Hearing Wrap Up: Amidst Reforms, U.S. Postal Service is in a Better Position Than Two Years Ago

Press ReleasePublished: May 17, 2023

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Postmaster General DeJoy provides updates on the state of U.S. Postal Service reforms, including the Delivering for America Plan and Postal Service Reform Act of 2022

Key Takeaways:

U.S. Postal Service finances and performance have improved over the last two years under Postmaster General DeJoy's ten-year plan, the Delivering for America Plan (DFA).

• The Postal Service has suffered significant losses for the last fifteen years due to steep declines in mail volume. It has increasingly focused on package delivery to offset the decline in mail, yet it continues to lose money on an annual basis. The Postal Service has also suffered periods of poor service in recent years.
  • "Today we are in a substantially better position than we were just over two years ago. We have made great success pursuing the objectives of the DFA plan, and our whole organization is energetically and collaboratively deploying professional tactics that will continue to improve our operational precision, reduce our cost of performance, increase our service reliability, grow our revenue, and provide long-term enjoyable career paths for all our employees," said Postmaster General DeJoy during his opening testimony.

The Postal Service Reform Act of 2022 (PRSA) removed obstacles from the Postal Service as it attempts to regain its financial footing.

• Most notable legislative actions in the PSRA were the provisions requiring future Postal Service retirees to enroll in Medicare and the elimination of the requirement that the Postal Service pre-fund retiree health benefits.

There is still work to be done to return the Postal Service to a state of good financial health.

• During the hearing, Postmaster General DeJoy outlined solutions to further improve savings and efficiency, including modernizing the delivery network.

Member Highlights:

Subcommittee Chairman Pete Sessions (R-Texas) asked Postmaster General DeJoy what the Postal Service is doing to crack down on a surge of mail crime and theft surrounding cluster boxes.

"Cluster boxes were effective for mail and effective for time when crime was less," Postmaster General DeJoy said. "Any access to our system is in fact a target that we need to defend. We are looking at different types of double validation and keys."

DeJoy also noted, "Much of this has to do with the attention that the crime gets. When we do in fact catch people, mail crime is not foremost a federal crime, it's not one of the things prosecutors run to prosecute, and all of this plays into the whole situation that creates the increasing nature of these happenings."

Rep. Tim Burchett (R-Tenn.) noted that mail delays hurt families and small businesses, and asked about how the Delivering for America Plan commits to improving Postal Service performance.

Postmaster General DeJoy: "The Delivering for America Plan is having a tremendously positive impact on mail delivery. Today, 98 percent - as I said in my opening remarks - of the American population receive their mail and packages within three days."

DeJoy added, "We've been racing to staff and to clean up some operational habits that developed throughout the pandemic."

Rep. Gary Palmer (R-Ala.) asked for an estimate of when the Postal Service would break even with its budget.

Postmaster General DeJoy noted a few reasons the Postal Service hasn't yet balanced its budget, including inflation. "We are trying to reconcile that right now. There are three basic reasons we did not make our targets. Number one, CSRS administrative action was in our plan - that is three billion dollars in our current P&L this year. Number two, inflation was way above what we predicted inflation to be in that plan. Although we've been raising prices, it's always in our ears. That's the tune of 2 billion dollars. And in the middle of the process of doing this, we needed to focus first on keeping service up and getting into a position where we could start making tactical moves."

Postmaster General DeJoy added, "We're behind, we're not happy with it, but there were significant events we needed to deal with."

Chairman Comer (R-Ky.) examined the implementation of the Postal Reform Act of 2022. Chairman Comer also asked Postmaster General DeJoy to detail how network modernization would improve saving and performance.

Postmaster General DeJoy responded that network modernization consolidates locations to improve efficiency and save money. "Right now, when we look at national distribution, we move mail and packages to 420 different locations that have been haphazardly put together over the last fifteen years. That disaggregates mail, it creates 55,000 trucks a day that run across the country and at thirty percent full, and we were flying a lot of air. We are collapsing this and aggregating this into sixty locations, converting those other locations."

"At the end of the day, we have a 10.6-billion-dollar transportation budget. I plan to get three of four billion dollars out of that." DeJoy added.

Rep. Jake LaTurner (R-Kan.) inquired about the result of a requirement under the Postal Service Reform Act for the Postal Regulatory Commission to conduct a study of the causes of inefficiencies within the Postal Service.

Postmaster General DeJoy responded: "My engineering staff is studying the recommendations. We most likely will not agree with what it is that their study identifies. There seem to be some blatant misses in terms of what their assumptions are, but we'll go through that, we're going to get a response."

Rep. LaTurner also asked if there were any cost reduction tactics that DeJoy is constrained from implementing.

Postmaster General DeJoy said that he has been constrained by the Postal Regulatory Commission. "There's a lot of things I'm constrained from doing," he said.

CLICK HERE to watch the hearing.

READ MORE: Sessions: There are Signs of Progress in Postmaster General's Plan to Improve Postal Service, More Work to Be Done