Opportunity knocks: The Postal Service invites postmasters to replace themselves

June 22, 2012

The Postal Service has notified postmasters considering retirement that they’re welcome to apply for a job as a Postmaster Relief (PMR).  It’s “an opportunity to continue to serve postal customers” — and an opportunity to earn $11.76 an hour. 

Who could pass up an opportunity like that?  Who wouldn’t want to give up a good-paying full-time job, transition into retirement a few years before you’re ready, and then take your old job back for half the day and at a third your hourly wage?

The Postal Service must be counting on quite a few takers.  Perhaps there will be a lot of postmasters who figure that between their pension, the $20,000 VER offer, and a few hours a week as a PMR, they’ll be able to get by.  Maybe some of them will simply to want to “continue serving their community.”

In any case, the letter to postmasters from the Postal Service is rather vague about some of the details, and there are a couple that warrant a closer look. 

The letter says, “Under the rules that allow the Postal Service to reemploy annuitants without a reduction in their retirement annuity, the Postal Service must first post the PMR position.  If, as we expect in most cases, no qualified applicant applies for the position, we will then select a retired postmaster to fill the vacancy.”  The letter goes on to say, “Your ability to work in this position without reduction to your annuity is subject to specific conditions and a limited duration.”

In order to get some sense of what’s behind those comments, it’s necessary to go back to the statute and regulations that govern reemployment of government retirees.


Decoding the rules

Title 5 of U.S. Code, sections 8344(i) and 8468(f), contain the laws concerning federal retirees, annuities, and re-employment.  Generally speaking, retirees don’t go back to work for the government, and when they do, their annuities are usually reduced.  But as section 8344(i) describes, there are exceptions. 

The Director of the Office of Personnel Management (OPM) can issue waivers “on a case-by-case basis for employees in positions for which there is exceptional difficulty in recruiting or retaining a qualified employee.” 

The OPM can also delegate authority to the head of an agency to make such exceptions “for an employee serving on a temporary basis, but only if, and for so long as, the authority is necessary due to an emergency involving a direct threat to life or property or other unusual circumstances.”

These sections of Title 5 are implemented by the Code of Federal Regulations, which provides more details.  The part entitled “Reemployment of Military and Civilian Retirees to Meet Exceptional Employment Needs” (5 CFR 553) says that there are four categories of case-by-case waivers: (1) An emergency hiring need; (2) a severe recruiting difficulty; (3) a need to retain a particular individual uniquely qualified for a specific 
project; and (4) requests based on other unusual circumstances not rising to the level of an emergency.

The CFR presents various rules about how each of these criteria should be applied, and this Q & A fact sheet from the OPM explains many of the details.  The fact sheet outlines the circumstances under which an annuitant can be reemployed under the criterion of “severe recruiting difficulty.”

According to the OPM, “The individual for whom an agency is seeking a waiver based on a severe recruiting difficulty must be the only qualified candidate described in the agency’s recruiting efforts.  For these purposes, a minimally qualified candidate is a qualified candidate.”

The fact sheet goes on to say, “Agencies MUST submit documentation for requests based on a severe recruiting difficulty,” and this documentation should include, among other things, a description of the length, breadth, and results of the agency’s recruiting efforts, including details about the number of applicants and an explanation as to why none of the candidates was selected.


Turning up the heat: The DC Hunger Strike

June 20, 2012


On June 25th, a band of protestors will travel to Washington DC to stage a four-day hunger strike calling attention to the Postal Service’s plans to reduce service and cut jobs.  That’s just days before the Postal Service implements the change in service standards that will end overnight delivery for about 20 percent of First Class mail, a prelude to further service reductions next year and in 2014.

“Save the Post Office” joins over 400 community groups, clergy, citizens, and postal workers endorsing the strike.  You can see the endorsement list here, and you can add your name here.  (By the way, the form asks for your phone number and street address, but those details won't appear in the endorsement list.)

The main theme of the Hunger Strike is that cuts to service will succeed only in driving business away from the Postal Service and sending it into a death spiral.  Slowing down the mail, closing plants, closing post offices and reducing window hours, and putting tens of thousands of postal employees out of work is not the way to solve the Postal Service’s financial problem. 

That problem can be addressed with a simple act of Congress:  Repeal the 2006 Congressional mandate that requires the Postal Service to pay $5.6 billion a year into its Retiree Health Benefit Fund (RHBF) — to cover health benefits decades in advance.  That mandate is the main cause of the postal deficit, and it’s completely unnecessary.

As the USPS Office of Inspector General has observed in a letter to Senator Bernie Sanders, “Prefunding retiree health care is rare in the public and private sectors.  We have been unable to locate any organization, either public or private, that has anything similar to the Postal Service’s required level of prefunding heath care benefits.”

If it’s so rare, why did Congress create such a fund in the first place?  Back in 2002, the Office of Personnel Management (OPM) determined that the Postal Service was on course to overfund the CSRS pension fund by over $70 billion.  The Government Accountability Office said the overfunding could top $100 billion.  But reducing the Postal Service’s payments into the pension fund would have added to the federal deficit by $4.5 billion a year.  One of the main reasons Congress decided to have the Postal Service prefund retiree health care was to keep those billions flowing into the Treasury. 

If Congress had been concerned simply with having enough money to pay for retiree health care, it could have decided on a 40-year payment schedule, as the OPM recommended.  But the health care payments would have been too small to balance out the $4.5 billion reduction in payments to the pension fund.  So Congress came up with a ten-year payment schedule — hence the $5.6 billion the Postal Service is now required to pay into the RHBF.

An endless stream of news reports repeats the message coming from Congress and postal headquarters:  The Postal Service has lost $25 billion over the past five years, and If nothing is done, the Postal Service will go broke.  And it's all because of the Internet.

But as the Postal Regulatory Commission stated in its most recent Annual Compliance Determination, “The primary reason for the losses is the overly optimistic RHBF prefunding requirement.  If there had been no prefunding requirement, the cumulative 5-year loss would have been reduced to $4.4 billion.”

So over 80 percent of the $25 billion deficit was caused by the prefunding mandate.  As for the remaining $4.4 billion, about a third of that loss occurred in 2009 and 2010 and can be attributed directly to the recession.  The big loss in 2011 was due partly to the continued weakness in the economy, but it has another cause — and it's not the Internet.  Postal management deserves a good deal of the blame for recent revenue losses.  Whether by accident or design, it has helped to undermine the relevancy and viability of the Postal Service by constantly invoking insolvency and “Greece,” by announcing one cost-cutting plan after another, by reducing service and by promising to reduce it more. 

In the end, however, Congress must take responsibility for the crisis.  “Not the Internet, not private competition, not the recession — Congress is responsible for the postal debt,” explains Jamie Partridge, a retired letter carrier traveling from Portland, Oregon, for the Hunger Strike.    “Corporate interests, working through their friends in Congress, want to undermine the USPS, bust the unions, then privatize it.”

“We will not stand by as our beloved Postal Service is destroyed,” says Tom Dodge, a postal worker from Baltimore who will be joining the Hunger Strike.  “We will shame Congress and denounce the Postmaster General.  We will engage in dramatic actions on Capitol Hill and at the USPS Headquarters to turn up the heat on decision makers.”

For more about the Hunger Strike, visit the website of Communities and Postal Workers United, a national grassroots network that’s working to share information and expertise in order to preserve customer service and fight the privatization of the Postal Service.

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.

Historic Post Offices: An Inventory of the Legacy

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.

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