United States Postal Service Letter Carrier Lakesha Dortch-Hardy delivers mail in Chicago in this file photo taken November 29, 2012. The U.S. Postal Service is planning to drop Saturday delivery of first-class mail, a congressional source said on Wednesday. The cash-strapped mail agency will still deliver packages, said the source, who is familiar with the matter but not authorized to speak on the record.
WASHINGTON — The U.S. Postal Service plans to drop Saturday delivery of first-class mail beginning the first week of August, a move that the financially struggling agency said will save $2 billion annually.
The Postal Service is cutting costs aggressively as it grows increasingly frustrated that Congress is dragging its feet in authorizing a structural overhaul that could stabilize the agency.
USPS Probed for travel expense abuse
The U.S. Postal Service's watchdog is investigating the agency for runaway travel expenses, a lingering problem for the cash-strapped mail carrier even as it tries aggressively to cut costs.
A report from the Postal Service's Office of Inspector General, released in September, found that the agency, which lost almost $16 billion in last year, had overpaid more than $1 million in travel reimbursements to employees during an 18-month period.
The report said the employees improperly claimed refunds or used government-issued travel cards for personal expenses such as hotel stays and purchasing gasoline, among other issues.
The Postal Service agreed to the watchdog's recommendations, including better systems to monitor travel card activity and better written expense policies, but the Office of Inspector General is still probing the issue.
Office of Inspector General spokeswoman Agapi Doulaveris said in an interview that she could not provide details on whether the money had been recovered or any punitive or corrective measures had been taken because the investigations are still active.
In September, David Kosturko, a former Postal Service executive, was convicted of defrauding the agency of more than $17,000. According to a February 2011 report from the Office of Inspector General, the Postal Service overpaid more than $600,000 in travel costs as result of improper claims by employees. In a 2009 report, the office said, employees continued to make "imprudent and unnecessary purchases during a time of severe economic uncertainty in the Postal Service."
The September report found that several employees booked two tickets from the same destination, canceled the more expensive one and took the cheaper flight, but claimed refunds for the higher priced flights. Employees also canceled trips but still collected refunds.
It also found that employees abused government-issued travel cards with excessive cash advances and used the cards for personal expenses, such as a hotel stay in Las Vegas.
Postal Service spokesman David Partenheimer said he could not comment beyond the written response included in the September report, in which the mail agency said it concurred with some of the recommendations and planned to implement them between November 2012 and January 2014.
While the amount of money involved may pale in comparison to other government travel scandals, such as the General Services Administration's opulent Las Vegas convention in 2010, the Postal Service is unique for its financial woes.
The 238-year-old institution has been buckling under the pressure of massive payments for future retiree benefits and dwindling revenue as more people communicate by email.
Lat year the agency ran into its legal borrowing limit and defaulted twice on required payments to the federal government.
It is aggressively trying to cut costs, but is banking on Congress passing legislation to overhaul its operations and put it on sounder financial footing.
So far, Congress, preoccupied by other priorities including budget fights, has not been able to agree on measures such as ending Saturday mail delivery and closing rural post offices across the nation.
Representative Darrell Issa of California, the Republican chairman of the House Oversight Committee and a leading voice on Postal Service reform, said the agency needs to do more to get its travel expense waste under control.
"USPS must take every action within its power to rein in fraud and mismanagement within its travel system in order to cut costs," Issa said in a statement to Reuters.
The agency, which lost $16 billion last year, has blamed much of its recent troubles on a 2006 law that requires it to make massive payments into its future retirees' health care fund, as well as on reduced mail volumes as Americans increasingly turn to email and online communications rather than dropping a stamped letter in a postal box.
Some experts have previously estimated that the Postal Service could run out of cash by October.
However, ending Saturday mail delivery will not significantly stop the financial bleeding, and some critics said the move could backfire if customers become irritated by an erosion in service.
According to the plan, the mail agency will still deliver packages and prescription drugs six days a week and will not change post office operating hours. But it will not deliver direct mail or magazines.
The announcement comes just weeks after the USPS board of governors directed the agency to accelerate cost-cutting measures rather than wait "indefinitely" for legislation.
"The Postal Service is advancing an important new approach to delivery that reflects the strong growth of our package business and responds to the financial realities resulting from America's changing mailing habits," Postmaster General Patrick Donahoe said in a statement.
The 237-year-old institution ran up against its legal borrowing limit last year and defaulted twice on required payments to the federal government.
Postal officials have said for years that the agency needed to cut back on delivery days, as well as close underused facilities and reduce its work force.
Lawmakers spent more than a year on postal legislation, including proposals to eliminate Saturday delivery, but were unable to agree on a bill.
"The choice is either changes to some of the services or raise prices, and people don't want prices raised," Donahoe said at a press conference.
Response to the plan has been mostly critical, as a number of high-ranking officials have denounced the move. U.S. House District 2 Rep. Sanford Bishop, D-Albany, said Wednesday the House needs to develop a reform bill that will allow the Postal Service to get its finances in order.
"While I understand the financial challenges currently facing the United States Postal Service and its need to reduce costs, many people rely on timely mail delivery in Southwest and Middle Georgia," Bishop said. "The House of Representatives needs to pass a postal reform bill, much like the Senate did last Congress, so that the Postal Service can get their fiscal house in order and provide the mail service that all Americans require."
The United States Postal Service may be acting outside of its legal authority if it suspends Saturday delivery as previous language in appropriations bills requires six-day mail. It is vital that the USPS work with Congress to develop a plan that allows it to become more fiscally efficient while keeping the services that Americans rely upon," he said.
USPS officials previously contended they needed permission from Congress to make the changes but now believe they may be able to take some actions without new legislation.
GREETING CARD FIRMS OBJECT
No law requires that the Postal Service deliver mail six days a week, but Congress has included a provision in legislation to fund the federal government each year that has prevented the USPS from reducing delivery service. The current funding measure expires in March and would free the Postal Service to change its delivery schedule unless Congress prohibits it in the next spending resolution.
The Postal Service is already facing some resistance to making delivery schedule changes without permission from Congress.
"Today's announcement by Postmaster General Donahoe to eliminate six-day delivery is yet another death knell for the quality service provided by the U.S. Postal Service," said Jeanette Dwyer, president of the National Rural Letter Carriers' Association.
Elijah Cummings of Maryland, the top Democrat on the House of Representatives' Oversight Committee, said delivery frequency should be determined by legislation "rather than through arbitrary action by the Postal Service."
But Representative Darrell Issa of California and Senator Tom Coburn of Oklahoma, both Republicans, called the change a common-sense move and noted President Barack Obama has supported allowing the Postal Service to move to five-day delivery.
Trade organizations that have a stake in Saturday mail deliveries such as the Greeting Card Association and National Association of Letter Carriers also expressed their disappointment.
George White, president of the Greeting Card Association, said the organization is concerned that this will drive down the number of greeting cards sent. More than 60 percent of greeting cards are delivered through the Postal Service, he said.
"Eliminating Saturday service is short-sighted and self-defeating. There are much better alternatives that will lead to a stronger Postal Service, without significantly and negatively impacting the citizen mailer," White said.
NALC president Fredric Rolando, said the plan was disastrous and would harm small businesses, rural communities, the elderly and the disabled. "We call for the immediate removal of the postmaster general, who has lost the confidence of the men and women who deliver for America every day," Rolando said via email.
Donahoe said the changes would allow the Postal Service to continue benefiting from the growing package delivery business as Americans order more products from websites such as eBay and Amazon.com.
Package deliveries were a bright spot in a bleak 2012 fiscal year, with package revenue rising 8.7 percent during the year.