The Postal Service (USPS) has reported its financial results for the 2022 fiscal year which ended on September 30. The agency either had a very big net income or sizable losses for the year depending on how you want to look at it.
How is this possible?
It is because of the Postal Service Reform Act (PSRA) which became law in the spring. Among other things, the bill eliminated the prefunding requirement for USPS retiree health benefits, something that was draining the coffers of the agency at a rapid rate. As a result of the new law, USPS canceled all past due prefunding obligations.
With that background, here are the key financial results for USPS in FY 2022.
Without the financial aid from Congress via the PSRA, USPS reported an adjusted loss of $473 million for the year, compared to adjusted income of $1.5 billion for the same period last year.
According to USPS, “Adjusted loss (income) excludes the impact of the PSRA, retiree health benefits expense, non-cash workers’ compensation adjustments for the impacts of actuarial revaluation and discount rate changes, which are outside of management’s control, and amortization expenses for the Civil Service Retirement System (CSRS) and the Federal Employee Retirement System (FERS) unfunded liabilities.”
However, if the financial impact of the PSRA is included in the figures, the agency had net income of $56.0 billion for the year, compared to a net loss of $4.9 billion for the same period last year. This was due to the one-time financial impact of the legislation taking effect.
The adjusted loss increased by $2 billion over last year thanks to rapidly rising inflation. These were some of the cost increases fueled by inflation that impacted the Postal Service’s bottom line:
- Compensation and benefits expenses $1.4 billion (2.9%) higher
- Highway transportation expenses $696 million (12.8%) higher
- Other expenses, namely gas for delivery vehicles and rent/utilities, $1.3 billion (13%) higher
Inflation is creating a substantial financial burden for the Postal Service, and the agency said that inflation is going to continue to create problems for it in the future also.
“As we previously mentioned in the third quarter release, the enactment of the PSRA was a key component of improving the Postal Service’s financial condition,” said Chief Financial Officer Joseph Corbett. “However, the one-time, non-cash impact to net income is not reflective of our true financial condition for the year. High inflation is presenting significant challenges to the Postal Service. We are rising to meet these challenges through strategic management of our business that will allow us to continue providing high-quality service to the American public while supporting our employees and achieving long-term financial sustainability.”
Other Highlights From FY 2022 USPS Financial Results
Despite a volume decline of 1.6 billion pieces, operating revenue was $1.5 billion higher than last year. Marketing mail revenue increased $1.4 billion (9.7%), First-Class Mail revenue increased $772 million (3.3%) on a volume decline of 1.7 billion pieces, and Shipping and Packages revenue decreased $700 million (2.2%).