The United States Postal Service (USPS) is proposing roving structural changes to its operations-the organization says it will be come fiscally insolvent next month and needs urgent reform.
To combat further fiscal disaster the USPS is proposing legislative measures to reinstate its financial house. According to a news release from the group, the USPS will pursue legislative action to allow it to establish its own health benefits program, administer its own retirement system and have the ability to adjust the size of its workforce to match operational needs and the changing market place.
The USPS proposes to cut its workforce by 220,000 employees over the next four years. From 2007 to 2010 mail volume has declined by 20 percent "from 213 billion to 171 billion pieces, while prices remained capped at the rate of inflation-resulting in net losses over the period of just over $20 billion, including a loss in FY2010 of $8.5 billion," a news release from the group said. A reduction in mail is one reason for the proposed workforce scale back.
To help drive down costs the group will establish a health insurance solution similar to that implored in the private sector. The USPS does not control health care benefit programs for its employees or its retirees, other than bargaining for the apportionment of costs between active employees and the postal service.
USPS believes it should manage its own health benefit program to drive down fringe benefit cost, which account for about 33 percent of total labor costs.
Additionally, under the Postal Reorganization Act, the USPS is currently obligated to provide wages and benefits not comparable to those provided in the private sector-the group says the private sector is adjusting constantly to changing market conditions with adjustments in plan design, care management, eligibility and cost management, among other things, to maintain fiscal sobriety.
"The Postal Service believes it is in the interest of the federal government, our retirees and active employees, our stakeholders and the postal community as a whole to segregate once and for all the postal service’s health benefit obligations-including the obligations for retirees as well as active employees and their families-from those of the rest of the federal government," a news release from the group says.
The new proposal would eliminate the Congressional mandated retiree health benefit pre-payment program, which the postal service has contributed $5.5 billion a year to the trust fund for future retiree health benefits. The new proposal would also let the USPS access the money it has overpaid the system-to date between $50 and $75 billion have been overpaid.
The final new proposal would allow the postal service to decide on mail frequency-the group has been advocating for 5 day a week service.