USPS FY2017 Annual Report to Congress

FY2017 Comprehensive Statement Overview of Postal Operations

Mission

According to Title 39 of the United States Code, “The United States Postal Service shall be operated as a basic and fundamental service provided to the people by the Government of the United States, authorized by the Constitution, created by an Act of Congress, and supported by its people. The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable and efficient services to patrons in all areas and shall render postal services to all communities.”

Governance

By law, we have an 11-seat Board of Governors (the “Board”), which consists of our Postmaster General, our Deputy Postmaster General and nine independent Governors. The President appoints these independent Governors, with the Senate’s advice and consent. The Board is required to have a quorum of six members to exercise its powers. In 2014, the Board issued a resolution establishing a Temporary Emergency Committee (TEC), consisting of all remaining members of the Board, to exercise certain powers reserved to the Board in the event that the number of Governors in office is insufficient to form a quorum. At present, the TEC consists only of our Postmaster General and Deputy Postmaster General. For the first time since we began operations as the United States Postal Service in 1971, there are no presidentially appointed Governors; however, three Governor nominations have been sent to the Senate and await confirmation. For ease of use, references to the “Board” or “Board of Governors” encompass the TEC as appropriate.

Services

In fulfilling our universal service obligation, we provide services to patrons in all areas and communities in the United States. This includes rural areas, communities and small towns where Post Offices are not self-sustaining. We use a variety of transportation methods to move mail through this large network, including highway and air transportation. We leverage strong partnerships with more than 8,000 suppliers, including private carriers for air and surface transportation.

Services are provided through approximately 31,000 Post Offices, stations and branches; approximately 4,000 additional Contract Postal Units, Community Post Offices and Village Post Offices; a network of commercial outlets; and our website, www.usps.com. We deliver to approximately 157 million city, rural, PO Box and highway delivery points. We aim to make our retail locations convenient, accessible and cost-effective.

Postal Rates

Postal rates are established to be fair, equitable and affordable. Prices and fees are reviewed and approved by our Governors and subject to a review process by the Postal Regulatory Commission (PRC). In FY2017, our retail price for a First-Class Mail stamp ($0.49) was the most affordable across all posts in industrialized nations.

We offer two categories of products, which are classified for regulatory purposes as market-dominant products and competitive products. Market-dominant products include, among others, First-Class Mail, USPS Marketing Mail (more commonly known as Marketing Mail and formerly known as Standard Mail) and Periodicals. Currently, price increases for these products are subject to a price cap based on the Consumer Price Index for All Urban Consumers. Competitive products, such as Priority Mail, Priority Mail Express, First-Class Package Service, Parcel Select, Parcel Return Service and some types of International Mail, have greater pricing flexibility. Our Governors set prices for competitive products and the PRC reviews them for legal compliance. By law, prices for these products must cover costs attributable to each product (i.e., the direct and indirect costs attributable to such products) and must contribute a reasonable share (currently 5.5 percent) of our institutional costs, as determined by the PRC.

Semipostal Stamps

In FY2017, we sold two semipostal stamps, the Breast Cancer Research semipostal stamp and the Save the Vanishing Species semipostal stamp, both mandated by Congress. These semipostal stamps are postage stamps with a postage value equal to the First-Class Mail single-piece, one-ounce stamp rate in effect at the time of purchase, plus an amount to fund a designated cause. By law, revenue from sales of semipostal stamps, less the postage paid and the reasonable costs incurred by us, are distributed to designated agencies to support the designated causes.

The Breast Cancer Research stamp generated approximately $1.9 million in funds in excess of the postage value in FY2017. Of this amount, the Postal Service retained $8,875 to cover our costs to sell and distribute the stamp. Of the remaining amount,
approximately $1.3 million (70 percent) was given to the National Institute of Health and approximately $571,000 (30 percent) was given to the Medical Research Program at the Department of Defense.

The Save the Vanishing Species stamp generated approximately $684,000 in funds in excess of the postage value FY2017. We did not deduct any costs in connection with these stamps in FY2017. All of the funds collected in excess of the postage value were given to the U.S. Fish and Wildlife Service to support the Multinational Species Conservation Funds.

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