USPS May Not Have Cash to Meet Payroll in October

In a series of tweets, Scott MacFarlane has reported  that a presentation by Jim O’Brien, VP Distribution and Postal Affairs of Time Inc indicated that the USPS may run out of cash next October.   The presentation was made at a recent “Industry Focus Group.

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A Postal Service spokesperson confirmed to Mr. MacFarlane that the Federal Government will be responsible for payroll as of that date if the Postal Service runs out of cash and the Postal Service is expected to continue to provide service.

Before Postal Service stakeholders get their feathers ruffled, they should note that the Postal Service did not confirm Mr. O’Brien’s assertion.   While the Postal Service may face the inability to make payroll sometime in the future, there is no publicly available information that would identify a specific month or day when that will occur.  The following tweet illustrates why there is significant confusion about what the Postal Service liquidity problem really is.

The tweet mentions liquidity and accounting losses  in the the same tweet which makes it seem that the Postal Service is bleeding $25 million in cash every day.   However, the $25 million in daily losses include non-cash expenses (depreciation) and accrual of obligations for retiree benefits that the Federal Government has deferred for last few years.   So the Postal Service’s spokesperson effectively obfuscates the Postal Service’s financial position instead of clarifying it.  So there is no way to reasonably evaluate Mr. O’Brien’s assertion.

However, what makes a zero cash position this fall plausible this year is that the Postal Service’s cash position in September and October 2012 was boosted by revenue generated from campaign related mail that will not be in the mailstream this fall.

While the Postal Service may face the inability to make payroll sometime in the future, there is no publicly available information that would identify a specific month or day when that will occur.  However, what makes a zero cash position this fall plausible this year is that the Postal Service will not generate revenue from campaign related mail this year that gave it a significant cash boost in September and October of 2012.

Until independently developed information about the Postal Service’s liquidity is presented, Mr. O’Brien’s assertion is only a reminder of three key facts relating to postal reform.

  1. Postal policy remains a relatively low priority item on the legislative agenda of both the House and Senate.   Postal policy has significantly less political visibility than other issues that consume legislative time including gun control, immigration, the budget, transportation policy, farm policy and various appropriations bills.  These bills are likely to tie up both houses of Congress until September.
  2. The postal reform effort in the 113th Congress is basically starting from scratch.   Changes in the Postal Service’s financial and market position and the composition of Congress requires different approaches than what was presented before.  What makes this process particularly daunting is that a majority of Congress does not accept the direction that Postal Service management has set as the Postal Service’s turn-around strategy.
  3. Only the imminent shutdown of the Postal Service would raise the visibility of postal policy to the point that the leadership in both Houses would bring a reform proposal to the floor of  either House.  It is unclear whether a crisis would result in Congress passing a bill that supports the Postal Service management’s strategy to turn-around the Postal Service or whether it will result in Congress supporting a different strategy altogether.
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18 Responses to “USPS May Not Have Cash to Meet Payroll in October”

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  1. considering donahoe or one of his top cronies ‘predicted’ each year, for about the last three years that the usps might run out of cash, another prediction means nothing. the clueless donahoe missed his best chance to get resolution when the usps missed the first of the ridiculous ‘pre-fund 75 years into the future’ payments. at that point donahoe should have ordered all postal operations to cease one week from that date. the fact is, the united states economy could not stand a hit that big and the do-nothing
    losers in congress would have had a postal fix within one week!

  2. Henry says:

    October? still have 6 months, not to worry

  3. Hanging Tough says:

    Time to offer an early out to the Mail Carriers. If they offer a VER without a cash incentive Thousands would take it, but many would not without a cash incentive. This would trim the work force without overwhelming the retirement system. It would also allow the USPS to trim the payroll without losing too many employees at once. If they need to trim more in the future, they could THEN offer a cash incentive. 25 million a day? They’ve got to do SOMETHING.

  4. Nancy says:

    Has the upper management at USPS considered taking a cut in their pay?
    Are bonus’s still going out? If so maybe they should be elimanted completely.

  5. Tom says:

    TOTALLY PRIVATIZATION AND THE PROBLEM SOLVED, DON’T WASTE TAX PAYERS’ MONEY.WE ARE IN DEEP DEBT.

    • grannybunny says:

      Privatization is a non-starter. There’s no private entity capable of doing the job, much less interested in doing it.

  6. Terry Pasko says:

    Well look at all the carriers that come back two to three hours early everyday. Sit home and get paid! No wonder they don’t want to retire. Free money to sit home.

  7. Marilynn Reeves says:

    We need a WOMAN PMG that can really manage money and a few good women under her. The men we have now are just not SMART enough to handle the job.

  8. Marilynn Reeves says:

    PO needs to get rid of the union so they can fire those who do not wish to do there jobs. Make all jobs career job rather than part time so the employee will have something to loose if they do not do a good jobs. Hire Supervisiors that think of themselves as workers and not gods.

  9. Working Postmaster says:

    Nancy,

    I believe you are calling our Pay for Performance raises, BONUSES? You, are misinformed, as are most employees. We receive no “step increases” COLA. Our only opportunity for a pay raise is based on the performance of our employees. We have not received a pay raise, in 4 years.

  10. Glenn Koscielski says:

    28 yrs of watching inept managers and huge waste in failed automation systems with no accountability doesn’t surprise me that the USPS is crumbling. People like Issa blaming union workers is typical of obstructionist republicans. Worker input to improve the system is ignored. Yet the blame the employee story is a standard. We work nights, weekends and hours that keep us from our families. Issa forgets there are two signatures on contracts. The unions and the PMG. If the contract is detrimental why sigh it?! So much disinformation! So tired of being the scapegoat of the naysayers! We are hard working dedicated and professional workers! Fire Donahoe and put in someone who knows how to run the service!

  11. mark says:

    boo hoo my postmaster makes 90 thousand to sit on his ass and eat trim the fat postal service would be fine

  12. George says:

    Pay For Performance needs to be eliminated! $800 billion was spent on it in 2009 – and by lying about numbers! The work was done by the carriers, not by the Managers/Supervisors in the office. If the USPS can afford to pay that money out, they deserve to lose all the T.E’s/CCA’s that are now quitting due to a 27% pay cut. Haven’t you noticed all the brand new CCA’s quitting after a few weeks? $15 is not enough to be subject to that kind of treatment.

  13. grannybunny says:

    I wouldn’t hold my breath waiting for that Federal Government paycheck! :)

Trackbacks

  1. [...] In a series of tweets, Scott MacFarlane has reported  that a presentation by Jim O’Brien, VP Distribution and Postal Affairs of Time Inc indicated that the USPS may run out of cash next October.   The presentation was made at a recent “Industry Focus Group. A Postal Service spokesperson confirmed to Mr. MacFarlane that the Federal Government will be responsible for payroll as of that date if the Postal Service runs out of cash and the Postal Service is expected to continue to provide service. US Postal Service tells @macfarlanenews : “possibility the American taxpayer will be on the hook” for postal worker paychecks come October — Scott MacFarlane (@MacFarlaneNews) April [Read More] [...]



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