Senators Question U.S. Postal Service on Executive Bonuses, Cost-Controls

(Washington, D.C.) – Montana’s U.S. Senators Max Baucus and Jon Tester are calling on the U.S. Postal Service to answer questions on the progress of non-legislative cost-control measures.

“We need to know that the Postal Service is cleaning house and not just arbitrarily shutting down post offices in rural America to try to save money,” said Baucus, who secured a commitment from Postmaster General Patrick Donahoe to come to Montana before making further decisions on cutting or consolidating Montana postal services. “Montanans understand that when times are tough, we’ve all got to pitch in. But, it doesn’t sit well to see your local post office on the chopping block while the Postal Service fails to do all it can to find long-term solutions.  The Postal Service needs to do its fair share including getting rid of underused and expensive facilities in urban areas before it closes down rural post offices and reduces its services.”

“The Postal Service cannot balance its books on the back of rural America,” Tester said.  “We are working together to find common-sense financial solutions such as co-locating post offices with local businesses, sharing postmasters between rural communities, and capping pay and bonuses for Postal Service executives.”

The letter sent to Postmaster General Patrick Donahoe today outlined a series of questions including management of product pricing, accounting for rental income and disposal of excess vacant space and buildings, cost of executive bonuses, and long-term planning for health care costs and workforce demands. 

At-a-glance: Baucus and Tester Question Postal Service on cost-containment:

  • Pricing of Products and Workshare Discounts: For Fiscal Year (FY) 2009, the Postal Regulatory Commission (PRC) found that $1.7 billion of the Postal Service’s $3.8 billion loss came from 14 products that did not cover their costs, identifying in particular products “for which the Postal Service has a longstanding cost-control problem.”  For FY 2010, the PRC again found that 10 products did not cover their costs, resulting in another loss of $1.7 billion.  Please identify steps the Postal Service has taken to prevent losses from these and other products and discounts, the savings associated with those steps, and any statutory authority needed to prevent losses from these products and discounts.
  • Rental Income and Excess Space: An August 2011 Postal Service Inspector General report estimated that the Postal Service maintains 67 million square feet of excess interior space, but “does not understand the extent of interior excess space in its facilities.”  Please identify the steps the Postal Service is taking to maximize revenue through the disposal of unused space and cost savings associated with existing lease agreements, as well as the revenue and savings associated with those steps.
  • Executive Bonuses:  As an example, according to the Congressional Research Service, former Postmaster General John Potter earned $501,384 in total compensation in FY 2010.  Most Americans would be shocked to know that Postal Service executives can earn larger salaries, in the form of bonuses and deferred compensation, than Cabinet-level secretaries such as the Secretary of Defense.  Please identify the total yearly compensation for the most recent fiscal year for the top 12 officers of the Postal Service, as well as the amount of deferred annual incentive bonuses.

Baucus and Tester also reiterated a call to work together to address structural problems within the Postal Service while also looking for a common sense approach to Congressional action on postal reform.

Full text of letter is available online HERE.