Postal Service (USPS) has been a self-supporting, wholly governmental entity. Non-Reliant on Appropriations

The PRA designed the USPS to be a marketized government agency, which is an agency that would cover its operating costs with revenues generated through the sales of postage and related products and services. Of the $8.4 billion expense increase, nearly all of it resulted from the PAEA's RHBF funding requirements. If RHBF payments are excluded, the USPS would have run modest surpluses of $800 million in FY2013 and $300 million in FY2014. The USPS has greater freedom to price competitive products. Mail volume was 23.2% lower in FY2014 than in FY2003, and 27.1% below its FY2006 peak. Additionally, during the past decade the "mail mix" has shifted. An increasing portion of the mail handled by the USPS is advertising mail, which yields low profits. Concurrently, the annual volume of first-class mail, which is highly profitable, has been dropping steadily, at least in part because mailers are shifting to electronic communications (e.g., online bill remittances and payment). Debt and Liquidity

The USPS reached its $15 billion debt cap in late FY2012 and continues to have no remaining borrowing authority through the end of FY2014. Figure 3 above shows the USPS's revenues were $7.1 billion higher in FY2007 and FY2008 than in FY2014. Since that time, the U.S. Treasury's "Monthly Statement of the Public Debt" has not included an entry for the CPF. Despite these organizational actions and the increase in revenue for the USPS in FY2013, the Postal Service projects that legislative change will be necessary to improve liquidity moving forward. The above financial data, however, suggest that for any reforms to be successful they would need to
contend with the USPS's short-term liquidity problem; be of sufficient magnitude to make appreciable changes to the USPS's annual operating revenue (currently $67 billion) or operating costs (currently $70+ billion); enable the USPS to sufficiently fund its retiree health benefits; help the USPS reduce its debt (currently $15 billion); and place the USPS on a long-term trajectory where the agency's revenues could be expected to meet or exceed expenses.
Since 1971, the U.S. Postal Service (USPS) has been a self-supporting government agency that covers its operating costs with revenues generated through the sales of postage and related products and services.
The USPS is experiencing significant financial challenges. After running modest profits from FY2003 through FY2006, the USPS lost $45.6 billion between FY2007 and FY2013. Since FY2011, the USPS has defaulted on $22.4 billion in payments to its Retiree Health Benefits Fund (RHBF). The agency reached its $15 billion borrowing limit in FY2012 and has not reduced total debt since that time. In October 2012, the USPS bolstered its liquidity by withdrawing all of the cash from its competitive products fund. This fund has not been replenished.
While the revenues for the USPS increased in FY2014, expenses have also risen. Compared with FY2013, expenses for FY2014 were $1.1 billion higher while revenues have increased by $500 million.
The USPS's recent financial difficulties are partially the product of reduced demand. The agency has experienced a 36.3% drop in mail volume during the past 10 years. Additionally, during the past decade the "mail mix" has shifted. A growing portion of the mail is advertising mail, which yields low profits. Concurrently, the annual volume of first-class letters, which are highly profitable, has been dropping steadily, at least in part due to mailers shifting to electronic communications. As a result, the Postal Service's revenues in FY2014 were lower than they were in FY2005. Additionally, the Postal Service's liquidity has decreased and its debt has increased since FY2006, partially as a result of the statutorily mandated payments to the RHBF that were made between FY2007 and FY2010. The USPS has not had sufficient liquidity to make the payments since FY2011.
This report discusses these issues in more detail, and includes financial results through the end of FY2014. This report will be updated in the event of any significant developments.