USPS Posts Another Net Loss in Fiscal Year 2016
Revenue ticks up slightly, but rising expenses drive a $5.6 billion loss in the agency's tenth straight year in the red.
The U.S. Postal Service (USPS) concluded its 2016 fiscal year by reporting a tenth straight annual net loss. The agency lost $5.6 billion in FY 2016, which concluded on September 30, a slight increase over the $5.1 billion loss reported in FY 2015, and the $5.5 billion bled in 2014.
In perhaps its most strongly worded public statement to date, the USPS blamed the loss on an "unaffordable" retiree health benefits program, which carried a $5.8 billion prefunding obligation.
"Despite the positive trends in some aspects of its business, the net loss suffered by the Postal Service this year cannot be ignored," the statement reads. "Even with continued proactive and aggressive management, such losses are likely to persist for the foreseeable future because of mandated costs such as an unaffordable retiree health benefits program … and an ineffective pricing system."
Absent the expense of the mandated health benefit program, the USPS says it would have posted a $200 million gain in 2016. Still, the benefits package makes up a small portion of the agency's overall expenses, which jumped 4.2 percent to $77.09 billion compared to 2015. Total operating revenue increased as well, albeit more slowly, from $68.79 billion in 2015 to $71.43 billion this year, an increase of 3.8 percent.
The periodicals class dipped 5.1 percent in volume and 5 percent in revenue, to 5.54 billion units and $1.51 billion, respectively. Losses in the category accelerated over those observed last year, when volume fell 3.4 percent, and outpaced overall losses for the agency — the "standard mail" and "shipping and packages" categories actually saw increases in 2016. The periodicals class accounted for 3.5 percent of the agency's overall mail volume, down slightly from 3.8 percent a year ago.
Not helping the financial situation was the April expiration of the Postal Regulatory Commission's exigency surcharge, a 4.3 percent premium applied to all classes of mail since January 2014, designed to help the USPS recoup some $4 billion in lost revenue. Despite reaching its recovery goal, the USPS has made clear its desire to reinstate the surcharge, arguing that it really needs around $12 billion to reach solvency.
"This is why legislative and regulatory reforms remain critical for us to meet the needs of the American public now and well into the future," said Postmaster General Megan Brennan, in the statement.