USPS Ends Another Fiscal Year With Billion-Dollar Losses | Citizens Against Government Waste

USPS Ends Another Fiscal Year With Billion-Dollar Losses

The WasteWatcher

While it is unsurprising to hear that the United States Postal Service (USPS) finished another year in the red, the numbers released on November 14, 2019 should be an alarm bell for taxpayers.

From fiscal year (FY) 2007 through FY 2018, the USPS’s net losses totaled $69 billion.  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.  This marks 13 years of consecutive losses for the USPS, totaling $77.8 billion.

In FY 2019, the USPS saw a decline of 2.6 percent in total volume of mail and package deliveries.  That is largely driven by the diminishing First-Class Mail service, which shrank by 3.1 percent.  Package volume continued to increase, but only by 0.3 percent.  The increase in package deliveries and general price increases did boost annual revenue to $71.1 billion, but losses are still outpacing revenue.

Post Master General Megan J. Brennan admitted that an increase in revenue is not sufficient to fix the USPS’ dire financial situation, stating, “Revenue growth in our package business will never be enough to offset imbalances in the Postal Service's business model, which must be addressed through legislative and regulatory reforms in order to secure a sustainable future.”

There is no doubt that the USPS is facing a serious financial crisis.

According to the Government Accountability Office (GAO), total unfunded liabilities and debt for the USPS in FY 2018 stood at $143 billion, which is double its annual revenue.  The USPS was included in GAO’s 2019 High Risk List report, which stated that the agency’s financial condition is “deteriorating and unsustainable.”

Even more concerning is that large portion of the USPS’ losses are outside of the management’s control.  This includes a $3.5 billion increase in workers’ compensation costs, $994 million in contractual pay increases, and $320 million in retirement benefits expenses “due largely to the higher amortization costs of unfunded benefits.” However, even if the uncontrollable losses are removed from the net loss calculation, the USPS still ran a $3.4 billion deficit for FY 2019.  “We continued to make progress in the fiscal year in containing expenses that are under management’s control,” said USPS Chief Financial Officer Joseph Corbett. “However, actions within the control of the Postal Service are not enough to return the Postal Service to financial health.”

While many of the most consequential and far-reaching postal reforms will require congressional action, there are many changes that USPS management could undertake now, under the direction of its executives, and with the support of its Board of Governors and regulators at the Postal Regulatory Commission.  The U.S. Treasury Department’s Postal Task Force’s Report, United States Postal Service: A Sustainable Path Forward, was a strong conversation starter for reform, including suggestions like focusing on the core mission, prioritizing private-sector partnerships, realigning labor costs, reviewing the Universal Service Obligation, and consolidating underperforming facilities. 

Without market-oriented reforms, such as those proposed in the Treasury’s report, the USPS’s finances will remain in the red, and eventually reach the catastrophic stage, where taxpayers will be left to foot the bill.