Wednesday, September 17, 2014
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State Steward March/April Article

Saving Rural Delivery

With proposed USPS office closures loom-ing, U.S. SEN. Sherrod Brown (D-OH) met on March 8th with PMG Donahoe to push the USPS to minimize the closure of processing centers and post offices in Ohio, preserve rural post offices and maintain six day mail delivery.
Brown is a co-sponsor of the Postal Service Protection Act, which preserves Saturday mail delivery, restricts the closure of rural and urban post offices, and protects mail processing facili-ties to ensure maintenance of timely service. The legislation would address the most immediate financial problem facing the postal service by eliminating the unique requirement that the postal ser-vice prefund 75 years worth of future retiree health benefits in just 10 years. This mandate costs the USPS between $5.4 and $5.8 billion per year, accounting for all of the USPS $20 billion in losses from 2007 to 2010.
Recently, the USPS announced its Network Rationaliza-tion Plan. The plan would close 250 mail processing & distribution centers of which nine are in Ohio, including Akron, Athens, Can-ton, Chillicothe, Dayton, Steubenville, Toledo and Youngstown. The announcement created uproar among local business leaders and lawmakers, prompting Brown to demand the USPS release the Area Mail Processing (AMP) study it used to make its decision. So far, the USPS has been unwilling to release the reports and Ohio lawmakers are not alone when it comes to stone walling by the USPS on this issue.
Sen. Susan Collins (R-ME), Steve King (R-IA), Carl Levin (D-MI) and Congresswomen Grace Napolitano (D-CA) among others have requested AMP studies for their States and have only received redacted (blacked out) versions that are incon-clusive. Iowa lawmakers filed a Freedom of Information Act re-quest to get the information and the USPS said it would provide the report, but it would cost $831,143.16. Yep, you read that right, over $800K to get a copy of the report.
When the USPS announced the Network Rationalization plan to consolidate 250 area mail processing plants and eliminate 34,000 jobs back in September, they said it would save $3 billion a year. When the USPS presented its case to the Postal Regulatory Commission in December, they said it would save $2.1 billion. But the numbers on cost savings and affected positions that postal managers presented at public meetings for each facility don’t add up to anything like that. The estimates provided at those meetings appear to have downplayed how many jobs would be lost, and they also raised questions. Will the Network Rationalization plan really save as much as the USPS says?
How the USPS arrived at its cost saving estimate is very difficult for non-experts to understand since it involves very com-plex calculations and a thorough knowledge of the nuances of the mail stream. But the basic principal is not hard to grasp. Eliminat-ing 34,000 positions would save about $2 billion a year (figured at $60,000 per position for salary and benefits). Another half billion would be saved in non-labor costs, but there would also be a half billion dollar loss in revenue due to the reduction in service stan-dards. That leaves us with about $2.1 billion in total savings.
The Network Rationalization plan is filled with page after page of details about how the cost savings would be achieved, but there is no plant-by-plant breakdown. Ohio lawmakers would like that breakdown because when you look at the numbers for cost savings on each plant, they just don’t add up to the USPS estimate of total cost savings. Some watch dog groups have identified major discrepancies that total over a half billion dollars per year, nearly half of what the USPS says it will save.
In each of the Ohio communities where public hearings were held, the USPS gave a power point presentation that included some financial estimate, but they were very sketchy. In some cases, the presentation simply provided the total amount that would be saved and the number of positions that would be elimi-nated, with no other details. In other cases, the presentation broke down the cost savings into four main categories including work hours, management, maintenance, and transportation costs.
The National Postal Mail Handlers Union (NPMHU) on March 3rd published the AMP studies for 134 of the 250 proposed closures under the Network Rationalization plan. Though heavily redacted, these reports contained a lot of numbers on cost savings and eliminated positions, along with a narrative explaining the savings and staffing changes.
If you add up the numbers for these 134 facilities and then estimate what the total cost savings for all 223 facilities slated for consolidation would be, you end up with a total savings of $874 million. If you subtract the $500 million in lost revenue the USPS anticipates the reduced service standard will cause, your left with $374 million in savings for the entire Network Rationaliza-tion plan. That’s less than 20% of what the USPS says the plan will save.
The reality of the plan will see 200 communities suffering a big economic hurt when the plants close with tens of thousands of workers displaced and 34,000 positions eliminated. First-class mail standards will have to be lowered, inflicting immeasurable harm on the postal service brand and reputation.
Sen. Brown has sent multiple letters to PMG Donahoe outlining concerns with the closures, which could lead to signifi-cant job losses, delayed mail, and deteriorated service. His co-sponsor of the Postal Service Protection Act would fix the immedi-ate fiscal problem of the USPS by allowing the Postal Service to recover the overpayments it made to its retirement programs. Ad-ditionally, the bill would allow the Postal Service to recover the overpayments that it made to its pension plans. The bill goes on to end the prohibition on USPS providing non-postal related services, protect six-day delivery, and prevent the closure of rural post of-fices. If you see Sen. Brown, please thank him for his support of rural carriers.

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