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Postal Service announcing 1Q financials tomorrow

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Just a heads-up that the U.S. Postal Service will be announcing its first-quarter fiscal 2014 financial results on Friday morning. Because of the holiday shipping season, the first quarter is typically the Postal Service’ s strongest, so it will be interesting to see whether the steady (albeit relative) improvement in USPS finances continued in the three-month period from October through December.

The numbers typically are released at a Board of Governors meeting. In this case, however, the Postal Service plans to announce them via a news release, followed by posting of the full quarterly report. Federal Times will have the story.

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With stamp prices set to rise, legal challenges filed

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The price of a first-class stamp rises from 46 to 49 cents tomorrow and the cost of a host of other mail products and services will also increase following regulators’ decision last month to grant the U.S. Postal Service a temporary emergency rate increase.

As FedLine noted a couple of days ago, both the U.S. Postal Service and a mailing industry coalition planned to contest (albeit for different reasons) the Postal Regulatory Commission’s ruling. In appeals Thursday with the U.S. Court of Appeals for the District of Columbia Circuit, both camps followed through. You can read the USPS filing here and the industry’s here, but neither spells out the grounds for their respective appeals. They will have to do so by Feb. 24, under a schedule released Friday by the court clerk’s office.

In a news release, industry leaders called the PRC’s ruling mistaken and warned that it could boomerang on the Postal Service. “The evidence used to secure this increase, more than three times the rate of inflation, is fundamentally flawed, and thus inherently inaccurate,” said Mary Berner, president and CEO of MPA–The Association of Magazine Media. “Increased rates will only result in more lost volume for the Postal Service. . . . This counterproductive decision should be returned to sender.”

 

 

 

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Postal Service, mailers poised to challenge exigent rate decision

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In granting a emergency postal rate hike last month, the Postal Regulatory Commission left both sides unhappy: The mailing industry, represented by an umbrella group known as the Affordable Mail Alliance, was displeased that the five-member commission agreed to any increase above the inflation rate; U.S. Postal Service leaders were frustrated that the boost will be temporary, ending once $2.8 billion is raised.

Now, the two camps are both preparing to appeal the decision in court. The Postal Service will file its challenge with the U.S. Court of Appeals for the District of Columbia Circuit by Thursday’s deadline, spokesman Dave Partenheimer said in a Wednesday email, while proceeding with implementation of the increase on Jan. 26 (this coming Sunday), as previously announced. Also on Thursday, the mailers alliance will file an intent to appeal the commission’s decision, an industry source said.

 

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Postal Service explains increase in headquarters staffing

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As FedLine recently reported, official U.S. Postal Service statistics showed that the career employee headcount fell in almost all segments of its workforce from 2009 through 2013, with USPS headquarters being the one exception. FedLine asked the Postal Service for comment on that point on Jan. 3; the agency responded this past Friday. Here is the full statement provided by USPS spokeswoman Patricia Licata; it has also been added to the original FedLine post.

“The Postal Service reductions in career employees were equally felt across both management and craft ranks. While the specific headquarters number has increased slightly, it cannot be viewed in isolation. Efficient management is about effectively allocating resources, and throughout this period, we have eliminated, shifted, streamlined and consolidated work across various functions, including human resources, customer relations, operations and finance, and across various levels, including local, district, area and headquarters.

“For example, the centralization of HR transactional work from the local and district level to the HQ level through an HR shared service center resulted in cost savings and operational efficiencies. Additionally, we have in-sourced work once performed by contractors in the form of three call centers, which has improved our customer service. Steps have been taken within the management ranks as in the craft ranks to efficiently allocate resources and cut costs while maintaining the highest level of service and customer satisfaction.

“Based on our integrated management approach, the appropriate way to view these career reductions is to look at the headquarters, headquarters field support, inspection service, area offices, and professional administration and technical personnel in total, which has been reduced by 17% over this period. The second level of management, including postmaster/installation heads and supervisors/managers was reduced by 21% over this period. In total, the management ranks over this period had a 21% reduction, which is commensurate with overall craft reductions.”

Clerks hit hardest by USPS cuts, stats show. Headquarters grows.

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For career U.S. Postal Service employees, the last few years have brought an unrelenting wave of cutbacks. In its latest annual report, the agency furnishes some eye-opening numbers on how the downsizing has affected different segments of its workforce.

The overall career headcount declined by more than one-fifth from 2009 to 2013 (surely one of the sharpest drops in USPS history).  But the ranks of clerks and nurses plummeted by one-third and the number of employees classified as “professional, administration and technical” fell almost as steeply. Virtually all of the cuts, it should be noted, were accomplished without reductions-in-force.

The one sector to grow during that time was headquarters staff (not counting field support), which increased a little more than 5 percent. FedLine asked the Postal Service earlier this month what might account for the increase; the agency’s explanation has been added below the table.

2009 2013 Percentage change
Total career employees 623,128 491,017 -21.2
Headquarters 2,811 2,967 +5.5
HQ–field support units 4,455 3,870 -13.1
Inspection service–field 2,617 2,411 -7.9
Inspector general 1,155 1,135 -1.7
Area offices 1,047 807 -22.9
Postmasters/installation heads 23,672 17,804 -24.8
Supervisors/managers 28,812 22,940 -20.4
Professional, administration, technical 6,460 4,375 -32.3
Clerks/nurses 177,842 118,751 -33.2
Mail handlers 52,954 40,102 -24.3
City delivery carriers 200,658 167,388 -16.6
Motor vehicle operators 8,113 6,598 -18.7
Rural delivery carriers–full-time 67,749 66,099 -2.4
Vehicle maintenance employees 5,252 5,033 -4.1
Building and equipment maintenance personnel 39,531 30,737 -22.5

And here is the Postal Service’s explanation for the growth in headquarters’ workforce:

“The Postal Service reductions in career employees were equally felt across both management and craft ranks. While the specific headquarters number has increased slightly, it cannot be viewed in isolation. Efficient management is about effectively allocating resources, and throughout this period, we have eliminated, shifted, streamlined and consolidated work across various functions, including human resources, customer relations, operations and finance, and across various levels, including local, district, area and headquarters.

“For example, the centralization of HR transactional work from the local and district level to the HQ level through an HR shared service center resulted in cost savings and operational efficiencies. Additionally, we have in-sourced work once performed by contractors in the form of three call centers, which has improved our customer service. Steps have been taken within the management ranks as in the craft ranks to efficiently allocate resources and cut costs while maintaining the highest level of service and customer satisfaction.

“Based on our integrated management approach, the appropriate way to view these career reductions is to look at the headquarters, headquarters field support, inspection service, area offices, and professional administration and technical personnel in total, which has been reduced by 17% over this period. The second level of management, including postmaster/installation heads and supervisors/managers was reduced by 21% over this period. In total, the management ranks over this period had a 21% reduction, which is commensurate with overall craft reductions.”

[Updated on Jan. 21 to include the Postal Service's explanation for the increase in headquarters employment.]

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Postal Service again restrained on top executives’ pay in ’12

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The U.S. Postal Service continued to keep a comparatively tight lid in 2012 on senior executive salaries, according to its recently released annual report to Congress. By law, the Postal Service has to list all employees whose pay exceeded that of a Cabinet secretary. For calendar 2012, that threshold was $199,700; a dozen USPS executives and officers made more than that, down from 13 in 2011 and 38 in 2010, according to the official rundown.

Here’s the 2012 list (found on p. 66 of the annual report):

Paul Vogel, president, digital solutions, $312,175* **

Pat Donahoe, postmaster general and chief executive officer: $276,840

David C. Williams, inspector general: $263,684**

Ron Stroman, deputy postmaster general: $245,000

Anthony Vegliante, chief human resources officer and executive vice president: $240,000*

Joseph Corbett, chief financial officer and executive VP: $239,000

Megan Brennan, chief operating officer and executive VP: $235,000

Mary Anne Gibbons, general counsel and executive VP: $230,000*

Ellis Burgoyne, chief information officer and executive VP: $230,000*

Jo Ann Feindt, VP, Southern area operations: $224,300

Dean Granholm, VP, Pacific area operations: $219,116

Drew Aliperto, VP, Western area operations: $219,000

For fiscal 2013, incidentally, pay and bonuses for non-bargaining unit employees remained frozen, the report says, adding that this was the six straight year that compensation for executive officers was affected “by either a freeze in salary and/or a non-payment of performance lump sums.”

*Now holds a different position, is no longer with the Postal Service or was not in this position for the entire 2012 calendar year

**Includes annuity paid by the Office of Personnel Management

Postal Service announcing 2013 year-end financial results next Friday

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The U.S. Postal Service will be announcing its final fiscal 2013 financial results next Friday, according to a Federal Register notice today, and as usual, the only suspense will lie in the exact amount of red ink. If there’s a silver lining, it’s that last year’s loss will be nowhere near 2012’s monster figure of $15.9 billion.

That was a fluke, caused in large part because the Postal Service’s books reflected the cost of two skipped payments for future retiree health benefits. (Congress had pushed the deadline for the 2011 payment into 2012.) For 2013, the final number is likely to be in the range of $6 billion.

But as FedLine has noted before, even modest improvements in the Postal Service’s financial performance lessen the political heat on Congress to move on the long-term restructuring legislation that USPS leaders desperately want. Those odds, never good to start with, continue to fade.

The House of Representatives, for example, has yet to take up a postal overhaul bill sponsored by Rep. Darrell Issa,, R-Calif., almost four months after the measure came out of  committee. This week, the Senate Homeland Security and Governmental Affairs Committee had initially planned to take up a competing measure sponsored by Sen. Tom Carper, D-Del., according to a draft agenda obtained by FedLine, but then dropped it from consideration, apparently because of a lack of consensus.

As the year winds to a close, lawmakers’ attention is likely to be consumed by budget negotiations aimed at heading off another partial government shutdown early next year. And with congressional mid-term elections coming next year, the prospects for legislative action–absent a full-blown, can’t-pay-the-bills crisis–will be even slimmer.

 

The Postal Service (yawn) defaults again

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If a smidgen of suspense lingered earlier today about whether much of the government would shut down tomorrow, there was never the slightest doubt that the U.S. Postal Service would skip a legally required retiree health care payment for the third straight year.

Pretty much ever since the Postal Service defaulted on the 2012 payment, USPS leaders have been warning they would miss the $5.6 billion obligation due by midnight tonight; in another 15 minutes or so, the agency will officially be in default. Unlike past years, however, when an anxious Congress either cut the amount of the annual installment or pushed back the deadline, this year’s no-show routine now seems . . . routine.

But Sens. Tom Carper, D-Del., and Tom Coburn, R-Okla., sponsors of a Senate bill that would give the Postal Service some relief on the “prepayment” requirement, put out a joint statement calling the default a reminder of the agency’s broader financial woes. After holding two hearings on the bill earlier this month, Carper said, “I hope to move our bipartisan legislation swiftly through our committee and onto the Senate floor for a vote as soon as possible.”

The current pre-funding schedule is laid out in the 2006 Postal Accountability and Enhancement Act. According to numbers included in a Government Accountability Office report, the agency has made $17.9 billion in required payments and-as of tomorrow–will have defaulted on $16.7 billion worth.

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First-class stamp price would rise to 49 cents under USPS proposal

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The sound you heard from the U.S. Postal Service this morning was the other shoe dropping in the wake of its its failed attempt to end Saturday mail delivery earlier this year. The “exigent” rate increase proposed today would raise about $2 billion per year, or roughly the same amount that cutting Saturday delivery was supposed to save.

Much of the added revenue would come from a hike in the price of a first-class stamp from 46 cents to 49 cents. The proposal would also increase the charge for additional letter ounces from 20 cents to 21 cents, raise postcard prices by a penny to 34 cents, and  push the cost of an international letter to $1.15.

After the Postal Service dropped the planned Saturday delivery cuts in April, its board told agency officials both to try to renegotiate existing labor contracts and study possibilities for raising more money. The first idea predictably went nowhere with postal unions and managerial groups. So the only option is the rate increase announced today that would take effect Jan. 26 if—and this is a mighty big question mark—the Postal Regulatory Commission approves.

In a letter cited in the USPS news release, board Chairman Mickey Barnett laid the blame on Congress for failing to pass legislation that would put the Postal Service back on a secure long-term financial footing.

“Of the options currently available to the Postal Service to align costs and revenues, increasing postage prices is a last resort that reflects extreme financial challenges,” said Barnett in the letter. “However, if these financial challenges were alleviated by the timely enactment of laws that close a $20 billion budget gap, the Postal Service would reconsider its pricing strategy. We are encouraged by the recent introduction of comprehensive postal reform legislation in Congress, and despite an uncertain legislative process, we are hopeful that legislation can be enacted this year.”

Of course, that rationale will be cold comfort to the mailing industry trade groups who have already re-united to kill the proposal just as they blocked a similar effort back in 2010. The issue is likely to dominate tomorrow’s previously scheduled hearing on postal issues before the Senate Homeland Security and Governmental Affairs Committee.

 

The proposed increase is likely to dominate

USPS consultant to divine future of stamps under $500K+ contract

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What might the future hold for the humble postal stamp? The financially challenged U.S. Postal Service is paying a New York consulting firm named Faith Popcorn’s BrainReserve more than a half-million dollars to find out.

“Who will be buying stamps in 2019, 2024 and 2034? What will they be used for?,” reads the company’s description of the $566,000 task order awarded last month. “How can we embed innovation and new thinking into stamps, to engage America’s coming generations and the [USPS’s] existing and new customers?”

After starting the job early last month, BrainReserve–whose website touts its consulting specialty as “applied futurism”–is supposed to finish up work by mid-October, the statement indicates. Faith Popcorn, the company’s CEO, is billing the Postal Service at an hourly rate of $836. Labor fees for other BrainReserve staff involved in the project range from $91 to $334 per hour.

According to the description, a copy of which was obtained by Federal Times, BrainReserve is to devise strategies both to slow the “predictable decline” in stamp use and to “reinvent and reimagine” stamp relevance to promote growth. While sales of the adhesive-backed paper squares and rectangles have been steadily waning as Americans turn to the Internet to pay bills and stay in touch, they still garner $8 billion annually for the Postal Service, the company says.

“This is a complex, multi-dimensional issue,” it concludes. “The methodology requires in-depth investigation, analysis and ideation in order to Trend-correct the current decline in USPS Stamp volume and begin to structure powerful mechanisms for growth.”

A BrainReserve employee referred questions to the Postal Service, where spokeswoman Toni DeLancey said the firm was hired in January under a competitively awarded indefinite-delivery/indefinite-quantity contract to support product innovation and brand management. BrainReserve, which had not previously done business with the Postal Service, was founded in 1974 and has worked for American Express, Campbell Soup Co. and other Fortune 500 firms, DeLancey said in an email.

It is “important to note,” she added, that BrainReserve’s “statements of work” for this and other assignments are not USPS documents. The “terms and conditions of any task order awarded may be different from what is reflected in these documents.” Nagisa Manabe, the Postal Service executive vice-president in charge of sales and marketing, was not available for an interview late last week.

The stamp project is one of five task orders that BrainReserve has so far received, DeLancey said. Another is an almost $1.1 million endeavor to explore the possibility of using letter carriers to provide paid home visitation services to the elderly and ill. Those services could include a daily personal visit and regular checks to make sure that customers are using medical devices or taking prescribed medications, according to the company statement of work for that task order.

Since its founding, the Postal Service has connected people, often going beyond the call of duty to provide “caring personal connections in times of crisis,” the document adds. The home visit concept “builds upon and formalizes this powerful aspect of the USPS heritage.”

At the National Rural Letter Carriers’ Association, one of two unions representing the workers who would play a central role in any such visitation program, a spokesman said the group is not currently involved in the project, but would “very much” like to be. Efforts to get comment from the National Association of Letter Carriers were unsuccessful.

For anyone who’s interested, you can check out the statements of work for the two task orders here.

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