USPS targets major cost savings in 2008

USPS The US Postal Service (USPS) is aiming for major cost savings of over $1 billion in an “aggressive” financial plan for fiscal 2008 designed to hold down its losses. But it has not yet decided on any rates increases for the year starting on October 1. "BvDP"

The 2008 Integrated Financial Plan (IFP) projects revenue of $78.2 billion and expenses of $78.8 billion in fiscal 2008 (-2%), resulting in a net loss of $600 million, USPS announced. For fiscal 2007, the Postal Service projects revenues of $75.0 billion and expenses of $80.4 billion, resulting in a projected net loss of $5.4 billion.

The 2008 plan assumes no rate changes over the next fiscal year and an increase in spending below the rate of inflation. The US Postal Regulatory Commission is currently reviewing USPS rates and product classification.

But financial planning for the forthcoming year remains significantly affected by Postal Act of 2006 which requires USPS to set aside large sums for pensions and other benefits, the US postal organisation pointed out.

“Absent the negative financial impacts from the Postal Act of 2006, the Postal Service projects operating income of $1.5 billion this year and $400 million next year,” said H. Glen Walker, Chief Financial Officer.

The projected 2007 net loss includes operating income of $1.5 billion and a $6.9 billion negative financial impact from the Postal Act of 2006. This negative impact includes a $3.0 billion one-time escrow expense, which was required under the previous law, an additional $5.4 billion payment into the Retiree Health Benefit Fund for 2007, and $1.5 billion in savings from the Civil Service Retirement System (CSRS) relief.

The 2008 plan predicts a record ninth consecutive year of Total Factor Productivity growth, which measures the relationship between workload and resource usage. TFP is planned to grow by 1.0 percent in 2008, USPS said.

© 2020 BvDP. Terms of Service All Rights Reserved.