The U.S. Postal Service suspended bonuses and other incentives for its top managers and executives in summer 2011. The Postal Service said it took the action as a result of its "dire financial situation," the loss of $8.5 billion in fiscal year 2010 and expected deficit of $8 billion more in 2011.
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"We must continue to identify opportunities to reduce spending where possible, and eliminate costs which are not deemed essential for the continuation of our operations," Anthony J. Vegliante, the Postal Service's chief human resources officer, said in a memo distributed in summer 2011. Vegliante earned a salary of $240,000 in 2011.
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The suspension of bonuses and other incentives for top Postal Service managers and executives was described as a "temporary policy change" that was to remain in place "until further notice," the Postal Service said. It did not effect Postal Service clerks, mail handlers and union workers.
"When communicating this information to your management teams, please assure them that this action in no way suggests a lack of appreciation for the tremendous job they do on a daily basis," Vegliante wrote. "Now, more than ever, it is paramount that each of us - as leaders of this organization - take the time to thank our employees for their efforts during these extremely difficult times."
Postal Service Trims Costs
The Postal Service said about 62,000 of its workers would have been eligible for the executive and administrative bonuses in 2011, according to the Federal Times. The incentives are designed to keep Postal Service pay in line with compensation in the private sector.
The Postal Service ban on bonuses means that the agency's employee recognition and incentive awards are suspended until further notice. The measure applied to all administrative and managerial positions, as well as senior managers.
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The ban prohibited awarding cash, cash equivalent or non-cash tangible items intended for employee recognition. Cutting the bonuses saved the agency about $7 million in 2011. The Postal Service also suspended contributions to the Federal Employee Retirement System earlier in the year.
Postal Service Spending Criticized
Earlier in the year, the Office of Inspector General sharply criticized the Postal Service's travel spending, saying there were numerous examples of waste, fraud and abusive credit-card use, including one instance of an employee who used a government-issued travel card more than 50 times at adult entertainment establishments.
"Postal Service employees did not comply with prescribed travel policies resulting in over $600,000 in excessive travel costs for lodging and airfare," the OIG reported in February 2011. The Postal Service said it was taking corrective action.
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Of 155,104 Postal Service lodging transactions that came under review, 21,691 exceeded the government lodging rate, according to the OIG. Its policy requires travelers to obtain the government rate for official lodging. One employee claimed 326 lodging nights for reimbursement over a 20-month period that, in total, exceeded the prescribed government lodging rates by $17,877.
Postal Service Calls for Reform
Though the Postal Service is bleeding money, it receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.
In announcing the cancellation of bonuses, the Postal Service said it had made "significant cost reductions in areas within its control" but needed Congress to approve several other measures to boost its financial outlook.
They include eliminating mandated retiree health benefit pre-payments; forcing the federal government to return Civil Service Retirement System and Federal Employee Retirement System overpayments to the Postal Service; and allowing the Postal Service to determine the frequency of mail delivery.
Postal Service Wants to End Saturday Mail Delivery
The Postal Service says stopping Saturday mail, an idea that has been floated several times, and moving to five-day delivery would save the agency $3.1 billion. The agency says "there is no longer enough mail to sustain six days of delivery."
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The Postal Regulatory Commission says ending Saturday mail would save far less than that, only about $1.7 billion a year. The Postal Regulatory Commission also projected that ending Saturday mail would result in larger mail-volume losses than the Postal Service predicts.
Under five-day delivery, the Postal Service will no longer deliver mail to street addresses - residences or businesses - on Saturdays. Post Offices will remain open on Saturdays, though, to sell stamps and other postal products. Mail addressed to post office boxes will continue to be available Saturday.