Some of the most creative accounting appears in the US Postal Service's budget.
Earnings for this constitutionally-mandated program will yo-yo, according to the Office of Management and Budget (OMB). In 2010, the USPS lost $682 million. But in 2011, it has a projected surplus of $758 million, and the next year it will have a loss of $5.3 billion.
All without so much as an increase in the price of a stamp. (Yet.)
What’s going on here?
Call it unusual accounting. As mandated by Congress, the USPS has been socking away money in both the Federal Employees Retirement System and the Civil Service Retirement System. Now, both systems are overfunded.
Congress also mandated that the USPS pre-fund its retiree health care benefits – making it the only federal agency not allowed to “pay as you go.”
So, last year, the USPS dutifully sent some $5.5 billion into the health-care pre-funding. This year, the administration proposes moving $6.9 billion in retirement overfunding to the USPS, over a 30 year period. For 2011, that would be $550 million. In addition, the budget proposes deferring $4 billion of the pre-funding payment, in 2011. Voila: the USPS goes from a loss to a profit.
“This change would still prudently pre-fund retiree liabilities but on an accruing cost basis rather than the arbitrary amounts fixed in current law, which do not allow for the dramatic shifts in demand or workforce size that USPS has experienced in recent years," said the White House in its budget documents.
Congress, which has voted down this proposal in the past, still has to agree.
Even with this strange accounting, the USPS will still be operating in the red by 2012, so in May, the Post Office hopes to raise the price of a first class stamp by 2 cents. The US Postal Regulatory Commission will decide Wednesday if the postage rates will rise.
