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Burrus Testifies on Capitol Hill:
To Survive, USPS Must Change Strategy

APWU Web News Article #060-09, May 20, 2009

In testimony before a House panel May 20, APWU President William Burrus told lawmakers that if the Postal Service is to survive, it must re-examine its overall strategy.
[full testimony - PDF]

APWU President William Burrus testified on Capitol Hill, May 20, 2009

He emphasized that there is an urgent need to pass H.R. 22, which would allow the USPS to pay its share of contributions for annuitants’ health benefits out of a retirees fund rather than from its operating budget. “But adjusting the payment method of retiree healthcare benefits is just one option the Postal Service is pursuing, and it is only a short-term fix to stave off imminent collapse; it will not address the long-term challenges,” he said.

The union president also condemned many of the USPS’ cost-cutting efforts. “Actions such as plant consolidations, employee reassignments in large numbers, [and] reduced retail hours are having a detrimental effect on service, and in many cases generate little or no savings,” he said during a hearing held by the House Subcommittee on Federal Workforce, Postal Service and the District of Columbia.

The cost-cutting initiatives are undermined by the Postal Service’s flawed rate strategy, Burrus testified, which slashes revenue from major mailers without reducing USPS expenses.

Underscoring the severity of the USPS’ financial crisis, several lawmakers at the hearing, including subcommittee Chairman Stephen Lynch (D-MA), indicated that Congress may have to consider allowing the Postal Service to reduce the number of delivery days from six per week to five.

Burrus rejected the suggestion, calling it “an act of desperation” that would “hasten the demise of the Postal Service.” Private companies would step in to provide service on the sixth day, he said, accelerating the diversion of mail from the Postal Service.

Congress is unlikely to approve such a proposal, Burrus said, but because it is so dramatic, entertaining it “sucks all the oxygen out of the discussion.”

Strenuous Opposition

Speaking specifically about the postal network, Burrus noted that “since the release of its original Transformation Plan in April 2002, the Postal Service has ignored demands by legislators and workers for details about where, when, and how consolidation would take place.”

Many of the consolidation announcements “generated strenuous opposition from workers and affected communities,” he testified, noting that “in 2006 and 2007, 37 of the 50 consolidations were terminated, placed on hold, or reversed.”

The Postal Service also “was the subject of severe criticism by the Government Accountability Office (GAO) for the lack of transparency in its planning efforts, and for failing to allow for sufficient input from workers, citizens, and public officials,” Burrus said.

A GAO report [PDF] concluded that “Inconsistency in data calculations also impacts the ability of USPS to accurately determine the expected cost savings,” and noted that "the USPS Inspector General found discrepancies in the projected cost savings… resulting in savings that may have been significantly overstated,” Burrus pointed out.

Concerns Persist

“Despite USPS assurances to the contrary, citizens, community leaders, small-business owners, and postal workers are concerned that a ‘realigned’ mail processing network will reduce service and delay delivery of the mail,” the union president said.

“The danger is clear: If service to small businesses and individual citizens is permitted to decline, it could lead to the demise of the institution. Regrettably, the Postal Service has consistently failed to share an overview of its network realignment plans.”

A basic flaw in the Postal Service network realignment strategy is that it considers only the facilities under its direct control, Burrus said, and ignores the broader mail-processing and delivery universe that includes private facilities. In doing so, the Postal Service ignores savings that could be achieved by reducing outsourcing and worksharing-discount.

The Postal Service asserts that it is attempting to cut costs, Burrus observed. “Despite the shortcomings I have outlined, I want to emphasize that the APWU does not oppose cost reductions or improved efficiency,” he said. The record shows, for example, that the union has supported the USPS automation program, he noted, “even though it had a profound effect on the number of APWU jobs — because we believed it was necessary for the long-term survival of the Postal Service.”

Rate Strategy Subverts Efforts

The APWU president told lawmakers that the USPS cost-cutting efforts are “subverted by its postage rate strategy, which dramatically reduces revenue from major mailers without a corresponding reduction in service.”

“The USPS business model is based on the erroneous premise that discounts for large mailers increase volume. However, a review of the effects of three decades of rate manipulation reveals that discounts have failed to boost first-class volume.”

During the Capitol Hill hearing, Burrus presented data that demonstrate that “despite disproportionate increases in postage discounts, volume has been unaffected.”

“The misguided rate strategy has undermined the principle of universal service at uniform rates,” Burrus testified, “and tests the limits of the law. Under the guise of transferring postal work to the large mailers and rewarding them with discounts derived from ‘costs avoided,’ the uniform-rate standard has been eroded.”

The only mailers who pay the “published” first-class rates are individual citizens and small businesses, Burrus said. “Passing H.R. 22 will provide the Postal Service immediate relief; but the long-term solution to the crisis is to end the policy of subsidizing large mailers at the expense of American citizens and the USPS.”

Other witnesses at the hearing included John Hegarty, president of the National Postal Mail Handlers Union; Dale Goff, president of the National Association of Postmasters of the United States; William P. Galligan, USPS Senior Vice President for Operations; John Waller, director of the Office of Compliance and Accountability of the Postal Regulatory Commission, and representatives of the mailing industry.

[more H.R. 22 news]

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