Tue. Jul 23rd, 2024

USPS OIG – State of the U.S. Postal Service’s Financial Condition

June 21, 2024 , ,

READ FULL ARTICLE AT » Office of Inspector General OIG

Background

While the U.S. Postal Service is viewed by the American people as one of the most trusted government organizations, it has suffered a history of financial net losses dating back to 2007. The Postal Service sought to address these challenges through its 10-year strategic plan, Delivering for America (DFA); published in March 2021. The DFA plan calls for over $40 billion in capital investments and calculates projected savings through initiatives that include $24 billion in revenue improvements, $34 billion in management cost savings, $44 billion in regulatory changes, and $58 billion in legislative and administrative actions.

What We Did

Our objective was to evaluate the financial performance of the Postal Service in relation to its DFA plan financial projections.

What We Found

The DFA plan was developed during a time of considerable uncertainty, and conditions have evolved. The DFA plan projected positive net income starting in fiscal year (FY) 2023. Actual results show a net loss of $950 million from operations in FY 2022 and a $6.5 billion net loss in FY 2023. While actual revenue was higher than DFA plan projections, actual expenses exceeded expense projections and actual revenue in both years. The Postal Service stated the differences between actuals and projections were primarily attributed to higher than projected volume of mail, which led to higher expenses to process that volume, higher rates of inflation than projected, and slower than planned progress on DFA initiatives. We generally concur with these causes for the differences. There was higher-than-projected mail volumes; however, work hour reductions did not align with the volume decline as assumed in the Plan. Further, we could not conclude how the initiatives’ progress compared to DFA projected savings because the Postal Service did not track initiatives’ progress back to the DFA plan. Strategic plans can evolve, and opportunities exist for management to improve transparency by providing a comprehensive update to its DFA plan and communicating the outcomes.

Management Comments and Recommendations

We made two recommendations to update and communicate the DFA plan financial projections and develop a plan to track and communicate progress on the DFA plan initiatives. Management agreed with one recommendation and generally agreed with the other recommendation. The Office of Inspector General (OIG) considers management’s comments responsive, as corrective actions should resolve the issues identified in the report. The Postal Service’s comments and our evaluation are at the end the finding and recommendations.

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
Share this
0
Would love your thoughts, please comment.x