Tags
Fredric Rolando, Lori Ann LaRocco, mail, National Association of Letter Carriers, New York City, Postal reform, Postal Service, unfunded mandates, United States, United States Postal Service, USPS
So screamed the headline, wedged between ubiquitous Olympic news. What does this hyperbole mean? Not much for you and me at the moment. The hullabaloo regards federally mandated payments to the US Treasury for prefunding future retiree health benefits.
What is prefunding? Why is it necessary and why is the US Postal Service (USPS) the only organization that is federally mandated to do this? Most organizations contribute to retiree health benefits as those expenses accrue. But back when the living was easy, USPS was handed a federal mandate to prefund future retiree health benefits. Fredric Rolando, President of the National Association of Letter Carriers (NALC), told Lori Ann LaRocco of CNBC “The congressional notion was that the Postal Service was making lots of money selling its products and services, and so it might be a good idea to put those profits into pre-funding future retiree health care benefits for the next 75 years and do so in a decade. No one else, public or private, does this – but it would put the Postal Service that much more ahead of the game in terms of future liabilities. And so, in 2006, Congress mandated that the USPS do so, at a price tag of about $5.5 billion a year.”
At first glance, this decision makes sense. We’ve all heard of retirees who reach the golden milestone only to discover that their retirement funds were mismanaged and there’s nothing there for them. And, the retiring baby boomers will strain future healthcare budgets. As I’ve researched the issue, I’m finding that some states are prefunding retiree health benefits to some degree. But, 75 years of prefunding set aside in ten years? That’s ludicrous. Combine that mandate with a global economic slump which effected USPS just as it did every other industry and things start looking real dicey. Now let’s add the growing obsolescence of the Postal Service’s mission and it’s inability to successfully reinvent itself and we have a crisis.
Guess why UPS & FedEx, though also struggling financially, are in better shape the USPS? In addition to no mandate to prefund retiree health care, they also have no federal mandate to serve geographically isolated and sparsely populated areas at the same cost as high density areas like New York City. So, the guy in Dutch Harbor, Alaska get’s his Amazon.com book, right? Maybe it’s a day late, but the book arrives in his mailbox for the same price that the same book would arrive in the mailbox of the guy living 20 miles from Amazon’s distribution center. And most likely, the book was shipped via UPS, but delivered by a USPS carrier through a pre-arranged contract. There are a host of other disadvantages burdening USPS, like an unwieldy Postal Board of Governors that controls postal rates, making it impossible for USPS to fluctuate up and down with the market as its competitors do. And let.s not get into federally regulated hiring procedures.
Reality bites. When was the last time you opened your mailbox to find something that brought bona fide joy to your heart? More likely, you find a bill that has already been automatically, electronically paid. I continue to sign up for the hard copy not from need but as a measure of loyalty to my former postal colleagues. What most
of us yank out of the mailbox is officially called “bulk business mail.” Colloquially, we recognize this stuff as “junk mail.” Today (Monday) I had four pieces of mail. One was a bill, which also arrives electronically, and three were “bulk business mail”—advertisements which, by the way, I also receive online.
Right now, the only people who truly live for the mail are older than I, on Social Security, and technologically incapable of keeping up with the changing paradigm. I feel great empathy for that segment of the population. But even they are being dragged, kicking and screaming, into the digital age. The federal government will stop mailing benefit checks next year, opting instead, to pay directly (and far more cheaply) to direct deposit or debit accounts. The American public is pushing for the federal government to save money—to cut spending. It is a no-brainer that the feds would stop paying irrelevant postage to send out millions of benefit checks. So there goes another reliable segment of Postal revenue.
We have reached a point at which it is only fair to ask, Is the Postal Service an essential part of commerce? Is it relevant? Could its function be combined with another agency or contracted out? My question understandably elicits rage from the NALC. USPS Letter Carriers have a long and proud history of safely delivering crucial and sensitive documents no matter what obstacles came between them and their daily rounds. Snow, sleet, rain, earthquake, flood, tornado, war—we were there for the American citizen. But today, people worry far more about their cell service than their mail service.
The underlying calamity for USPS is that the “sanctity of the mail” is mostly irrelevant or hanging by a thin thread. People my age and younger are already used to receiving important documents electronically. We acknowledge the inherent privacy and safety issues involved in electronic communication. But guess what? The convenience of digitizing and automating payments outweighs the risk factors for most of us. Let’s face it, unless the mail you receive is placed in a locked mailbox, there really is no sanctity to it’s delivery. Your trusty, professional mailman may physically place your mail and only your mail in your mailbox (although not always) but who knows what sneaky little crook is shadowing your mailman, eager to lift the treasured data he just delivered? Or perhaps the crook precedes your mailman and grabs those envelopes with your payment checks enclosed? Yes. Such behavior is a felony. Yes, there is an entire Postal department dedicated to ferreting out and prosecuting such criminals. But explain all that to the guy who’s identity has been stolen from the mailbox, the garbage can, or the Internet. So, if there is no sanctity in our mail, does it ultimately matter who shoves it in the mailbox? Could the paperboy do the same job for a whole lot less money?
Rancorous finger-pointing has hobbled resolution of Postal finances. The USPS administration, seeing the oncoming drought, has slashed and burned services, reduced forces, and tried to squeeze the life-blood out of rank and file employees. As in any huge organization, the changes have been chaotic, illogically thought out, and have succeeded only in antagonizing the workforce and cracking open a chasm of mistrust between management and craft.
USPS administration threatens Congress (and the labor unions) with reduced services:
- The closure of up to 92 mail processing facilities—a strategy that would inevitably slow the mail’s progress from point to point.
- Reducing operational hours of small and rural retail Postal facilities.
- Eliminate Saturday delivery—an effort to both reduce man hours as well as facilities overhead
The NALC argues that cutting service is a death knell for USPS. If the prefunding mandate were lifted, the USPS could put money back into employees, service, and retool for a rosier future.
Congress, does what it does best these days: sits on its ass and twiddles its thumbs, afraid of making any definitive decision.
Meanwhile, 8 million Postal jobs hang in the balance. Large scale mailers, looking to the future, explore ways of disengaging from the Postal Service. And the prefunding? Much as everyone is going to scream at me, I’m not convinced it’s such a bad idea, particularly since this country seems completely unable to reform its medical delivery system. But how about a break on the time frame for prefunding 75 year’s worth of bennies?
The USPS defends its default: The U.S. Postal Service will not make mandated prefunding retiree health benefit payments to the Treasury of $5.5 billion due Aug. 1, 2012 or the $5.6 billion payment due Sept. 30, absent legislation enacted by Congress. This action will have no material effect on the operations of the Postal Service. We will fully fund our operations, including our obligation to provide universal postal services to the American people. We will continue to deliver the mail, pay our employees and suppliers and meet our other financial obligations. Postal Service retirees and employees will also continue to receive their health benefits. Our customers can be confident in the continued regular operations of the Postal Service.” Hmmmm.
Rangewriter 
Documents are sent electronically. Bills are paid online. Checks are wired directly to bank accounts. I have to go to the post office to get our mail, and I’m down to two visits a week. Even then, I frequently find myself peering into an empty mailbox. What is the USPS doing to identify its changing function?
LikeLike
Not much, Charles. And that is a sad fact. The entrenched belief is that the USPS is so much a part of American fabric that there will always be a need for it. Strangely enough, in recent years, some studies have found USPS to be the most trusted of government agencies…that’s not saying a lot, but I found it surprising.
But trust and history don’t pay the bills. Nearly every effort the postal service has made to position itself in the new communication world has been an abysmal failure. Even mechanizing mail processing and distribution has often come at a huge cost of trial and error. (Rolling out expensive new sorting technology that is flawed, investing in software programs that aren’t functional in the work environment, purchasing fleets of vehicles that are completely unsuitable for the job….the list goes on and on.)
And unfortunately, a whole lot of postal employees really believe that “the sanctity of the mail” is important. I don’t agree, obviously.
Yes, even holiday greetings, when they get sent at all, are going digital. It’s sad, but true. I so loved my job in the early years. It is now almost unrecognizable to me.
LikeLike
I read somewhere that all the junk mail helping keep the USPS afloat these days is actually delivered at a loss. I think that means that taxpayers are actually subsidizing the crap that we don’t want delivered daily to our mailboxes.
I’m one of the vanishing breed that still uses the postal service for all kinds of things–the old accounting adage “always leave a paper trail” runs deep in my psyche. I can’t shake some underlying uneasiness because all our glorious technology has an Achilles heel that most people seem to pooh pooh but to me seems precarious: dependence on a steady energy supply. Today, the headlines scream that half of India’s power grid is down. In the last four days our house was without power for five and a half hours one day and four and a half two days later. I had an Idaho Power employee tell me a couple years ago that they’d red lined three times that summer (it was early August) and that with the vast increases in energy usage things were looking kind of scary. There’s little in our national energy or security policies to boost my confidence either.
So I’m trying to avail myself of all the advantages of the electronic age while still maintaining good back-up systems. But I agree, 75 years of pre-funding is a little over the top. I love getting your take on the USPS Linda. As an insider’s view it carries a lot of weight for me.
LikeLike
There’s a lot to be said for a paper trail, Dia. When power goes down, for whatever reason, natural disaster, war, whatever, we will all struggle. Can’t even buy an ice cream cone before the ice cream melts when the power goes down, cuz the store can’t ring up a sale w/o power!
Actually, the USPS is not funded through tax dollars. Hasn’t been since the 1971 Postal Reorganization Act which cut its government subsidies.It is a business, like any other business, except that it is still under government oversight and regulation…Postal Board of Governors who set pricing structures and approve Postal products and services. It’s sort of a weird paradigm. I’m sure that at least 75% of Americans believe that the USPS is government funded. I think they call this a “quasi-government operation.”
Last I knew, junk mail (ahem….bulb business mail) was still the backbone holding the organization together. A noxious thought. Also, the service has worked hard to re establish parcel business that it once practically handed over to competitors for lack of interest and vision. That said, BBM and Priority mail packages are not holding pace with costs, especially when those costs include prefunding 75 years worth of future retiree health benefits to the tune of about 5.5 billion a year. There is supposedly another 50-75 billion dollars that the USPS has overpaid to Social Security. I’m not clear on the details of that issue, but I know that the unions have been fighting like mad for years, trying to push the USPS to recoup those funds from the government.
I suspect big changes are in the future of mail delivery. Many union members suspect a conspiracy at the top of USPS management. I’m not a conspiracy theorist, but I do believe we’ve long suffered from a lack of strong leadership, vision, and common sense.
LikeLike
Well, I was one of those Americans laboring under a misapprehension. I thought it was taxpayer supported, too. VERY good to know it’s not. It all sounds very dysfunctional…especially if they’re supported to function as a competitive business but there’s rate setting going on. Thanks for educating me!
LikeLike
These unreasonable mandates placed on the USPS by its owner, the feds, have always made my skin crawl.
Many politically conservative thinkers use the example of the feds pitiful job of running the USPS as a foundation for their belief that the government should remain in charge of as few things as possible. I’ve heard many folks asking the question, why hand over our health care system to the feds after we see what they’ve done, in recent years, to the USPS and airport security?
What do you think about those types of questions.
LikeLike
My friend, you never fail to ask the questions that force me to stop and think. But at the moment I’m over my eyebrows in a book project. I will responded with a thought-out answer when I’m able to come up for air. Please don’t give up on me.
LikeLike
Oh dear, Dinkerson, why do you ask these really good questions? You know you unleash my opinionated mouth in doing so. . .
Like health care, the USPS presents interesting and nuanced concerns. Some federal mandates are necessary and beneficial to the country. For example, the infrastructure that brings communication and merchandise to all reaches of the country is a must. That USPS has no leeway and flexibility in pricing and product development is a problem. (That statement is slightly inaccurate, in that the USPS can and does adjust prices, as we all know. However the process of doing so, requires government oversight and takes too long to be effective in today’s constantly fluctuating market.) The unreasonable pre-funding mandate is a problem. That USPS prefund retiree health benefits 75 years into the future is ludicrous, particularly given the tenuous position of the organization’s own future health.(And, if our national health care issue were resolved the prefunding retiree health care would be a mute point.) As a whole, I think the Postal Service does a phenomenal job of doing what it does. It is one of the most trusted federal agencies (quasi-federal) in the country. Its delivery infrastructure is pretty darned amazing.
On to health care. If government-run health care is such a horrible idea, why do people wring their hands over the very idea of losing Medicare? Medicare is an example of government funded health care. As I approach the age of eligibility and watch my older friends enter the system, I’m surprised to discover how eager they are for the services it provides. In asking my well-educated and health-conscious friends about their new health care plans, each one of them has praised the level of care that they receive through medicare. (I was shocked to discover this, actually!)
Of course there are problems with Medicare. When things go wrong, the hyperbole and the rhetoric inflame each failure. But when countless things go well, we tend not to notice. Long term funding of Medicare absolutely must be addressed because of the Baby Boom influx and because of our increasing life span. But I see no reason to throw the baby out with the bathwater. We have a good system, we need to address the problems and keep it functioning…and in my opinion expand the model to include every American citizen. Why should health care have anything to do with employment?
I take issue with people who feel that their tax burden is onerous and unfair. I maintain that we get what we pay for in one form or another. If we, as individuals, stop supporting federal infrastructure, we all lose. It doesn’t matter that grandma never drives the Interstate highway system. Her tax dollars (adjusted per income) help support that infrastructure. Goods are delivered to her and her community via that infrastructure. Grandma may walk to the local pharmacy for her meds, but how did those meds get to the pharmacy?
The same is true of so many government services that we don’t think about until we need them. For example, an army of fire fighters is slaving to protect the homes and the people living in far flung communities in Idaho as I write this. Many of those same people spend the balance of their year bitterly complaining about their tax obligations. You can bet that if their property survives, they will be ever-so-thankful that someone paid the taxes to support that army of fire fighters. I have never put a child through the public education system but I have happily contributed to the education of other people’s children for 40 years. Why? Because we are a community. It is in our own best interest to ensure that everyone is fed, educated, and cared for. Some need help. I help. Maybe some day I will need help…and help will be there for me.
Do we have problems with federal spending? Of course. Citizen oversight and involvement is a must. The sheer scale of government programs builds problems into them. But the scale also provides the benefit of spreading cost across a large pool of contributors. It’s all a matter of balance. (in my humble opinion. ;-])
LikeLike
Just so you know, I found this to be a phenomenal answer. To continue this conversation would be unnecessarily laborious, considering you’ve summed it up well.
Thanks for your response.
Hope you’re doing well.
LikeLike
Also, I should mention, I read this as soon as you wrote it. I’m only just getting around to my thanks, But I’m certain you know how that can happen.
LikeLike
I do know how that can happen, but I also worry that I haven’t heard hide nor hair of you lately on my “reader” feed. I hope you are okay. I know that blogging has to take a back seat to living and I hope that is the case.
And thank you, always, for your incredible generosity. We have much to learn from each other.
LikeLike