The Board of Governors of the United States Postal Service voted to prohibit the elimination of Saturday delivery slated to take effect on August 5. Postmaster General Patrick Donahoe had announced the move in February–minus approval from Congress or the Postal Regulatory Commission–in hopes of trimming some $2 billion from the ailing Postal Service’s operating budget.
Congress foreshadowed the action taken yesterday by the Postal Service when, in March, it rubber-stamped an extension of the Continuing Resolution that funds Postal Service operations. The C.R. contains language stating that funding is dependent on mail service continuing at 1984 levels.
“Although disappointed with this Congressional action, the Board…has directed the Postal Service to delay implementation of its new delivery schedule until legislation is passed that provides the Postal Service with the authority to implement a financially appropriate and responsible delivery schedule,” read a statement issued today by the Board of Governors.
The board’s action elicited little surprise from associations representing bulk mailers, though it ignited concerns about what are termed “exigent” price increases above the rate of inflation.
“The real news here is that the board has said to [Postal Service] management that they now have to consider all options to lower costs, exigency increases included,” says Hamilton Davison, president of the American Catalog Mailers Association. “There’s no reason that Congress can’t present the Postal Service with the flexibility to size its own infrastructure. Any business would do that in this situation, but the Postal Service is prevented from doing it. An exigent rate increase will put it on a downward death spiral.”
The Direct Marketing Association’s SVP of government affairs Jerry Cerasale echoed serious concerns about a rate increase, but noted that at least the Postal Board’s action settled scheduling issues for bulk mailers in the short run. “The DMA’s membership is split on Saturday delivery, but confusion over whether or not it would happen on August 5 was a negative for all,” Cerasale says. “Summer and fall mailing schedules needed to be resolved.”
Above and beyond compliance with the C.R., the board’s statement left no doubt that it fully supports Donahoe’s efforts to control costs by moving to a five-day schedule. It “is a necessary part of a larger five-year business plan to restore the Postal Service to long-term financial stability,” the board noted, adding that “according to numerous polls, this new delivery schedule is widely supported by the American public.”
Unlike DMA, most catalog mailers back the shortened schedule. “We were one of the early supporters of five-day delivery,” Davison says. “Our members say they’ll take one-day delivery if it translates into lower cost. That’s how much of an overarching concern cost is.”
Former Postal Regulatory Commission staffer Cerasale says that an exigent rate increase will take time, involving proposals and discussions among the PRC, Congress, postal unions, and other interested parties. “The next shoe that will drop is going to be from Congress in the form of bills and some hearings,” he predicts. “Also, I would expect postal management to speed up the consolidation and closure of processing facilities.”
The next regularly scheduled open meeting of the Postal Board of Governors is set for May 10.
As mailers ponder significant increases in mailing costs, the Postal Board’s announcement elicited jubilation from one congressional office. “I applaud today’s decision by the Board of Governors to direct the Postmaster General to cease his misguided efforts to blatantly disregard the will of Congress, and the rule of law itself,” read a statement released today by Virginia Rep. Gerry Connolly. “Whether one believes we must preserve our Nation’s universal service standard, or prefers that we drastically cut mail volume and revenue, we all should be able to agree that it is imperative that the Postal Service follow the law.”
The five Postal Service Governors are presidential appointees. The current board includes lawyer and former New Mexico legislator Micky Barnett, ex-Nevada Congressman James Bilbray, retired ITT CEO Louis Giuliano, lobbyist Ellen Williams, and Dennis Toner, who served as deputy chief of staff for Vice President Joseph Biden when he was a Senator.
