Mail Management:

Labor Programs Run by States Could Reduce Postage Costs

GGD-91-43: Published: Mar 20, 1991. Publicly Released: Mar 20, 1991.

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J. William Gadsby
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Pursuant to a congressional request, GAO reviewed Department of Labor (DOL) opportunities to reduce postage costs through improved mail management operations at State Employment Security Agencies (SESA).

GAO found that: (1) past DOL efforts to reduce SESA mailing costs achieved limited cost reductions due to inadequate presort equipment and software; (2) DOL could reduce its annual mailing costs by a total of $6.7 million by successfully encouraging SESA to presort more and to include the nine-digit zone improvement program (ZIP) code on their mail; (3) SESA had little incentive to minimize postage costs because savings resulting from improved mail management did not benefit them directly; and (4) to achieve postal savings, DOL would have to provide SESA with funds for presort equipment and software, or get them to use contractors to presort their mail.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOL agrees with the recommendation, but is waiting for the Postal Service to change procedures to require direct accountability. DOL has issued draft guidance on direct accountability to all SESA. DOL should convert to direct accountability by October 1, 1994. Any potential savings would have to be reevaluated after fiscal year 1995.

    Recommendation: The Secretary of Labor should encourage SESA to obtain postage discounts by revising the allocation formula for reimbursing SESA administrative costs so that SESA that do realize postage savings are rewarded directly, through increased funding of their administrative costs.

    Agency Affected: Department of Labor

  2. Status: Closed - Implemented

    Comments: DOL provided SESA with the funds to automate mailing operations in February 1992.

    Recommendation: The Secretary of Labor should encourage SESA to presort mail and include the nine-digit ZIP code on their mail. If the funds needed to buy presorting equipment are not available, SESA should be encouraged to contract for presorting services as an alternative.

    Agency Affected: Department of Labor


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