The Postal Service reported a $2 billion net loss for the second quarter of fiscal year 2016 according to its latest financial report. Losses for the same quarter last year were $1.5 billion.
The bulk of the losses were blamed on an “unfavorable change” in workers’ compensation expenses resulting from interest rate changes, something the Postal Service pointed out is beyond its control. This resulted in $547 million of the losses.
The total worker’s compensation expenses for the quarter came to $1.454 billion, an increase of $748 million over last year’s costs.
Income overall was higher than the same quarter last year if the workers’ compensation expenses are not factored in. What the Postal Service calls “controllable income” came in at $576 million for the quarter, an increase of $263 million over the same quarter last year.
“Controllable income” is the impact of operational expenses including compensation, benefits and work hours; it does not reflect costs such as pre-funding retiree health benefits.
While the separate reporting of the controllable income may help to mask some of the losses, the Postal Service is not naive about its overall financial situation.
Postmaster General and Chief Executive Officer Megan J. Brennan summed it up this way:
“While we have been successful in achieving controllable income during the quarter, we are still reporting net losses and contending with long-term financial challenges. We continue to focus on improving operating efficiencies, speeding the pace of innovation, and increasing revenues for the Postal Service.
“I am grateful to our dedicated employees who helped us to achieve controllable income this quarter, but we cannot let this result mask the financial challenges we face. Our financial situation is serious, but solvable. We are confident that we can return to financial stability through the enactment of prudent legislative reform and a favorable resolution of the upcoming regulatory review of our rate-setting system.”