gotiation and of the law. That was not the promise. So now we find the Postal Service in great financial difficulty, and I think, to a great extent, it can be attributed to the fact that the promises were not kept. Mr. Chairman, I want to talk a little about the automation program. I have read the GAO report and, to a great extent, agree with the GAO report. Mr. Handelman hit on something I agree with also, and that is the problem is with the implementation of automation. In anticipation of implementation, cuts were being made in staffing and budgets were being cut, and the consequences of that were, GAO said they can't see a significant effect on cost. I think the reason for that was there was a great increase in overtime. I can tell you that our postmasters have worked 10 and 12 hours a day, 6 and 7 days a week, and continue to do that, continue to do it, voluntarily, I might add, in most cases, and yet the staffs are still being cut. There is a serious problem with that. You mentioned, Mr. Chairman-you asked about the 74 divisions. I can recall when Postmaster General Casey came in with Mr. Garrity, and we paid Mr. Garrity $900 a day. I think the boondoggle cost quite a bit, and how anyone could believe we could go from 5 regions, 43 districts, and come up with 74 divisions and it would be less costly, just doesn't make sense. Like anything else, when you start setting up a structure that way, you are going to start to build a hierarchy. Everybody will protect their turf. And that is exactly what happened. Mr. Handelman also mentioned the fact policies are not consistent, and they are not. If we go with a complaint to headquarters and say, look, this division is violating this policy, the answer we get is, well, they have to have some flexibility. They have to have some flexibility. So there is no consistency in policy in the Postal Service. The morale of our postmasters is not good. Their budgets are still being cut, and I think that is something that the committee will have to look at eventually. Somebody will have to take a good look at this thing, because I think at this point, I would venture to say, Mr. Chairman, that it is a fact, and probably unprecedented, that we have more postmasters out on stress-related disability than we have ever had at any one time in the history of this country. We are talking about people that have deep-seated commitments to the institution. One of the problems we have with postal reorganization, I believe, is the fact we brought people from the outside who were not committed to the institution. They really didn't care. They were there for the money and for whatever, but they didn't have the commitment for the broad needs of the institution that postal employees under the Post Office Department did have. I think that significantly impacted the postmasters in terms of productivity and morale. So here again, I am not too sure that the postal reorganizationI think it was a good thing for the country at the time, but I am not too sure that subsequently the American people are getting their moneys' worth out of what has happened since. And the bottom line is the American people. Our postmasters are committed to their communities. If, for just once, the Postal Service would ask the postmaster, you set up what you think is the appropriate type of service for your community and let us take a look at it, instead of imposing the Service standards on them, we might have a lot better relationship with our communities and the American people. And, for sure, our postmaster would have a greater degree of pride in the institution and in the fact that they were the ones setting up the community standards. They would be responsible for it. Our postmasters have responsibility without authority. They are responsible for any number of programs, but don't have the authority to implement. When you have to go out and get a request for $25 to get toilet paper and lightbulbs, we have a serious problem out there. So it is one of the many problems our postmasters are faced with. Our processing of communications-we have consultations with them all the time. The communications process still isn't what it should be. For example, we just found out, by reading Linn's Stamp News, the U.S. Postal Service has plans for electronic mail service. Still hasn't been discussed with us. We didn't know that. There will be a variable rate postage stamp. We don't know that. It hasn't been discussed with us. So, Mr. Chairman, we have some serious concerns, and we know this committee has been very supportive of the postmasters and the Postal Service. We have one more issue I would like to bring to the committee, and that is, we are opposed to a balanced budget amendment. We feel it would be chaotic. We feel the impact not only on postal employees and fellow employees would be just terrible, but we also believe that it would require an increase in taxes. There can be a better way of doing this. We think the Congress should be the ones that, with the Congress and any administration, should be able to introduce a balanced budget program that will not have the impact and the long-term effects on Government. Mr. Chairman, that is the end of my statement, and I will be glad to answer any questions. [The prepared statement of Ted Valliere follows:] PREPARED STATEement of Ted Valliere, Director of Government Relations, NATIONAL ASSOCIATION OF Postmasters of THE UNITED States Mr. Chairman and members of the committee, my name is Ted Valliere, director of government relations of the National Association of Postmasters of the United States (NAPUS). NAPUS represents 43,000 active and retired postmasters. On behalf of president James F. Miller, who (do to other commitments) could not be here, we thank you for giving us this opportunity to express our views regarding the U.S. Postal Service. The Postal Service is being challenged, now, like no other time in history. It is faced with decreasing volume in most, it not all, of its categories of mail. Competition continues to increase and contributes to declining revenue. Perhaps most critical are the rapidly improving changes in technology in the field of communications that will ultimately change the way Americans communicate with one another. Budget Despite the promises of the Postal Reorganization Act (Public Law 91-375), the Postal Service became a prime target for the administration's deficit reduction program in the 1980's. The series of "hits", along with lengthy and continuous rate cases, have had a dramatic impact on the financial stability of the Postal Service. Unfortunately, the administration continues to target the Postal Service for additional revenue, even though the Postal Service is funded entirely by ratepayers. We urge this committee and the Congress to continue to resist additional "hits" on the U.S. Postal Service. Automation Largely, we agree with the report by the General Accounting Office (GAO) directed to the Postal Service's automation program. We believe that automation has had a salutary effect on cost. However, we also believe that cuts in staffing in anticipation of deployment of automation has required a need for additional overtime in many postal facilities. Thus putting in question the impact of automation on cost in the short term. We do believe that full deployment of the automation program simply because there is more statistical control of a machine paced operation will have a positive impact on cost and service in the long term. Joint Task Force on Postal Ratemaking NAPUS has taken no formal position on the recommendations of the task force, however, the record will show that we have been outspoken in our criticism of the current ratemaking process. We support any changes that provide the Postal Service the flexibility to compete and that will expedite the tedious and complex system currently in place. It is our understanding, Mr. Chairman, that the recommendations of the task force can be implemented administratively. If that is the case, we urge you and the committee, in your oversight of the ratemaking process, to look toward the possibility of making legislative changes in the event task force recommendation do not ease the tension between the Postal Rate Commission and the Board of Governors or if the recommendations do not translate into a realistic ratemaking process for the Postal Service and the American people. Mr. Chairman, NAPUS is concerned about the closing and consolidation of post offices throughout the country. Clearly, the Postal Reorganizational Act acknowledges the need for a post office in a community in going so far as to state that "a post office shall not be closed solely for operating at a deficit." We believe an autonomous city deserves a postmaster. Postmasters have displayed dedication to their communities and loyalty to the Postal Service. We can state without qualifications that postmasters throughout the country have extended themselves well beyond the norm in their efforts to provide service to their communities and to help the Postal Service through its financial crisis. We also believe that Congress and the postmaster organizations should be given reasonable notice prior to the closing and consolidation of offices by the Postal Service. Communication/Management By Participation (MBP) Consultation with the Postal Service in ongoing as provided by law. However, we do believe that there could be better communication in terms of new programs that impact our postmasters. For example, we learned, that a variable rate U.S. Stamp will go on sale this summer by reading Linn's Stamp News. We also learned that the United States has announced plans to develop electronic mail systems. This organization has not yet been advised of these programs, yet, they have a direct impact on our members. Management By Participation (MBP), a program we continue to support and one that is touted as a means of joint problem solving, has been disappointing. Postmasters are asked to bring their employees into the decisionmaking process. This organization and its members, however, have not been given the same opportunities except as determined by postal executives. Balanced Budget Amendment From a political point of view, in an election year, the proposed "balanced budget amendment" sounds like a cure-all for deficit reduction. Such an amendment would be chaotic and would have devastating impact on the entire spectrum of American society. In addition, enactment of such a measure would likely see increases in existing taxes. We oppose such a measure and ask the Congress not to support such an amendment to the Constitution. Mr. Chairman, the letter of invitation to testify indicated you were seeking our views with regard to the Joint Task Force on Postal Ratemaking. We addressed a few other issues of concern and we are willing to answer questions that are not specifically directed toward the task force if you and the committee members desire. Thank you. Mr. HAYES. The last point you make, you and I certainly are on the same wavelength about the balanced budget amendment. Do you feel that the Service is top heavy at the managerial levels? Mr. VALLIERE. Oh, yes, sir. I can remember when I was at the Management Academy. We sat around 1 day and identified 24 levels of management at that time. At that time. And that was back in the 1980's. Probably 1982, 1983. Yes. Mr. HAYES. All right. And what impact do you think layoffs, which are to be anticipated or projected, will have on postmasters across the country? Mr. VALLIERE. We are the same situation as NAPS. We don't think it will have a direct impact on us as a RIF. They would have to initiate an adverse action against an individual postmaster. So it would require a RIF, I believe. Mr. HAYES. All right. Well, I want to say thank you for your testimony-oh, Mrs. Morella is still with us. You are sitting back. I thought I had lost you. Mrs. MORELLA. Mr. Chairman, I wouldn't miss this meeting. Mrs. MORELLA. Thank you. I am interested in the fact that you point out in your testimony there is a lack of communication which would really enhance people working together and efficiency. Matter of fact, a couple of startling points that you mention, first of all, a variable rate U.S. stamp will go on sale this summer. You found out by reading Linn's Stamp News; and then that you learned that we will be developing electronic mail systems, and yet your organization still has not even been informed of it. I wonder if you might want to comment further on that? That is pretty strong stuff, and I guess that is just an indication of further lack of communications here; is that correct? Mr. VALLIERE. Mrs. Morella, we are in a communication industry and we don't even communicate with ourselves. The fact of the matter is, if we had good communications and proper communications, we wouldn't have nearly the problems we have today in the Postal Service. Mrs. MORELLA. What can we do about it? With our oversight authority, to a certain degree, maybe we can make some recommendations. Mr. VALLIERE. You can't force people to talk. We can acknowledge there is some problem, but you can't force people to talk. Even in those areas where, for example, we have consultation meetings, as provided by the law, and we go in and discuss our issues, we can have a pending file for a year and we still have not got answers to the questions we raised a year earlier during our consultation. You know, my background is varied. I have been a union activist; I have worked on both sides of the fence. Postmasters and supervisors are treated worse than craft employees and have less protection because they don't have a contract. And that is unfortunate because they have got the commitment. But I think communication is a critical area that—and we have raised this before. It has been raised on multiservice issues; that we should have better communications. I have heard this for 40 years and it hasn't happened. This is a great institution and I think-I hope that it will continue to be a great institution because privatization would be chaotic. It would make the savings and loan, airline industry, AT&T, look like a tea party if you were to privatize the U.S. Postal Service. It would be the greatest tragedy ever imposed by the government on the American people. Mrs. MORELLA. So we should look internally for whatever benefits can accrue to better efficiency in terms of what can we can do. You also mention that you are sorry that the management by participation program has been dropped. Mr. VALLIERE. The management by participation? Mrs. MORELLA. Yes. Mr. VALLIERE. We had a survey last year, and we also discussed in oversight, Mrs. Morella, and we had some serious problems with our postmasters when they answered that survey. Morale was terrible. There have been no significant improvements in that situation. We might have one or two places where it is better, but there has been no significant improvements in the management by participation. Mrs. MORELLA. What was the idea behind it; that managers would be involved in working with others; is that it? Mr. VALLIERE. Joint decisionmaking. Mrs. MORELLA. Joint decisionmaking. Just to put a name on it. Mr. VALLIERE. The biggest part was the communications aspect of it. Mrs. MORELLA. That is a shame. Well, I hope that we can pass that on to people who will be making a difference. Mr. Valliere, it is always a pleasure to work with you. As a matter of fact, one of the benefits of these series of oversight hearings that we have had, Mr. Chairman, have been that we have met some nice people through it and have had an opportunity to be involved for the mutual benefit of the Postal system. Thank you. Mr. VALLIERE. Thank you, Mrs. Morella. Mr. HAYES. One final question I would like to raise is we have heard of some cases of third-class mail that may have been held back in order to make the numbers on first class. Do you find the pressure to be so severe that Postmasters sometimes have to choose; and is there a solution to this problem? Mr. VALLIERE. Well, you know, the law is pretty clear about the classifications of mail and they should carry their own weight. This third-class mail issue-and the Postal Service I think made some serious mistakes. The Postal Rate Commission, I should say, created some serious problems for the Postal Service, financial problems, by doing what they did on third-class mail. I don't know. I am really not prepared to respond to that question in depth, Mr. Chairman. Mr. HAYES. Okay. In most of the testimony we have heard today it has been said that practically in all divisions that the line of communications between top level and lower level responsibility in |