USPS Joins 'High Risk' List

[POSTMAN]

http://voices.washingtonpost.com/federa ... id=topnews" onclick="window.open(this.href);return false;

The U.S. Postal Service urgently needs restructuring to meet rapidly declining mail volume and must immediately cut costs, according to a new report by the Government Accountability Office. The Congressional auditing agency today added the nation's mail delivery service to its list of "high risk" federal government agencies and programs that either need a massive overhaul or cost taxpayers billions of dollars in waste, fraud, abuse or mismanagement.

“There are serious and significant structural financial challenges currently facing the Postal Service," acting GAO director Gene L. Dodaro said in a statement.

The mail service has suffered as customers continue to choose e-mail and online bill payment programs over snail mail and as the recession has cut overall business spending. The Postal Service also faces significant infrastructural and personnel costs, including hefty payments to a retiree benefits program, Dodaro noted.

Mail volume is expected to fall by 28 billion pieces this fiscal year, to a total of 175 billion pieces, down from 203 billion pieces in fiscal year 2008, according to GAO. USPS projects a net loss of $7 billion this fiscal year and debts to climb above $10 billion, leading to a cash shortfall of approximately $1 billion. Losses are expected to continue in 2010.

The GAO's classification "accurately reflects our current financial reality," USPS spokeswoman Yvonne Yoerger said in an e-mail. "Securing the fiscal stability of the Postal Service will require continued review of retiree health benefit pre-funding, as well as gaining flexibility within the law to move toward five-day delivery, to adjust our network as needed, to develop new products the market requires and to work with our unions, mailers, stakeholders and Congress to meet the challenges ahead."

Those possible cutbacks and GAO's new classification for USPS will be the focus of a House hearing on Thursday. Postal officials want to trim mail delivery to five days a week and close several of its 38,000 postal processing facilities and post offices nationwide. As part of the cutbacks, USPS has already removed at least 200,000 "underperforming" blue mailboxes from city streets, rural routes and suburban neighborhoods in the last two decades.

GAO endorsed the proposed cutbacks today, stating that USPS must consolidate operations, close unneeded facilities and consider layoffs. The Postal Service will be removed from the list only once it addresses its structural challenges, according to GAO.

The "high risk" list is a biennial accounting of agencies and programs costing taxpayers billions of dollars annually due to waste, fraud, abuse and mismanagement. In most cases, GAO recommends the executive branch take corrective action or that Congress pass legislation to fix the problems.

The 2009 list released in January already includes 30 agencies or programs of concern, including the FDA's oversight of medical products, the nation's outdated financial regulatory system, the 2010 Census and the Defense Department's procurement process.

Today's decision marks a return for the Postal Service to the high-risk list. GAO removed USPS from the list earlier this decade after auditors concluded it had addressed financial and personnel issues.