USPS gets a financial overhaul: Here's what we know about the Postal Service Reform Act

WASHINGTON - President Joe Biden signed the Postal Service Reform Act of 2022 into law on Wednesday, providing the agency with a much-needed financial overhaul.

"It is no exaggeration to say the Postal Service is essential as it ever was, as it's ever been today," Biden said in remarks before signing the bill.

The Postal Service has remained fiscally underwater due to legislation passed decades ago limiting how it spends its money and what services it could offer. The USPS reform bill will give the agency that flexibility back.

The bill easily passed Congress with rare bipartisan support, receiving a 79-19 vote in the Senate on Tuesday evening, after the House passed it last month in a 342-92 vote.

Here's all you need to know on the postal reform bill that is now law.

USPS finances strained

To understand the need for the Postal Service Reform Act, it's important to first understand why the U.S. Postal Service needs reform in the first place.

"The Postal Service is deeply in debt," said James O'Rourke, a management professor at the University of Notre Dame. "They have an $80 billion long-term debt arrangement, and their operating revenue is only about $18.5 billion a year. While that is a slight increase from last year and the year before, profit is now at very slim margins and over the past five years, they have lost money consistently."

The agency's financial woes can be traced back decades.

When the Postal Reorganization Act of 1970 became law, it required the postal service to serve all Americans while also breaking even.

"It basically introduced an identity crisis that had very real consequences for USPS's operations ever since: is it a business or is it a service?" said Porter McConnell, co-founder of the Save the Post Office Coalition.

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Decades later, in 2006, the Postal Accountability and Enhancement Act was passed, which required the USPS to put money aside for future retiree health benefits and restricted the services the agency could offer in the future to only the ones it already offered.

The Postal Service was supposed to save $5 billion for the first 10 years of the program, which was on a 50-year schedule. But by 2012, it began defaulting on the payments. It said at the time that without defaulting, the agency wouldn't be able to pay its employees, suppliers or deliver the mail. Since the act's passage, the USPS has seen rising net losses in revenue for more than a decade.

"Whether intentional or no, both policies had the effect of draining the postal service's coffers almost immediately, and prompting calls for reform," McConnell said.

O'Rourke said that given the Postal Service's cost of business and current debt, the agency could "go out of business" within a year without further action.

What's in the Postal Service Reform Act?

The reform legislation aims to address some of those problems.

Under the law, the mandate that required the Postal Service to pay into future retiree health benefits will be dropped. Instead, retired postal employees will be required to enroll in Medicare.

In addition, the USPS must maintain a public dashboard tracking service performance and will report regularly on its "operations and financial condition," according to a summary of the bill. It will also be able to create "non-postal services" in partnership with state and local government, like fishing licenses and subway passes, McConnell said.

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The bill will save the Postal Service almost $50 billion over the next decade, according to Michigan Sen. Gary Peters, chairman of the Homeland Security and Governmental Affairs Committee.

"This bill, which has been 15 years in the making, will finally help the Postal Service overcome burdensome requirements that threaten their ability to provide reliable service to the American people,” Peters, a Democrat, said in a March 8 statement.

Still, some say the bill doesn't go far enough. McConnell, who called the act "a skinny bill by all measures," said some items the bill could have added include postal banking, funds to make postal trucks electric with public charging stations, census outreach and grocery delivery.

"This bill buys us time to have a conversation about the future of the post office," McConnell said. "The urgent conversation we turn to now is what should the future of the post office look like?"

What does that mean for customers?

While people using the Postal Service might not immediately see a difference, over time the agency's financial stability will start to make a difference.

"The vast majority of the budget shortfall at USPS can be attributed to the pre-funding mandate that the bill eliminates," McConnell said. "Eliminating it removes the biggest excuse for the service cuts and price hikes that postal customers have experienced since Louis DeJoy became Postmaster General. We have seen that austerity logic leads to short-sighted decision-making, and that leads to slower, more expensive mail for all of us."

Regarding mail-in votes for future elections, O'Rourke said that, given no real evidence of widespread voter fraud via mail, voting by mail is more of a state legislative issue than a Postal Service one.

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"I have full confidence the Postal Service can handle an election, could handle three or 4 million ballots," O'Rourke said. "They proved they could do it the last time around.

"They deliver between 10 and 12 billion pieces (of mail) at Christmas," he added. "Election is a day at the beach for those guys."

This article originally appeared on USA TODAY: Postal Service Reform Act: What we know about the new USPS law