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 Postal Service: Revenue Forgone Appropriation 


The Administration continues to support the enactment of comprehensive postal reform legislation that is consistent with the report of the President’s Commission on the United States Postal Service and is guided by the principles of Best Governance Practices, Transparency, Flexibility, Accountability, and Self-Finance, as expressed by the President on December 8, 2003. The Postal Service provides an important service to the American people and the economy, and the Administration believes that the Postal Service should continue providing affordable and reliable universal service, while limiting exposure to taxpayers and operating appropriately in the competitive marketplace.

The Administration is committed to working with the Congress and postal stakeholders in early 2005 to bring about needed reforms that ensure that we have a healthy Postal Service for future generations. To this end, the Budget proposes to use the pension savings provided to the Postal Service by the Postal Civil Service Retirement System Funding Reform Act of 2003 (P.L. 108-18) that would otherwise be held in escrow in 2006 and beyond, to put the Postal Service on a path that fully funds its substantial retiree health benefits liabilities.

source:  Budget of the United States Government


source: OMB Report: Major Savings and Reforms in the President's 2006 Budget." (pdf)"

President's budget proposed only $37 million for USPS --and not  the $779 million as requested

posted February 10, 2004-

According to the Wall Street Journal,  lawmakers are debating whether the U.S. postal system lacks the funds to install sufficient safeguards to cope with terrorist attacks. After the anthrax attacks of 2001, which killed five people, including two postal workers, the U.S. Postal Service hired contractors to install irradiation equipment designed to neutralize anthrax spores. But deployment has been limited to mail intended for government offices. Although the U.S. Postal Service has spent more than $500 million on biodefense since the anthrax attacks, it hasn't attached anthrax biosensors to the equipment. Nor has it begun to roll out a planned expansion of the irradiation system to cover mail delivered to most of the 128 million homes and 12 million businesses in the U.S.

 The president's budget for the fiscal year that starts Oct. 1, unveiled on Tuesday, proposed only $37 million for the Postal Service, far short of the $779 million for biodefense requested by the agency. It has vowed to go directly to Congress to seek these funds, including $384 million in reimbursement for money already spent out of its own revenue. A spokesman for House Appropriations Committee Chairman Bill Young (R., Fla.), said that, as a rule, Congress tends to be "very reluctant" to provide direct appropriations to an agency that's "supposed to be self-sustaining." Ira Cohen, spokesman for Rep. Danny Davis (D., Ill.), said his boss favored more funding in the 2005 budget to upgrade biodefense in the postal system. "If you're going to give the Postal Service the added responsibilities of homeland-security issues, why should that be financed" out of Postal Service revenues, he said. Rep. Davis is a member of the Government Reform Committee, which has been considering a Postal Service revamp.

While the ricin scare renewed focus on the postal system, experts pointed out that while irradiating equipment could play a role in neutralizing anthrax, it wouldn't neutralize an inert poison such as ricin. Sensitive to any suggestion that the agency is dragging its feet, the Postal Service insists its terrorism-fighting efforts aren't falling behind. "We are right on schedule," said Thomas Day, vice president of engineering at the Postal Service. He also said the agency will try to find more money for biohazard-detection equipment even if Congress doesn't provide funds. "We are still committed to doing it, and it would have to come from our operating funds," he said. A protracted funding logjam could trigger the shutdown of some mail processing and distribution centers in order to reduce the overall cost of additional detection equipment. But any move toward widespread closings is likely to face fierce opposition from the unions that represent most of the Postal Service's 750,000 employees.

 Postal officials also could shift a bigger chunk of security costs to anyone who mails a letter or package. The Postal Service is expected to start seeking approval in early 2005 for its next rate increase, which would take effect about a year later. Consumers and businesses already have been hit by three rate increases since the start of 2001.

- 2005 Federal Budget Lacks USPS Emergency Funding-The U.S. Postal Service requested $779 million for bio-defense in 2005. The agency said part of that $779 million already has been spent, with the rest to be spent next year. The USPS last received emergency-preparedness funding in the 2002 fiscal year, when it got $762 million. Postmaster general John E. Potter sent a letter Feb. 2 to Rep. John W. Olver, D-MA, of the House Subcommittee on Transportation and Treasury, and Independent Agencies -- which has jurisdiction over the USPS. Potter wrote that the funds the agency requested are consistent with its Emergency Preparedness Plan, which was submitted to Congress on March 6, 2002, and updated April 30, 2003. If this money is not included in the federal budget, Bob McLean, executive director of the Mailers Council said, it would have to be built into postal rates. The USPS is expected to start seeking approval in early 2005 for its next rate increase, which would take effect about a year later. However, McLean said, if it is determined that someone brought it in and dropped it in the Senate mailroom as opposed to it being sent through the mail, "then I don't think the postal service gets any bump out of this at all."  (DMNews- 2/12/04)

Below are excerpts from ....

Budget of the United States Government

Bush cuts would affect over 100 programs

Fiscal Year 2005


Federal Funds

General and special funds:


For payment to the Postal Service Fund for revenue forgone on free and reduced rate mail, pursuant to subsections (c) and (d) of section 2401 of title 39, United States Code, ø$65,521,000, of¿ 61,709,000, which ø$36,521,000¿ shall not be available for obligation until October 1, ø2004¿ 2005: Provided, That mail for overseas voting and mail for the blind shall continue to be free: Provided further, That 6-day delivery and rural delivery of mail shall continue at not less than the 1983 level: Provided further, That none of the funds made available to the Postal Service by this Act shall be used to implement any rule, regulation, or policy of charging any officer or employee of any State or local child support enforcement agency, or any individual participating in a State or local program of child support enforcement, a fee for information requested or provided concerning an address of a postal customer: Provided further, That none of the funds provided in this Act shall be used to consolidate or close small rural and other small post offices in fiscal year ø2004¿ 2005. (Division F, H.R. 2673, Consolidated Appropriations Bill, FY 2004.)

The Postal Service received a total of $762 million in emergency funds in 2001 and 2002. Included in this amount is:

$175,000,000 from the Emergency Response Fund to the U.S. Postal Service in response to the anthrax attacks. These funds were released by the President on November 20, 2001, pursuant to P.L. 107–38.

$500,000,000 from the Emergency Supplemental Act of 2002 (P.L. 107–117) to protect postal employees and postal customers from exposure to biohazardous material, sanitize and screen the mail, and replace or repair Postal Service facilities destroyed or damaged in New York City as a result of the September 11, 2001, terrorist attacks. These funds became available to the Postal Service for sanitizing and screening the mail after it submitted an emergency preparedness plan and an associated expenditure plan to the Congress.

$87,000,000 from the Supplemental Appropriations Act of FY 2002 for Further Recovery from the Response to Terrorist Attacks on the United States (P.L. 107–206) to further protect postal employees and postal customers from exposure to biohazardous material and to sanitize and screen the mail.

 Pursuant to Public Law 93–328, the 2005 appropriation request of the U.S. Postal Service for Payment to the Postal Service Fund is $75,881,000. This amount includes: $69,803,000 requested for free mail for the blind and overseas voting; and $6,078,000 as a reconciliation adjustment for 2002 actual mail volume of free mail for the blind and overseas voting. In addition to these funds, $36,521,000 (an advance appropriation from 2004 for the 2004 costs and the 2001 reconciliation adjustment for free mail for the blind and overseas voting) will become available to the U.S. Postal Service in 2005.

Financing.The activities of the U.S. Postal Service are financed from the following sources: (1) mail and services revenue; (2) reimbursements from Federal and non-Federal sources; (3) proceeds from borrowing; (4) interest from U.S. securities and other investments; and (5) appropriations by the Congress. All receipts and deposits are made to the Postal Service Fund and are available without fiscal year limitation for payment of all expenses incurred, retirement of obligations, investment in capital assets, and investment in obligations and securities.

Separate legislation also increased the Postal Service’s statutory borrowing authority beginning in 1991. Section 2005 of title 39, United States Code, as amended, increased the Postal Service’s borrowing authority by $2.5 billion in 1991 for a revised ceiling of $12.5 billion and an additional $2.5 billion in 1992 for a revised total ceiling of $15 billion. The total net increase in amounts outstanding in any one fiscal year were also increased and now may not exceed $2.0 billion in obligations issued for the purpose of capital improvements and $1.0 billion for the purpose of paying operating expenses. As of September 30, 2005, it is expected that the total debt instruments issued and outstanding pursuant to this authority will amount to $3.073 billion.

Operating.Estimated revenue will total approximately $69.2 billion in 2005. This includes $69.1 billion from mail and services revenue, $20 million from investment income, and $76 million for revenue foregone appropriations in 2005. Total expenses are estimated at approximately $69.2 billion in 2005.

Postal Reform Summary03.18.05 (doc. 45.5 KBs)