|Curator's Corner — Government shutdown and USPS|
|Saturday, October 19, 2013 12:25 AM|
The Fall colors are in full bloom and the air is crisp. This is my favorite time of year. It is a great prelude to the holidays that are full of joy and peace. It also brings us to a time of year for giving. This year you can give yourself a present while giving the museum a boost and possibly purchase a unique gift for someone else. I am talking about the art auction that will be at the museum at 3 p.m. Nov. 3. Come enjoy wonderful complementary hors d’oeuvres and wine for just a $10 admission while looking at over 150 pieces of artistic expression that will be available for purchase.
This event will bring you numerous opportunities for enjoyment with door prizes, a 50/50 drawing and a raffle of a week’s vacation at a condominium in a resort area of your choice.
To guarantee your seat, please contact any member of the board of directors or simply mail your check for $10 per person to: MPH, PO Box 174, Delphos OH 45833. We know you will enjoy this event. A limited number of tickets will be available at the door.
As of this writing, the government shutdown is alive and well. Except for some key positions, everyone in government service is furloughed. So why is the US Postal Service operating the same as it has every other day? The simple answer is that the USPS does not operate as part of the federal budget.
At a time when there is talk of raising postage rates, now might be a good time for me to explain a little bit about the relationship between the USPS and the federal government.
The US Postal Service is part of the executive branch of the government. I am sure you remember the three branches of government; the other two being legislative and judicial. Congress does have oversight committees that regulate the USPS but the ultimate management is held by the Board of Governors who is appointed by the president. Yes, for the most part, money generated by taxes does not fund the USPS; stamps and fees are the primary source of funding.
Certain additional tasks assigned to the post office are supposed to be done on a reimbursement basis. For example, the international mailing of absentee ballots, free matter for the blind and reduce postage rates for non-profit organizations.
In 1971, with the Postal Reorganization Act signed by President Nixon, the USPS was to operate like a private business. Since then, Congress wanted the post office to reduce the mailing costs for non-profits but also mandated that no class of mail or product cost can subsidize the costs of another. When your company or organization mails bulk business mail (what you knew as third class mail), they pay a rate that covers the entire cost. But non-profits pay less. This is called revenue foregone and our government was required to pay the difference.
In the 1980s, revenue forgone reached $1 billion annually and Congress lagged behind in its payments. In 1993, there was a bill passed to allow the USPS to spread the costs to other ratepayers and to reimburse the USPS $29 million a year for the next 42 years to pay off the debt from non-payment. It did, however, continue the free matter for the blind and overseas absentee ballots reimbursement.
Now to the good stuff…. Where did all the billions go? USPS is required to prefund the health benefits of postal retirees. How much you say? In 2007 through 2010: 8.4, 5.8. 1.4*, 5.5 in billions (*Congress allowed a one year reduction of 4 billion). Can you imagine what the financial picture would be if this prefunding nightmare did not exist? Other federal agencies and most private sector companies use a “pay-as-you-go” system, by which they pay premiums as they are billed.
Another financial burden on the USPS has been funding the pension benefits of military retirees that subsequently earn a pension from the post office. This provision came into effect with the passage of a bill in 2003. My research has not revealed the current status of this provision but hopefully I can get a clearer understanding in the near future.
So are there any questions why the US Postal Service is in financial trouble? Now you see why the USPS continues to operate as a separate entity and how the current shutdown has had little effect on operations.