The Postal Service continues to record massive net losses per the latest financial figures announced Friday. In total, the Postal Service suffered a net loss of $5.1 billion in FY 2015 (October 1, 2014 – September 30, 2015).
However, the Postal Service said that the majority of the losses are not its fault, blaming them primarily on “certain statutorily mandated payments over which the Postal Service has no control.”
These “mandated payments” are the health and retirement benefits payments the Postal Service is required to make for its employees. Legislation in 2006 required the Postal Service to pre-fund 75 years’ worth of retiree health benefits. These benefits are unfunded by almost $87 billion which is why Congress mandated the advanced funding in the 2006 legislation. The Postal Service has been earmarking about $5.6 billion in revenue annually towards the effort.
Besides the massive payments for employee benefits, total mail volume declined to 154.2 billion pieces from 155.5 billion pieces in 2014, and First-Class Mail and Standard Mail volume decreased by 2.2 percent and 0.3 percent, respectively. Operating expenses of $73.8 billion increased by $648 million or 0.9%.
Controllable income for 2015 was also down over the previous year to $1.2 billion from $1.4 billion. Controllable income is defined as net loss excluding expenses related to the mandated prefunding of retirement health benefits, actuarial revaluation of retirement liabilities and non-cash workers’ compensation adjustments, which are factors largely outside of management’s control.
The Postal Service also said the losses were partly a result of increased competition and a lack of flexibility in the types of products and services it can offer. It continues to press for legislation that would ease the funding mandate for employee benefits as well as increase its flexibility in setting rates.
“We achieved controllable income in excess of $1 billion for the second consecutive fiscal year giving us some limited flexibility to make critical investments in the future of the organization,” said Postmaster General and CEO Megan J. Brennan. “To maintain this success we will need to continue our efforts to grow the business and drive operational efficiencies. However, we will also need the enactment of legislation that makes our retiree health benefit system affordable and that provides increased pricing and product flexibility.”