Government Operations:

Potential Financial Effect on the U.S. Postal Service of Increased Voting by Mail

GAO-12-72R: Published: Oct 20, 2011. Publicly Released: Oct 20, 2011.

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Lorelei St James
(214) 777-5719
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

The United States Postal Service (USPS) is in a serious financial crisis and has not generated sufficient revenue to cover its expenses and financial obligations as mail volume continues to decline. Congress requested that we examine how much additional revenue could result from the increased use of voting by mail--that is, more registered voters receiving and casting ballots through the mail. Currently, all states use voting by mail to some degree, most commonly in the form of absentee ballots mailed to registered voters who cannot, or choose not to, vote in person on Election Day. However, Oregon and Washington now administer elections solely through mail voting. According to a 2009 U.S. Election Assistance Commission (EAC) study, about 23.7 million ballots, or 17.7 percent of all votes, were cast by mail in the 2008 presidential election. This report documents information on the revenue potential of increased use of voting by mail that we presented to your office on August 17, 2011.

We found that voting by mail has limited potential for providing USPS with additional revenues substantial enough to affect its deteriorating financial condition because of the small potential increase in volume relative to total mail volume, the low profit margins on election mail, and the lack of strong nationwide support for voting by mail. We found the potential for additional revenues was limited, in part, because the volume of election mail would be relatively low even if mail voting were implemented nationwide in presidential elections. To gauge the potential impact of increased voting by mail under one possible scenario, we estimated the election mail volume that could have resulted if the 2008 presidential election had been conducted solely by mail. Our estimate assumed 190 million outgoing ballots--one for each registered voter in 2008--and 134 million returned, completed ballots--the number of voters who actually cast ballots in the 2008 election--resulting in 324 million pieces of mail, or about two-tenths of 1 percent of USPS's total fiscal year 2009 mail volume of 177 billion pieces. Given that mail volume has declined an average of nearly 14 billion pieces a year since fiscal year 2008, the additional election mail would be unlikely to alter the current trend of declining mail volume, particularly when taking into account that presidential elections occur every 4 years. We estimate that not only would this amount of election mail have minimal impact on mail volume but, more importantly, it would not significantly increase USPS's revenues. Election ballots sent to voters typically are mailed using either Nonprofit Standard Mail or First Class Mail rates, depending on a number of factors, including the information contained in the ballot, whether the ballots are presorted, and how local postal officials interpret the mail classification standards. Voters must generally use First Class postage to return completed ballots. To account for the use of the two different rates for outgoing ballots, we estimated revenue using both. According to our estimates, an all-mail 2008 presidential election could have generated revenue ranging from $224 million using Nonprofit Standard Mail rates to $415 million using First Class Mail rates, representing less than 1 percent of USPS's total fiscal year 2009 revenue of $68.1 billion. Although we were able to estimate potential revenue had the 2008 presidential election been conducted solely by mail, we were unable to assess the extent to which this additional source of volume and revenue would have mitigated USPS's financial loss in 2009. Election mail is currently processed using a variety of mail classes, and USPS does not separately account for costs attributable to election mail as it does for individual classes of mail, such as First Class or Standard Mail. However, USPS officials told us that they make little, if any, profit on election mail, depending on factors such as whether it is sent First Class--one of the most profitable classes of mail for USPS--or Nonprofit Standard. The class of mail that includes the Nonprofit Standard rate is, on average, unprofitable, with the revenue that USPS receives for this class covering only 82 percent of the cost USPS incurs delivering it. USPS officials stated that the Postal Service views the processing and delivery of election-related materials more as a required public service than a revenue opportunity. USPS plans to submit a proposal to the Postal Regulatory Commission by the end of 2011 to create an Election Class Mail rate, which would offer a flat rate for mail up to 3.3 ounces per piece and the features of First Class Mail, including forwarding and return service, but at a lower price than First Class Mail. USPS officials have not yet made public the price of postage for Election Class Mail but have stated that it would be less than current First Class rates and more than Nonprofit Standard Mail rates.

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