NALC President Rolando explains to Senate why S. 1486 would be damaging to USPS
Sept. 27, 2013—NALC President Fredric Rolando testified today before the Senate Homeland Security and Government Affairs Committee, which has Postal Service oversight. This was the second of two hearings to focus on S. 1486, a postal bill introduced this summer by Sen. Tom Carper (D-DE), the committee chairman, and Sen. Tom Coburn (R-OK), its ranking member.
“We appreciate very much your hard work in putting together S. 1486,” Rolando told the committee, “but we feel that the bill fails to permanently address the primary cause of the Postal Service’s current financial crisis—the unaffordable 2006 mandate to pre-fund future retiree health costs.”
This unique mandate, required of no other federal agency or private enterprise, is responsible not just for 80 percent of USPS’ losses incurred since 2007, but for 100 percent of the agency’s recorded loss so far this year. In fact, according to the Postal Service’s own financial reports, USPS would have reported a $660 million profit for the third quarter of Fiscal Year 2013 if it weren’t for the pre-funding payments.
But there are many other problems with the bill besides its so-called pre-funding reforms, Rolando said.
“That inadequate pre-funding proposal, combined with the prospect of large postal hikes, the elimination of Saturday mail delivery and business door delivery, the phase-out of household door delivery, and the promotion of a morale-killing two-tier postal workforce would drive the Postal Service into a death spiral,” he said.
While Internet diversion has indeed caused a decline in first-class mail volume, thanks to increased reliance on e-mail and online bill payments, “the Internet is also creating new business opportunities for the Postal Service,” Rolando said, “and with it, surging package revenues.”
President Rolando was on the hearing’s second panel, alongside National Postal Mail Handlers Union President John Hegarty, National Association of Postmasters President Robert Rapoza, and economists Douglas Holtz-Eakin and Dean Baker.
“The rate at which the Postal Service is required to pre-fund retiree health benefits has no economic logic,” Baker told the committee. “Treatment of the Postal Service has been asymmetric with other private firms.”
Baker also noted that pre-funding accounts for about 8 percent of the Postal Service’s revenue. “If you were to take any thriving business—an Apple or an Amazon—and say, ‘OK, we made an accounting mistake; you have to pay 8 percent of your revenue into “X” fund,’ that would be a huge burden that would jeopardize even their viability. So I think we have to recognize that.”
Most of those on the second panel, in fact, focused on how the Postal Service’s financial picture is gradually improving—that the benefits of Internet commerce and package delivery are not just offsetting the declines in First Class Mail, they’re generating an operating profit. Some of those who testified alongside President Rolando agreed with him that S. 1486 represents a destructive approach to postal reform that, if passed, would degrade the network, and that meaningful reform requires either the repeal or the massive reduction of the pre-funding mandate.
Postmaster General Patrick Donahoe was a witness on the first panel, along with representatives from the Office of Personnel Management (OPM) and the Government Accountability Office (GAO).
A good deal of discussion throughout the hearing also dealt with the rising cost of health care and the Postal Service’s proposal to create a separate USPS health plan, either inside or outside the Federal Employees Health Benefit Program (FEHBP). While discussions on this particular topic are ongoing, President Rolando stressed later that most of the savings the Postal Service believes can be achieved through a separate postal plan outside of FEHBP can be achieved through sensible reforms within FEHBP.
Rolando indicated that NALC and the Postal Service were working together to develop a set of FEHBP reforms that would achieve this goal, which the union could support as part of an overall package of acceptable reforms to strengthen the Postal Service.
“Making changes could result in a meaningful reduction to the unfunded liability for future retiree health benefits,” Rolando said, “thereby addressing the pre-funding problem, the main cause of the Postal Service’s recent financial losses.”
At one point during the hearing, Sen. Jon Tester (D-MT) asked Donahoe to clarify something the postmaster general said in his testimony during the hearing a week earlier.
“You stated that it was your belief that under the current [law], an arbitrator can not consider the financial health of the United States Postal Service,” Tester said.
“I misspoke,” Donahoe replied. “What I should’ve said was, they can’t consider it but they’re not required by law not to consider it. I think that’s where I misspoke.”
“Because I think the last three arbitrations there was a lot of financial information brought forth by the Postal Service,” Tester said.
In fact, the financial situation of both parties in an arbitration always is presented during hearings, and arbitrators are required to consider every exhibit and piece of evidence presented during proceedings before rendering a decision.
Sen. Carper admitted that the S. 1486 is not perfect. “It’s not the finish line,” he said, “but it can be improved.”
Carper did leave the door open for finding a way to preserve six-day mail delivery. “If there’s a true interest on the part of our friends in organized labor to be able to preserve six day a week service,” he said, “I don’t know if there’s some way you can negotiate a compensation package maybe for the folks that are delivering on that sixth day that makes this competitive, that makes the Postal Service able to do it and not do it at a loss.
“I know that you all have tried to do that before,” the senator said. “I would just ask that you look at that again as you go forward. I know there’s good spirit involved in those negotiations; I’d just urge you to keep at it.”
And keep at it we will, Rolando said later. “This is an opportunity for NALC’s activists to get in the game now, while the committee is still working on the measure,” he said. “All of us have a stake in what will happen with this bill over the next few months,” he said, “so it’s critical that we each write, call and e-mail our senators and tell them to oppose S. 1486 as it’s currently drafted.”
A fact sheet and talking points that outlines the provisions of S. 1486, and why they are so damaging, are available here.
Click here to read President Rolando’s officially submitted written testimony.
Click here to visit the Senate committee’s web page to watch the hearing and to download other witnesses’ testimony.
@CAPT JACK,
do you want me to make you some sandwiches ?
Levi,
Do you want some sandwiches ?
All the BS and failure to eliminate a total wasted cost in 6 day street delivery is a sham. 6 day street delivery is maintained due to politics and union and management pressure groups. The American public should lobby to eliminate a total wasted cost in delivery advertising circulars 6 days a week. People need jobs but not by creating a waste that only creates non recoverable expense.
Recently PMG Donahoe told congress that discounts to large mailers was between $14 and $18 billion a year. This amount dwarfs PAEA and yet the national union reps have not jumped on this. The mail associations say for every percent in the increase of postage they lose the same percentage of volume in their business. What the mailers fail to mention is the volume always comes back and that they were not entitled to these discounts to begin with.
The Postal Regulator Commission sued postal management earlier this year for giving these discounts and won. The P.O. is appealing the decision.
Big D-Only one union contract was negotiated,that being the APWU’s,whose president turned his back on them and is Donahoe’s stooge and his biggest supporter.
Each % is at least $40 an up a month. Bigger Better B-B-Q’s
Just saying
I would stay as long as you can if you haven’t maxed out on your retirements
Buyouts are nice if your maxed out at 80%.
Some CSRS at 68% walk now, it’s forever.
Just saying.
Mr. Carper seems to fast forward past any conversation relating to the elimination of the 5.6 billion dollar payment the Bush administration strapped the service with. Pass a bill with that removed and you could preserve 6 day delivery and end talk of needing a postal health plan. If 100% of losses are attributed to this payment and the retiree health benefits have prefunding for years to come then get rid of the payment Mr. Carper! This was created so that congress would have another cash cow dipping station to borrow from besides the thrift fund and civil service fund. It’s obviously been redundantly echoed into the memory banks of congress in testimony that this fund is healthy into the forseeable future prior to this mandate. It is also obvious through the negotiated union contracts that the postal service wants to hire new employee’s at a much lower rate with increased flexability over hours and days off. This leeway translates into buyouts for fers and civil service employee’s making top pay. The ultimate goal being a trimmed down “FERS” work force that they would have control over while paying much less per hour. The savings from this over time would be substantial.
To qoute Walt Kelly’s POGO, “we have met the enemy and he is us.”
The Postal Service was a good job for generations of Americans. Progress destroyed it. The Sorry among us certainly contributed to the destruction.
I feel bad for the carriers who actually worked hard day in an day out to support the loafers who didn’t.
In 2001 the USPS paid over $1.5 Billion in OWCP charge backs for folks who would not work. It paid $1.5 Billion in 2002. In 2012 it paid a little over $1 Billion. A Billion dollars is a thousand million dollars.
As an old Mail Handler, I say thank you Carriers for earning us the little respect that we get.
In the past, the under privileged could work for the Postal Service and give their kids a middle class life style. The kids got to go to college and live the dream.
No more. The next generation of strivers will sadly be stuck with the primary job skill of saying “you want fries with that?” And the next generation of duds and parasites will (hopefully) not be leaching off of the workers. Unfortunately, with entitlements, the parasites will probably be living much better than the workers.
I was never a carrier, but to the hard working carriers, past and present, I say “thank you.”
Good news If Congress shuts down service to America the USPS Deliveries would continue as usual because the U.S. Postal Service receives no tax dollars for day-to-day operations. It relies on income from stamps and other postal fees to keep running.
But those same funds that keep things going Congress is/has made it harder to keep saying this.
An old fashion tar-n-feather could be a game changer an send a strong message, you were sent by us to serve us.
Avon calling Mr Ted Cruz
Some eyeshadow? Lip gloss? Might help sale your party’s stance?
Remember “If opportunity doesn’t knock? Build a door!
Milton B.
Yes Mr President?
Please send the special of the day to Mr Eric an friends Cantor, along with some green tea.
Thank you
GOP special of the day.
@maildike…want me to make you some sandwiches ?
Hey Redumbo, where are you on Saturdays? Ah, I bet you’re having a cup of coffee and reading the newspaper! Really! Stop all the BS and get rid of Saturday delivery! No one cares!