Check’s Not In Mail: Postal Service re-organization failed to stem billions in losses

The U.S. Postal Service has now accumulated a whopping $98 billion in losses since it went into the red in 2007 and its much-ballyhooed reorganization has failed to reverse the trend as expected, according to a sobering new report from the iconic mail agency’s watchdog.

The Postal Service inspector general reports that the mail service recorded losses of $950 million in 2022 and $6.5 billion in 2023, in the first two years after implementing its decade-long Delivering for America (DFA) reorganization plan.

“The DFA plan was developed during a time of considerable uncertainty, and conditions have evolved,” the inspector general reported. “The DFA plan projected positive net income starting in fiscal year (FY) 2023. Actual results show a net loss of $950 million from operations in FY 2022 and a $6.5 billion net loss in FY 2023.

“While actual revenue was higher than DFA plan projections, actual expenses exceeded expense projections and actual revenue in both years,” the audit noted.

The audit cited a variety of reasons that drove up costs, included increased mail usage but most importantly the persistently high inflation triggered by President Joe Biden’s spending agenda in the post-pandemic era.

“During our scope period of FYs 2022 and 2023, the United States experienced year over year monthly inflation rates between 3.0 percent to 9.1 percent,” the inspector general noted. “This period marked one of the highest levels of inflation – as measured by the Consumer Price Index for All Urban Consumers Index (CPI-U)15 – since the 1980s and much higher than the Postal Service projected in its DFA plan for revenue and expenses."

Inflation was “most acute” when it came to the Postal Service’s half-million personnel and its compensation and retirement expense categories.

“At the end of FY 2023, the total number of career employees at the Postal Service was approximately 525,000, including an increase of approximately 29,000 (6 percent) employees due to career conversions,” the IG noted. “As shown in Figure 7, compensation expense and FERS normal expense, per employee, were dramatically higher by 9.1% and 18.2%, respectively, due primarily to the contractual cost-of-living adjustments for approximately 525,000 employees, which includes the 29,000 converted employees now eligible for employer retirement contributions.”

The watchdog urged the service to revise its projections to the reality of the current economy in hopes of getting the plan on track. It also rebuked the Service’s managers for failing to track when it was hitting its DFA budget targets.

“We could not conclude how the initiatives’ results or progress in FYs 2022 and 2023 compared to DFA projected savings because the Postal Service did not track specific initiatives’ progress back to the projected savings they determined under each P&L category in the DFA plan projections,” the report noted.