August 13, 2020

These are crazy times regarding the Postal Service.  We see a choice between following the political debate about whether the new Postmaster General, Louis DeJoy, is purposely sabotaging the USPS, or staying with the facts we know and continuing our mission.  Of course, we choose the latter.  The Alliance always has been, and will continue to be, apolitical and non-partisan.

To help nonprofit mailers and other interested parties sort out fact from politics, we offer the following 15 pieces information:

1. Postmaster General Louis DeJoy started on June 15, and in the seven weeks since has instituted a mandate to stay closely aligned with existing operating plans. The mandate is to move and deliver mail on time according to published service standards, and to do so within planned budgets.  The goal is to greatly reduce excess costs related to overtime and transportation that apparently were accepted by previous leadership.

2. The USPS Office of Inspector General and the Government Accountability Office have documented numerous opportunities to reduce and control USPS operating costs. And these respected watchdogs have strongly recommended that USPS leadership do so.

3. The Alliance and many other mailer representatives have documented waste, declining productivity, and savings opportunities numerous times. We have been particularly outspoken in the hundreds of pages of comments, declarations, data, analysis, library references, and letters we have sent to the Postal Regulatory Commission.  We have done so as the regulator has proposed several rate surcharges on top of the inflation-based increases that the 2006 postal law allows USPS.

4. For many years, it has been common for major mailers and individuals to experience late delivery of mail. We hear this often from our members, and let USPS know.

5. The USPS official reporting of its performance versus service standards has been well less than 100 percent for some time. For example, in the third fiscal quarter of last year, April through June 2019, First-Class Mail was 93.38 percent on time, Marketing Mail 91.13 percent, and Periodicals Mail 87.86 percent.  In other words, the three main categories of mail were late 6.62 percent, 8.87 percent, and 12.14 percent of the time.  And some of the late mail tailed out to several days.

6. During the pandemic this year, mail delivery slowed even more. In the April-June 2020 quarter, FCM slowed to 90.82 percent, MM to 89.50 percent, and periodicals to 76.91 percent on time.  Put the other way, FCM was late 9.18 percent of the time, MM 10.50 percent, and Periodicals 23.09 percent.  These declines happened before the new mandates were issued by the new PMG.

7. The Alliance has been keeping a close eye on the delivery on nonprofit mail. So far, we have heard of very few unusual or new delays in mail during July and August from the nonprofit sector.  Nonprofits are major mailers of First Class Mail, Marketing Mail, and Periodicals.  We generate about 10 percent of all USPS mail volume.  We will continue to monitor and will report significant delays to USPS as we normally do.

8. Seven weeks into the new leadership of USPS, we believe it is near impossible to sort out whether a mail delivery problem is business as usual, related to the pandemic, an adjustment to the new operational policies, or something else. Time and real data will tell, hopefully.

9. The USPS did a poor job of communicating its cost-cutting initiatives to rate-paying customers, the mailing industry, Congress, the media, and the general public. In fact, a leaked description of the mandate, apparently written by a mid-level manager in the field, became the first public awareness of the changes.  Interested parties reacted quickly, especially to one sentence in the manager’s description that referred to leaving mail behind until the next day to transport or deliver.  USPS management has been playing catchup in trying to set the record straight.

10. The Postal Service explicitly denied that the hold mail language came from a headquarters directive. United States Postal Service General Counsel Thomas Marshall responded to members of House Oversight, saying the documents about slowing mail are not official USPS policy, the Postal Service is not changing service levels, and it’s committed to doing its part for voting by mail.

11. The CARES Act passed on March 27 extended an additional $10 billion line of credit to USPS to cover losses caused by Covid-19. The law requires that USPS and the Department of the Treasury agree on terms and conditions before the line of credit would be activated.  The Board of Governors approved such terms and conditions, and the PMG signed the agreement with the Secretary of Treasury on July 29.  Reactions ranged from normal businesslike terms, especially for a borrower in fear of illiquidity, to theories of ulterior motives involving the Executive Branch interfering in the agency.  The agreement within the terms and conditions to share the twenty largest negotiated service agreements-ten for mail and ten for packages-drew especially vehement opposition, as the contracts previously had been shared only with the Postal Regulatory Commission and the private companies in the agreements.  All three agencies are members of the Executive Branch: USPS, PRC, and Treasury.

12. On August 7, PMG DeJoy announced a reorganization of the officer corps of USPS, something that virtually all previous PMGs have done in recent years. Very experienced and qualified officers were moved to different roles that were relevant to their areas of expertise.  The organization chart was labeled “Interim – USPS Leadership Team.”  It does not include a Deputy Postmaster General who is appointed by the PMG and the Governors, and is a member of the Board of Governors.  More changes are promised.  So far, the reorganization seems to us very similar to previous such moves by virtually all modern-day Postmasters General.

13. On July 30, 2020, the USPS had $14.526 billion in cash, according to page 12 of the Monthly Statement of the Public Debt. (USPS cash is invested in Treasury Securities that are part of the Public Debt.) That’s an increase of $832 million over June 30.  In addition, USPS, as of its June 30 Form 10-Q, had $600 million more borrowing authority under its $15 billion statutory cap.  The Postal Service also has the $10 billion credit line given by the March 27 CARES Act.  Combining cash and borrowing authority, USPS has $25.126 billion in cash access, based on the latest public data.  The HEROES Act, currently advocated by the Democratic House, would double USPS cash access to $50 billion, with a grant of $25 billion.

14. An alternative to a large, one-time appropriation is an acknowledgement that the USPS has a large and growing Universal Service Obligation (USO) that needs to be clearly defined and funded. The USO is usually defined as all the things the Postal Service does that a private sector, profit-seeking business would not do.  Or, put more positively, USO is the public service element of what USPS does.   Congress could clearly define the USO, assign an independent body to value it each year, and appropriate funds annually to cover its cost, as it did prior to 1980.  Expecting the declining market dominant mail volume sent by captive customers to fund not only the cost of their mail but also the public service costs is a recipe for disaster.  Above-inflation rate hikes will accelerate the departure of what remains the main funding source for USPS.

15. Two of the top career officers of USPS, David Williams and Thomas Marshall, wrote a letter to USA Today stating that the Postal Service is fully capable of and committed to on-time handling of the expected volume of voting by mail this fall.  They also stressed that local elections authorities also have an important role to play in ensuring a smooth election.  The fact that several states have been successfully performing 100 percent vote by mail for some time is a testament to its viability.