Published May 09, 2012
The U.S. Postal Service floated a cost-cutting plan Wednesday that would keep open thousands of rural post offices, amid concerns about widespread cuts and closures.
Postmaster General Patrick Donahoe said the financially struggling agency no longer seeks to close as many as 3,700 post offices after May 15, and will instead focus on reducing full-time staff while keeping open post offices in rural areas that would have reduced hours but continued access to stamp machines and individual letter boxes.
“We’ve listened to our customers in rural America and we’ve heard them loud and clear,” he said during a press conference in Washington. “We believe today’s announcement will serve our customers’ needs and allow us to achieve real savings to help the Postal Service return to long-term financial stability.”
Among the concerns of rural residents is they lack reliable Internet service, so they must depend on letters and packages for such important items as mail-order prescription drugs.
Though no post office will close and no zip code will be retired, 13,000 rural post offices could have their hours cuts two to six hours for the agency to meets its multibillion-dollar cost-cutting goal.
Donahoe said the two-year approach includes options and will be completed September 2014 with estimated savings of a $500 million annually.
Megan Brennan, the agency’s chief operating officer, said at the press conference that 39 percent of the agency revenue is generated outside post offices, particularly by customers doing business online or with retail partners.
We’re “committed to rural America, but know post offices are not profitable and in financial crisis,” she said.
The Postal Service intends to seek regulatory approval and get community input, a process that could take several months. The new strategy would then be implemented over two years and completed in September 2014, saving an estimated half billion dollars annually.
Under the new plan, communities would be given the option of keeping their area post offices open, but at reduced hours. Another option would be to close a postal office in one area while keeping a nearby one open full-time. Communities also could opt for alternatives, including creating a Village Post Office in which postal services are offered in libraries, government offices or local stores such as a Wal-Mart, Walgreens or Office Depot.
The latest move comes as the Postal Service is making a broad push for Congress to pass legislation this summer that would allow the agency to move forward on its multibillion-dollar cost-cutting plan, which includes an end to Saturday mail delivery.
Due to rural opposition, the Senate this month passed a bill that would in part impose a one-year moratorium on shuttering rural post offices and place additional restrictions afterward, a move that the Postal Service later denounced as "totally inappropriate" because it kept unneeded facilities open.
In the House, hesitancy among rural lawmakers is helping to stall a separate bill that would allow for far more aggressive postal cuts.
Most of the 3,700 post offices that had been under review for possible closing had been in rural areas with low volumes of business, with as many as 3,000 only having two hours of business a day, though open longer. The agency now operates more than 31,000 retail outlets around the country.
Post office officials expect to save more money with the new plan, mostly by weeding out full-time postmasters who don't have labor contract protections and replacing them with part-time workers. The agency plans to offer buyouts for the nation's more than 21,000 postmasters, noting that more than 80 percent of its postal costs in rural areas are labor related.
The Postal Service has been grappling with losses as first-class mail volume declines and more people switch to the Internet to send messages and pay bills. The agency has forecast a record $14.1 billion loss by the end of this year; without changes, it said, annual losses will exceed $21 billion by 2016.
It also is pushing Congress to pass legislation by early summer. If the House fails to act soon, postal officials say, they will face a cash crunch in August and September, when the agency must pay more than $11 billion to the U.S. Treasury to prefund future retiree health benefits. Already $13 billion in debt, the health payment obligation will force the mail agency to run up against its $15 billion debt ceiling, causing it to default on the payments.
The Associated Press contributed to this report.