Converting some 29,000 workers from temporary to career status made them eligible for retirement benefits and required the USPS to make employer contributions toward those benefits. Image: photosince/Shutterstock.com
By: FEDweek StaffRevenues were above projections in the first two years of the Postal Service’s “Delivering for America” program, but costs were higher as well, including those related to employees, an inspector general audit has said.
The report comes as the USPS has put a general pause, under pressure from Congress and postal regulators, on a key element of that plan involving consolidating and moving work in its processing and delivery network.
“While actual revenue was higher than DFA plan projections, actual expenses exceeded expense projections and actual revenue in both years,” the report said. The plan had projected the USPS to be in the black in 2023, but instead it suffered a net loss of $950 million from operations in FY 2022 and a $6.5 billion net loss in FY 2023.
“The Postal Service stated the differences between actuals and projections were primarily attributed to higher than projected volume of mail, which led to higher expenses to process that volume, higher rates of inflation than projected, and slower than planned progress on DFA initiatives. We generally concur with these causes for the differences,” the auditors said.
They also noted that “conditions have evolved significantly” since the plan was put forward in 2021 and that “its projections no longer provide a reasonable basis for comparisons to future years’ results, and we could not link current progress on initiatives back to the DFA plan projections.”
For example, it said that mail volume did not decrease over 2022-2023 as much as had been projected, but that work hours did not decrease at a comparable rate, “signaling a reduction in workhour productivity.” A “labor productivity” measure the USPS uses, which had changed little over 2016-2021, fell from 62.3 to 59.3 and then to 53.8 in 2022 and 2023.
Meanwhile, higher inflation rates ranging from 3 to 9.1 percent during that period drove up the expected employment-related costs, due to contractual cost-of-living adjustments. Further, converting some 29,000 workers from temporary to career status made them eligible for retirement benefits and required the USPS to make employer contributions toward those benefits.
The report said that management agreed with a recommendation to update financial plan projections based on current conditions, and that it generally agreed with one to specifically track the results of initiatives under the Delivering for America program.
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