Postal reform: The time to comment is now

Nonprofits need to keep an eye on Congress and the postal regulator: their use of mail could be in jeopardy

By STEPHEN M. KEARNEY, EXECUTIVE DIRECTOR, ALLIANCE OF NONPROFIT MAILERS | 06/23/2016

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Many nonprofits rely heavily on postal mail to raise funds, share information, and distribute newsletters and magazines. That’s why nonprofits generate one-tenth of all U.S. mail. But this great channel could be at risk in the coming weeks and months. Congress is trying to craft legislation to “reform” the U.S. Postal Service (USPS), and the Postal Regulatory Commission (PRC) is scheduled to start a massive public review of how postage rates are set.

Just last week, five members of the House Oversight and Government Reform Committee released a discussion draft of a possible postal reform bill. They are inviting comments here through June 29, after which they expect to introduce a bill by July 15. Nonprofits should take a moment to absorb what this bill would do, and then submit comments expressing your concerns.

Nonprofit mailers should have three big concerns about this draft legislation. First, it would actually bring back half of the rate surcharge that was just removed on April 10, making a 2.15 percent increase permanent and costing mailers $1 billion a year. That means nonprofit mailers would be hit with a $100 million cost increase. The immediate rate increase is not a reform at all, just a bargaining chip in bipartisan negotiations on the committee.

The second big concern for mailers is that the bill would elevate “cost coverage” of every type of mail to be a primary requirement equal to the Consumer Price Index (CPI) cap on postage increases. If a nonprofit mails anything larger than a letter—such as magazines, newsletters, catalogs, or larger fundraising appeals—it could face ongoing postage increases well above inflation for the foreseeable future. That’s because USPS cost data, which many suspect is inaccurate, says that Periodicals and Standard Mail Flats are “underwater.” That is, USPS contends that their postage doesn’t fully cover the cost to deliver them plus a contribution to overhead.

Of course, getting the costs of handling these products down is the alternative to raising prices, but USPS has not been good at that, and Congress and the PRC can’t seem to be able to hold them accountable. The bill does require a new PRC study on postal costing methodologies, but the result could be too little, too late.

A third thing to worry about in this bill is that its largest reform to lower postal costs might not actually happen. Called “Medicare integration” the aim is to get all Medicare-eligible postal retirees to use Medicare as their primary health insurance. This would shift as much as $54 billion in cost borne by the USPS to pay health insurance premiums over to the Medicare fund that already has received billions in payments from postal employees.

The problem is that two other powerful government entities need to sign-off, and there is a good probability that they will not. One is the House Ways & Means Committee that has jurisdiction over Medicare, and the second is the Congressional Budget Office that scores all new bills for their monetary impact on the federal budget for the next ten years. So, the biggest postal cost-saving element could drop out of the bill, while rate increases seem predestined.

Finally, whether this draft bill moves in Congress or not, the PRC will soon start a regulatory review of postal pricing. It is critical that nonprofit mailers have a strong voice in this proceeding to ensure that the only solution to USPS deficits is not excessive postage increases.

We also need to remind lawmakers and regulators that nonprofit letters, flats, newsletters, magazines, and other mailings are among the most wanted types of mail in America’s mailboxes and help fund critical services and missions that our society needs.