The U.S. Postal Service on Feb. 17 laid out an updated five-year plan that, among other provisions, calls for raising the cost of first-class stamps 11 percent to 50 cents.
“The plan we have developed requires a combination of aggressive cost reduction, rethinking the way we manage our health care costs, and comprehensive legislation to reform the business model of the Postal Service,” Postmaster General Patrick Donahoe said in a news release. “If provided the flexibility to quickly implement this plan, we can return to profitability and better serve the American public. If not, we risk becoming a significant burden to the American taxpayer.”
The
plan also calls for:
- adopting a new USPS-administered health care program, including elimination of prefunding and the transfer of retirees into the USPS plan, for projected annual savings of $7 billion;
- targeted prices increases in standard bulk-mail services; and
- as previously discussed, moving to a five-day delivery schedule and consolidating facilities.
Springfield's mail processing center is among those being considered for closure, which would cut about 57 jobs, according to
Springfield Business Journal archives.
Overall, the plan calls for a $20 billion reduction in annual costs by 2015, rising to more than $22 billion by 2016. According to the USPS, budget cuts are necessary to mitigate a 25 percent drop in first-class mail volume since 2006.
To achieve the proposed reductions, legislative reform is required, and according to the Postal Service, the absence of reforms could result in annual losses as high as $18.2 billion by 2015, with total debt of $92 billion by 2016.
"We have set out a roadmap to put our current financial crisis behind us and we are highly confident that it is achievable,” Donahoe said in the release. “However, our success depends on whether we can quickly implement our proposed changes, and that depends on whether we can gain the necessary legislative reforms we need to move ahead.”
Currently, the USPS owes $12.9 billion to the U.S. Treasury, according to the release.
The Postal Service's new five-year plan has been independently reviewed and analyzed by Evercore Partners, and previously received a business model analysis from McKinsey & Co. Inc. and revenue projections from the Boston Consulting Group.
The USPS posted a $3.3 billion net loss in the first quarter of fiscal 2012, according to a separate news release.[[In-content Ad]]
