Just when things seemed to be looking up for the Post Office, more bad news comes to darken their doorway. They may be turning a profit in the next couple of quarters, but there’s a financial dark cloud looming on the horizon. Like many state and municipal governments around the country, the USPS offers a generous retirement plan for its workers. Very generous. It includes guaranteed health care coverage for the rest of your life. But a new report at Government Executive reveals a recent audit showing that the pool of available money to pay for those benefits is going to dry up in a little over a decade if some changes aren’t made.
The U.S. Postal Service will run out of money to pay for its retirees’ health care in 12 years if Congress does not take action to address the funding shortfall, according to a new audit of the benefit program.
Funding for former postal employees has long been a sticking point in the fight to get the mailing agency’s finances back on firmer footing, and for the last 10 years USPS has faced a requirement to prefund the benefit for future retirees. USPS has defaulted on many of those payments and the Government Accountability Office now describes the financial outlook of the Postal Service Retiree Health Benefits Fund as “poor.” About 500,000 retirees rely on the program, GAO said, and current law has no contingency plan for what would happen if the agency runs out of money to pay for their care.
So according to the labor agreement set up for the Post Office, they’re supposed to be pre-funding the health care plan for all of their retirees to avoid precisely this situation. But they’ve missed a lot of those prefunding payments, adding up to the tune of $38B. Adding more confusion to the situation is the fact that there’s no provision under current law stating what to do if they run out of money.
Considering that the USPS is lucky to turn even a small profit most years, it’s not as if they’re going to magically generate nearly $40B extra over the next decade. So what do they do then? Come back to the taxpayers looking for another bailout? Somehow I don’t think there’s going to be much support for that in Congress. This could be yet another argument against privatizing the Post Office. Can you imagine what a for-profit private company would do under these circumstances?
Much like state and municipal government workers, the Post Office is struggling under the burden of unreasonable expectations. Fat, generous retirement plans are mostly a thing of the past in this modern economy. Everyone is running on tight margins and facing plenty of competition. Unless you work in one of the loftiest, highest paying positions in the country, expecting your former employer to provide you with a steady income and free benefits for the rest of your life is simply unrealistic. But these types of agreements are in place all over the country and such plans are going bankrupt right and left.
I still think the Post Office could be made more profitable, but it will require new leadership that’s willing to shake things up. For one thing, they should increase the cost of sending out unsolicited junk mail, including political campaign mailers. The big private carriers like UPS and FedEx aren’t going to touch that end of the business with a ten-foot pole. If the USPS raised the junk mail rate by a nickel they would either bring in hundreds of millions of dollars in additional revenue every year or we’d have less garbage in our mailboxes. It’s a win either way.