USPS reports $1.4 billion profit, $522 million in ‘controllable income’ for first quarter
By Bill McAllister, Washington Correspondent
No one in Washington disputes that the first quarter of the U.S. Postal Service’s fiscal year is its most profitable.
After all, it includes all that revenue from Christmas mail.
But after the Postal Service reported Feb. 9 it had “controllable income” of $522 million in its latest first quarter, which ended Dec. 31, 2016, the Alliance of Nonprofit Mailers said the Postal Service was burying the real news that it made a $1.4 billion profit for the quarter.
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Both numbers were accurate, and both were reported in the Postal Service’s press release.
The $1.4 billion number was in the primary earnings table provided by the USPS to the Postal Regulatory Commission, while the $522 million figure was included in the footnotes of the report.
What caused the flap over accounting was a $1.7 billion gain the USPS recorded during the quarter.
It represents an anticipated decrease in workers’ compensation costs, a change caused entirely by interest rate changes, according to postal spokesman David Partenheimer.
Controllable income is a term the Postal Service likes to use because it reflects charges that postal management can control.
It excludes charges such as the costly prepayment of retiree health costs that Congress imposed on the Postal Service.
The alliance, which is headed by Stephen Kearney, a former top financial officer at the USPS, said that the Postal Service used to include adjustments to workers compensation costs in its overall losses.
But with interest rates falling, the Alliance complained that the USPS is now excluding the worker compensation figures from its costs, misleading the public about its “bottom line.”
Asked about the difference, postal spokesman David Partenheimer said the USPS believed “it was more appropriate and transparent” to avoid that workers compensation figure in their discussion.
“Had we emphasized a net income of $1.4 billion in our disclosures that would have been misleading,” he said.
The income the Postal Service reported for the quarter ending Dec. 31 compared to a gain of $1.3 billion in the previous year.
In a news release, the Postal Service said its package revenues soared by 14.7 percent in the quarter.
But that was offset by a 7.5 percent decline in first-class mail revenues.
Total revenues for the quarter came to $19.2 billion, compared to $19.4 billion a year earlier when postage rates were higher.
“Our current financial situation is serious but solvable,” Postmaster General Megan J. Brennan said in the news release.
In a session with reporters, she said she believed mailers, postal unions, and postal management had finally reached an agreement on postal legislation that could resolve some of the Postal Service’s continuing financial problems.
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