Column: Post Office cost-cutting should include a look at funding requirement

Pity the poor U.S. Postal Service, still hemorrhaging money after years of drastic “efficiencies.”

Despite $15 billion in cuts, including 168,000 jobs slashed, over the past six fiscal years, the U.S. mail still is operating in the red to the tune of a stunning $25 million a day. Times are so stressful they've got Postmaster General Patrick Donahoe turning to drink. Or its delivery, anyway.

Last week he told the Associated Press he'd like lawmakers to give his carriers the go-ahead to deliver beer, wine and spirits - a move he estimates could boost revenues by as much as $50 million a year. It's just about the only proposal I've heard of that hasn't caused howls of protest, but it wouldn't be nearly enough on its own to save the struggling post.

Right now, a bill is making its way through Congress that would limit Saturday delivery to packages and phase out door-to-door delivery entirely in the next decade, transitioning instead to the curbside mailboxes and cluster boxes already common in newer neighborhoods. Closer to home, the Postal Service has announced plans to relocate and downsize Post Offices in Coralville and Iowa City. Public meetings to discuss the proposals are scheduled in both cities next Wednesday. They're sure to be heated.

The fact is, bringing the Postal Service into the black will take lots more than efficiency, or even new deliveries. (Even though first-class mail volume has dropped 60 percent over the past decade, the delivery of packages already has been on the upswing.) For years, we've been hearing it will require overhauling our expectations of the mail. After all, all the easy cuts already have been made, haven't they? Maybe not. A closer look at the numbers reveals a surprising contributor to the shortfall: A relatively new requirement, unique to the Postal Service, to pre-fund most retiree health benefits, and to do so in short order.

According to the Associated Press, $11.1 billion of the Postal Service's $16 billion lost last year was due to this advance payment requirement, passed by Congress in 2006. According to the National Association of Letter Carriers, pre-funding is responsible for 78 percent of the $42.5 billion in losses the Postal Service has recorded since it took effect. The USPS estimates reverting to a traditional “pay-as-you-go” structure would free up about $5.65 billion in cash flow every year. Yup, every year. Puts the proposal to allow booze delivery into perspective.

I'm all for efficiency, but that goes for efficiency in budget matters, too. Before cutting any more services, Congress should take a hard look at whether keeping that pre-funding mandate is worth the price we'll all have to pay.

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