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USPS reports Fiscal Year 2017 3rd quarter results (updated)

The U.S. Postal Service has released a report on its financial results for the third quarter of Fiscal Year 2017, covering April 1-June 30.

Here is NALC President Fredric Rolando’s statement on the report:

Impact of Exigent Price Rollback on Operating ProfitsClick here to download this chart (PDF).

Today’s financial report shows the underlying business strength of the U.S. Postal Service while also indicating the need to address external matters beyond USPS control.

The quarterly operating loss of $587 million puts the Postal Service in the red by $55 million three-quarters through the 2017 Fiscal Year. These figures reflect the impact of last year’s rollback in stamp prices. Without the two-cent reduction in stamp prices, this quarter’s revenue would be $500 million higher and the year-to-date revenue would be $1.5 billion higher.

With the original stamp price, the year-to-date figures would show an operating profit of more than $1.4 billion. The figures would be on a par with those of the past three years, which had a combined operating profit of $3.2 billion. We would be talking about a government entity producing an impressive operating profit through earned revenue.

The April 2016 rollback in stamp prices was the first since 1919, and it makes little financial sense because the Postal Service already has the industrial world’s lowest rates. The rollback reduces revenue at USPS―which gets no taxpayer money―by $2 billion a year.

Fortunately, the Postal Regulatory Commission (PRC) is in the midst of a legally mandated review of the postage rate-setting system. The PRC has said it intends to issue a decision this fall. At present, USPS is constricted in its ability to adjust rates by no more than the Consumer Price Index (CPI), but the CPI is an economy-wide measurement of consumer goods and services that doesn’t fit a transportation and delivery provider. The PRC has the ability to correct this mismatch and relieve the resulting financial pressure.

Meanwhile, Congress should address the pre-funding burden it imposed in 2006, which requires USPS―alone among all public and private entities―to pre-fund future retiree health care benefits decades into the future. This produces an onerous annual burden of billions of dollars.

Addressing these external financial burdens would allow USPS―which is based in the Constitution and which enjoys broad public and political support―to continue providing Americans and their businesses with the industrial world’s most affordable delivery network.


The media coverage of the USPS 2017 third-quarter report was largely constructive.

Associated Press. AP ran a story in advance of the USPS report that indicated that the Postal Regulatory Commission was looking favorably on addressing the price decrease and made clear that pre-funding is something that no other entity, public or private, is required to do. The story called pre-funding “onerous” and said that Congress’ failure to address that issue made it more likely that the PRC would allow a price hike.

AP’s story the next day featured Postmaster General Megan Brennan’s push for a change in rate-setting and termed the rate cap “unreasonable.” The only person quoted other than Brennan was President Rolando:

"Today's financial report shows the underlying business strength of the U.S. Postal Service while also indicating the need to address external matters beyond USPS control," said Fredric Rolando, president of the National Association of Letter Carriers. "Congress should address the pre-funding burden it imposed in 2006."

Federal News Radio. The day of the announcement, Federal News Radio followed AP’s lead with a story whose headline spoke of USPS’ bid for “stamp price flexibility.” The story quotes Brennan, USPS Chief Financial Officer Joseph Corbett and Rolando:

Fredric Rolando, president of the National Association of Letter Carriers, said the rollback of the exigent postal rate made “little financial sense,” and called on postal regulators to give the USPS more pricing flexibility for its products.

“The PRC has the ability to correct this mismatch and relieve the resulting financial pressure,” Rolando said in a statement.

Government Executive. Similarly, Government Executive’s story cited the rate-pricing issue and pre-funding. Rolando and Brennan were the only people quoted.

The National Association of Letter Carriers noted that while USPS is slightly in the red this fiscal year in the controllable part of its business -- a net loss of $55 million -- it would actually would have turned an operational profit of $1.5 billion if PRC had not forced the Postal Service to roll back an emergency price hike it instituted in 2014. That marked only the second time ever, and the first time in 97 years, the agency decreased the price of a stamp.

“Addressing these external financial burdens would allow USPS, which is based in the Constitution and which enjoys broad public and political support, to continue providing Americans and their businesses with the industrial world’s most affordable delivery network,” said NALC President Fredric Rolando.

 

USA Today. Following AP’s lead, USA Today’s story focused on possible rate increase.

Washington Examiner. The Examiner, well-read among conservatives in Congress, had a story that highlighted the fact that USPS gets no tax money. It quoted Brennan, Corbett and Rolando:

Postal unions noted that lower stamp prices affected the results after the expiration of a 2-cent surcharge Congress imposed in 2014 and said the price should be higher. "These figures reflect the impact of last year's rollback in stamp prices. Without the 2-cent reduction in stamp prices, this quarter's revenue would be $500 million higher and the year-to-date revenue would be $1.5 billion higher," said Fredric Rolando, president of the National Association of Letter Carriers. "The April 2016 rollback in stamp prices was the first since 1919, and it makes little financial sense because the Postal Service already has the industrial world's lowest rates."