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Report: Mandate Pushed Postal Service Into the Red

Washington — The financially strapped U.S. Postal Service had a loss of$1.3 billion during the first quarter of fiscal 2013, but saw a continued uptick of its shipping and package revenue, with a 4.7 percent bump, according to the agency’s financial statement.

USPS, which rankled some lawmakers last week with its announced plans to end Saturday mail delivery in August, could have turned a $100 million profit if not for a congressional mandate that officials have said cripples agency finances.

The report, released Friday, shows the Postal Service paid $1.4 billion toward health benefits for future retirees. A 2006 law requires the early payment of 75 years worth of retiree benefits within 10 years.

Though declining first-class mail volume has been a drag on the agency’s funds, the benefit prepayments have long been cited as a major drain on USPS coffers by agency officials and union leaders alike.

“The $1.4 billion in pre-funding charges this quarter accounts for all — and then some — of the overall red ink of $1.3 billion,” National Association of Letter Carriers President Frederic Rolando said in a statement Friday. “Since pre-funding went into effect, it accounts for more than 80 percent of the agency’s red ink.”

The Postal Service defaulted on two of its pre-funding obligations last year.

The agency’s first-quarter loss amounted to less than half of the $3.1 billion loss the agency reported for the corresponding period last year.

Shipping-and-packaging revenue increased by $154 million, or 4.7 percent, compared with the first quarter of 2012, largely because of growth in Internet shopping and marketing campaigns to promote the agency’s shipping services.

Revenue from advertising mail rose during the first quarter to $141 million, up 3.1 percent from the corresponding period in 2012. Campaign mailers from last year’s election are thought to have provided a boost.

Despite those gains, revenue from first-class mail, which makes up the lion’s share of the agency’s income, dropped by $237 million, or 3.1 percent, as volume declined by 4.5 percent.

The Postal Service said it suffered a $15.9 billion net loss for fiscal 2012, which ended Sept. 30.

Postmaster General Patrick Donahoe announced Wednesday that the agency would end Saturday mail delivery beginning in August to save $2 billion per year.

The director’s unilateral action amounts to a gamble that Congress will not reach a consensus to thwart his plan. He appears to be taking advantage of lawmakers’ dysfunction over budget matters in recent years.

Congress’s last temporary spending plan, which expires March 27, includes language requiring the Postal Service to deliver mail six days a week. But legislators have not said whether they will insist on such a provision in the next appropriations bill.

Donahoe on Friday called for legislators to give the Postal Service greater flexibility in managing its finances.

“We urgently need Congress to do its part and pass legislation that allows us to better manage our costs and gives us the commercial flexibility needed to operate more like a business does,” he said. “This will help ensure the future success of the Postal Service and the mailing industry it supports.”

Sen. Thomas Carper, D-Del., chairman of the Senate committee that oversees the Postal Service, vowed in a statement Friday to push for comprehensive legislation that “reforms, right-sizes and modernizes” the agency.

Carper also criticized Donahoe’s five-day delivery plan as inadequate for solving the organization’s financial woes.