Accountability Office (GAO). Feb 7, 2020, 10 AM The House of Representatives passed the legislation Feb. 5 with bipartisan support. The Postal Service reported a loss of $2.7 billion for the fiscal year that ended Sept. 30. House passes legislation to ease USPS debt burden. On a typical day, our 634,000 employees physically deliver 493 million mail pieces to 159 million delivery points.”. The U.S. My credits include Fortune, the Wall Street Journal, the New York Times Magazine, Zenger News, NBC News, CBS Moneywatch, Technology Review, The Fiscal Times, and Inc. Get. This sounds like some screwy conspiracy theory. The U.S. Given that the postal service had been a major employer of veterans, that effectively means transferring a significant financial burden from the Department of Defense to the USPS, according to Rubio. Chart 3. The USPS, as of 2019, has 469,934 career employees and 136,174 non-career employees. Debt Collectors Sued | States Object to Proposed Fed Banking Rule | States Move to Stop USPS Changes By Lori Kalani, Bernard Nash. The House will cut short its August recess to address United States Postal Service. The U.S. 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011; Annual operating revenue . Mail volume dropped more than a quarter, and has not rebounded. Luckily, the USPS has enough cash to make ends meet over the next few months. Retired postal workers participate in federal pension programs and receive health benefits. The USPS Fairness Act , which passed the House at the start of 2020 and is currently before the Senate, is a misguided approach to solving the retirement fund’s issues. “[T]he USPS was on the hook for the whole pension of any veteran who worked for it” because of the 2003 Pension Reform Act, Rubio wrote. USPS’s Total Debt Is Immense ($Billions). Many of them were already transitioning from paper mail to electronic correspondence, and the financial crisis increased their incentive to bail from mail. It’s a social network. USPS can’t borrow on the open market, so it has had to limit [7] its infrastructure investments. 1 facts.usps.com WELCOME TO THE MOST ADVANCED, SOPHISTICATED AND POWERFUL NETWORK IN THE NATION. It’s only that low if you include Social Security and Medicare, which are mandatory. And no legislator or president wants that to occur on his watch. $70.6 B. The agency has around $120 billion in unfunded debt and obligations, most of which flow from compensation and benefits owed to its significant cohort of employees and retirees. If you were lucky enough these days to have a real pension and moved from Company A to Company B, the pension benefits at B wouldn’t be a continuation of those at A. All Rights Reserved, This is a BETA experience. Find information on our most convenient and affordable shipping and mailing services. Last year, the U.S. This marks 13 years of consecutive losses for the USPS, totaling $77.8 billion. 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