Busy week at the PRC: The union complains, the Postal Service shares numbers, and the senator sends a letter
June 17, 2012
It was a busy week at the Postal Regulatory Commission. On Wednesday and Thursday, the Commission heard cross-examination from witnesses challenging the Postal Service’s Network Rationalization plan to close over 200 processing plants. The APWU has also filed a complaint about the plan as well as a motion for an emergency order seeking to prevent the Postal Service from implementing the service standard changes at the end of June.
On Friday, several interesting documents concerning POStPlan — the plan to cut hours at 13,000 post offices — showed up in the PRC’s daily listings. There’s a spreadsheet showing the cost savings on the plan, a response to an inquiry about the revenue losses the plan might cause, and a request for non-public status on another library reference containing the revenue numbers for all the POStPlan post offices.
The PRC also received a letter from Senator Carper on Friday, urging the Postal Service to speed up its Advisory Opinions.
We’ll get to the latest developments on Network Rationalization in the next post. For now, here’s the latest on POStPlan, plus a comment on Senator Carper’s letter.
Cost savings on POStPlan: No great expectations
The Postal Service has provided the PRC with a spreadsheet showing how POStPlan could save $500 million. There’s not much to the analysis, and it looks a lot like the guestimates we made a couple of weeks ago.
The Postal Service says that the goal of POStPlan is not to save $500 million or to achieve any particular cost savings. In a reply to an information request from the Commission, the Postal Service simply says, “Postal management's goal in pursuing the POStPlan is to improve efficiency and meet customer needs by matching retail hours and services to community postal needs and use patterns” (POIR 1-10).
According to the Postal Service, then, it will be better able to “meet customer needs” if it closes their post office a few hours a day. That’s pretty much along the same lines as its view that closing 3,700 post offices would be a form of “retail access optimization.” The new plan is not about saving money, says the Postal Service. Its purpose is simply to “match” retail hours to postal needs. “The goal,” says the Postal Service, “is not contingent on a specific cost savings estimate or expectation.”
While a specific cost savings estimate may not be the goal, the Postal Service is justifying the plan by saying it will save $500 million, and the spreadsheet shows how. The total cost for labor for the 17,727 impacted post offices is currently $1.26 billion. Under POStPlan, the labor costs would be $0.75 billion. The total savings is around $517 million.
You can see the original USPS spreadsheet on Google docs, here. For some reason, it includes not only the 17,727 post offices that are part of the plan, but another 4,100 Level 18’s that aren't. Just to make things a little clearer, here’s the spreadsheet with those Level 18s removed, and some numbers on hours of operation and hourly wages added:
As you can see, the cost savings analysis compares the total labor costs for full-time postmasters to the lower costs for using part-time replacements. The difference between them is the savings. There’s nothing in the analysis about other costs that POStPlan might incur, like training thousands of part-time workers or sending someone from an Administrative Post Office to a Remotely Managed Post Office to open or close the lobby, having a carrier go the post office to distribute the mail for PO boxes in the morning (the office may open only in the afternoon), and all the other expenses in managing part-time post offices from afar.
What revenue losses?
As part of its inquiry into cost savings, the PRC also asked the Postal Service to “explain any efforts the Postal Service has made to estimate the expected impact on revenue from reducing window service hours under the POStPlan. Include electronic worksheets showing how this estimate was calculated.”
The Postal Service could provide no such worksheets. It says it wouldn’t know how to do such calculations. In reply to this request, the Postal Service says the following. It’s worth quoting in full.
June 14, 2012
Last week the National Trust for Historic Preservation named the Historic Post Office Building to its annual list of the 11 Most Endangered Historic Places.
The historic post office faces an “uncertain future,” observes the National Trust in its press release. The Postal Service has been closing post offices at an unprecedented pace, announcing one downsizing plan after another, and selling off its properties. At least forty historic post offices have been sold or put on the market in the past year.
Among the Trust's main concerns is the way the Postal Service has been handling the sell-off. "The lack of a transparent and uniform national process from the Postal Service — one that follows federal preservation laws when considering disposal of these buildings — is needlessly placing the future of many historic post office buildings in doubt," says the Trust. Stephanie Meeks, president of the National Trust, says she hopes to work with the Postal Service to develop a process for adapting and reusing the historic buildings.
Asked about the announcement from the National Trust, USPS spokesperson Sue Brennan told the Associated Press — in an article that appeared in over a hundred news outlets — that of the 31,500 post offices nationwide, only 55 are officially listed on the National Register of Historic Places.
That didn’t sound right, so I contacted Ms. Brennan. She explained that the number 55 probably referred to how many National Register post offices were among the 3,700 post offices being studied for closure last year, and she graciously provided a very thorough USPS list that inventories all the Postal Service’s historic post offices.
As it turns out, about 440 currently operating post offices are on the National Register, and as many as 1,800 others are eligible for the Register. Here are a list and a map of the 440, complete with photos and links to more information, like the National Register nomination documents. More tables and maps are listed at the end of this post.
The Postal Service’s Real Estate
The Postal Service is obviously having cash flow problems, and it clearly likes to poor mouth when it suits its purposes. But its deficit problem is primarily and unnecessarily caused by the 2006 Postal Accountability and Enhancement Act (PAEA), which requires the Postal Service to pay $5.6 billion annually into a fund for the health care of future retirees. The payments aren't just for retirees. They were mandated by Congress so it could avoid refunding overpayments to the postal pension fund, which would have added to the federal deficit.
The Postal Service isn't really going broke. It's actually incredibly wealthy. If you ignore the health care prepayments, it is basically breaking even, in spite of the weak economy and diversion to the Internet. (For FY2012 year-to-date, the loss is $275 million, about 0.7% of revenues.) The Postal Service generates $65 billion in annual revenues, and it is sitting on a mountain of assets — 8,600 properties, 214,000 vehicles, $326 billion in retirement funds, and much else, like intellectual property and an experienced, knowledgeable workforce. No one knows how much the Postal Service is worth.
The Postal Service has not released any numbers about the value of its real estate holdings, and it may not even know the total itself. According to an OIG report issued last year, the Postal Service does not maintain fair market or assessed tax value records for its properties. It does, however, keep track of purchase prices, and in its 2011 fiscal summary, the Postal Service reported holding over $24 billion (in purchase price) for property such as buildings and land. The OIG figured that the assets were worth at least twice that due to appreciation, but on its books, the Postal Service goes the other way and depreciates them by half.
A significant portion of the Postal Service’s $25 to $50 billion in real estate resides in just a few buildings, like large processing plants, which can be worth $50 or $100 million a piece, sometimes more. According to the OIG’s report, L’Enfant Plaza is probably worth $115 million.
On today’s market, a typical post office can go for anywhere between a half million dollars to several million, as you can see on the USPS Properties for Sale website. This site, by the way, is the product of a partnership between the Postal Service and CB Richard Ellis, the world’s largest commercial real estate firm, which is now handling sales and leases.
Figuring a rough average of a million dollars per post office, the 2,200 historic properties could be worth something like $2 billion.
Even if the Postal Service were to sell every one of these treasures, it wouldn’t add up to one annual payment to the retiree health care fund, which could be eliminated by a simple act of Congress. That means Congress must ultimately bear responsibility for the dismantling of the country's rich legacy of historic post offices.
June 7, 2012
BY MARK JAMISON
The United States Postal Service has abandoned the American people. At the direction of its Board of Governors and through the efforts of its primary officer, the Postmaster General, it has abandoned its mission of service and its basic responsibilities to the citizens of this country.
In place of an uplifting vision of binding the nation together, the leaders of the Postal Service have embraced a cynical view that denies the traditional American commitment to community and to building a solid national foundation in favor of a purely individualistic pursuit of selfish greed.
The leaders of the Postal Service have been aided and abetted in their actions by a Congress that is no longer able to act in a bipartisan way to serve the interests of the people of the United States. Hell, the vast majority of the members of Congress are no longer able to define the interests of the people of the United States. Instead, Congress splits, parses, and divides the common interest and ends up serving the deepest pockets and the most influential and wealthiest among us.
Also helping in the demise of a treasured national institution has been the Administration in Washington, a group that was elected on the promise of hope and change but instead has governed on the basis of business as usual. Its appointments relating to postal matters are either based on cynical political calculation or simply reflect complete surrender to a vision of America that severs us from generations of progress on equality and community.
Blame can also be laid at the feet of the various employee organizations. With few exceptions, the unions and management associations have increasingly accepted a corporatized postal system that redefined service into little more than a huckster’s sales pitch. They have countenanced an ever more incestuous relationship with a small segment of the marketing industry. Instead of finding a common purpose and a community of interest, these organizations have fought with each other for meaningless shreds of advantage and thereby enabled senior management to divide and conquer, leaving employees and the public worse off.
June 6, 2012
THE NATIONAL TRUST FOR HISTORIC PRESERVATION has named the Historic Post Office Building to its annual list of the 11 most endangered places. The Trust has a story, a slideshow, a feature on the post office in Geneva, Illinois, and a press release (which has the most details). The Chicago Tribune also has a story, and the Associated Press has another.
The National Trust has put the historic post office on its endangered list because the Postal Service, as part of its big push to downsize its retail network, has been selling off post office buildings, many of them valuable national treasures.
"This isn't about taking on the post office," explains Stephanie Meeks, president of the National Trust for Historic Preservation. "Of course we don't quibble with the post office having to do what they have to do to manage their business, but we do want to make sure there's a thoughtful process in place for managing the historic resources."
The Trust notes that the “lack of a transparent and uniform national process from the Postal Service — one that follows federal preservation laws when considering disposal of these buildings — is needlessly placing the future of many historic post office buildings in doubt." The Trust hopes to work with the Postal Service "to develop a consistent, sensitive, and transparent process that follows established federal preservation law for protecting historic post office buildings targeted for disposition."
One of the communities especially pleased by the news from the National Trust is La Jolla, California, which was singled out for special attention by the Trust, along with Gulfport, Mississippi, Fernandina Beach, Florida, and Geneva, Illinois. The folks in La Jolla have been fighting hard to save their historic New Deal post office, under threat of sale for many months now. They’ve put up a Facebook page and website, and it looks like they’ve gotten the attention of Senator Feinstein. There may even be a call for legislation to protect historic post offices. A flurry of articles came out today about the La Jolla post office: U-T San Diego, La Jolla Patch, La Jolla Light, and SD News.
Legacy for Sale
Three-fourths of the country’s 32,000 post offices are housed in leased spaces, but the Postal Service owns about owns 8,989 post-office properties, including post office buildings, vacant land for post-office development or modular post offices. According to David Partenheimer, a postal service spokesman, some 28% of those properties — about 2,500 — are either on the National Register of Historic Places or eligible to be listed due to their historical significance. A search of the National Register shows 869 post offices currently listed, most no longer active. A preliminary review suggests there are over 300 currently active post offices on the National Register. You can see images of many of the post offices on the National Register on wikipedia.
(In an AP story about the National Trust's announcement, USPS spokesperson Sue Brennan said there are 55 post offices on the National Register. We're checking on that.)
Over a thousand post offices were built during the New Deal. They are particularly significant because of their famous murals. According to Dallan Wordekemper, Postal Service historian, about 800 of the New Deal post offices contain priceless sculptures and murals, often prized more than the buildings themselves. Although often mistakenly identified as WPA murals, they were produced under the Treasury Department's Section of Painting and Sculpture, later called the Section of Fine Arts.
Over the past year, the Postal Service has embarked on a plan to dispose of its vast real estate holdings, and many of these New Deal post offices have already been sold. Last July, the Postal Service entered into a contract with the largest commercial real estate company in the world, CB Richard Ellis, to manage lease negotiations and sales. In November, CBRE and the USPS started a website displaying some of properties for sale. There are about 80 listed right now, a good number of them historic properties.
As of last September, the Postal Service had already sold $140 million in post offices and other property during fiscal year 2011, according to USPS spokesperson Sue Brennan. As the Wall Street Journal reported, “Postal officials say it's unclear how many of these historically significant post offices will be sold, but many communities are already starting to see the for-sale signs go up.”
Over the past year, at least 43 historic post offices have been sold or put on the market: