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Postal Service may not be able to pay 2011 bills
Friday - 8/6/2010, 9:07am EDT
Senior Internet Editor
The U.S. Postal Service is in dire financial straits. Like most of us, they'll need to make more, spend less, or come up with some combination of the two.
According to the latest quarterly report, the USPS plans to "increase efficiency, reduce costs, and generate new revenue", but that may not be enough to make up for the predicted $7 to $8 billion dollar shortfall.
In fact, the Postal Service says it may not be able to pay all of its bills in 2011.
Joe Corbett, Chief Financial Officer at USPS, told Federal News Radio they've already cut the jobs of nearly 100,000 postal employees.
"We've taken the equivalent of over 30,000 people out of the workforce this year alone, and last year was the equivalent of 65,000 people out of the workforce in terms of fulltime equivalent. So we've been really working hard in terms of adjusting our workforce and being more efficient."
But even as they're making changes to the revenue stream, initiating cost cutting initiatives, and growing the top line with advertisement and summer sales, "at the end of 2011, without any fundamental changes - changes in legislation or contractual changes with our unions - we would actually run out of cash on the last day of 2011."
The report mentions two points of hope for the Postal Service: over-payments already made into the Civil Service Retirement System could result in nearly $75 billion dollars in found money for the USPS. "We're trying to work with Congress and OPM," said Corbett, "to have those amounts credited to us which would go a long way toward solving the entire problem."
And some big savings could be realized if the USPS didn't have to pre-fund retiree health benefits, currently running about $5.5 billion a year.
"If you were to remove retiree health benefits and just a few other small items required by law for the Postal Service that don't apply to anyone else," said Corbett, "we'd actually be just as profitable, for example, as FedEx or UPS."
In the meantime, Corbett said the Postal Service is still moving forward with plans to cut Saturday delivery, which could save another $5 billion a year.