Honest assessments needed to determine next steps for Postal Service

If Americans have noticed that their mail is being delivered later and more erratically in 2015 than in the past, it is not their imaginations — it is true.

On Aug. 13, 2015 the U.S. Postal Service (USPS) Office of Inspector General released a report highlighting a “Substantial Increase in Delayed Mail.” The number of letters arriving late had jumped by almost 50 percent (494 million pieces) since the start of the year.

{mosads}As a result, the Government Accountability Office (GAO) was asked by Congress to analyze the Postal Service’s effectiveness in providing prompt, affordable and reliable mail service in order to develop further understanding of the problems at hand. What the GAO found in its Sept. 30, 2015 report was that the USPS’s tracking system for measuring on-time delivery of mail was so erratic that it became impossible to complete any form of legitimate performance analysis. According the report, information on delivery performance has lacked transparency and was haphazardly cataloged, making it difficult for stakeholders to access. The GAO report also observed that the USPS’s oversight body, the Postal Regulatory Commission, has not taken significant action to force the USPS to properly measure and report this information.

The GAO determined that information for 45 percent of market-dominant mail products was incomplete and faced various limitations. This includes, and is not limited to, an absence of printed barcodes, which are among USPS’s most basic tracking mechanisms. Having a greater command of this performance data would be essential for effective management, oversight and accountability.

Concerns related to mismanagement and lack of transparency at the USPS is certainly not a new story. With the exception of one 18-month period, the $68 billion agency has been featured on the GAO’s annual “High Risk List” of federal programs worthy of scrutiny “due to their vulnerabilities to fraud, waste, abuse, and mismanagement” since 2001. In determining its ominous outlook for USPS, GAO has noted many times that the USPS has insufficient revenues to cover the expenses of its further expanding product base, is using a “broken business model” and that the agency faces an impending financial crisis.

The USPS has lost more than $50 billion in the last eight years, and its financial position continues to deteriorate. It has announced losses of $5.1 billion for fiscal year 2015, making it even more likely that it will reach nine consecutive years of multibillion dollar losses.

These consistent losses look worse still in the face of an analysis report by former top Clinton economic adviser Robert Shapiro that states that inherent subsidies and monopoly benefits provided to the USPS result in more than $18 billion in financial competitive advantages per year.

The USPS has increasingly evinced a desire to deviate from its core mission of mail delivery and explore new areas for growth under its current outmoded structure, all in order to chase revenue and fend off necessary structural reforms. However, many of these new exploits into well-functioning markets have not been subjected to reasonable cost-benefit analysis to justify diverging from the agency’s core mission.

Beyond the USPS’s plans to expand into grocery delivery, agency officials also attempted a same-day delivery service in San Francisco for a select group of commercial mailers, which failed miserably, bringing in only $1 of revenue for every $10 that was spent. The latest pie-in-the-sky idea from postal management is to offer banking at thousands of its facilities, despite its lack of expertise in this area.

Instead of pouring resources into ill-advised ventures, the USPS must redirect its focus back toward its core products. This means ensuring that data regarding delivery times are accurately measured and made available, and also verifying that the prices set for letter delivery reflect the actual costs.

As it currently stands, far too little is known about the USPS’s on-time delivery statistics. It is also unclear whether the money we are all paying for letter mail is actually going to support this primary service, and not inappropriately being used to prop up the agency’s new expansions.

The path to restoring the USPS to stable fiscal footing begins with an accurate assessment of the agency’s financial landscape, greater accountability, and transparency for all stakeholders. Such a commonsense approach would be an easy first step for Congress to take when it addresses postal reform in the future.

Paige is vice president of Citizens Against Government Waste.