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USPS & Postal Policy

USPS announced excessive rate increases

The Nonprofit Alliance is disappointed with the U.S. Postal Service’s enormous increase in postal rates of 6.5% to 8.5%, depending on the class of mail, that went into effect on August 29, 2021.

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 in January, 2021.
  • The Postal Regulatory Commission (PRC) approved this increase, which went into effect on August 29, 2021.
  • 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 in the midst of the world-wide 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.

POSTAL: Background

The Postal Service has been a hot topic of conversation. Whether the discussion centered around Postmaster General Louis DeJoy, age and reliability of postal equipment, or slow delivery, controversy has surrounded the USPS. 

And now, mailers have to deal with a 6.5 to 8.5% increase in postal rates (depending on the class of mail) that went into effect on August 29, 2021.  This is on top of the January 2021 rate increase.

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?

With the large increase in postal rates, which took effect on August 29, 2021 — well-beyond the rate of inflation (or CPI) increasing 6.5–8.5%, depending on the class of mail — mailers face a very challenging situation. And as noted, this latest 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? It’s now all about Capitol Hill…

On November 12, the U.S. Court of Appeals (D.C. Circuit) ruled against the suit filed by a coalition of mailers’ associations. The Court upheld the Postal Regulatory Commission’s decision to grant the Postal Service the ability to raise postage rates higher than the rate of inflation (CPI).

With that disappointing decision, now it’s all about Capitol Hill. Legislation is currently moving through Congress that is a step in the right direction. The postal reform legislation, which was reported out of the House postal committee in May 2021, has several positive provisions, including moving the large retiree healthcare cost off the Postal Service and putting it in Medicare where most retiree healthcare costs reside. HOWEVER, the legislation does NOT have any language limiting future postal rate increases.

The House postal reform bill, H.R. 3076, will likely come to the House Floor early this year and we anticipate no changes to the bill as it moves through the House. The real battle will come later when the Senate takes up the bill and it appears the Senate may be willing to make adjustments to the legislation. To that end, TNPA has been working with a number of Senators key to the postal process who may be willing to modify the legislation, including:

  • Senator Gary Peters (D-MI) – the chair of the postal committee
  • Senator Rob Portman (R-OH) – the top Republican on the postal committee
  • Senator Susan Collins (R-ME) – who co-authored the 2006 Postal Reform Act (the last major postal legislation Congress has enacted)
  • Senator Tom Carper (D-DE) – who co-authored with Senator Collins the 2006 Postal Reform Act

The Bottom Line

TNPA strongly believes that structural reform of the Postal Service is badly needed. There has been no substantial postal reform legislation since the 2006 PAEA. However, effective postal reform legislation must include language making future postal rate increases predictable, largely in line with inflation.

Who are the key players?

IN THE U.S. SENATE 

  • Senator Gary Peters (D-MI), Chair of the Homeland Security and Governmental Affairs Committee (HSGAC)
  • Senator Rob Portman (R-OH), Ranking Republican on the Homeland Security and Governmental Affairs Committee 
  • Senator Tom Carper (D-DE)
  • Senator Susan Collins (R-ME)
  • + 20 additional co-sponsors to the proposed postal reform bill of 2021

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

Read more…

My (Virtual) Day on the Hill, by Sandra Miao (June 2021)

Increasing Mail Costs on the Horizon (April 2021)

Legislative Round-Up (Jan 2021)

US Postal Service Rate Increases, A Tool to Understand the Impact on Your Nonprofit of the January 2021 Increases

A Perfect Storm for USPS (Sept 2020)

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