Employee Benefits Big Chunk Of Postal Service’s $8.5 Billion Loss
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A year after the nation’s Postmaster General received a six-figure bonus and huge salary increase, the U.S. Postal Service (USPS) is in a dire financial crisis attributed largely to the exorbitant cost of employee benefits and compensation.
The independent federal agency is rapidly declining and had a record loss of $8.5 billion in fiscal year 2010, a remarkable increase of nearly $5 billion in losses from the previous year. The upcoming fiscal year is expected to be just as bad, according to a report published by the investigative arm of Congress, the Government Accountability Office (GAO).
Additionally, the USPS is in serious financial debt and owes the U.S. Treasury $12 billion. Investigators project that the agency will lose at least $6.4 billion in fiscal 2011 with a big chunk of it going to retirement benefits for employees. In 2010 the USPS paid more than $5 billion for retiree health benefits alone and $3.6 billion in worker’s compensation, according to the GAO.
At this rate the forecast is bleak for the 596,000-employee USPS and congressional investigators predict that the financial outlook is not expected to improve in the “foreseeable future.” The agency’s financial condition actually began to deteriorate sharply in 2007, the GAO found, and the decline just worsened in the last year.
Amid the crisis, Postmaster General John Potter, who retired a few months ago, received a six-figure bonus and his already-lucrative pay nearly doubled. While he threatened unprecedented layoffs and cuts in mail delivery, Potter’s salary increased from $186,000 in 2007 to $265,000 in 2009 and he got a sweet “performance bonus” of $135,000, bringing the total of his taxpayer-financed compensation—salary, bonuses, retirement benefits and other perks—to more than $800,000.
The USPS has also been marred by another scandal; of the hundreds of thousands of tax delinquent federal employees, the USPS has the most scofflaws with nearly 30,000 workers who owe Uncle Sam close to $300 million.