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As Budget Shortfalls Loom, U.S. Postal Service Eyes Nonprofit Mail

(March 23, 2010) Facing predictions of huge budget shortfalls, the United States Postal Service has signaled that it will take a closer look at nonprofit mail, which could mean steeper rate increases for nonprofit mailings.

Anthony Conway, executive director of the Alliance of Nonprofit Mailers, who has been following this issue closely, says that the concern over nonprofit mail revenues in particular could be bad news for nonprofits. "Everybody would get hit with this, but we in the nonprofit sector may get hit more than the average," Conway told AFP eWire this week. "This could be a big rate increase."

Heightened Focus on Nonprofit Mail

At a meeting of the Postal Service earlier this month, the Postmaster General announced that the Postal Service will file for a "moderate" rate increase in early 2011. Although no details were provided, Conway expects that mailers will see rate increases in January 2011.

In addition to announcing a rate increase for 2011, the Postal Service says nonprofit mail is not covering its attributable costs and that the law says each mail class must cover its costs.  Yet, another law says nonprofit mail is to be priced at 60 percent of the regular rates, the postmaster general noted. He said these "competing laws should be addressed." Worry by the Postmaster General that nonprofit mail is a burden on the budget could lead to negative repercussions for charities.

Plans to Address Budget Crisis

The Postal Service says that it may have a cumulative $238 billion shortfall by the year 2020 if it takes no action to address the crisis. In response, it has a plan to reduce the shortfall by $123 billion that includes action in four areas:  product and service initiatives to grow revenue; productivity improvements; workforce flexibility; and purchasing savings. 

To address the remaining $115 billion shortfall the Postal Service unveiled a seven point plan:

  1. Eliminate the retiree health benefit prefunding requirement.
  2. Reduce mail delivery frequency from 6 to 5 days a week.
  3. Expand access: Close and consolidate existing postal facilities and expand access through postal sales at grocery stores, pharmacies, online, and office supply stores.
  4. Workforce: Replace existing full-time employees with part-time employees when the full-time employees retire. And, through collective bargaining lower the cost of employee benefits.
  5. Pricing: Change exiting law to have price CPI price cap apply for total competitive products together, not at the current class level.
  6. Expand Products and Services: Greater flexibility to introduce new products and services.
  7. Oversight: Less oversight to allow greater speed and flexibility.

The Alliance notes that all measures except for number 4 would require congressional action to put into effect.

Five-day Mail Delivery a Possibility

Following the Postal Service conference, Sen. Tom Carper, D-Del., endorsed Postmaster General John Potter's plan to cut Postal Service deliveries from six to five days to address revenue declines, reported CongressDaily.

"As Postmaster General Potter pointed out today, the Postal Service will need to make significant, strategic changes to its operations in the coming months and years in order to maintain universal service and to provide the products and services so many Americans depend on," said Carper, who chairs the Senate Homeland Security and Governmental Affairs Federal Financial Management Subcommittee. The panel oversees the Postal Service.

Five-day delivery has been a goal of the Postal Service but has been blocked by congressional opposition, reports CongressDaily.

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