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Testimony: 

Before the Subcommittee on Financial Services and General Government, 
Committee on Appropriations, U.S. Senate: 

United States Government Accountability Office: 
GAO: 

For Release on Delivery: 
Expected at 2:30 p.m. EDT:
Thursday, March 18, 2010: 

U.S. Postal Service: 

Financial Crisis Demands Aggressive Action: 

Statement of Phillip Herr, Director: 
Physical Infrastructure Issues: 

GAO-10-538T: 

GAO Highlights: 

Highlights of GAO-10-538T, a testimony to the Subcommittee on 
Financial Services and General Government, Committee on 
Appropriations, U.S. Senate. 

Why GAO Did This Study: 

The U.S. Postal Serviceís (USPS) financial condition and outlook 
deteriorated significantly during fiscal year 2009. USPS was not able 
to cut costs fast enough to offset declining mail volume and revenues 
resulting from the economic recession and changes in the use of mail, 
such as electronic bill payment. 

In July 2009, GAO added USPSís financial condition and outlook to its 
High-Risk List and reported that USPS urgently needed to restructure 
to improve its financial viability. Declines in mail volume and 
revenue, large financial losses, increasing debt, and financial 
obligations will continue to challenge USPS. 

This testimony provides (1) information on USPSís financial condition 
and forecast and (2) GAOís perspective on the need for USPS 
restructuring. In addition, questions and issues are included for 
Congress to consider regarding USPSís proposal to reduce delivery from 
6 to 5 days. This testimony is based on GAOís past and ongoing work, 
including its work on postal reform issues, its report adding USPSís 
financial condition and outlook to its High-Risk List, and updated 
information on USPSís financial condition and outlook. 

What GAO Found: 

As mail volume declined by 35 billion pieces (about 17 percent) in 
fiscal years 2007 through 2009, USPSís financial viability 
deteriorated, with close to $12 billion in losses, and it does not 
expect total mail volume to return to its former level when the 
economy recovers. USPS forecasts that total mail volume will decline 
to 167 billion pieces in fiscal year 2010óthe lowest level since 
fiscal year 1992, and 22 percent less than its fiscal year 2006 peak. 
It also projects a record loss of over $7 billion. Further, USPS has 
halted construction of most new facilities and expects to borrow $3 
billion in fiscal year 2010, which would bring its total outstanding 
debt to $13.2 billion, close to its $15 billion statutory limit. 
Looking forward, USPS projects that by fiscal year 2020, total mail 
volume will further decline by 16 percent, to the lowest level since 
1986. Absent additional actions to cut costs and increase revenues, 
USPS expects financial losses will escalate over the next decade. 

Figure: USPS Actual and Projected Net Income (Loss), Fiscal Years 2000 
to 2020: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year: 2000; 
Actual Income/Loss: -$0.2 billion. 

Fiscal year: 2001; 
Actual Income/Loss: -$1.68 billion. 

Fiscal year: 2002; 
Actual Income/Loss: -$0.68 billion. 

Fiscal year: 2003; 
Actual Income/Loss: $3.87 billion. 

Fiscal year: 2004; 
Actual Income/Loss: $3.07 billion. 

Fiscal year: 2005; 
Actual Income/Loss: $1.45 billion. 

Fiscal year: 2006; 
Actual Income/Loss: $0.9 billion. 

Fiscal year: 2007; 
Actual Income/Loss: -$5.14 billion. 

Fiscal year: 2008; 
Actual Income/Loss: -$2.81 billion. 

Fiscal year: 2009; 
Actual Income/Loss: -$3.79 billion. 

Fiscal year: 2010; 
Projected Income/Loss: -$7.8 billion. 

Fiscal year: 2011; 
Projected Income/Loss: -$11.75 billion. 

Fiscal year: 2012; 
Projected Income/Loss: -$15.14 billion. 

Fiscal year: 2013; 
Projected Income/Loss: -$16.99 billion. 

Fiscal year: 2014; 
Projected Income/Loss: -$19.77 billion. 

Fiscal year: 2015; 
Projected Income/Loss: -$22.56 billion. 

Fiscal year: 2016; 
Projected Income/Loss: -$25.6 billion. 

Fiscal year: 2017; 
Projected Income/Loss: -$24.62 billion. 

Fiscal year: 2018; 
Projected Income/Loss: -$26.98 billion. 

Fiscal year: 2019; 
Projected Income/Loss: -$30.11 billion. 

Fiscal year: 2020; 
Projected Income/Loss: -$33.07 billion. 

Source: USPS. 

[End of figure] 

Action is urgently needed in multiple areas by USPS and Congress to 
address USPSís pressing challenges so that it can achieve financial 
viability, including restructuring USPS operations, networks, and 
workforce to reflect changes in mail volume, revenue, and use of mail. 
The longer it takes for USPS and Congress to address USPSís 
challenges, the more difficult they will be to overcome. When GAO 
placed USPSís financial condition and outlook on its High-Risk List, 
it identified the following key actions USPS and/or Congress could 
take: reduce employee compensation and benefits; consolidate retail 
and processing networks; consolidate administrative field structure; 
generate revenue through new or enhanced products; change funding 
requirements for retiree health benefits; and realign delivery 
services. GAO will analyze USPSís proposal to reduce delivery from 6 
to 5 days when it becomes available. Included in this testimony are 
questions and issues for Congress to consider regarding delivery 
changes. GAO will also be issuing its report later this spring that 
provides its perspective on USPSís financial crisis, as well as 
additional options for restructuring. 

View [hyperlink, http://www.gao.gov/products/GAO-10-538T] or key 
components. For more information, contact Phillip Herr, at (202) 512-
2834 or herrp@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to participate in this hearing on the U.S. Postal 
Service's (USPS) financial condition, a topic we have been continually 
monitoring given USPS's deteriorating financial condition during 
fiscal year 2009. My statement will provide (1) information on USPS's 
financial condition and forecast and (2) our perspective on the need 
for USPS restructuring. In addition, we provide questions and issues 
for Congress to consider regarding USPS's proposal to reduce delivery 
from 6 to 5 days. 

My statement is based upon our past and ongoing work, including our 
work on postal reform issues, our report adding USPS's financial 
condition and outlook to our High-Risk List, and updated information 
on USPS's financial condition and outlook. We conducted this 
performance audit in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a 
reasonable basis for our findings and conclusions based on our audit 
objectives. 

USPS's Financial Condition Has Deteriorated and its Outlook is Poor: 

As mail volume declined by 35 billion pieces (about 17 percent) in 
fiscal years 2007 through 2009, USPS's financial condition 
deteriorated, with close to $12 billion in losses, and it does not 
expect total mail volume to return to its former level when the 
economy recovers. This volume decline was largely due to the economic 
downturn and changing use of the mail, with mail continuing to shift 
to electronic communications and payments. In July 2009, we added 
USPS's financial condition and outlook to our High-Risk List and 
reported that USPS urgently needed to restructure to address its 
financial viability.[Footnote 1] Despite $6.1 billion in cost savings 
in fiscal year 2009 as well as congressional action that relieved USPS 
of $4 billion in mandated payments to prefund postal retiree health 
benefits,[Footnote 2] USPS still reported a loss of $3.8 billion for 
the year. Also, USPS debt increased by the annual statutory limit of 
$3 billion, bringing outstanding debt to $10.2 billion at the end of 
fiscal year 2009. 

These declines along with large financial losses, increasing debt and 
financial obligations, are projected to continue to challenge USPS. 
Most recently, total mail volume for the first quarter of fiscal year 
2010 was down almost 4.5 billion pieces, a decrease of almost 9 
percent over last year. For fiscal years 2010 and 2011, USPS is 
projecting annual deficits exceeding $7 billion and additional 
pressures to generate sufficient cash to meet its obligations. 
Further, USPS has halted construction of most new facilities and has 
budgeted $1.5 billion in capital cash outlays (mostly for prior 
commitments), which is down from the average of $2.2 billion in the 
previous 5 fiscal years. USPS also expects to borrow $3 billion in 
fiscal year 2010, which would bring its total outstanding debt to 
$13.2 billion, close to its $15 billion statutory limit, which it 
could reach as early as fiscal year 2011. USPS projects that financial 
losses will escalate over the next decade, with cumulative losses of 
over $230 billion by fiscal year 2020 if its planned cost reduction 
and revenue generation initiatives are not implemented. (see figure 1). 

Figure 1: USPS Actual and Projected Net Income (Loss), Fiscal Years 
2000 to 2020: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year: 2000; 
Actual Income/Loss: -$0.2 billion. 

Fiscal year: 2001; 
Actual Income/Loss: -$1.68 billion. 

Fiscal year: 2002; 
Actual Income/Loss: -$0.68 billion. 

Fiscal year: 2003; 
Actual Income/Loss: $3.87 billion. 

Fiscal year: 2004; 
Actual Income/Loss: $3.07 billion. 

Fiscal year: 2005; 
Actual Income/Loss: $1.45 billion. 

Fiscal year: 2006; 
Actual Income/Loss: $0.9 billion. 

Fiscal year: 2007; 
Actual Income/Loss: -$5.14 billion. 

Fiscal year: 2008; 
Actual Income/Loss: -$2.81 billion. 

Fiscal year: 2009; 
Actual Income/Loss: -$3.79 billion. 

Fiscal year: 2010; 
Projected Income/Loss: -$7.8 billion. 

Fiscal year: 2011; 
Projected Income/Loss: -$11.75 billion. 

Fiscal year: 2012; 
Projected Income/Loss: -$15.14 billion. 

Fiscal year: 2013; 
Projected Income/Loss: -$16.99 billion. 

Fiscal year: 2014; 
Projected Income/Loss: -$19.77 billion. 

Fiscal year: 2015; 
Projected Income/Loss: -$22.56 billion. 

Fiscal year: 2016; 
Projected Income/Loss: -$25.6 billion. 

Fiscal year: 2017; 
Projected Income/Loss: -$24.62 billion. 

Fiscal year: 2018; 
Projected Income/Loss: -$26.98 billion. 

Fiscal year: 2019; 
Projected Income/Loss: -$30.11 billion. 

Fiscal year: 2020; 
Projected Income/Loss: -$33.07 billion. 

Source: USPS. 

Note: The projection for fiscal year 2010 is from USPS's Fiscal Year 
2010 Integrated Financial Plan. USPS projections for fiscal years 2011 
through 2020 are from its plan and assume that (1) USPS takes no 
management actions beyond those in its fiscal year 2009 budget and (2) 
USPS's total statutory borrowing limit of $15 billion would be 
increased to accommodate these losses. 

[End of figure] 

Further, USPS does not expect total mail volume to return to its 
former levels when the economy recovers. It projects that total mail 
volume will decline to 167 billion pieces in fiscal year 2010--a level 
not seen since fiscal year 1992, and 22 percent less than its fiscal 
year 2006 peak. By fiscal year 2020, USPS projects, at best, further 
volume declines of about 16 percent, to about 150 billion pieces, the 
lowest level since 1986 (see figure 2). 

Figure 2: Actual and Projected Total Mail Volume, Fiscal Years 1971 
through 2020: 

[Refer to PDF for image: line graph] 

Billions of pieces of mail: 

Fiscal year: 1971; 
Volume of mail: 87.0 billion. 

Fiscal year: 1972; 
Volume of mail: 87.2 billion. 

Fiscal year: 1973; 
Volume of mail: 89.7 billion. 

Fiscal year: 1974; 
Volume of mail: 90.1 billion. 

Fiscal year: 1975; 
Volume of mail: 89.3 billion. 

Fiscal year: 1976; 
Volume of mail: 89.8 billion. 

Fiscal year: 1977; 
Volume of mail: 93.2 billion. 

Fiscal year: 1978; 
Volume of mail: 96.9 billion. 

Fiscal year: 1979; 
Volume of mail: 99.8 billion. 

Fiscal year: 1980; 
Volume of mail: 106.3 billion. 

Fiscal year: 1981; 
Volume of mail: 110.1 billion. 

Fiscal year: 1982; 
Volume of mail: 114.1 billion. 

Fiscal year: 1983; 
Volume of mail: 119.4 billion. 

Fiscal year: 1984; 
Volume of mail: 131.5 billion. 

Fiscal year: 1985; 
Volume of mail: 140.1 billion. 

Fiscal year: 1986; 
Volume of mail: 147.4 billion. 

Fiscal year: 1987; 
Volume of mail: 153.9 billion. 

Fiscal year: 1988; 
Volume of mail: 161.0 billion. 

Fiscal year: 1989; 
Volume of mail: 161.6 billion. 

Fiscal year: 1990; 
Volume of mail: 166.3 billion. 

Fiscal year: 1991; 
Volume of mail: 165.9 billion. 

Fiscal year: 1992; 
Volume of mail: 166.4 billion. 

Fiscal year: 1993; 
Volume of mail: 171.2 billion. 

Fiscal year: 1994; 
Volume of mail: 178.0 billion. 

Fiscal year: 1995; 
Volume of mail: 180.7 billion. 

Fiscal year: 1996; 
Volume of mail: 183.4 billion. 

Fiscal year: 1997; 
Volume of mail: 190.9 billion. 

Fiscal year: 1998; 
Volume of mail: 196.9 billion. 

Fiscal year: 1999; 
Volume of mail: 201.6 billion. 

Fiscal year: 2000; 
Volume of mail: 207.9 billion. 

Fiscal year: 2001; 
Volume of mail: 207.5 billion. 

Fiscal year: 2002; 
Volume of mail: 202.8 billion. 

Fiscal year: 2003; 
Volume of mail: 202.2 billion. 

Fiscal year: 2004; 
Volume of mail: 206.1 billion. 

Fiscal year: 2005; 
Volume of mail: 211.7 billion. 

Fiscal year: 2006; 
Volume of mail: 213.0 billion. 

Fiscal year: 2007; 
Volume of mail: 212.2 billion. 

Fiscal year: 2008; 
Volume of mail: 202.7 billion. 

Fiscal year: 2009; 
Volume of mail: 177.1 billion. 

Fiscal year: 2010; 
Volume of mail: 166.1 billion. 

Fiscal year: 2011; 
Volume of mail: 164.0 billion. 

Fiscal year: 2012; 
Volume of mail: 164.6 billion. 

Fiscal year: 2013; 
Volume of mail: 164.6 billion. 

Fiscal year: 2014; 
Volume of mail: 161.6 billion. 

Fiscal year: 2015; 
Volume of mail: 158.6 billion. 

Fiscal year: 2016; 
Volume of mail: 155.5 billion. 

Fiscal year: 2017; 
Volume of mail: 153.3 billion. 

Fiscal year: 2018; 
Volume of mail: 151.4 billion. 

Fiscal year: 2019; 
Volume of mail: 150.0 billion. 

Fiscal year: 2020; 
Volume of mail: 148.9 billion. 

Projected fiscal year 2020 volume is the lowest level since fiscal 
year 1986. 

Source: USPS. 

[End of figure] 

* First-Class Mail volume has declined 19 percent since it peaked in 
fiscal year 2001 and USPS projects that it will decline by another 37 
percent over the next decade. (see fig. 3). This mail is highly 
profitable and generates over 70 percent of the revenues used to cover 
USPS overhead costs. 

* Standard Mail (primarily advertising) volume has declined 20 percent 
since it peaked in fiscal year 2007, and is projected to remain 
roughly flat over the next decade. This class of mail is profitable 
overall but lower priced, so it takes 2.5 pieces of Standard Mail, on 
average, to equal the profit from the average piece of First-Class 
Mail. Standard Mail volume was affected by large rate increases in 
2007 for flat-sized mail, such as catalogs, and the recession that 
affected advertising such as mortgage, home equity, and credit card 
solicitations. These solicitations appear unlikely to return to former 
levels. Standard Mail also faces growing competition from electronic 
alternatives, increasing the possibility that its volume may decline 
in the long-term. 

Figure 3: Actual and Projected First-Class Mail and Standard Mail 
Volume, Fiscal Years 1990 through 2020: 

[Refer to PDF for image: multiple line graph] 

Billions of pieces of mail: 

Fiscal year: 1990; 	
First Class: 89.3 billion; 
Standard Mail: 63.7 billion. 

Fiscal year: 1991; 	
First Class: 90.3 billion; 
Standard Mail: 62.4 billion. 

Fiscal year: 1992; 	
First Class: 90.8 billion; 
Standard Mail: 62.5 billion. 

Fiscal year: 1993; 	
First Class: 92.2 billion; 
Standard Mail: 65.8 billion. 

Fiscal year: 1994; 	
First Class: 95.3 billion; 
Standard Mail: 69.4 billion. 

Fiscal year: 1995; 	
First Class: 96.3 billion; 
Standard Mail: 71.1 billion. 

Fiscal year: 1996; 	
First Class: 98.2 billion; 
Standard Mail: 71.7 billion. 

Fiscal year: 1997; 	
First Class: 99.7 billion; 
Standard Mail: 77.3 billion. 

Fiscal year: 1998; 	
First Class: 100.4 billion; 
Standard Mail: 82.5 billion. 

Fiscal year: 1999; 	
First Class: 101.9 billion; 
Standard Mail: 85.7 billion. 

Fiscal year: 2000; 	
First Class: 103.5 billion; 
Standard Mail: 90.1 billion. 

Fiscal year: 2001; 	
First Class: 103.7 billion; 
Standard Mail: 89.9 billion. 

Fiscal year: 2002; 	
First Class: 102.4 billion; 
Standard Mail: 87.2 billion. 

Fiscal year: 2003; 	
First Class: 99.1 billion; 
Standard Mail: 90.5 billion. 

Fiscal year: 2004; 	
First Class: 97.9 billion; 
Standard Mail: 95.6 billion. 

Fiscal year: 2005; 	
First Class: 98.1 billion; 
Standard Mail: 100.9 billion. 

Fiscal year: 2006; 	
First Class: 97.5 billion; 
Standard Mail: 102.4 billion. 

Fiscal year: 2007; 	
First Class: 95.9 billion; 
Standard Mail: 103.5 billion. 

Fiscal year: 2008; 	
First Class: 91.7 billion; 
Standard Mail: 99.1 billion. 

Fiscal year: 2009; 	
First Class: 83.8 billion; 
Standard Mail: 82.7 billion. 

Fiscal year: 2010; 	
First Class: 77.1 billion; 
Standard Mail: 78.9 billion. 

Fiscal year: 2011; 	
First Class: 71.4 billion; 
Standard Mail: 82.2 billion. 

Fiscal year: 2012; 	
First Class: 69.2 billion; 
Standard Mail: 84.9 billion. 

Fiscal year: 2013; 	
First Class: 67.0 billion; 
Standard Mail: 87.0 billion. 

Fiscal year: 2014; 	
First Class: 64.9 billion; 
Standard Mail: 86.7 billion. 

Fiscal year: 2015; 	
First Class: 61.8 billion; 
Standard Mail: 86.3 billion. 

Fiscal year: 2016; 	
First Class: 59.2 billion; 
Standard Mail: 85.9 billion. 

Fiscal year: 2017; 	
First Class: 57.3 billion; 
Standard Mail: 85.7 billion. 

Fiscal year: 2018; 	
First Class: 55.6 billion; 
Standard Mail: 85.5 billion. 

Fiscal year: 2019; 	
First Class: 54.0 billion; 
Standard Mail: 85.8 billion. 

Fiscal year: 2020; 	
First Class: 52.4 billion; 
Standard Mail: 86.3 billion. 

Source: USPS. 

[End of figure] 

In addition to the projected losses caused by declining mail volume, 
USPS believes that stagnant revenue, costs of providing universal 
service, and rising workforce costs will also lead to losses. 

USPS and Congress Need to Act Aggressively to Address Financial Crisis: 

USPS urgently needs to restructure to improve its current and long-
term financial viability. On March 2, 2010, USPS addressed these 
issues in its plan, entitled "Ensuring a Viable Postal Service for 
America: An Action Plan for the Future,"[Footnote 3] which identified 
seven key areas where-in it would need legislative changes or 
congressional support. Improving its financial viability is critical 
because USPS plays a vital role in the U.S. economy, and is at the 
core of a mailing industry valued at about a trillion dollars, 
according to USPS. Moreover, it is the largest civilian federal 
agency, employing approximately 599,000 career employees as of 
December 31, 2009 and operating a total of about 38,000 facilities 
nationwide as of September 30, 2009. 

We have previously concluded that restructuring is needed in multiple 
areas, including action and support by Congress, since no single 
change will be sufficient to address USPS's pressing challenges. 
According to USPS, even if it took all of the actions it could under 
existing law, it would still face unsustainable losses of at least 
$115 billion by 2020. A major challenge for USPS is to cut costs and 
restructure quickly enough to offset unprecedented volume and revenue 
declines--particularly costs related to its workforce, retail and 
processing networks, and delivery services--so that it can cover its 
operating expenses. We have an ongoing review, as mandated by the 
Postal Accountability and Enhancement Act of 2006,[Footnote 4] to 
evaluate options and actions for the long-term structural and 
operational reforms of USPS. Due to the urgency of the USPS financial 
crisis, we plan to issue our study in April 2010, ahead of the 
December 2011 statutory deadline. 

When we placed USPS's financial condition and outlook on our High-Risk 
List, we identified the following key actions USPS and/or Congress 
could take:[Footnote 5] 

1. Reduce compensation and benefit costs through: 

* retirements: Annually through 2020, about 5 percent of USPS 
employees will be eligible and expected to retire, according to USPS. 
That represents approximately 300,000 employees, about half of the 
workforce as of March 2, 2010. 

* lower benefit costs: USPS pays a higher percentage of employee 
health benefit premiums than other federal agencies (80 percent versus 
72 percent, respectively). In addition, USPS pays 100 percent of 
employee life insurance premiums, while other federal agencies pay 
about 33 percent. 

2. Consolidate retail and processing networks: 

* Remove excess capacity in the 600 mail processing facilities 
nationwide, where processing capacity for First-Class Mail exceeds 
processing needs by 50 percent. 

* Maximize use of lower-cost retail alternatives: Approximately 30 
percent of USPS retail revenue currently comes through alternate 
channels, such as stamps bought by mail, on the Internet, and at 
grocery stores, indicating that customers have begun shifting to such 
alternatives. 

* Reduce the network of 36,500 retail facilities, where maintenance 
has been underfunded for years, resulting in deteriorating facilities 
and a maintenance backlog. USPS recently reported that it has more 
retail facilities than McDonalds, Starbucks, and Walgreens combined. 
Further, it stated that its post offices average about 600 visits per 
week, representing only 10 percent of average weekly visits to 
Walgreens. 

3. Consolidate field administrative structure: Review the need for 74 
district offices and 8 area offices. 

4. Generate revenue through new or enhanced products: Use its pricing 
and product flexibility to maximize profitable mail volume. 

In the past, we have also discussed, and the Postal Service has 
recently proposed, additional options for restructuring that would 
require congressional approval: 

1. Change funding requirements for retiree health benefits: USPS asked 
Congress to revise the funding requirements for its retiree health 
benefit obligation. USPS had difficulty making its required payment to 
prefund retiree health benefits in fiscal year 2009 and has warned 
that it may have similar difficulty for fiscal year 2010. As noted, in 
fiscal year 2009, a looming cash shortfall led to last-minute 
congressional action to reduce USPS's required payments to prefund 
retiree health benefits from $5.4 billion to $1.4 billion. 

2. Realign delivery services with changing use of mail: USPS has asked 
Congress to allow it to reduce delivery from 6 days to 5 days per 
week, stating that eliminating Saturday delivery would provide annual 
savings of about $3 billion.[Footnote 6] The Postal Regulatory 
Commission (PRC) estimated in 2008 that eliminating Saturday delivery 
would result in savings of about $1.9 billion, based on somewhat 
different assumptions regarding the likely effects on mail volume and 
costs. 

The Postmaster General stated in March 2010 that USPS plans to request 
a PRC advisory opinion on this change, which would lead to a public 
proceeding that would include input by interested parties. Before this 
plan could be implemented, Congress would need to stop including 
statutory restrictions contained in USPS annual appropriations that 
mandate 6-day delivery. Congress might wish to consider several 
questions regarding such a change: 

1. How would eliminating Saturday delivery impact USPS's efforts to 
grow mail volume and encourage commercial mailers to continue using 
the mail? 

2. How would eliminating Saturday delivery affect mail processing 
costs? Salary and benefits for mail processing employees and carriers? 

3. What will be the expected effects on delivery service standards? 

4. How will consumers and business customers be affected by a move to 
5-day delivery? How does USPS plan to mitigate these effects? 

5. How does USPS plan to communicate eliminating Saturday delivery and 
other related changes to mailers and the public? 

6. Will there be sufficient P.O. boxes to handle a potential spike in 
demand for those customers wishing to pick up mail on Saturdays? 

7. How much lead time would be needed for USPS to modify its 
operations and financial systems before eliminating Saturday delivery? 

8. What other options has USPS considered that could significantly 
reduce costs without reducing delivery service? 

These issues need to be addressed in the expected USPS 5-day delivery 
proposal so that stakeholders fully understand the potential 
ramifications of these changes. More broadly, USPS faces larger issues 
with regard to restructuring and its financial viability. The longer 
it takes for USPS and Congress to address USPS's challenges, the more 
difficult they will be to overcome. 

Mr. Chairman, this concludes my prepared statement. I would be pleased 
to answer any questions that you or other Members of the Subcommittee 
may have. 

Contacts and Staff Acknowledgments: 

For further information regarding this statement, please contact 
Phillip Herr at (202) 512-2834 or herrp@gao.gov. Individuals who made 
key contributions to this statement include Teresa Anderson, Tonnyť 
Conner-White, Colin Fallon, Brandon Haller, Margaret McDavid, and 
Crystal Wesco. 

[End of section] 

Footnotes: 

[1] GAO, High-Risk Series, Restructuring the U.S. Postal Service to 
Achieve Sustainable Financial Viability, [hyperlink, 
http://www.gao.gov/products/GAO-09-937SP] (Washington, D.C.: July 28, 
2009). 

[2] A looming cash shortfall in 2009 necessitated last-minute 
congressional action to reduce USPS's mandated payments to prefund 
retiree health benefits from $5.4 billion to $1.4 billion. Pub. L. No. 
111-68, ß 164, 123 Stat. 2023 (Oct. 1, 2009). 

[3] USPS's plan and related material are available at [hyperlink, 
http://www.usps.com/strategicplanning/futurepostalservice.htm]. 

[4] Pub. L. No. 109-435, ß 710 (Dec. 20, 2006). 

[5] [hyperlink, http://www.gao.gov/products/GAO-09-937SP]. 

[6] USPS plans call for continuing providing window retail service and 
delivery to post office boxes on Saturday, as well as remittance mail 
service for business mailers. 

[End of section] 

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