The U.S. Postal Service’s Financial Condition:
A Primer

Kevin R. Kosar
Analyst in American and National Government
July 24, 2013
Congressional Research Service
7-5700
www.crs.gov
R43162
CRS Report for Congress
Pr
epared for Members and Committees of Congress

The U.S. Postal Service’s Financial Condition: A Primer

Summary
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 $41.1 billion between FY2007 and FY2012. Since
FY2011, the USPS has defaulted on $11.1 billion in payments to its Retiree Health Benefits Fund
(RHBF). The agency has reached its $15 billion borrowing limit and is low on cash. In October
2012, the USPS bolstered its liquidity by withdrawing all of the cash from its competitive
products fund.
At the end of the first half of FY2013, the USPS’s financial condition showed no appreciable
signs of improvement. The agency’s revenues and operating expenses were little changed relative
to mid-FY2012.
The USPS’s recent financial difficulties are partially the product of falling revenues. The agency
has experienced a 21.4% 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 FY2012 were lower than they were
in FY2003. Additionally, the Postal Service’s liquidity has decreased and its debt has increased
because of the statutorily mandated payments that must be made to the RHBF each year.
This report discusses these issues in more detail, and it will be updated after the USPS releases its
FY2013 third quarter financial results in early August 2013 and in the interim should there be any
significant developments.
This report replaces CRS Report R41024, The U.S. Postal Service’s Financial Condition:
Overview and Issues for Congress
, by Kevin R. Kosar.


Congressional Research Service

The U.S. Postal Service’s Financial Condition: A Primer

Contents
Background ...................................................................................................................................... 1
Independent Establishment of the Executive Branch ................................................................ 1
Non-Reliant on Appropriations ................................................................................................. 1
Treasury Accounts ..................................................................................................................... 1
Borrowing Authority ................................................................................................................. 2
The USPS’s Financial Condition ..................................................................................................... 2
Profitability ................................................................................................................................ 3
Year-to-Date Profitability .................................................................................................... 3
Ten-Year Profitability Trend ................................................................................................ 3
Revenues.................................................................................................................................... 4
Year-to-Date Revenues ........................................................................................................ 5
Ten-Year Revenue Trend ..................................................................................................... 5
Expenses .................................................................................................................................... 6
Year-to-Date Expenses ........................................................................................................ 6
Ten-Year Operating Expense Trend .................................................................................... 7
Debt and Liquidity ..................................................................................................................... 8
Observations .................................................................................................................................. 10

Figures
Figure 1. USPS Profitability, FY2003-FY2012 ............................................................................... 3
Figure 2. USPS Profitability Without the Annual RHBF Payments ................................................ 4
Figure 3. USPS Revenues, FY2003-FY2012 .................................................................................. 6
Figure 4. USPS Expenses, FY2003-FY2012 ................................................................................... 8
Figure 5. USPS Debt ........................................................................................................................ 9

Tables
Table 1. USPS Mid-Year Operating Expenses Minus RHBF Payments, FY2012 and
FY2013 ......................................................................................................................................... 7

Contacts
Author Contact Information........................................................................................................... 11

Congressional Research Service

The U.S. Postal Service’s Financial Condition: A Primer

Background
Independent Establishment of the Executive Branch
Since 1971, the U.S. Postal Service (USPS) has been a self-supporting, wholly governmental
entity.1 Prior to that time, the federal government provided postal services via the U.S. Post Office
Department (USPOD), a federal agency that received annual appropriations from Congress.
Members of Congress were involved in many aspects of the USPOD’s operations, including the
selection of managers (e.g., postmasters) and the pricing of postal services.
In 1971, Congress enacted the Postal Reorganization Act (PRA; P.L. 91-375; 84 Stat. 725), which
replaced USPOD with the USPS—an “independent establishment of the executive branch” (39
U.S.C. 201).
Non-Reliant on Appropriations
The PRA designed the USPS to be a marketized government agency; that is, an agency that
would cover its operating costs with revenues generated through the sales of postage and related
products and services.2 Although the USPS does receive an annual appropriation, the agency does
not rely on appropriations. Its appropriation is approximately $90 million per year, about 0.1% of
the USPS’s $65 billion operating revenue.3 Congress provides this appropriation to compensate
the USPS for the revenue it forgoes in providing, at congressional direction, free mailing
privileges to blind persons and overseas voters.
Treasury Accounts
The Postal Service Fund, which the USPS uses for most of its financial transactions, is off-
budget, and therefore not subject to the congressional controls of the Congressional Budget and
Impoundment Control Act of 1974 (P.L. 93-344; 88 Stat. 297; 2 U.S.C. 621).4

1 The USPS often is mischaracterized as a quasi governmental or private entity. It is neither. The USPS is a government
agency that was created by Congress to achieve various public purposes. Federal law defines what products and
services the Postal Service may offer. Additionally, the USPS’s employees are federal employees who participate in the
Civil Service Retirement System, the Federal Employees Retirement System, and the Federal Employees Health
Benefits Program. On quasi governmental entities, which have both governmental and private sector attributes, see
CRS Report RL30533, The Quasi Government: Hybrid Organizations with Both Government and Private Sector Legal
Characteristics
, by Kevin R. Kosar.
2 The term “marketized” refers to a government agency structured to provide goods and services in the manner of a
private firm. On marketization as an alternative to privatization, see CRS Report RL33777, Privatization and the
Federal Government: An Introduction
, by Kevin R. Kosar, pp. 23-29.
3 For further details on the USPS’s appropriations, see CRS Report R42730, Financial Services and General
Government: FY2013 Appropriations
, coordinated by Garrett Hatch, pp. 73-75.
4 For further background on the USPS’s budget status, see CRS Report RS20350, Off-Budget Status of Federal
Entities: Background and Current Proposals
, by Bill Heniff Jr.; and Office of Management and Budget, Budget of the
U.S. Government Fiscal Year 2013: Appendix
(Washington: GPO, 2012), pp.1389-1392, at
http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/oia.pdf.
Congressional Research Service
1

The U.S. Postal Service’s Financial Condition: A Primer

The USPS also has two other accounts that are on-budget: the Postal Service Retiree Health
Benefits Fund (RHBF) and the Competitive Products Fund (CPF), which were established by the
Postal Accountability and Enhancement Act of 2006 (PAEA).5 The RHBF is an account into
which the USPS must deposit annual prepayments towards current employees’ future retirement
benefits.6 The CPF was established to hold the revenues derived from the sale of competitive
products and services and any returns earned on the investment of these funds in U.S. Treasury
securities.7
Borrowing Authority
Unlike private companies, the USPS does not have the authority to borrow money from private
lenders. Rather, the USPS may borrow money from the U.S. Treasury’s Federal Financing Bank.
Federal statute limits the USPS’s debt increases to $3 billion per year, and the USPS’s total debt
to $15 billion.8
The USPS’s Financial Condition
A variety of approaches may be used to consider the financial condition of a firm.9 Here, the
USPS’s financial condition is examined by the metrics of profitability, revenues, expenses, and
debt and liquidity.
The USPS issues both quarterly (report on 10-Qs) and annual financial statements (10-Ks and
annual reports). The data below were drawn exclusively from these USPS sources.10 The financial
figures have not been adjusted to reflect inflation.11

5 P.L. 109-435; 120 Stat. 3198. The accounts are at 5 U.S.C. 8909(a) and 39 U.S.C. §2011(a)(2), respectively.
6 The PAEA requires the USPS to make annual RHBF payments of between $5.4 billion and $5.8 billion from FY2007
to FY2016. The payments are due on September 30 of each year. The USPS may not withdraw funds from the RHBF
during this 10-year period. Between FY2007 and FY2016, the USPS also must make annual outlays to cover a portion
of the healthcare premium costs of current retirees. After FY2016, the USPS will pay current retiree health benefit costs
from the RHBF, and will maintain the fund by making annual payments into it. For further details, see U.S. Postal
Service, “2012 Report on Form 10-K,” November 15, 2012, pp. 40-43, at http://about.usps.com/who-we-are/financials/
10k-reports/fy2012.pdf.
7 Further details on the CPF may be found in 39 C.F.R. 3060 at http://www.gpo.gov/fdsys/pkg/CFR-2011-title39-vol1/
pdf/CFR-2011-title39-vol1-part3060.pdf.
8 39 U.S.C. §2005(a).
9 The Government Accountability Office, for example, has assessed the USPS’s financial condition on the metrics of
revenues, expenses, profitability and liabilities. See Government Accountability Office, U.S. Postal Service: Urgent
Action Needed to Achieve Financial Sustainability
, GAO- 13-562T, April 13, 2013, at http://www.gao.gov/assets/660/
653841.pdf.
10 The USPS’s financial reports and statements may be found at http://about.usps.com/who-we-are/financials/.
11 According to the Bureau of Labor Statistics’ “inflation calculator,” the Consumer Price Index showed a 25% increase
between 2003 and 2012, a period nearly coincident to FY2003 to FY2012. See http://www.bls.gov/data/
inflation_calculator.htm.
Congressional Research Service
2

The U.S. Postal Service’s Financial Condition: A Primer

Profitability
Profitability here is defined as operating revenues less operating expenses.12 Operating revenues
(hereinafter, revenues) include funds received by the USPS for the provision of products and
services.13 Operating expenses (hereinafter, expenses) include all costs incurred by the USPS in
the provision of products and services.14
Year-to-Date Profitability
In the first two quarters of FY2013, the USPS booked $3.0 billion in operational losses. Of this
amount, $2.8 billion was a charge for the RHBF.15
Ten-Year Profitability Trend
Between FY2003 and FY2012, the USPS had four profitable years followed by six unprofitable
years (Figure 1). The USPS’s deficits during the past six years amount to $40.8 billion.
Figure 1. USPS Profitability, FY2003-FY2012
(billions of dollars)
$10.0
$5.0
$0.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
-$5.0
-$10.0
-$15.0
-$20.0

Source: CRS graphic based upon U.S. Postal Service “Annual Reports” and “Form 10-Ks.”
Note: Values are not adjusted for inflation.

12 The USPS reports annual profitability as either “income from operations” or “loss from operations.” This report uses
“profitability” as a proxy for these two terms, but otherwise employs the USPS’s definitions of financial terms (e.g.,
profitability, operating expense, debt, etc.).
13 Operating revenues exclude any revenues the USPS derives from investment income or interest earned on deposits.
14 Operating expenses exclude interest owed by the USPS on funds borrowed.
15 The USPS is legally obliged to pay $5.6 billion into the RHBF in FY2013. Accordingly, for the first half of FY2013
the USPS recorded one-half of this amount ($2.8 billion) as an RHBF charge on its 2nd quarter financial statement.
Congressional Research Service
3

The U.S. Postal Service’s Financial Condition: A Primer

The USPS’s losses began in FY2007, the same year the USPS began making payments into the
RHBF.16 Between FY2006 and FY2007, the USPS’s revenue rose $2.1 billion, from $72.7 billion
to $74.8 billion. The agency’s expenses increased $8.4 billion during this same period, from
$71.7 billion to $80.1 billion. Of the $8.4 billion expense increase, nearly all of it resulted from
the PAEA’s RHBF funding requirements. In FY2007, the USPS had a $5.4 billion outlay to the
RHBF, and an almost $3 billion one-time charge for transferring funds from a USPS escrow fund
to the RHBF per P.L. 109-435.
While RHBF payments have affected the USPS’s profitability, the USPS would have run deficits
each of the past four years even if the agency did not have to make RHBF payments (Figure 2).
These non-RHBF deficits would total $14.7 billion, an amount nearly equal to the USPS’s total
borrowing authority. As Figure 3 and Figure 4 below illustrate, these deficits were produced by a
sharp drop in revenues. (Expenses did not fall equivalently.)
Figure 2. USPS Profitability Without the Annual RHBF Payments
(billions of dollars)
$6.0
$4.0
$2.0
$0.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
-$2.0
-$4.0
-$6.0

Source: CRS graphic and calculation based upon U.S. Postal Service “Annual Reports” and “Form 10-Ks.”
Note: Values are not adjusted for inflation.
Revenues
Pursuant to federal statute, the USPS earns revenues through the provision of postal products and
services.17 The PAEA separated USPS products and services into two categories—“market-
dominant” (or monopoly) and “competitive.”18 Market-dominant products include those products
and services that the USPS need not compete with the private sector to provide (e.g., first-class

16 See U.S. Postal Service, “Annual Report, FY2007,” 2007, pp. 25-26, at https://about.usps.com/who-we-are/
financials/annual-reports/fy2007.pdf.
17 39 U.S.C. §404.
18 39 U.S.C. §3621-2634.
Congressional Research Service
4

The U.S. Postal Service’s Financial Condition: A Primer

letters). Competitive products and services are those for which a competitive market exists, such
as overnight parcel delivery.19
The USPS may annually raise the rates (prices) of products in the market-dominant class by no
more than the Consumer Price Index for All Urban Consumers (CPI-U). The USPS has greater
freedom to price competitive products.20 In January 2013, the USPS raised prices 2.6% on
market-dominant products and services, and 9% on competitive products.21
Of the USPS’s $65.2 billion in revenues in FY2012, $53.8 billion (82.5%) came from sales of
market-dominant products and services.22
Year-to-Date Revenues
Over the first two quarters of FY2013, USPS’s revenues totaled $34.0 billion. This amount is
slightly higher ($0.1 billion) than the USPS’s revenues for the first two quarters of FY2012
($33.9 billion).
Ten-Year Revenue Trend
Between FY2003 and FY2012, the USPS’s revenue grew for six years then declined for four
years (Figure 3). The USPS’s FY2012 operating revenue of $65.2 billion is $3.3 billion, or 4.8%,
lower than its FY2003 revenues ($68.5 billion). The rapid decline in mail volume began
approximately shortly after the U.S. economy had officially entered a deep recession.23
The USPS’s revenues are derived almost entirely from postage paid for the delivery of mail.
Hence, when mail volumes rise, the USPS’s revenues tend to rise. Between FY2003 and FY2007,
mail volume increased from 202.2 billion to 212.2 billion mail pieces. Since then, mail volume
has dropped sharply—to 158.9 billion pieces in FY2012. Mail volume, then, was 21.4% lower in
FY2012 than in FY2003, and 25.1% below its FY2006/FY2007 peak.24
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.25 Concurrently, the annual

19 FedEx and UPS are among the private firms that compete with the USPS to provide overnight parcel delivery.
20 39 U.S.C. §3622(c)(2) and 39 U.S.C. §3633 set a floor for competitive products prices by requiring that they be
priced at not less than an amount calibrated to generate revenue sufficient to cover the USPS’s costs to provide them.
21 U.S. Postal Service, “Quarter II, 2013 Report on Form 10-Q,” May 10, 2013, p. 22, at https://about.usps.com/who-
we-are/financials/financial-conditions-results-reports/fy2013-q2.pdf.
22 Postal Regulatory Commission, “Annual Compliance Determination, FY2012,” March 28, 2013, p. 161, at
http://www.prc.gov/Docs/86/86931/2012_ACD_Web-REVISED-5-7-13.pdf.
23 CRS Report R40198, The 2007-2009 Recession: Similarities to and Differences from the Past, by Marc Labonte, p.
1. The USPS’s mail volume peaked in FY2006 at 213.1 billion mail pieces, and was nearly as high in FY2007. In the
first two quarters of FY2008 (October through December and January through March), mail volume was higher than in
the same quarters in FY2007. It was not until the third quarter of FY2008 (April through June) that the USPS reported a
decline in mail volume relative to the same quarter in the previous year. By the end of FY2008, mail volume had
dropped from 212.2 to 202.7 billion mail pieces. Thus, chronologically it was the case that the U.S. economy entered a
recession in December 2007, and mail volume began falling approximately four to six months later.
24 In FY2006, mail volume peaked at 213.1 billion mail pieces. The following year, mail volume was 212.2 billion
(.4% lower).
25 For further details, see Postal Regulatory Commission, “Annual Compliance Determination, FY2012,” pp. 80-81 and
(continued...)
Congressional Research Service
5

The U.S. Postal Service’s Financial Condition: A Primer

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).26
Figure 3. USPS Revenues, FY2003-FY2012
(billions of dollars)
$80.0
$75.0
$70.0
$65.0
$60.0
$55.0
$50.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012

Source: CRS graphic based upon U.S. Postal Service “Annual Reports” and “Form 10-Ks.”
Note: Values are not adjusted for inflation.
Expenses
Year-to-Date Expenses
Over the first two quarters of FY2013, USPS’s expenses totaled $37.1 billion. This amount is
$3.2 billion, or 7.9%, lower than the USPS’s expenses for the first two quarters of FY2012 ($40.3
billion).
If the RHBF expenses are removed from consideration, the USPS’s mid-FY2013 expenses are
slightly higher ($66 million) than its mid-FY2012 expenses (Table 1).


(...continued)
105-106.
26 U.S. Postal Service, “Annual Report FY2003,” p. 1, and U.S. Postal Service, “2012 Report on Form 10-K,” p. 27.
Congressional Research Service
6

The U.S. Postal Service’s Financial Condition: A Primer

Table 1. USPS Mid-Year Operating Expenses Minus RHBF Payments,
FY2012 and FY2013
(billions of dollars)
FY2012
FY2013
Quarter 1
$19.4
$18.2
Quarter 2
$20.9
$18.9
Total $40.3
$37.1
(Less RHBF expense)
($6.1)
($2.8)
Total $34.2
$34.3
Source: U.S. Postal Service, Quarter II, FY2012 and FY2013 “Reports on Form 10-Q.”
Note: Values are not adjusted for inflation.
Ten-Year Operating Expense Trend
The USPS’s operating expenses have increased from $63.9 billion to $81.0 billion (21.1%) in the
past 10 years.
If the RHBF portion of the expenses is removed, the USPS’s annual expenses increased 9.4%
over the decade. Figure 4 shows that in the four years (FY2003 to FY2006) prior to PAEA’s
establishment of the RHBF (FY2007), expenses grew from $63.9 billion to $71.7 billion (12.2%).
More than half of this increase ($5 billion) reflected rising compensation costs.27 After the
enactment of the PAEA, the USPS’s expenses (minus the RHBF) slightly declined.

27 U.S. Postal Service, “Annual Report, FY2003,” p. 26, at https://about.usps.com/who-we-are/financials/annual-
reports/fy2003.pdf; and U.S. Postal Service, “Annual Report, FY2007,” p. 24.
Congressional Research Service
7

The U.S. Postal Service’s Financial Condition: A Primer

Figure 4. USPS Expenses, FY2003-FY2012
(billions of dollars)
$90.0
$85.0
$80.0
$75.0
$70.0
$65.0
$60.0
$55.0
$50.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Operating Expenses
Operating Expenses Less RHBF

Source: CRS graphic and calculation based upon U.S. Postal Service, Quarter II, FY2012 and FY2013 “Reports
on Form 10-Q.”
Note: Values are not adjusted for inflation.
Debt and Liquidity
The USPS reached its $15 billion debt cap in late FY2012 and continued to have no remaining
borrowing authority at the end of quarter 2 of FY2013.28 The USPS was debt-free in one of the 10
years between FY2003 and FY2012 (Figure 5). Factors contributing to the USPS’s growing debt
include falling annual revenues and the agency’s $17.9 billion in payments into the RHBF.29
Figure 3 above shows the USPS’s revenues were $10 billion higher in FY2007 and FY2008 than
in FY2012.

28 U.S. Postal Service, “Quarter II, 2013 Report on Form 10-Q,” p. 12; and U.S. Postal Service, “2012 Report on Form
10-K,” pp. 52-53.
29 The USPS made the following payments in the RHBF: $5.4 billion (FY2007), $5.6 billion (FY2008), $1.4 billion
(FY2009), and $5.5 billion (FY2010). The agency has not paid into the RHBF since FY2010. U.S. Postal Service,
“2012 Report On Form 10-K,” pp. 40-43.
Congressional Research Service
8

The U.S. Postal Service’s Financial Condition: A Primer

Figure 5. USPS Debt
(billions of dollars)
$15.0
$12.0
$9.0
$6.0
$3.0
$0.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012

Source: CRS graphic based upon U.S. Postal Service “Annual Reports” and “Form 10-Ks.”
Note: Values are not adjusted for inflation.
Postal Service Fund balance: At the end of quarter 2 of FY2013, the USPS had $2.7 billion in
cash, which is a low level for an agency with an average weekly operating expense of more than
$1.3 billion.30
Competitive Products Fund balance: The CPF held a balance of $1.6 billion at the conclusion
of FY2012.31 This amount was the largest year-end balance the CPF had in its five-year existence.
Shortly after FY2012 concluded, however, the USPS transferred the CPF’s entire balance into the
PSF.32 As of May 2013, the U.S. Treasury’s “Monthly Statement of the Public Debt” carried no
entry for the CPF, likely indicative of the CPF having little, if any, balance.33
Retiree Health Benefits Fund balance: The RHBF had $45.7 billion dollars as of the end of
FY2013, and $46.1 billion as of May 2013.34 As currently calculated, the USPS’s unfunded
RHBF obligation is approximately $47 billion.35 Federal law prohibits the USPS from drawing
any funds from the RHBF before FY2017.36

30 U.S. Postal Service, “Quarter II, 2013 Report on Form 10-Q,” p. 12.
31 Postal Regulatory Commission, “Annual Compliance Determination Report,” p. 174.
32 Ibid., p. 175.
33 U.S. Treasury, “Monthly Statement of the Public Debt,” May 2013, p. 10, at http://www.treasurydirect.gov/govt/
reports/pd/mspd/2013/opdm052013.pdf.
34 U.S. Postal Service, “2012 Report on Form 10-K,” p. 42; and U.S. Treasury, “Monthly Statement of the Public
Debt,” May 2013, p. 10.
35 U.S. Postal Service, “2012 Report on Form 10-K,”p. 42.
36 Pursuant to 5 U.S.C. §8906(g)(2)(A), the USPS shall use the RHBF to pay the healthcare costs of current employees
starting in FY2017.
Congressional Research Service
9

The U.S. Postal Service’s Financial Condition: A Primer

The USPS’s lack of borrowing authority has contributed to its self-reported “severe lack of
liquidity.”37 Had the USPS not transferred the entire balance of the CPF to the PSF, it would have
less than $1.0 billion in cash.
The USPS did not make its FY2011 and FY2012 RHBF benefit payments, leaving it $11.1 billion
in default. The agency reports it will not have enough cash to make the $5.6 billion RHBF
payment due September 30, 2013. Additionally, it is not clear whether the USPS will be able to
make its estimated $1.4 billion worker’s compensation payment in October 2013.38 The agency’s
limited liquidity and lack of borrowing authority is constraining the USPS’s ability to make
capital and operational upgrades (e.g., replace its aging fleet of delivery vehicles).39
The USPS is scheduled to report its FY2013, third-quarter financial results in early August
2013.40
Observations
Congress designed the USPS to be financially self-supporting. The agency’s ability to remain
financially self-sustaining over the long term is questionable. In the past five years, the USPS’s
revenues have fallen (Figure 3), but the agency’s costs have at best plateaued (Figure 5). The
USPS’s annual revenue in FY2012 was lower than its revenue 10 years earlier. Additionally, the
revenue trend depicted in Figure 3 may indicate a long-term weakening of the demand for the
USPS’s current products and services.41
The agency’s weak cash position presents a significant short-term peril. The USPS has warned,
should circumstances leave us with insufficient cash, we will be required to consider
emergency measures to ensure that mail deliveries continue. These measures could require
that we prioritize payments to our employees and suppliers ahead of those to the Federal
Government.42
Payment prioritization can ameliorate a liquidity crisis, but it cannot remedy it. Until the agency
can consistently reap revenues in excess of expenses, its cash will continue to dwindle. With no
further borrowing authority the USPS could find itself with insufficient funds to continue
operations.

37 U.S. Postal Service, “Quarter II, 2013 Report on Form 10-Q,” p. 7. Liquidity refers to the quantity of cash and assets
easily convertible to cash. Any firm, governmental or private, with low liquidity risks cash shortfalls that can disable it
from meeting its obligations, e.g., paying its employees, creditors, etc.
38 U.S. Postal Service, “Quarter II, 2013 Report on Form 10-Q,” p. 8. The USPS did have sufficient cash to make its
$1.4 billion payment to the Department of Labor for workers’ compensation in October 2012. U.S. Postal Service,
“2012 Report on Form 10-K,” p. 48.
39 The USPS currently is forecasting greatly reduced budgets for capital commitments in the next five years. U.S.
Postal Service, “2012 Report on Form 10-K,” p. 52.
40 39 U.S.C. §3654(a)(1) requires the USPS to file its quarterly financial reports within 40 days of the end of each
quarter. Quarter three concludes on June 30.
41 Postal Regulatory Commission, “Annual Compliance Determination, FY2012,” pp. 29-30.
42 U.S. Postal Service, “2012 Report on Form 10-K,” p. 49.
Congressional Research Service
10

The U.S. Postal Service’s Financial Condition: A Primer

It goes beyond the scope of this report to assess which operational or policy changes could
improve the USPS’s financial condition sufficiently to enable it to continue as a self-funding
government agency. 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 $65 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.


Author Contact Information

Kevin R. Kosar

Analyst in American and National Government
kkosar@crs.loc.gov, 7-3968


Congressional Research Service
11