The United States Postal Service (USPS) continued to spend into the red by losing $562 million in the second quarter of 2017, according to a fiscal report Wednesday.
The postal service releases annual and quarterly reports to highlight its budget and expenses. The latest report adds to the billions the postal service has already lost in recent years. The USPS partially blamed the shortfall on the expiration of a surcharge that allowed for increased prices on certain services.
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“This reduction was driven by the April 2016 expiration of the exigent surcharge, which would have generated approximately $500 million in additional revenue during the quarter had it remained in place, and to a lesser extent, a $69 million increase in controllable operating expenses,” the report stated.
The USPS argued in the report that legislative and regulatory reforms are needed to fix the funding issue. Critics have previously contested that the real issue is mismanagement from those in charge of the post office. The Taxpayers Protection Alliance (TPA) adds the postal service is sliding closer to bankruptcy.
“This loss is a stark reminder about the agency’s inability to achieve fiscal stability,” TPA responded in a statement. “After posting losses during the December holiday delivery season, the USPS appears on track for its 11th consecutive fiscal year in the red.”
The TPA warns the increase debt has increased the likelihood that taxpayers will be asked to bail out the agency. It adds that the post office even failed to pay its retiree health benefits payments despite a legal mandate. Nevertheless, the post office has managed to significantly decrease losses since last year.
“The net loss for the quarter declined to $562 million from a $2 billion net loss a year ago, as the Postal Service benefited from declines in operating expenses outside of management’s control,” the report states. “Expenses for mandatory retiree benefit programs fell by a net $1.2 billion due to changes in funding requirements.”
The report adds that workers’ compensation expenses fell by $1.1 billion because of fluctuating interest rates. The post office has previously highlighted labor costs as a major expense. It noted last year that compensation increased by $922 million, while benefits went up an additional $1.2 billion.
The USPS released a report last year citing issues that are likely driving up costs. It highlighted increased labor costs, retirement benefits, and a lack of statutory flexibility as areas of concern. It didn’t mention management issues, which critics have rejected.
Congress has been especially interested in addressing the financial challenges the post office has been facing. Postmaster General Megan Brennan urged the need for legislative reforms during a congressional hearing Feb. 7. The House Oversight and Government Reform Committee also introduced a bill to help the postal service prevent losses.
“Even with continued achievements in improving operational efficiency and revenue, the Postal Service cannot overcome systemic financial imbalances caused by legal and other constraints,” the report stated. “Passage of legislation that would allow the Postal Service to operate within a more sustainable business model is urgently needed.”
The USPS can only enact so many reforms before interfering with congressionally-mandated restraints. The reform bill addresses the problem in several ways. It’s designed to reform the postal service retirement plan, give the postal service more flexibility with pricing, and allow for services not traditionally covered by the postal service.
The postal service reported a net loss of $5.1 billion for fiscal year 2015. It also reported a $5.5 billion loss in the year before that. The reports in past years put the blame on issues ranging from legislative burdens and statutorily-mandated payments, while critics pointed to management.
The postal service has also faced criticism in recent years for attempts to expand its services beyond mail delivery, even as first-class mail delivery has slowed. According to an internal survey of postal employees obtained by InsideSources last year, the organization’s workforce is deeply dissatisfied with the direction of the organization.