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the Postal Service is not working as it should. It is not transmitted down below.

Do you have any suggestions as to how we might improve it? I know we will keep after that, so we don't think this can go on unanswered, in an effort to improve that sort of situation. Because that is important if the Service itself is to survive, as I see it.

Mr. VALLIERE. If, Mr. Chairman, we looked at communications and communication skills, the one most critical important thing is learning to listen. If they learn to listen, it would be a big step forward. I don't know how you can impose this on people. It is a real tragedy, because I do believe that, in any walk of life, communication is critical to any kind of success, and certainly for the success of the Postal Service.

By and large, the Postal Service has employees that really have pride and commitment in the institution, but they are not heard. They are not heard. If we can ever-I wish I could give you an answer to that because we could solve a lot of the world's problems; certainly a lot of the Postal Service's problems.

Mr. HAYES. Certainly with all your years of experience and service as a Postmaster in your particular region, if you have not met with the new Postmaster General, I would suggest you sit down and give him the benefit of some of our experience.

Did I understand you to say you had met with him?
Mr. VALLIERE. Pardon me?

Mr. HAYES. Did I understand you to say you had met with the incoming Postmaster General?

Mr. VALLIERE. No, I have not, but I understand some of the organizations did meet with him.

We are looking forward to working with him. I have talked to a lot of people, obviously, but, Mr. Chairman, because I know what his background was, it, of course, causes us some concern.

But even some of the building trades folks say, look, we didn't like what he did, but he was fair. I think that is critical. We all know there has to be change in the Postal Service if it is to survive as an institution, and it is not easy to deal with change. Everybody resists change, particularly when they are affected, but something will have to be done.

Hopefully, Mr. Runyon will do it in such a way we create change that is acceptable to all concerned and fair.

Mr. HAYES. All right. Thank you very much. It is important to see that we do what we can to improve the line of communication between the top and the bottom in the whole Service. Thank you very much.

Mr. VALLIERE. Thank you, Mr. Chairman.
Mr. HAYES. The hearing is adjourned.

[Whereupon, at 3 p.m., the committee was adjourned, subject to the call of the Chair. (Additional material received for the record follows:] PREPARED STATEMENT OF HON. MICHAEL R. McNulty, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF New YORK Mr. Chairman, I would like to take this opportunity to congratulate Mr. Rubin Handelman, president of the National Association of Postal Supervisors (NAPS), on a long and distinguished career with the Postal Service.

As you know, Mr. Handelman recently announced his retirement from the Postal Service after 49 years of service. Over nearly half a century of dedicated service, Mr. Handelman rose from clerk in 1943, to supervisor in 1966, to president of Branch 100 in New York City in 1972, to NAPS national secretary in 1976, to executive vice-president in 1984, and finally to NAPS president in 1986. It was, truly, a remarkable career.

As a member of the Post Office and Civil Service Committee, I have had occasion to communicate often with NAPS. These dealings were always amicable and helpful—a direct result of the kind of leadership Rubin Handelman has provided.

I commend Rubin for his great contribution to public service, and wish him all the best in his much deserved retirement. It has been a pleasure working with him, and the entire NAPS organization. He will, indeed, be missed.

PREPARED STATEMENT OF ARMANDO OLVERA, PRESIDENT, NATIONAL LEAGUE OF

POSTMASTERS Mr. Chairman and members of the committee, my name is Armando Olvera and I am the president of the National League of Postmasters. The league proudly represents postmasters throughout this Nation.

I am accompanied by Ed Bowley, our legislative consultant. We are pleased to have this opportunity to assist your committee in its general postal oversight responsibilities.

Inevitably, these annual hearings highlight significant changes in the U.S. Postal Service, and certainly this year is no exception, with the announcement of a new Postmaster General of the United States.

While Postmaster General Marvin T. Runyon is not expected to take over the reins of this huge and complex industry until July 6, I have had the pleasure of meeting with him.

The league welcomes Postmaster General Runyon and we wish him every success and I have assured him of the league's full support and cooperation toward his efforts.

Postmaster General Runyon has an impressive record of innovative management, both in the auto industry and at the Tennessee Valley Authority (TVA). We have heard pros and cons about his management style, but we propose to form our own opinion through working with him.

The past year has been particularly difficult for the U.S. Postal Service as the recession, reconciliation of the Federal budget, and the recent rate case all contributed to mail volume loss and a revenue decline.

Even before the announcement of a new Postmaster General was made, Acting Postmaster General Mike Coughlin was diligently working to find solutions to these problems.

Acting Postmaster General Coughlin issued a recent memorandum to field division general managers, outlining the Service's financial experience through the first two quarters of fiscal year 1992 and outlining plans for dealing with the current situation and the future.

The focus was on some $200 million under plan in the current year and a projected $1.8 to $2.0 billion loss for fiscal year 1993.

He states that this situation is caused by three factors: a 29-cent stamp instead of 30 cents--the failure to fully capture all cost reduction workhour savings

and the failure to adjust our workhour usage to match the declining volume and workload.

When this kind of information reaches the postmaster level-rumors begin to fly and many questions are raised. Over these past few weeks our phones have not been quiet a minute.

"Will there be layoffs?”
“Will there be early-out retirement?”
“Will there be retirement incentives?"
“Will our budgets be cut?"
“Are divisions being reduced?”
“Are we eliminating MSC's?"

We have assured postmasters that, although many things are presently being discussed, there are no definite plans to do any of these things at the present time; nonetheless, they remain concerned.

When postmasters hear of Postmaster General Runyon's "downsizing" and "privatizing' track record, added to an already frightening situation, the "concern" turns into "fear” in many instances; however, Mr. Chairman, I am looking at this in

a positive manner. I see a great challenge, and I believe every postal employee has a major stake in the outcome.

There will be complaints of stress and these challenges can cause stressful conditions if we permit it; but, such challenges can also be rewarding opportunities.

I have called on postmasters to lead the way—to raise their present 110 percent efforts to the next level.

First, I believe all postal personnel must understand and accept the fact that a serious financial problem exists; that volume is declining and service is not where it should be. Once we accept this truism-we can turn our collective minds toward finding solutions to deal with the situation.

Mr. Chairman, the league is prepared to work with all concerned parties in seeking ways to restore and maintain an economic and efficient universal postal service.

Last march I was privileged to appear before this committee as the Postal Service was nearing its twentieth anniversary, and I proposed at that time that after 20 years, perhaps it might be appropriate to revisit the Postal Reorganization Act, Public Law 91-375.

I was pleased to review the statement of the Joint Task Force on Postal Ratemaking that was presented to this committee on May 12, 1992, and I totally agree with their conclusion that both bodies need to work as partners.

It makes one wonder why it has taken 20 years for the parties to realize they can and should work together. For these past 20 years I have failed to understand the necessity for two Presidentially-appointed bodies to oversee the functions of a Federal agency, particularly when they proceed in seemingly opposite directions—so their report is encouraging.

I am pleased that their recommendations on “priority opportunities to improve the effectiveness of the postal ratemaking process which the Postal Service and the Postal Rate Commission should pursue jointly” has been accepted.

While their recommendations, for most part, can be implemented without legislation, I would recommend some additions which will require amending the Postal Reorganization Act.

First, we believe a ratesetting mechanism for monopoly on non-monopoly services should be addressed separately. Non-Monopoly service rates should be approved by the Postmaster General and/or the Postal Board of Governors. After all, for those services, the public has a choice and does not have to use the Postal Service.

For example, Express Mail, Priority Mail and parcel post are highly competitive services, yet, Federal Express can raise or lower rates in 1 day. The Postal Service in 10 months—maybe.

We also ask this committee to pursue a review of certain mail rates to be triggered automatically through the Consumer Price Index (CPI) or some similar device.

The U.S. Postal Service requires greater ratemaking flexibility to enhance its financial position and meet competitive challenges. Many of these challenges are, and will continue to be, from advanced technology.

Mr. Chairman, we further believe that other areas of the PRA should be revisited after 20 years.

The league participated in proceedings with other representatives of the postal community for a year and a half and I believe the fruits of our labors are worthy of review by this committee.

The group included top postal management and a broad range of mailers and postal employee organization representatives.

Therefore, the following proposed drafts tentatively adopted by this group, are offered to the committee at this time and I ask that they be reviewed with a view toward consideration of legislative action in the 103d Congress.

Mr. Chairman, I commend you, the members of this committee, and the staff, for arranging these timely and very essential hearings. I appreciate the invitation to participate and I will be pleased to assist your efforts in every way possible.

DRAFT CONCEPTS OF THE

LEGISLATIVE WORKING GROUP

EMPLOYMENT AND COMPENSATION FLEXIBILITY

Part-Time Employment of Annuitants
compensation of Governors
Executive Pay
Dual Pay Restrictions

RATE AND SERVICE FLEXIBILITY

Service Contracts
Experimental Services
Pricing Flexibility for Competitive Services
Expedited Mail Classification changes
Expedited Service Changes
Simplified or Periodic Rate Adjustments
Modification of commission Rate Recommendations

OPERATIONAL AND ADMINISTRATIVE FLEXIBILITY

Redirection of Financial Activities to Private Markets
Mitigation of Transportation Restrictions
International Arrangements

EMPLOYMENT AND COMPENSATION FLEXIBILITY

Part-Timo Employment of Annuitants

Proposal: Exempt retired postal employees from the reemployment penalties of 5 U.S.c. ( (8344 and 8468. Compensation of Governors

Proposal: Raise the annual salary of the Governors of the Postal Service to $30,000, and their per-day meeting stipend to $900. Direct the Postal Service, every five years, to furnish its recommendations for the adjustment of these amounts to the postal legislative committees oi Congress.

Executive Pay

Proposal: Allow the total compensation of postal officers and employees (including performance-related bonuses and achievement awards) to exceed Level I of the Executive Schedule, while retaining the Level I cap on postal salaries. Require payments which would compensate persons at the rank of APMG or above in excess of the Level I figure to be approved by a majority of the Governors of the Postal Service. Dual Pay restrictions

Proposal: Exempt the Postal Service from the Dual Compensation Act, 5 U.S.C. (5532.

RATE_AND SERVICE FLEXIBILITY

Service Contracts

Proposal: Authorize the Postal Service to negotiate service contracts with specific customers, under the following conditions:

Negotiated service contracts could prescribe the timing,
quantity, preparation, and other characteristics of
mailings, and include variable but compensatory prices and
service guarantees.
To avoid favoritism among competing mailers, arrangements
negotiated with one customer would be available to other
customers who could demonstrate that they were similarly
situated.

Prices for services not subject to substantial competition
would be based on established rate schedules, but could
allow the direct passthrough of worksharing or similar
savings to the customer.
simple "volume discounts" for services not subject to
substantial competition would not be allowed.
Prices for services which are subject to substantial
competition, such as parcel post and Express Mail, would be
required to cover only attributable costs, plus a small
markup for overhead.

Whether a particular service was subject to substantial competition, and thus eligible for flexible pricing, would be determined in a special expedited proceeding before the Postal Rate Commission.

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