This report identifies long-term structural or operational issues that may affect the U. S. Postal Services's (USPS) ability to provide affordable universal postal service on a break-even basis. One key issue is the Service's retirement costs and future liabilities. USPS had a net loss of $199 million in fiscal year 2000 and recently announced a $1.7 billion net loss for fiscal year 2001. The impact of September 11 and the subsequent anthrax mailings on the volume and the cost of future mail service is unclear. USPS' annual retirement plan costs are projected to rise significantly in the next 10 years--from $8.5 billion in fiscal year 2000 to $14 billion in fiscal year 2010. USPS also faces mounting debt because of pay increases resulting from new labor contracts and annual cost-of-living adjustments for retirees. USPS reported an outstanding liability for future retirement benefits of $32.2 billion as of September 2000, and anticipates paying another $16.5 billion in interest on this liability over 30 years. The Post-Retirement Health Benefit Program--an additional benefit available to USPS retirees--cost $744 million in fiscal year 2000. When this benefit is added to the retirement plan, it raises total retirement costs for fiscal year 2000 to $9.3 billion. USPS projects that this additional post-retirement health benefit will cost $2 billion in fiscal year 2010, raising the Service's total retirement costs to $16 billion that year.
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