USPS financial woes swell with $2.1B net loss last quarter
The financial distress continues for the United States Postal Service, which reported a net loss of $2.1 billion in the third quarter of 2017, an increase of more than $570 million over the same period last year.
“The Postal Service has incurred cumulative net losses of $63.6 billion from 2007 through June 30, 2017, and projects continuing annual net losses in the future absent legislative and regulatory change,” Thursday's release read.
Due to these substantial losses – incurred despite 11% growth in package shipments – USPS said Thursday that without legislative reform, it will have insufficient liquidity to “meet all of its existing legal obligations when due, to pay down its debt and to make critical infrastructure investments.”
The Postal Service also warned it will most likely default on $6.9 billion in payments for future retiree health benefits for the fifth consecutive year. The organization owes $33.9B in unfunded retiree health obligations from unpaid dues in 2012 through 2016. The Postal Service has more than $120 billion in unfunded liabilities, mainly for retiree health and pension benefits, according to a Government Accountability Office report. This amounts to 169% of fiscal year 2016 revenues. Unfunded liabilities have been at more than 150% of revenues since 2011.
Nevertheless, USPS CEO Megan Brennan adopted an optimistic outlook on the financial situation of the organization, while acknowledging the gravity of existing and continued challenges.
“Our financial situation is serious, but solvable,” Brennan said. “The continuation of aggressive management actions, and legislative and regulatory reform, will return us to financial stability and enable the Postal Service to maintain the long-term affordability of mail, invest in America’s mailing and shipping industry, and best serve the American public."
However, the USPS is no stranger to fiscal challenges. Expenses at the United States Postal Service have outpaced revenue for the past 10 years. According to the House Committee on Oversight and Government Reform, the postal service has accrued $62 billion in losses over the past decade.
The agency also has $15 billion in outstanding debt, which is the statutory limit.
While the prospects for legislative reform appeared bright earlier this year, they have since dimmed. The House Committee on Oversight and Government Reform voted to advance The Postal Reform Act of 2017 in March, in order to provide relief to the agency. However, the bill – sponsored by the Committee’s former Chair Rep. Jason Chaffetz (R-Utah) – could be dead now that Chaffetz has resigned from Congress.