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Congressional Testimony
April 4, 2000, Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 2174 words
HEADLINE:
TESTIMONY April 04, 2000 WILLIAM J. HENDERSON POSTAL-MASTER GENERAL AND CHIEF
EXECUTIVE OFFICER UNITED STATES POSTAL SERVICE HOUSE
APPROPRIATIONS TREASURY POSTAL APPROPS.
BODY:
Statement of William J. Henderson Postmaster General and Chief Executive
Officer United States Postal Service before the Subcommittee on Treasury, Postal
Service, and General Government Committee on Appropriations, U.S. House of
Representatives April 4, 2000 Good morning, Mr. Chairman and Members of the
Subcommittee. I appreciate this opportunity to testify before the Subcommittee
to present the Postal Service's appropriation request for FY 2001. Last year
before this Committee, I described the significant progress that the Postal
Service has made over the past several years to improve service, increase the
value of the mail for our customers, and restore the financial health of the
Postal Service - all as envisioned in our founding charter, the Postal
Reorganization Act. I am pleased to report today that we have continued on that
path. We have invested in new facilities and infrastructure, rolled out new
services and conveniences for our customers, managed to stay in the black with a
small surplus, and delivered better First- Class Mail service. Last year, we
achieved the best overall delivery performance in our history for overnight and
two- and three-day committed First-Class Mail. We are working to build on that
progress in Fiscal Year 2000. However, as I also indicated last year, our
challenges are getting tougher. From the aggressive competition of domestic
delivery companies and foreign posts, to soaring fuel prices, to the continuing
growth of electronic alternatives to the mail, the Postal Service is faced with
slow growth and shrinking margins. As you know, in January these and other
pressures led the Postal Service to file a proposal for higher rates, to take
effect in 2001. While it was a difficult step for us to take, it was also a
fiscally prudent one. The Postal Service is required by law to pass on its
rising costs to postal ratepayers and to break even over time. Although we have
made significant strides over the past few years in restoring our equity, we
have yet to recover all of the losses that have built up since 1971. The
year-long time frame that it takes to request new rates and get them approved
and implemented also requires that we not delay in seeking higher prices and
risk further losses that could harm our financial condition. I assure you,
however, that the Postal Service is doing everything in its power to keep its
promise to the American people that mail will stay relevant and that our
universal gateway to their homes and businesses will continue to be there for
them. We have embarked on an aggressive effort to reduce costs and improve our
operating efficiency. As we have improved service over the last two years, we
have wrung nearly $2 billion dollars of costs out of our system. It has been a
painstaking and difficult effort, and it is by no means a final solution. In
fact, we have now set for ourselves a $4 billion cost reduction target to be
achieved by 2004. We will be tightening our belts and reengineering our
processes in purchasing, transportation, mail processing, and administration.
Our goal is to maintain and improve service, while expending fewer resources.
This will include reducing the size of our workforce. In the last nine months,
11,000 career positions have been absorbed by attrition, and that number will
continue to grow. We are also going to reduce administrative positions at postal
headquarters, our areas, and in our district offices. The lion's share of our
cost reductions - some $700 million a year at its peak - will come from
breakthrough productivity in our processing system. We are moving forward to
better manage the mail in a host of different ways - from the continuing
roll-out of an Information Platform to track mail throughout our system to
investments in the next generation of automation for flats and parcels. Our
breakthrough has begun. Our total factor productivity rose to 2.1 percent in the
final quarter of 1999. It is 2.2 percent for the first of FY 2000, and 2.7
percent in the second quarter. We also realize that we cannot continue to
survive - let alone thrive - by cost control alone. As we work to keep mail
affordable, we must also continue to grow the mail and achieve regulatory
reform. Therefore, we will continue to improve the performance of our core
products and add new features, while we respond to emergent customer needs in
the e-business arena. We will also continue to pursue a modernization of
the postal charter. We support H.R. 22 as a balanced approach that
encourages innovation, provides a more responsive, businesslike ratemaking
process, and ensures that the public interest is served. The United States is
now several years behind leading foreign counterparts in modernizing its postal
charter. Prolonged delay will increasingly keep American consumers and
businesses from reaping the growing benefits of global commerce, and ultimately
raise the likelihood of penetration into the domestic delivery market by more
liberalized foreign posts. As these top-to-bottom actions show, we are totally
committed to fulfilling our promise to the nation. The appropriations requested
today are a vital part of that promise. In the first place, they meet public
mailing needs of singular importance as defined by the Congress. And secondly,
by fully paying the Postal Service for its performance, they support our
continued progress and the viability of our national mail system. Today, the
Postal Service requests an appropriation of $96,093,000 for Fiscal Year 2001.
This entire amount is to be applied to the expense of revenue forgone on free
and reduced postage rates for certain types of mail, as mandated by Congress.
Most of this amount -- $66,473,000 -- reimburses the Postal Service for the cost
of providing free mail for the blind and overseas voting. The Postal Service
also requests $29,000,000 towards reimbursement for past year shortfalls in
revenue forgone funding. This is the eighth payment in a series of 42 annual
payments authorized for this purpose in the Revenue Forgone Reform Act. Finally,
consistent with the law, the $620,000 remainder of our request is a
reconciliation adjustment to appropriations in previous years. Each year,
appropriations for free and reduced rates are based on estimated mail volumes.
When final audited mail volumes become available, these figures are reconciled
with the estimates. Our request for the coming fiscal year accordingly contains
$620,000 to cover an audited shortfall in funding in Fiscal Year 1998. We have
again declined to request the annual public service appropriation of $460
million, which is authorized by law. We have not received an appropriation of
this type since Fiscal Year 1982. By not using these funds, the Postal Service
and this Committee have saved the Federal Government about $9 billion. We view
this as one of the ways we deliver on the promise of the legislative contract
that made the Postal Service a self- supporting government establishment.
Another way, of course, is maintaining universal service to everyone,
everywhere, every day. We are extremely proud of our success in that regard. The
Postal Service is the only entity that binds our nation together with secure,
affordable communications accessible to all. By honoring our appropriations
request, you will help us continue that tradition in the coming years. Thank
you, Mr. Chairman. At this time we would be happy to respond to your questions.
LOAD-DATE: April 12, 2000, Wednesday
