The Postal Service is facing “an unprecedented financial crisis” and will be unable to fix its problems unless Congress gives the organization more flexibility, a new report concludes.
USPS has about $22 billion in assets and $113 billion in liabilities, including liabilities related to a law that requires the organization to “prefund” health benefits for future retirees. The Postal Service is also being hurt by the erosion of First-Class Mail volumes, which have dropped 28 percent during the past five years.
“When you have roughly $4 billion of cash, and over $100 billion in liabilities, it doesn’t take a genius to figure out we’re in a financial crisis,” Chief Financial Officer Joe Corbett told the Wall Street Journal recently.
The USPS report, which was released June 18, debunks several myths surrounding the organization’s financial condition.
For example, the recent growth in the Postal Service’s package business isn’t enough to offset the drop in First-Class Mail revenue, the report states. It takes about $3 in package revenue to make up for the financial contribution of every dollar lost in First-Class Mail revenue, according to the report.
To remain competitive, the Postal Service must invest in new package sorting equipment and replace its aging fleet. More than 140,000 delivery vehicles are at least 20 years old.
In February, a Senate committee that oversees postal issues approved a reform bill, but the legislation hasn’t been voted on by the full chamber.
“The longer Congress waits, the longer it will take for us to get out of this financial mess and the greater the potential risk to the American taxpayer,” the report concludes.