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GAO-04-455R 1 (2004-02-06)

handle is hein.gao/gaocrptapyk0001 and id is 1 raw text is: G A 0 Comptroller General Accountability * Integrity* Reliability United States United States General Accounting Office Washington, DC 20548 February 6, 2004 The Honorable Susan M. Collins Chairman, Committee on Governmental Affairs United States Senate Subject: Need for Comprehensive Postal Reform Dear Chairman Collins: This letter responds to your request for our views on the need for postal reform and is based upon our prior testimonies related to this issue.' In summary, we believe that comprehensive postal reform is urgently needed. The ability of the Service to remain financially viable is at risk because its current business model-which relies on mail volume growth to cover the costs of its expanding delivery network-is not well aligned with 21st century realities. Since we placed the Postal Service's transformation efforts and financial outlook on our High-Risk List in April 2001, I have testified on several occasions about the governance, financial, operational, and human capital challenges that threaten the Service's ability to carry out its mission. If not effectively addressed in a timely manner, these challenges serve to threaten the Service's ability to remain self-supporting while providing affordable, high-quality, and universal postal services to all Americans. The following key trends serve to reinforce our view that enactment of postal reform legislation is needed: Declining mail volume: Total mail volume declined in fiscal year 2003 for the third year in a row-a historical first for the Service, which has depended on rising mail volume to help cover rising costs and mitigate rate increases. First- Class Mail volume declined by a record 3.2 percent in fiscal year 2003 and is projected to decline annually for the foreseeable future. Some of this decline is due to technology advances (e.g. E-mail, digital phones, faxes, and electronic bill payments) that are likely to increase in the future. This trend is particularly significant because First-Class Mail covers more than two-thirds of the Service's institutional costs. 'See U.S. General Accounting Office, U.S. Postal Service: Bold Action Needed to Continue Progress on Postal Transformation, C¢AO-O 4_8T (Washington, D.C.: Nov. 5, 2003); and U.S. Postal Service: Key Elements of Comprehensive Postal Reform, GAO-04-,397T (Washington, D.C.: Jan.28, 2004). GAO-04-455R Postal Reform

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