On Sept. 30, U.S. Postal Service to reach borrowing limit
On Sept. 6, Postmaster General/CEO Patrick R. Donahoe testified on behalf of the U.S. Postal Service before the committee on homeland security and governmental affairs, United States Senate.
His testimony included a synopsis of how serious the Postal Service financial situation is. “The most recent financial results continue to be grim,” said Donahoe in his testimony.
By the end of the fiscal year, which is September 30, the Postal Service will reach its statutory $15 billion borrowing limit. Without legislative change this year, Donohoe projected that available liquidity will be insufficient to meet the financial obligations and the Postal Service will face default.
The Postal Service ended Quarter III of fiscal year 2011 (April 1-June 30) with a net loss of $3.1 billion, according to Donahoe’s report. Net losses for the nine months which ended June 30 amount to $5.7 billion. The Postal Service is currently, projecting a net loss of up to $10 billion by the end of this fiscal year, depending on interest rates.
Donahoe went on to testify that “the growth in electronic communications continues to drive the diversion of First Class Mail.Instead of buying stamps, many consumers pay bills online, send e-vites to friends and family, and simply press ‘Send’ when they want to communicate.” The shifting of customer habits contributes to the drop in First Class Mail, a core product of the Postal Service.
The U.S. Postal Service is asking Congress to act this year on the following six core issues: Resolve pre-funding of Retiree Health Benefits (RHB); return the $6.9 Billion overfunding of the Postal Service’s obligations to the Federal Employees’ Retirement System (FERS); grant the Postal Service the flexibility to determine delivery frequency; allow the Postal Service the flexibility to restructure its healthcare and pension systems; and permit the streamlining of pricing and product development.
At the end of July, a news release from the postal service stated that, “as more customers choose to conduct their postal business online, on their smart phones and at their favorite shopping destinations, the need for the U.S. Postal Service to maintain its nearly 32,000 retail offices…diminishes.”
Over the summer, the postal service expanded their list of small town post offices to be studied for closure to include 76 rural offices in ND. Last spring, the Knox Post Office was among the first round of offices closed as part of the postal services’ efforts to save money. Although none in the immediate area are on the list to be studied, several neighbors to nearby counties have post offices on the list.
Carol McConnell, officer in charge, Rugby Post Office, has only been at the local office for two weeks and said she would not be able to give an accurate assessment of Rugby’s chances of closure.
Lynae Hartvickson, Wolford Post Office, said,”We (Wolford) is on one of the early closing lists. Other than that, I don’t know anything about if or when the Wolford Post Office will close.” Both ladies said they could refer the Tribune to a media specialist for any more questions.
The Postal Service is introducing a retail-replacement option for affected communities.
“Today, more than 35 percent of the Postal Service’s retail revenue comes from expanded access locations such as grocery stores, drug stores, office supply stores, retail chains, self-service kiosks, ATMs and Usps.com, open 24/7,” said Donahoe.
Towns without post offices could work with the Postal Service to incorporate a service area in a local business where stamps could be purchased as well as other popular postal products and flat-rate packaging.
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