On Thursday, August 1, 2019, the Senate approved three more nominees to the US Postal Service (USPS) Board of Governors (Board). John Barger, Ron Bloom and Roman Martinez IV bring the total number of appointed governors to 5, meaning that the Board now has a quorum for the first time in almost 5 years.
While it’s a positive step forward having a functional Board, there are still plenty of reasons to have a healthy skepticism about the current and future state of the USPS. The top 4:
- The USPS financial situation is getting worse. On Friday, August 9, the USPS will release the financial results for the 3rd Quarter of Fiscal Year 2019, and no one is expecting good news. As we saw in the second quarter, the USPS continues to see a decline in First-Class Mail volumes and a slowing in the growth of package volumes. That trend is expected to continue, meaning higher controllable losses (i.e., losses before any mandated expenses).
- Under the current system, the USPS can’t raise postage rates for market dominant products above the rate of inflation as determined by the Consumer Price Index (CPI) for the previous year. That’s a backward-looking approach that no private company follows. Instead, businesses look forward, anticipating future expenses, and set prices to cover their anticipated costs. The Postal Regulatory Commission (PRC) released a proposed new rate structure in 2017. While the new structure would address some of the financial problems of the USPS, the PRC has withheld taking action to implement the rule.
- The Board may be losing a member in a few months. Governor Robert Duncan’s official term expired in December of 2018 and is now in his “hold over year”. The president resubmitted Mr. Duncan’s name in January, however the committee didn’t report out his nomination favorably until late July. There are rumors that his nomination will be voted on soon, but inexplicably, his appointment wasn’t included in the August 1 vote.
- No comprehensive reform bill has been filed in either house of Congress. The campaigning for the 2020 elections has already begun, minimizing the chances for true bipartisanship. Without meaningful legislative reform, the USPS can’t take the necessary steps to create a secure financial future.
With these challenges, and the legal limitations on what the Board is allowed to change, expectations should be tempered. The PRC is the regulator and isn’t under the purview of the Board. The USPS can’t lobby Congress. The move to less paper isn’t going to stop.
A few things the Board can do:
- Publicly call on the PRC to implement the new ratemaking rules. No one wants higher postage rates, but the current rates are too low. The so-called “death spiral” is a myth. In 1995, First-Class Mail postage rates went up almost 20%. Volumes didn’t decrease, they increased.
- Bang the drum loudly on the need for legislative postal reform. Be interviewed by newspapers. Go on cable talk shows. Remind the politicians that they need the USPS to deliver their campaign messages to the voters. Keep the issue in the public spotlight.
- Release the 10-year plan – now. Then, admit that no one knows what will happen in 10-years. Release what operational changes the USPS will implement in the next 6 to 18 months.
- Meet with business mailers – large and small. Use tools like the Mailers Technical Advisory Committee and the Postal Customer Councils to talk directly with mailers about what they need from the USPS. Don’t rely on representatives from associations or the very large mailers.
For the first time since 2014, there is a quorum for the USPS Board of Governors. Will it make a difference?