USPS financial viability continues to be high risk because USPS cannot fund its current level of services and financial obligations from its revenues. As stated in GAO’s 2019 High-Risk update, USPS faces financial challenges that include the following:
- Poor financial situation: USPS’s overall financial condition is deteriorating and unsustainable. USPS has lost $69 billion over the past 11 fiscal years—including $3.9 billion in fiscal year 2018. USPS’s total unfunded liabilities and debt ($143 billion at the end of fiscal year 2018) have grown to double its annual revenue.
- Insufficient cost savings: The savings from USPS cost-reduction efforts have dwindled in recent years. Although USPS has stated that it will aggressively reduce costs within its control, its plans will not achieve the kind of savings necessary to significantly reduce current operating costs.
- Unfavorable trends: USPS’s expenses are now growing faster than its revenues—partly due to rising compensation and benefits costs and continuing declines in the volume of First-Class Mail.
USPS Unfunded Liabilities and Debt as a Percentage of USPS Revenue, Fiscal Years 2007 through 2018
Further, USPS has missed $48.2 billion in required payments for postal retiree health and pension benefits as of September 30, 2018. This includes $42.6 billion in missed payments for retiree health benefits since fiscal year 2010, and $5.6 billion in missed payments for pension benefits since fiscal year 2014. If USPS does not make any more payments for retiree health benefits, the fund supporting these benefits is projected by the Office of Personnel Management to be depleted in fiscal year 2030. If the fund is depleted, USPS would be required by law to make the payments necessary to cover its share of health benefits premiums for postal retirees. However, current law does not address what would happen if USPS misses those payments. Depletion of the fund, together with USPS’s potential inability to make remaining contributions, could affect postal retirees as well as USPS, customers, and other stakeholders, including the federal government.
www.gao.gov/mobile/key_issues/us_postal_service_financial_viability/issue_summary