The U.S. Postal Service: Common Questions About Post Office Closures (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
In recent years, the U.S. Postal Service (USPS) has announced initiatives to close up to 4,380 USPS retail facilities in rural, suburban, and urban areas. In May 2012, the agency may have changed course. The USPS issued a plan to “preserve” rural post offices, in great part by reducing their operating hours. In the same instance, the agency noted it was reviewing the status of 13,000 rural post offices, some of which might be closed. Thus, how many post offices may be closed remains unclear.
More than a dozen bills in the 112 th Congress carry provisions that address post offices and the public’s access to retail postal services, including H.R. 2309, H.R. 2692, S. 1668, and S. 1789. This report addresses common questions about the closure of post offices. Questions answered include
(1) What is a post office?
(2) How many post offices are there?
(3) How many post offices might the USPS close?
(4) What authority does the USPS have to close post offices?
(5) What is the current post office closure process?
(6) What is the role of the Postal Regulatory Commission in post office closures?
(7) When might the post office closure process begin?
(8) How many USPS employees may lose their jobs? and
(9) What current legislation carries provisions related to post offices?
Colloquially, the term “post office” often is employed to refer to any place where stamps are sold and postal services are provided by USPS employees. However, the USPS differentiates among several categories of postal facilities, including post offices, post office branches and stations, community post offices, and contract postal units. At the end of FY2011, the USPS had 35,119 retail postal facilities.
Congress has given the USPS considerable discretion to decide how many post offices to erect and where to place them. Congress also requires the USPS to provide the public with access to retail postal services (e.g., sales of postage, parcel acceptance, etc.). Both federal law and the USPS’s rules prescribe a post office closure process, which takes at least 120 days. The USPS must notify the affected public and hold a 60-day comment period prior to closing a post office. Should the USPS decide to close a post office, the public has 30 days to appeal the decision to the Postal Regulatory Commission. Sixty days after it has made a closure decision, the USPS may shut down a post office.
H.R. 2309, H.R. 2692, S. 1668, and S. 1789 are very different from one another. Among their other provisions, H.R. 2309 would reduce the number of post offices; H.R. 2692 would alter the post office closure process; S. 1668 would forbid any closure that would create more than 10 miles’ distance between any two post offices; and S. 1789 would alter the post office closure process and greatly reduce the USPS’s authority to close post offices.
This report will be updated to reflect significant developments.
The U.S. Postal Service (USPS) today released an important update to its business plan for returning to profitability and long-term financial stability. While fundamentally consistent with the approach advanced by the Postal Service over the past year, the plan released today incorporates important refinements of financial projections and recommended legislative reforms.“The plan we have developed requires a combination of aggressive cost reduction, rethinking the way we manage our healthcare costs, and comprehensive legislation to reform the business model of the Postal Service,” said Postmaster General, Patrick Donahoe. “If provided the flexibility to quickly implement this plan, we can return to profitability and better serve the American public. If not, we risk becoming a significant burden to the American taxpayer.”At its core, the plan requires the reduction of annual costs by at least $20 billion by 2015, rising to more than $22 billion by 2016. This cost reduction is necessary given projected declines in First-Class Mail volume, which has already has dropped by 25 percent since 2006. However, the Postal Service can achieve only a portion of these reductions under current business model constraints; legislative changes are needed to achieve the full $20 billion in cost reductions.In the absence of legislative reform that quickly enables meaningful operational changes and cost reductions, the Postal Service could incur annual losses as great as $18.2 billion by 2015, and accumulate a total debt of $92 billion by 2016. “These prospective losses would be unsustainable and highly undesirable,” said Donahoe. “Fortunately, as our plan demonstrates, such an outcome is entirely avoidable; the Postal Service can be profitable over the long term and not require taxpayer support.”The Postal Service is a self-financing federal entity that generates its revenue from the sale of postal products and services.
+ Full Document (PDF)
Postal Service’s policies and procedures to prevent and collect bad checks were effective and efficient. The Postal Service collected about 69 percent of bad check debt, and bad checks represented 0.14 percent of retail check payments, which was over seven times better than the industry average of 1 percent. In addition, the collection process for bad checks was cost effective, and management has decreased staffing to process and collect bad checks concurrently with bad check volume. However, there is additional opportunity to decrease bad check costs by increasing the bad check service fee to the national retail median.
21st Century Post Office: Aligning with the National Broadband Infrastructure Initiative Management Advisory
Based on our analysis of the technical, engineering, and business planning issues involved, we concluded that for-profit Internet Service Providers (ISPs) have provided thorough broadband coverage in the areas of the U.S. that would garner economic profit. However, there are unserved areas within the U.S. — mostly in rural areas — due, in large part, to the negative financial return involved when entering those markets.The private sector cannot change this broadband coverage gap alone. The Postal Service can assist the National Broadband Infrastructure Initiative through a public/private partnership with commercial ISPs to provide facilities and land for the expansion of the broadband infrastructure. A public/private venture could make ISP operations more affordable for the underserved.
PRC Advisory Opinion Finds USPS Proposal for Retail Closures Lacks Proper Analysis (PDF)
Source: Postal Regulatory Commission
The Postal Regulatory Commission today issued its Advisory Opinion in Docket N2011-1 on the Postal Service’s Retail Access Optimization Initiative (RAOI), a program that identified more than 3,600 post offices and other retail facilities for possible closure this year.
The Postal Service is required to ask the Commission for an Advisory Opinion on any change in nationwide service it proposes. The Commission found that the RAOI is likely to affect access to postal services. The Commission’s primary finding is that the RAOI was not designed to optimize the network. The Commission recommends the use of modern optimization tools and techniques to better maximize net retail revenues while fulfilling statutory service obligations.
Ruth Goldway, Chairman of the PRC explained: “The Commission was unanimous in expressing its concern that the Postal Service’s plan did not and could not, because of lack of data and analysis, determine the facilities most likely to serve the greatest number, reduce the greatest costs, or enhance the potential for growth or stability in the system. We agree that the Postal Service access network should be right-sized but found that the RAOI was not the proper approach to meet that goal.”
The Commission was unable to develop reliable cost savings estimates because the Postal Service does not collect facility-specific revenue and cost data, or separate retail costs from other operational costs. The Commission found that such data should be available for use in comprehensive facility closing plans.
+ Full Document (PDF)
See also: PRC Annual Report 2011
Postal Service Provides Guide to Mailing Season’s Greetings
Source: U.S. Postal Service
With 16.5 billion cards, letters and packages to be delivered between Thanksgiving and New Year’s Day, the U.S. Postal Service has shipping tips to help make sure gifts are delivered promptly and safely during the holiday season.
The Postal Service recommends the following mail-by dates to ensure gifts arrive on time:
Dec. 3 – Military mail destined for Afghanistan
Dec. 10 – Military mail for other overseas bases
Dec. 15 – Parcel Post, the most economical shipping service
Dec. 20 – First-Class Mail
Dec. 21 – Priority Mail
Dec. 22 – Express Mail
USPS Funding and Accounting Issues for Retiree Health Benefits (PDF)
Source: Congressional Research Service (via MSNBC/House Oversight and Government Reform Committee)
On December 20, 2006, the Postal Accountability and Enhancement Act (PAEA, P.L. 109-435) was enacted into law and was the first broad revision of the 1970 statute that replaced the U.S. Post Office with the U.S. Postal Service (USPS), a self-supporting, independent agency of the Executive Branch. Among other things, PAEA required the USPS to pre-fund their future retiree health benefits (provided through the Federal Employees Health Benefits Program) by establishing the Postal Service Retiree Health Benefits Fund (PSRHBF). The law established set payments to the fund from 2007 to 2016 of between $5.4 billion to $5.7 billion annually.
As the USPS faces increased financial challenges, Congress has temporarily reduced the USPS current retiree health payments to the PSRHBF. On October 1, 2009, the Legislative Branch Appropriations Act [of] 2010 (P.L. 111-168) was signed into law and provided immediate relief by reducing the USPS payment in 2009 to the PSRHB from the required $5.5 billion to $1.4 billion. More recently, in September 2011, Congress delayed the USPS FY2011 RHBF payment date from September 30, 2011 to November 18, 2011 (P.L.112-36).
The Office of Inspector General (OIG) of the USPS has stated in a recent report that the Office of Personnel Management’s (OPM) recent estimates of their future retiree health liabilities are too high and that under the current payment schedule mandated by PAEA, the USPS will have overfunded its retiree health liability in 2016. 3 In response to these concerns, the Postal Regulatory Commission (PRC) has undertaken an analysis of the different approaches employed by the USPS/OIG and the OPM to calculate the present value of the Postal Service’s obligations related to the PSRHBF.
New GAO Reports (PDFs)
Source: Government Accountability Office
1. Aviation Safety: Enhanced Oversight and Improved Availability of Risk-Based Data Could Further Improve Safety. GAO-12-24, October 5.
Highlights - http://www.gao.gov/highlights/d1224high.pdf
2. U.S. Postal Service: Allocation of Responsibility for Pension Benefits between the Postal Service and the Federal Government. GAO-12-146, October 13.
Highlights - http://www.gao.gov/highlights/d12146high.pdf
Retail and Delivery: Decoupling Could Improve Service and Lower Costs (PDF)
Source: U.S. Postal Service, Office of Inspector (via Consumer Postal Council)
The U.S. Postal Service’s (Postal Service) retail and delivery operations have been “coupled” both organizationally and physically since delivery services were first established almost 150 years ago. The location of these facilities, housing both delivery and retail, was primarily determined based on historical patterns or the need for delivery service efficiencies — with retail performance typically being a secondary consideration. However, there have been dramatic shifts in the marketplace and the Postal Service could benefit by reexamining such long standing practices with the opportunity to improve service, raise revenue, and lower costs. The purpose of this paper is to strategically examine the concept of “decoupling” delivery from retail, thereby breaking a long-standing organizational tradition. Such decoupling could be physical, managerial, or both.
In this study, we draw upon the experiences and insights of key stakeholders in the postal community, private sector delivery companies in the United States, and foreign postal operators to gauge potential consequences and outcomes.
In short, we found that while the Postal Service has made some steps in this direction, a much broader and more strategic implementation of decoupling could add value to the Postal Service by lowering costs and improving service to the American people. We believe that carefully decoupling retail and delivery both physically and managerially primarily in urban and suburban areas would have the most practical benefit. These changes could provide improved customer service for existing products and better options to the Postal Service for reconfiguring both its delivery and retail networks and offering retail products and services that can best respond to changing market conditions and diverse customer needs across the country.
U.S. Postal Inspection Service Annual Report FY 2010 (PDF)
Source: U.S. Postal Inspection Service
U .S . Postal Inspectors across the country safeguard every element of the postal system— including the hundreds of thousands of postal employees who process and deliver the mail and the millions of customers who use it . Postal Inspectors protect thousands of postal facilities and millions of dollars in postal assets—including vehicles, equipment, products, and revenue streams. In the past fiscal year, Postal Inspectors initiated more than 6,000 investigations and arrested over 6,000 suspects for crimes involving the mail or against the Postal Service.
The Postal Inspection Service continues to meet its overall goal of assuring the security of the Postal Service . About 46 percent of Inspectors’ arrests in FY 2010 related to mail theft—a total of 2,775 suspects . Postal Inspectors arrested approximately 1,000 suspects on mail fraud charges, and analysts prepared 76,955 responses to mail fraud complaints . Revenue-protection efforts by Postal Inspectors over the past year identified in excess of $110 million in postal revenue losses. I was proud to attend a DOJ press conference this past year with Attorney General Eric Holder and representatives from other law enforcement agencies to announce the results of Operation Broken Trust.
Our contribution to this 3½-month sweep targeting fraudulent investment schemes covered 37 mail fraud cases, including 11 Ponzi schemes, affecting more than 36,000 postal customers who suffered $600 million in losses . Results like this demonstrate the viability of our work in increasing the trust and confidence of postal customers through our investigations of fraudulent activity involving the mail
Postal Service Statement: Publication of Final Rule on Retail Discontinuance Actions
Source: U.S. Postal Service
The Postal Service will publish a final rule in tomorrow’s Federal Register that revises the procedures for discontinuance of Postal Service-operated retail outlets. These regulations enhance transparency and public participation, increase the efficiency of the discontinuance process, and ensure sound business judgment in decisions for the Postal Service’s retail operations. The revised procedures include the following features:
- Top-Down Process: The final rule allows Postal Service headquarters management to identify candidate offices for initial feasibility studies, thereby enhancing consistency of approach in field units.
- Factors Informing an Initial Feasibility Study: The final rule clarifies the factors that could be used to identify candidate retail units for an initial feasibility study to include earned workload, insufficient customer demand and the availability of alternate expanded access channels.
- Process Management: The final rule enables improvements to be made in the administration and management of the discontinuance process.
- Station and Branch Discontinuance: The final rule enhances public input and transparency in connection with reviews of USPS-operated stations and branches through use of the public posting requirements and public input procedures.
An advance copy of the final rule is now available online at http://ofr.gov/OFRUpload/OFRData/2011-17529_PI.pdf.
Postal Service Outperforms Green Goals: Annual Sustainability Report Released
Source: U.S. Postal Service
Continuing its green innovation and leadership strategy, the U.S. Postal Service released its fiscal year (FY) 2010 Annual Sustainability Report, which demonstrated the agency had exceeded a number of its sustainability goals — including nearly a 30-percent reduction in facility energy use, a 33-percent reduction of supplies purchases and a 133-percent increase in alternative fuel use.
“Delivering the mail to every person and business in America is a big job with enormous responsibilities to our customers and the environment,” said Postmaster General and Chief Executive Officer Patrick Donahoe. “That’s why ‘leaner, greener, faster, smarter’ is our sustainability call to action as we eliminate waste, reduce fuel and energy use and lower our carbon footprint, driving costs down in a sustainable, responsible way.”
Chief Sustainability Officer, Thomas Day, credits the agency’s culture of conservation for its gains. “Postal employees care very much about the environment. With the help of 400 green teams created to identify low- and no-cost conservation projects, we reduced energy and water use in 2010, saving more than $5 million. We also reduced waste to landfills and recycled 222,000 tons of material in 2010, which avoided $9 million in landfill fees and generated $13 million in revenue.”
Highlights from the report include:
- 171 billion — pieces of mail delivered to 150 million delivery points, along 230,000 routes, with 215,000 postal vehicles, of which 44,000 are alternative fuel-capable, logging 4 million miles a day.
- 27 billion — Cradle to Cradle CertifiedCM stamps and shipping supplies provided to customers. USPS is the only mailing and shipping company in the world to have earned this certification for materials that meet established standards for human and environmental health and recyclability.
- 1,067,834 — metric tons of CO2 reduced from an FY 2008 baseline, an amount equal to the annual emissions of nearly 204,000 passenger vehicles.
U.S. Postal Service: Audit Report – Compliance With Travel Policies and Opportunities for Cost Savings
Audit Report – Compliance With Travel Policies and Opportunities for Cost Savings (PDF)
Source: U.S. Postal Service, Office of Inspector General
Postal Service employees did not comply with prescribed travel policies resulting in over $600,000 in excessive travel costs for lodging and airfare in FYs 2009 and 2010. We estimate the Postal Service could realize an additional $600,000 in savings over the next 2 years, or $300,000 annually, if it takes action to curtail employee noncompliance with travel policies. Further, the Postal Service did not cancel 2,491 credit cards issued to former employees, including 53 employees listed as deceased in employee records. At the time of our audit, there was more than $37 million in open credit associated with cards of former employees.
Postal Service Challenges PRC Five-Day Analysis
Source: U.S. Postal Service
In a report issued today and delivered to Congress, the U.S. Postal Service asserted that the Postal Regulatory Commission (PRC) based a recent advisory opinion on a questionable analysis of the potential cost savings that could be achieved by implementing a five-day delivery schedule to street addresses.
The Postal Service has estimated that making the move would yield a net annual cost reduction of $3.1 billion based on extensive market research and financial estimates provided to the PRC March 30, 2010. The PRC issued a nonbinding advisory opinion March 24, 2011 that concluded that transitioning from a six-day delivery schedule to a five-day street delivery schedule would only achieve $1.7 billion in net annual savings.
The $1.4 billion discrepancy between the respective estimates results from:
- the Commission’s unwillingness to recognize about $760 million in savings from increased city carrier productivity and efficiency under a five-day schedule;
- the Commission’s failure to account for more than $260 million in highway transportation and mail processing economies associated with one less day of street delivery; and
- the Commission’s summary dismissal of the unrefuted testimony of market research experts to reach its conclusion that the Postal Service estimate of annual revenue loss resulting from the change was understated by $386 million.
On the variances between the agency’s cost savings estimates, the Postal Service report questions the PRC assumption that “little, if any, efficiencies and increases in productivity would be realized in certain city carrier activities by delivering the same volume Monday through Friday instead of Monday through Saturday.” The PRC revenue loss estimate “is contradicted by the overwhelming weight of expert testimony … [and] falls short of the requirement that it be based on substantial record evidence.”
The Postal Service Role in the Digital Age: Expanding the Postal Platform (PDF)
Source: U.S. Postal Service, Office of Inspector General
The Internet and the digital revolution are fundamentally changing the worlds of communications and commerce. The digital economy continues to grow at a rapid rate. Electronic substitution of traditional mail is accelerating as both consumers and businesses adopt electronic processes across multiple domains. Mail users are shifting from traditional hard copy distribution models to a variety of new ways to digitally communicate, advertise, or transact. They are attracted to greater convenience, faster service, and lower cost. The digital revolution has become the “disruptive innovation” to the traditional business of the U.S. Postal Service. With several different communications channels competing for consumers, the Postal Service needs to modernize its role to accommodate for the digital age.
The transition to a new digital landscape is already under way, but the path forward is undefined. The Postal Service should consider new products and services that reflect the evolving mandate to “bind the nation together” in a new world where people are increasingly communicating digitally. Using a foundation that links a physical address to an electronic mail box for every citizen and business, the Postal Service can build a digital platform that facilitates communications and commerce for postal, governmental, and commercial applications that are available to all.
The U.S. Postal Service Office of Inspector General Risk Analysis Research Center (RARC) has initiated a project to study the impact of the digital revolution on the future of the American postal ecosystem. This paper is the second in a series. The first paper described the radical changes affecting communications and commerce, identified trends, and discussed the impacts. This sequel identifies a set of applications the Postal Service should explore as a first step in redefining its mandated role of “binding the nation together.” While there is no indicator of how much of our communications and commerce will go digital, the migration is nonetheless creating a lengthening tail of digital refugees, which will only increase as the digital revolution progresses.
The conceptual framework depicted in the diagram on the next page constructs a strategic positioning for the Postal Service to consider. The framework is developed in response to three guiding principles:
- Providing solutions for the communications problems of the digital age.
- Utilizing the core competencies and assets of the Postal Service.
- Pursuing applications that are considered proper for the Postal Service.
Postal Service Announces Top Dog Attack Cities
Source: U.S. Postal Service
The Postal Service released statistics today highlighting the cities where the most dog attacks occur nationwide. Houston tops the list with 62 letter carriers attacked in 2010. Nationwide last year, 5,669 postal employees were attacked in more than 1,400 cities, yet that pales in comparison to the 4.7 million Americans bitten annually — the majority of whom are children.
These statistics are part of the reason the Postal Service recognizes National Dog Bite Prevention Week, May 15-21. The annual event provides dog attack prevention tips and information on responsible pet ownership.
Beyond the needless pain and suffering, medical expenses from dog attacks cost the Postal Service nearly $1.2 million last year. According to the Insurance Information Institute, dog attacks accounted for more than one-third of all homeowners insurance liability claims paid out in 2010, costing nearly $413 million.
PRC Issues Advisory Opinion on Postal Service Five-day Delivery Proposal; Lower Savings and Greater Impact on Service are Identified
PRC Issues Advisory Opinion on Postal Service Five-day Delivery Proposal; Lower Savings and Greater Impact on Service are Identified (PDF)
Source: Postal Regulatory Commission
The Postal Regulatory Commission today issued its Advisory Opinion in Docket N2010-1 on a Postal Service plan to end Saturday mail delivery, collection, and outbound mail processing.
The Postal Service is required to ask the Commission for an Advisory Opinion on any change in nationwide service it proposes. The Postal Service advised the Commission that due to falling mail volumes and revenues it is considering eliminating Saturday mail collection and delivery except for Express Mail and existing post office box service.
“Some of the Commission’s analysis in today’s Advisory Opinion suggests that even lower estimates of savings and higher volume losses are possible. In all cases, we chose the cautious, conservative path. Our estimates, therefore, should be seen as the most likely, middle ground analysis of what could happen under a five-day scenario,” said Chairman Ruth Y. Goldway.
Key findings of the Commission’s Opinion include:
- The Commission’s annual net savings estimate is $1.7 billion.
- The Postal Service’s savings estimate is $3.1 billion.
- Full savings in either case would likely not be achieved until year three after implementation.
- The Commission’s estimate of net revenue losses due to volume declines caused by the service cuts is $0.6 billion.
- The Postal Service estimate of net revenue losses is $0.2 billion.
- The planned changes would cause an average of 25 percent of First-Class and Priority mail to be delayed by two days.
- The Postal Service did not evaluate the impact of the proposal on customers who reside or conduct business in rural, remote, and non-contiguous areas.
- Customers in rural, remote, and non-contiguous areas can be particularly affected by the Postal Service’s plans. The Commission received significant input from rural America and traveled to South Dakota and Wyoming to meet directly with rural customers and community leaders.