On May 11, 2016 a hearing was held before the House Committee on Oversight and Government Reform regarding the state of the U.S. Postal Service. The Postmaster General, PRC Chairman Taub, Director Rectanus from the GAO, Mr. Rolando from the NALC, and Ms. Jessica Lowrance from Postcom all testified. As expected, the PMG continued to maintain that the financial situation of the USPS will remain in a dire state unless meaningful legislation can be passed.

Specifically, the PMG is asking the House to put forth legislation that would:

• Require full Medicare integration for parts A, B and D, for postal retiree health plans
• Restore the exigent price increase for market-dominant products
• Calculate all retirement benefit liabilities using postal-specific salary growth and demographic assumptions
• Provide some additional product flexibility

Representing the postage rate payers, Ms. Lowrance stated that industry is seeking:

• Non-disruptive, predictable, and affordably priced postage rates
• Complete, accurate, and transparent costing of postal products and services
• Consistent and reliable mail delivery service. If the USPS says it will take 3 days to deliver, then it should be 3 days; not 1 and not 5

While the discussion seemed a bit less tense than in prior testimonies before the House, it was clear that there is still a chasm between what the USPS wants and believes it needs and what the mailing industry is willing to tolerate or afford. Restoring the exigent price increase for example is an absolute non-starter for the postage rate payers from a negotiation aspect. Less than two weeks after the hearing, a strongly worded letter signed by over three dozen companies and associations (claiming to collectively represent 93% of all mail volume) was sent to Committee Chair Jason Chaffetz taking a firm stance against to any proposal to restore the exigent price and furthermore objected to any other statutory rate increase.

Chairman Chaffetz himself also seemed strongly opposed to some of the USPS requests in his closing statement. For example, he clearly did not support the idea of the USPS expanding their postal retail locations into coffee shops or banks. He did, however, believe there were ways in which the Federal Government might be able to leverage the vast network and daily interaction of the USPS with the public. He suggested there is potential to participate in services such as collecting census information or TSA pre-check registration. He cited the success in the USPS providing passport services and encouraged more of this type of expansion rather than encroachment of the USPS into industry provided services.

One particular item of note at the end of the testimony was the ten year review of PAEA, the law passed in 2006 that among other things established a CPI-based cap on price increases by mail class. This review is already underway by the PRC. However, Chairman Chaffetz shared his disappointment that the assessment is not further along. He hinted to potential legislation that may be introduced by the Committee sometime later this summer. PRC Chairman Taub stated that they likely won’t have their review done until much later this year; perhaps not until October 2016. This would once again leave consideration of any relief to the last minute for Congress, and this time in the midst of one of the most tumultuous Presidential elections in years past.

BCC Software will continue to closely monitor, and where it makes sense get involved, in these discussions. Based on the discussions at this hearing, the inactivity in the Senate to confirm any of the Board of Governor appointments, and the financial situation of the USPS it will certainly be an interesting 2016.

Stay tuned for a prediction for the second half of 2016 in our July eBulletin and thank you for your continued business!