Financially Ailing USPS Under Fire For Paying Manager Bonuses

With the U.S. Postal Service predicting that it will lose between $2 billion and $3 billion this year, its payment of some $280 million in bonuses to the managers of top-performing units has come under fire from at least two Senators.

Senators Fred Thompson (R-TN) and Jeff Sessions (R-AL) blasted the USPS for paying the bonuses last year to roughly 80,000 managers when its officials knew the postal service would have to raise rates for the second time in less than two years to head off a financial crisis.

Last week the postal service’s Board of Governors revealed that this spring the USPS will ask the Postal Rate Commission to endorse a rate hike of between 10% and 15% for early 2002. In a move to forestall possible delivery cut backs, postal governors also ordered an immediate freeze on billions of dollars worth of capital improvement projects in virtually every congressional district in the country.

Thompson chairs the Senate’s Governmental Affairs Committee. Sessions is a member of the Senate Judiciary’s administrative oversight and courts subcommittee.

Asserting that postal officials needed “a reality check,” Thomson said for them to approve and pay those bonuses “at a time when they were planning to seek new rate increases amid predictions loses of between $2 billion and $3 billion defies logic.”

Sessions, who questioned whether postal officials are purposely keeping profits low “to justify rate increases,” said the USPS would have ended fiscal 2000 with a surplus instead of a $199 million loss if they did not pay out the bonuses. Reportedly he has his staff delving deeper into the payments in addition to examining postal finances and operations.

Reportedly hearings into both the bonus program and all postal operations are being planed for later in the spring by both Thompson’s committee and the House Government Reform Committee chaired by Rep. Dan Burton (R-IN). And, there are unconfirmed reports that USPS Inspector General Karla Corcoran’s office is also investigating the bonus program.

The USPS defended the payments saying through spokesman Greg Frye that they were part of a Economic Value Added Variable Pay Program (EVAVPP) offered to postal managers before the postal service’s financial picture darkened. The program began in 1996 under then Postmaster General Marvin T. Runyon.

Frye also noted that while postal officials are eligible for merit raises, they are cannot get “locality pay” which most federal workers receive for working in high-cost areas.

In a related development the tactics being used by postal governors to force Congressional action on postal reform legislation have come under fire from industry officials.

Gene Del Polito, Association for Postal Commerce president, and Neal Denton, Alliance of Nonprofit Mailers executive director, saw the action by postal governors as an attempt to coerce members of Congress into acting on postal reform legislation their way instead of what was best for the nation.

Last week end a taxpayer watchdog group, Citizens Against Government Waste (CAGW) blasted the action by postal governors, calling it “nothing more than political extortion” to justify a rate increase.