The Postal Service’s case is represented to the PRC by a witness who presents the plan. His name is James J. Boldt, and his statement begins by identifying himself as the National Manager, Customer Service Operations, in the Office of Delivery and Post Office Operations at Postal Service Headquarters. He has served in this capacity since May 2011. He previously served as the National Manager, Rural Delivery, also within the Office of Delivery and Post Office Operations at Postal Service Headquarters. As the Manager of Rural Delivery, he was in charge of policies and procedures for more than 75,000 rural routes nationally. Before that he was a mail handler and clerk, going back to 1984, and he has also served as a postmaster.
Boldt’s testimony repeats much of what is stated in the Request for an Advisory Opinion, but we’ll go over it in detail anyway. [The original document is here.]
The Postal Retail Network Must Evolve
Boldt’s testimony explains the RAOI. He overviews the current postal retail network of 26,700 Post Offices and 4,800 subordinate stations and branches—there are as many full-service retail facilities in the United States as Starbucks, McDonalds, Seven-Eleven, and UPS Stores combined.
The post offices are classified on the basis of “earned workload” of each facility—a combined value for the mail distribution, PO box delivery and retail window service activity at a facility. Thus an office can have an earned workload of 2 hours per day, 3 hours per day, etc.
Then there are the “alternate access channels”— 62,650 private retail stores that sell postage stamps on consignment; 4,300 businesses that operate as Approved Shippers and accept packages and other matter for mailing; the Postal Service’s public website — www.usps.com — which offers various postal products and services; rural delivery carriers who provide retail products and services; and approximately 2,500 Automated Postal Centers, virtually all of which are located in postal retail lobbies and many of which are accessible after regular retail window service hours. In addition, postal customers can arrange by mail, fax and telephone to have postage stamps and shipping supplies delivered. Where rural or Highway Contract Route delivery is provided, customers have the option of carrier pickup of letters and packages at a delivery point.
Boldt notes that “as the Post Office’s role in the postal retail network has diminished, other aspects of the postal retail network have become more important,” and he proceeds to paint the alternatives as increasingly popular with customers. (Of course, what he does not explain is that the Postal Service has driven this shift away from the post office. He makes it seem as if they are simply responding to a changing demand.)
In order to provide evidence of these shifts, Boldt produces a chart showing the decline in customer visits to the post office. The graph shows a decline from 1,100 annual visits in 2007 to 927 in 2011, but the graph shows only the top portion of the line, so the angle of decline is exaggerated.
Boldt presents a second graph showing the declining share of postal revenue that comes from brick-and-mortar locations. Again, only the top part of the graph is shown, so it looks like post offices are trailing off to zero, when in fact it shows a decline from 80% to 65% of total revenues.
“As customers continue to embrace alternate access channels, all other things equal, it is likely that the proportion of overall postal retail revenue generated at Postal Service-operated retail units will continue to diminish in the future.” (Of course that will happen if they keep closing post office, cutting the hours they’re open, making them further and further away. It’s a self-fulfilling prophecy—they’re making it happen.)
Boldt says the development of the alternate network “is also consistent with the 2006 Congressional mandate to expand and market a variety of alternative retail access channels.” This is a reference to the PAEA, and it’s going to be the crux of the debate, as predicted on this website a few weeks ago. Did Congress intend for the USPS to expand the network to improve access to postal services, or to lead the way for replacing post offices with the alternatives?
Then Boldt presents another graph (Table 4) showing the decline in the number of post offices from 77,000 in 1900 to 27,000 in 2010, noting that closures slowed after the 1970 Postal Reorganization.
(That represents closing 50,000 post offices over 110 years, 450 post offices a year. Now they want to catch up for the slowed progress of the past 40 years by closing 4,500 in one year. This graph, by the way, comes from the USPS OIG’s “Barriers to Retail Network Optimization,” a document that points to all the difficulties that are encountered when the Postal Service wants to close post offices. This is just one example of many of how the GAO, the OIG, and the Postal Service, along with the Cato Institute and commissioned scholars, have long been working at preparing the case that is embodied in the RAOI.)
Boldt’s next chart focuses on 13,494 retail locations for which latitude and longitude data were available, 90% of which are located within ten miles of the nearest retail location, and nearly half within five miles. (It is not clear why geographic coordinates were available for only these post offices. The Save the Post Office website provides this data for the entire population of 4,500 post offices—just click on a post office on the map or the closing lists in the sidebar.)
Moreover, the distance is measured in miles based on geographic coordinates, not driving time. Again, it’s not clear why they did the calculations this way, since Google maps will easily provide the actual driving time, as available on my website. Questions will be asked about this, as discussed in Post #000.
The Scope and Objectives of the Retail Access Optimization Initiative
Boldt states that “in light of the widespread access to alternative sources for obtaining postal services, it is incumbent upon the Postal Service to review its physical retail network to determine if reasonable opportunities exist for making the network more efficient and customer access more convenient, while continuing to provide adequate access to its products and services.”
Boldt notes the “precipitous declines in mail volume” and “the severe financial duress under which the Postal Service has been operating” (no mention here of the stress caused by the pre-payment of retirement and health benefits to employees who haven’t been hired yet). “Such circumstances exert additional pressure on postal management to pay careful attention to its responsibility to efficiently provide service that meets its obligations to the public.”
For these reasons, says Boldt, the Postal Service headquarters has initiated the RAOI. “It should be emphasized,” he says, “that postal management is not pursuing the RAO Initiative in order to achieve any predetermined operating cost savings target in the postal retail network.
(This comment seems to emphasize that there’s no specific goal in mind for how many post offices will close or how much money will be saved. A given number might require that more post offices be closed to reach the goal, which would suggest that it’s not an evaluation of the particular post office that is driving the decision, but the need to reach a certain amount of savings.)
A footnote indicates that while 3,650 are being reviewed, “it is a virtual certainty that the review process will not lead to all of them being discontinued, but it is premature to estimate the number” that will eventually be closed.
The category of facilities to be reviewed is as described in the Request for an Advisory Opinion: 2,800 low workload post offices, 380 stations and branches with insufficient demand and available alternate access, 180 retail annexes with revenue of less than one million dollars in FY 2010 and located within a half mile of at least five alternate access sites; and 260 post offices undergoing discontinuance when the closing regulations were changed a few weeks ago.
The Revised USPS Handbook PO-101 Will Be Used
The process for discontinuing an independent Post Office or a subordinate station or branch, either closing it permanently or consolidating it, is described in the USPS Handbook PO-101. Boldt goes over the changes in the procedures and reviews the criteria for initial feasibility studies—postmaster vacancies, suspensions, earned workload below the minimum established level for the lowest non-bargaining (EAS) employee grade, insufficient customer demand, and the availability of alternate access channels.
In addition to altering the process for initiating a discontinuance, the revised regulations “aim to standardize and otherwise improve the administration and management of the discontinuance process.” The process will become more “efficient,” remove “waiting periods,” eliminate the requirements of circulating hard copies, and make increased use of a new computer system. The new procedures will also apply the same closing process to stations and branches as post offices, thus addressing some “public confusion” about why there’s a difference.
Boldt describes the new web-based database program, the Change Suspension Discontinuance Center (CSDC) program, that the Postal Service has used select candidates for discontinuance study. “The CSDC program streamlines and improves the overall discontinuance process, with specific goals of improving the standardization and tracking of retail facility closures and consolidations, and providing greater transparency over discontinuance activities.”
So now that it’s a top-down process, HQ will use the CSDC to pick post offices, and then notify local personnel to conduct a feasibility study. They will seek customer input by sending out questionnaires and making them available to walk-in customers, and they make the surveys available online as well. “In almost all instances, responsible personnel hold community meetings to discuss the potential discontinuances.”
As a footnote states, “Under the revised regulations, a community meeting is required at either the initial feasibility study stage or the post-proposal stage, except where high-level management has instructed otherwise because it would be infeasible to hold a community meeting.”
All the feedback from customers informs the feasibility study and determines whether a post office should be advanced in the discontinuance process. If it goes forward, the public receives formal notice of the Postal Service’s intention to discontinue a post office through the posting of a proposal. The proposal includes discussions of community postal needs, the effect on the community, the effect on employees, and economic savings. In many cases, customers submit comments using prescribed forms. Other customers transmit comments in the form of correspondence. This information is used to assess the proposal for discontinuance.
After the conclusion of the 60-day proposal posting period, management considers the comments, along with any other available information, and decides whether to recommend discontinuance. This recommendation is reviewed by both field and Headquarters management. If Headquarters concurs, then a final determination is posted for a 30-day period. Customers served by a Post Office have 30 days from the date of posting to appeal the final determination to the Postal Regulatory Commission. An additional 30-day waiting period will occur subsequent to the posting of the final determination, unless an appeal is timely filed with the Postal Regulatory Commission.
Management estimates that in normal circumstances, a discontinuance study may be concluded in 138 days, including the posting period and subsequent waiting period after the posting of a final determination, assuming that no appeal to the Postal Regulatory Commission is received. (It should be noted that in the past it took nine months to close a post office. You can read more about what these changes are all about in “How Fast Can You Close a Post Office.”
Application of the Handbook PO-101 to the RAO Initiative
Postal Headquarters has thus compiled a list of post offices that have met the criteria described above, and it advised field management on July 26, 2011 to begin feasibility studies of the identified Post Offices and subordinate retail units.
The Postal Service expects that the process of initiated these studies will take place on a rolling basis over a ten-week period. This means that during August and September, communities will start receiving surveys and questionnaires, and then public meetings will be scheduled. Based on all the information that’s gathered, local management will determine which retail facilities should be recommended for discontinuance. Where applicable, final determinations will be posted in Post Offices, stations, and branches beginning in late October, 2011.
There’s then a 30 day period during which an appeal can be filed, and another 30 day “waiting period.” “Accordingly, any resulting change in service at affected Post Offices, stations, and branches selected for discontinuance will occur no earlier than December 2011, which is more than 138 days after the date of the Request in this docket. As field management processes each discontinuance action, closings will continue from that point forward on a rolling basis.”