Copyright 2000 The Washington Post
The Washington
Post
November 15, 2000, Wednesday, Final Edition
SECTION: A SECTION; Pg. A37; THE FEDERAL PAGE
LENGTH: 756 words
HEADLINE:
Postal Service Expects Loss, Job Cuts; Lower Rate Boosts Proposed by Panel May
Worsen USPS Finances, Official Says
BYLINE: Ben White ,
Washington Post Staff Writer
BODY:
The U.S.
Postal Service expects to lose $ 480 million and to cut as many as 13,200 jobs
in fiscal 2001, according to figures it released yesterday.
Postal
officials suggested that the losses could be even greater because the $ 480
million figure does not reflect the rate increases recommended on Monday by the
independent Postal Rate Commission that were significantly lower than the
increases USPS requested.
The Postal Service had asked for a 6 percent
across-the-board increase in rates while the commission approved only a 4.6
percent rise, including a penny boost in the cost of a first-class stamp, to 34
cents. The rate commission reduced the rate increases sought by the Postal
Service for periodicals and other forms of mail.
Einar Dyhrkopp,
chairman of the USPS Board of Governors, said the Postal Service's financial
condition is expected to worsen in coming years despite cost-cutting and
improvements in productivity.
Postal Rate Commission Chairman Edward
Gleiman, however, disputed the Postal Service's gloomy financial forecast,
saying the lower rate increases will actually help the agency's bottom line by
increasing volume.
"Our guess is that they would do slightly better with
the smaller increases that we recommended," he said. "They ought to be able to
break even during the current fiscal year. And unless they incur more than $ 500
million in unforeseen expenses, they could even be sitting on a little bit of a
cushion."
The financial report predicting the loss of $ 480 million and
the need to cut 13,200 "workyears" was released by Richard Strasser, USPS chief
financial officer, at a meeting of the Board of Governors yesterday. The board
will meet again next month, when it is expected to approve the increases
proposed by the rate commission.
The 13,200 "workyear" cuts, which would
be in addition to 6,200 such cuts made in fiscal 2000, could come from
eliminating full-time and part-time jobs as well as reducing overtime.
After several years of posting profits, the Postal Service is expected
to report a loss for the recently ended fiscal year, possibly between $ 300
million and $ 400 million.
The Postal Service receives no taxpayer funds
to cover its operations and is expected to break even every year.
Revenue has steadily declined, however, due to increased competition
from private carriers as well as the growing popularity of e-mail, online
banking and online bill payment--Internet-age services that cut directly into
the agency's largest traditional revenue sources.
Postal officials, as
well as many on Capitol Hill, argue that the laws governing postal operations
are badly out of date, making it impossible for the agency to compete in a
rapidly changing economy.
A Postal Service spokesman said yesterday that
the mounting losses also stem from other factors, including increased fuel
costs.
Without legislation giving the Postal Service more flexibility to
change rates to reflect increased costs, the spokesman said, the agency will
have a hard time stemming operating losses in the future.
Rep. John M.
McHugh (R-N.Y.), chairman of the House subcommittee on the
Postal Service and a major proponent of reform
legislation, said he was surprised not by the expectation of a revenue shortfall
but by the fact that it was not higher.
"It's simply a circumstance of
what we have been watching for the last four years continuing: the inability of
the Postal Service to compete more effectively because of 30-year-old rules and
regulations," he said.
Reform legislation, endorsed once again by the
Board of Governors yesterday, has languished in Congress for years, blocked
largely by opposition from the United Parcel Service and others.
The
ultimate future of the legislation is in doubt partly because McHugh is
term-limited as chairman of the subcommittee and it is not clear who will
succeed him.
There is also concern among observers of the Postal Service
about Gleiman's plans to retire as chairman of the rate commission early next
year. Even those who oppose his decisions respect his fiscal skills and
knowledge of postal operations. Appointments to the commission are made by the
president and confirmed by the Senate.
"I don't think you need to have a
person that necessarily knows a great deal about the Postal Service," Gleiman
said of selecting a new chairman. "You have to have someone who is smart, who is
willing to work hard and who is analytically or quantitatively inclined and
doesn't come in with a fixed agenda."
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