The Universal Service Obligation – A Necessary Component To Meaningful Postal Reform

The challenges facing the U.S. Postal Service (USPS) continue to grab the attention of the media and the public. While the dismal performance during the peak season has improved, service levels still have not returned to standard. A second reorganization of the management structure has reduced the number of postal districts by 25 percent. A potential sharp increase in postage rates looms in the background.

The 117^th Congress has been seated and committee assignments finalized. Postmaster General (PMG) Louis DeJoy has already testified before two committees. President Biden has submitted his nominations to fill the open seats on the USPS Board of Governors.

To date, the only significant postal reform bill introduced in the House or Senate is the “USPS Fairness Act”. The bill repeals the requirement that the USPS prepay future retirement benefits. But the USPS has not made any of those payments in over a decade, and the bill doesn’t address how the USPS should pay for retiree health benefits.

On March 23, PMG DeJoy released a10-year plan, “Delivering for America”. It is intended to put the USPS on stable financial footing through a combination of investments, reduction in service levels, rate increases, and legislative reform. The plan has captured the attention of Congress, albeit perhaps not as hoped.

Political and mailing industry leaders have released official statements in opposition to the plan. Some have pointed out the importance of timely delivery by the USPS to the overall economy. Critics have pointed out the public’s reliance on the USPS to deliver essential goods, including prescription medicine. Other commenters have emphasized the shift to vote-by-mail in many states.

Could legislative reform address those issues? Yes. But only if Congress first defines the Universal Service Obligation (USO) of the USPS.

On March 6, 2020, the week before the pandemic shut down most of the nation, The Lexington Institute hosted a Capitol Hill Conference on Postal Reform. A dozen speakers from a variety of viewpoints – unions, management, industry, and regulators – shared ideas on what has worked, what has failed, and what should be considered to reform the USPS.

In her remarks, former PMG Megan Brennan set forth two questions that were repeated in different forms throughout the presentations:

• What services does the American public want the USPS to provide?
• How much, and through what mechanism, will the public pay for it?

The questions must be answered in that order. Increasing delivery times is not a solution if prescription medicines are sent through the mail. If post offices become a storefront for other government agencies, then closures are counterproductive. With the increase of vote-by-mail, who should pay the costs for accepting ballots at USPS Marketing Mail rates, but with enhanced service levels and additional reporting?

Fifty-one years ago, a wildcat strike by postal workers prompted a crisis that led to the transformation of the Post Office Department into the U.S. Postal Service. The opening paragraph of the resulting code states in part, “The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal services to all communities.”

No definition of “prompt”, “reliable” or “efficient”. Or how the USPS and management should be measured in meeting that mission. Nothing about packages, medicines or ballots.

It is time to define the USO. Only then will there be a foundation for comprehensive postal reform – instituting oversight of performance standards, resolving retiree funding issues, and establishing a rate structure that serves the public, industry, and the USPS.

About the Author: Mark Fallon is President & CEO of The Berkshire Company, an independent management consulting firm that specializes in the print-mail industry. For additional information visit www.berkshire-company.com.