Alaska News

In rural Alaska, Postal Service budget crisis looms large

CORDOVA, Alaska -- In the late 1980s, Cordovans went to the polls to decide on the future of their postal service. On the ballot, residents were asked to chose between two simple, yet drastically different options: home mail deliveries or on-site pick ups. Cordovans overwhelmingly voted down the home delivery idea, which came as a surprise to many. Even Gerald Masolini, who has been living in Cordova for the past 47 years.

"Like the Cordova Times Newspaper, the post office is one of the glues that holds our community together like an extended family," he said. "When we loudly said no to home delivery, we were actually stating how much we value having a common ground on which to regularly meet everyone in our tight-knit little town."

Thirty years later, once again Cordovans find themselves at a crossroad. However, this time they might have very little say in the future of the town's post office.

As reported in the Cordova Times last month, the free fall of Postal Service revenues has hit rock bottom last year with a record-low deficit of $16 billion. This is more than three times the reported $5.1 billion shortfall in 2011. The current Postal Service budgetary crisis combined with the expensive costs and unprofitable nature of delivering mail in rural areas have cast doubts in more than one Cordovan's mind: Will the post office remain open?

There has been no talk about shutting down the facility, and current regulations offer extra protection -- to some extent at least -- to rural towns. But under such financial stress, no post office in the country is unconditionally protected from closure.

To remedy skyrocketing deficits, the Post Office has come up with a wide range of solutions to increase cash flow and reduce costs.

Layoffs and closures have been imposed throughout the country. In 2011 USPS officials announced the shutting down of half of its mail processing centers -- over 250 -- and 3,700 post offices. According to Save the Post Office website, founded by New York University literature teacher Steve Hutkins, while a majority of the facilities seem to remain scheduled for closure, hundreds have been taken off the list. Most recently, postal officials have announced the end of Saturday deliveries, starting in August 2013, with the hope of saving nearly $2 billion annually.


But according to Zack Fields, the Alaska Democratic Party communications director, the response has been misguided.

Many believe that the Internet and the consequent decrease in mail volume are to blame for this economic downfall. Or that somehow, the Postal Service's own inefficiencies have caused its demise. While first class mail has been declining significantly, other areas such as parcel delivery or the delivery of junk mail are still profitable.

Instead Fields argues that actually, Congress is largely responsible.

In 2006, when the Postal Service still had money flowing into its accounts, Congress passed a bill asking the agency to work out how much it will have to spend on healthcare and retirement benefits for its 546,000 employees, and over the next 40 years.

Whatever that number was, USPS had to set this amount aside within 10 years.

"As far as I'm aware of, there's no other agency on earth -- private or public -- that prefunds 100 percent of your time period" said Zack Fields, adding that the 10 year schedule was often picked by legislators to match the Congressional Budget Office window, as opposed to being backed up by any rational reason.

Out of the Post Office's $15.9 billion deficit, as much as $11 billion is a direct result of these payments. Payments that no other federal agency is required to do on such short notice.

Another clause within the 2006 bill has further crippled the independent federal agency -- by preventing Postal Service from widening its sources of revenues. While post offices enjoy a great number of customers, the bill forbids the agency to own non-postal revenue. This policy has been keeping potential business partners at bay, as well as much needed outside income.

"If you're just focusing on infrastructure and layoffs, you're not actually solving the problem but creating a new one or making it worse," Fields concluded.

Alone, there is not much the Postal Service can do. It is independent of the federal government, but run by Congress and, therefore, powerless before the legislature. The House of Representatives and Senate had at least five different bills in the works during the last congressional session, all trying to come up with longterm solutions to avoid insolvency.

In 2012 the Senate passed a bipartisan bill, led by Republican Susan Collins (Maine) and Democrat Tomas Carper (Delaware), that would refund about $7 billion of retirement pre-funding to the Postal Service, considered by many as an overpayment. The bill would also enable the federal agency to partner with outside businesses and extend the 10-year payment schedule to 40 years.

The House failed to pass the Senate's bill, as it was working on its own version. Led by Republican Darrell Issa (California), the House bill turned out to be quite on the opposite of its Senate equivalent. It promoted more foreclosures and broke union contracts, making it for instance easier to lay off employees. And while the Senate was giving USPS two years to examine the issue of Saturday service into further details, Sen. Issa's bill was bringing a quick end to it.

In the end none of these bills were adopted, and now efforts must start from scratch for the new congressional session. But Postmaster General Pat Donahoe has announced that USPS will not be paying retirement pre-funding until the issue gets resolved. "Our issue is to make sure that we have money on hand to pay you and to pay our suppliers to make sure the mail gets delivered. And that's the main focus," Donahoe said in a January address on the agency's official website for retired employees

For remote towns like Cordova, shutting down the post office or reducing service to three or four days a week are hardly a solution. Beyond its social role, the cost of any alternative options for sending and receiving mail would be another financial burden in a city where prices are already going through the roof.

"Other services like UPS and FedEx don't cater to small places that have winter issues," explained Linée Perkins, who runs a general auto repair, describing the Postal Service of Cordova unreliable due to a lack of resources. Perkins has been going around town to educate small businesses and residents on the reasons behind postal delays, which she said have been felt by many, and encourage them to speak up.

Recently, the Cordova facility was left with only one postmaster and one clerk after two of its staff members retired. The postmaster is also to retire in three months, adding to the residents' anguish that mail such as bills or important documents might be delivered late in the future.

These recent departures followed by a temporary closure due to illness last month, seem to have triggered a reaction in upper management. Since then two part time seasonal employees -- non-career, no benefit and low wage -- have been hired to help out with the mail. But according to sources, the situation is so desperate that the aides were hired, despite having failed the Postal Service test they went to take out of town.


"There's not enough labor here, the post office has been understaffed for years" Perkins complained. "It just makes it that much harder to live rural and to run a business in rural Alaska."

This story first appeared in The Cordova Times. Contact Diane Jeantet at

Diane Jeantet

Diane Jeanete is a writer at The Cordova Times.