USPS & Postal Policy
Breaking News: USPS announces excessive rate increases
May 28, 2021 — The Nonprofit Alliance is disappointed with today’s announcement from the U.S. Postal Service to request an enormous increase in postal rates of 6.5% to 8.5%, depending on the class of mail.
Image Credit: Alliance of Nonprofit Mailers
Here’s what you need to know:
- This new increase is in addition to the 1.5% rate increase that took effect earlier this year.
- The Postal Regulatory Commission (PRC) is expected to approve this increase quickly and the new rates would likely go into effect in September.
- This additional rate increase in 2021 was made possible late last year when the PRC granted the USPS a new rate authority, allowing it to increase rates beyond the rate of inflation as measured by the Consumer Price Index (CPI).
- These excessive rate increases are on the heels of a year-long pandemic that has already stretched nonprofit organizations to the limit.
- Given the USPS’ new rate authority, these enormous rate increases could be repeated for each of the next several years.
As a long-term solution and to address this crisis at its root, TNPA is working toward much-needed legislation to structurally reform the USPS. The proposed legislation currently working its way through Congress represents a significant step in the right direction.
NOTE: The new rate-making authority is being challenged in the D.C. Federal Court of Appeals by the Alliance of Nonprofit Mailers, with the support of TNPA (as an “Intervenor” in the case) and other mailer organizations. The suit claims that the PRC’s granting of authority to USPS to raise postal rates beyond the CPI actually violates the limit set in law, and creates an authority not found in the Postal Reform Act of 2006.
The Postal Service has been a hot topic of conversation. Whether the discussion centered around new Postmaster General Louis DeJoy, age and reliability of postal equipment, or slow delivery, controversy has surrounded the USPS.
And now, mailers face a 6.5 to 8.5% increase in postal rates (depending on the class of mail) expected to take effect in late August or early September. This is on top of the January 2021 rate increase already implemented this year.
Why do nonprofits care?
The USPS is an important conduit for the nonprofit community. A well-written letter with a personal message sent via the mail has been—and continues to be—a vital means of communication from nonprofits to donors, members, beneficiaries, and the general public.
With postal rates expected to go up at a rate substantially higher than the rate of inflation, nonprofits are extremely concerned…And should be!
What is the Ideal Policy?
Ideal for the nonprofit sector—and all mailers—would be a return to the original goals of the Postal Reform Act of 2006: predictable rate increases, largely in line with the rate of inflation.
What is the Current Situation?
With the enactment of the landmark Postal Reform Act of 2006 (also known as the Postal Accountability and Enhancement Act of 2006, or PAEA), mailers faced a relatively stable situation in terms of postal rate increases. Specifically, the PAEA limited price increases to a formula derived from the Consumer Price Index. Therefore, in most years since 2006, postal rates increased approximately at the rate of inflation, a relatively predictable and reasonable rate of increase. Unhappily, thanks to the Postal Regulatory Commission (PRC) those days are over!
Under the 2006 law, the PRC was given the task of conducting a ten-year review of the law’s effectiveness. The PRC concluded the USPS’s poor financial situation was due to the CPI cap. It therefore proposed a new regulation, formally adopted in December 2020, which gave new ratemaking authority to USPS , NOT limited by a CPI cap. Mailers now face a new, much more challenging environment of substantially larger rate increases, year in and year out.
What to Keep an Eye On?
The Postal Service announced on May 28, 2021, a second 2021 rate increase. This one is excessive — and well-beyond the rate of inflation (or CPI) — increasing 6.5 – 8.5%, depending on the class of mail. The new rates are expected to take effect in around 90 days, or late August/early September. This pending rate increase is in addition to the 1.5% rate increase that just took effect on January 24, 2021.
The long-range consequences of the new rate-making authority could mean crushing increases over the next 4-5 years.
What can we do?
The Nonprofit Alliance is working on 2 fronts:
A LAWSUIT TESTING THE LEGALITY OF THE RULE
The Nonprofit Alliance has joined the lawsuit (as an “intervenor”) of the Association of Nonprofit Mailers (ANM) in the DC Federal Court of Appeals. The suit claims the PRC assumed the authority to raise rates beyond the CPI limit set in the law, an authority not found in the PAEA.
We strongly believe that structural reform of the Postal Service is badly needed. There has been no substantial postal reform legislation since the 2006 PAEA. There is currently legislation moving through Congress that is a step in the right direction (see below).
HOUSE OF REPRESENTATIVES
On May 13, the House Committee on Oversight & Reform unanimously reported out of committee for consideration on the House Floor H.R. 3076, the Postal Service Reform Act of 2021. TNPA worked on this legislation with Congresswoman Carolyn Maloney (D-NY), the chair of the committee. Among the key provisions of the legislation reported out of committee are:
- Moving the enormous postal retiree healthcare cost away from the USPS and onto Medicare, where most retiree healthcare costs reside.
- Eliminating the unfair requirement that the Postal Service prefund its retiree healthcare benefits for 75 years into the future. No private company or federal agency is required to comply with such a burdensome and unfair prefunding requirement.
- Maintaining six-day-per-week mail delivery.
- Requiring the USPS to develop an online, public-facing database that shows weekly service and delivery performance information.
However, the legislation does NOT include a requirement that future postal rate increases cannot increase faster than the rate of inflation (the Consumer Price Index, or CPI). Limiting future rate increases to the CPI is a top priority of TNPA.
Nonetheless, H.R. 3076 represents an important step in the process toward enactment of much-needed postal reform legislation. As yet, no date has been set for consideration of H.R. 3076 on the House floor. However, Chairwoman Maloney has stated that enactment of postal reform legislation is one of her top legislative priorities.
On May 20, Senator Gary Peters (D-MI), who chairs the Homeland Security & Governmental Affairs Committee (HSGAC) with postal jurisdiction, introduced S. 1720, To Provide Stability to and Enhance Services of the USPS.
This Senate bill has identical language to H.R. 3076 (mentioned above).
Senator Peters’ bill has 20 cosponsors — 10 Democrats and 10 Republicans — including Senators Rob Portman (R-OH), the Ranking Republican on the HSGAC; as well as Tom Carper (D-DE), who co-authored the 2006 Postal Reform Act, the last major piece of postal legislation enacted by Congress.
No date has been set as yet for consideration of S. 1720 by the HSGAC. However, similar to Congresswoman Maloney in the House, Senator Peters has also stated that enactment of postal reform legislation is a top priority.
Who are the key players?
IN THE U.S. SENATE
- Senator Tom Carper (D-DE)
- Senator Gary Peters (D-MI)
- Senator Rob Portman (R-OH), the Ranking Republican on the Homeland Security and Governmental Affairs Committee (HSGAC)
IN THE U.S. HOUSE OF REPRESENTATIVES
- Congresswoman Carolyn Maloney (D-NY), Chair of the Oversight & Reform Committee (the House committee with postal jurisdiction)
- Congressman James Comer (R-KY), Ranking Republican of the Oversight & Reform Committee
- Congressman Gerry Connolly (D-VA), chair of the subcommittee with postal jurisdiction.
- Congresswoman Virginia Foxx (R-NC), a senior member of the Oversight & Reform Committee