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On the heels of the postage rate changes that took place just a couple of weeks ago, some big news hit the nonprofit postal world last week and it’s a…
Most significantly, the Postal Rate Commission (PRC) agreed with the nonprofit industry and concluded the USPS won’t be allowed to change the calculation of the 60 percent ratio between nonprofit and commercial Marketing Mail rates. This is a topic that surfaced over the summer when the USPS said they wanted to re-align the discount ratio of nonprofit to commercial rates. This is a significant win for the nonprofit industry as we would have been looking at a 4.2% increase to nonprofit rates in addition to the looming postal reform adjustments, had the PRC ruled in favor of this modification.
Thank you to the Alliance of Nonprofit Mailers who led the opposition to this, filing two sets of extensive comments, and rallying industry leaders to issue comments to the PRC letting them know just how negatively this would have impacted the nonprofit industry.
While this is a great win for the industry, preventing a major rate hike and saving nonprofit mailers close to $61.5 million per year, there are number of items still looming that we are keeping a close eye on, including:
The PRC issued a notice of proposed rulemaking to address some of the concerns. Here are a few highlights in the proposal:
The PRC allowed the industry a 90-day comment period which ends on March 1st. Review of these comments is scheduled to occur by the end of March so the industry expects to hear from the PRC after that point.
The USPS just issued their first quarter results for 2018 stating controllable income of $353 million, compared to controllable income of $522 million for the same period last year. Stating the decrease was largely driven by volume declines in First-Class and Marketing Mail, higher normal cost of retiree health benefits expenses of $140 million and higher transportation expenses of $109 million, partially offset by a reduction in compensation and benefits expenses of $91 million. While they continue to see a surge in package volume, this is not offsetting the continual decline in letter mail. The USPS feels their long-term financial stability depends on the PRC establishing a new pricing system that enables the organization to generate sufficient revenue to cover their costs. Postmaster General and CEO Megan J. Brennan is pushing for these changes and shared these recent comments: “Although we continue to win customers and grow our package business, these gains are not sufficient to offset continuing declines in our mail business, which is our main source of revenue and contribution. We will continue to do everything within our control to improve operating efficiencies, manage expenses, expand our use of technology and keep mail affordable, but these actions must be combined with regulatory and legislative changes.”
Are major changes to postal rate-making system coming our way? Maybe, but for now it’s a wait and see situation. We’ll continue to monitor these items and keep you informed of any changes that may impact your budget. Contact us today for any questions or concerns.