Postal Service Releases Business Plans, Proposes Agency Changes to save more than $22 Billion Annually by 2016
In an effort to shave off more than $22 billion from its annual costs by 2016, the U.S. Postal Service (USPS) released a five-year business plan last week, outlining various personnel and pricing modifications that it wants to implement to save money.
“There are significant risks to achieving the Business Plan,” USPS wrote. “Each element of the Business Plan must be completely and successfully accomplished to achieve requisite savings – initiatives are significantly interdependent.”
Among the major initiatives included in the plan are proposals for USPS to provide its own healthcare program, adopting a five-day delivery week and reducing the number of full-time employees.
In the first quarter of fiscal year 2012, USPS reported a loss of $3.3 billion. Approximately 80 percent of USPS’s total costs come from labor costs, and about 40 percent of those personnel costs are benefits-related, USPS said. By establishing and providing its own healthcare program to employees, USPS estimates it could save approximately $7 billion annually. While the agency has said it is not yet considering layoffs, it does estimate that it will lose 150,000 full-time employees by fiscal 2016 since half of USPS’s career employees are currently retirement eligible.
Various changes to service will cut $2.5 billion by 2015. In the business plan, USPS proposed to reduce overnight delivery availability, cut Saturday delivery and extend delivery time for items traveling more than 200 miles.
Half of the initiatives included in the plan require legislative action, according to Postal Service Chief Financial Officer Joe Corbett.
“In the absence of legislative reform that quickly enables meaningful operational changes and cost reductions, the Postal Service could incur annual losses as great as $18.2 billion by 2015,” Corbett wrote in a letter to Congress. “Such an outcome is highly undesirable and entirely avoidable.”
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With all the talk on the Hill and at the Office of Personnel Management on federal workers’ insurance and retirement benefits options, it could be hard to understand how the different initiatives or legislative proposals will affect federal employees.