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Washington, DC.

The committee met, pursuant to call, at 10:11 a.m., in room 311, Cannon House Office Building, Hon. William L. Clay (chairman of the committee), presiding.

Chairman CLAY. The committee will come to order.

This is the committee's seventh postal oversight hearing this year.

Mr. Runyon, we welcome you for your first appearance before this committee as Postmaster General.

A great deal has happened since our last oversight hearing in June. Mr. Runyon took office on July 6 and on July 14 announced an ambitious plan to restructure the Postal Service within 120 days. His goal is the reduction of 30,000 overhead positions. To achieve this goal, the Postal Service offered eligible employees an early-out retirement and a 6-months salary incentive for those who retire by this Saturday. The results so far are mixed.

In terms of numbers, the incentives seem to have worked well, maybe too well. The Postal Service now expects 47,000 employees to retire. However, most of those retiring are clerks, letter carriers, and mail handlers, employees who touch the mail, not overhead employees. It seems the Postal Service is falling short of its stated goal. Confirmation of this was the Service's announcement late yesterday that the early-out retirement has been extended for most management personnel until November 20.

While I'm pleased that some employees are allowed more time to make a retirement decision, it raises the question: Are the wrong people retiring?

The exodus of experienced craft employees and its potential impact on service concerns members of this committee. Citizens, large mailers, small mailers, postal employees, and their organizations are concerned that the mail service may suffer. This committee is worried about how this restructuring will affect the entire postal workforce. Employees are required to make life-changing decisions without knowing what jobs they will have in the future.

I understand that employees at Postal Service headquarters who are being offered new positions at lower salaries are being asked to waive their appeal rights before the Merit Systems Protection Board. This, in our opinion, seems an inappropriate action.

The committee would like to know what specific steps will be taken to ensure that mail service will not suffer. We want to learn more about the Postal Service's plans for employees whose jobs will be eliminated.

Last spring, everybody understood that the Postal Service's financial condition required bold and resolute measures. Mr. Runyon, you have delivered, and we want you to succeed. We want a stronger and more efficient Postal Service. For the sake of preserving and maintaining the world's largest postal service, you must succeed. Two and one-half months into your plan, we want to hear whether it is succeeding, and we certainly want to thank you for coming this morning.

Are there any other opening statements?

Mr. Hayes.

Mr. HAYES. Mr. Chairman, I have a statement. I will just deal with its highlights, but I would like the entire statement to be made a part of the record.

Chairman CLAY. Without objection, so ordered.

Mr. HAYES. I want to welcome you, Mr. Runyon, on your first appearance before the committee as Postmaster General.

It has been a turbulent year, as you well know, in the Postal Service. We saw a perilous decline in volume, spurred by recession and a controversial rate case. Complaints about service have mounted and raised questions about the accuracy of the Consumer Satisfaction Index. Negative publicity about questionable business ventures and practices have strained relations with congressional supporters.

It became apparent that continuing in the old style of operation would not suffice and that the successful existence of the Postal Service demanded bold new leadership. Mr. Kunyon, you took on that role, and you are confronting that challenge. Reorganization was necessary, and your plan to set an example by trimming the fat from headquarters sent a clear signal that "business as usual" had ended.

Both management and labor testified that there is very little communication about decisions which affect the future of the Postal Service and its employees. The Letter Carriers and Postal Workers testified that they never received a copy of a memorandum on hiring of new employees; the postmasters testified that they read about a dramatic policy change in a newspaper. That testimony differs dramatically from your deputy's, who testified that communications are working.

In a similar vein, members of this committee have been left in the dark about future plans. It was not until last night that my office was notified about the revised plans for the early-out program. However, before we leave today, I hope you will assure us that you will change the emerging pattern of communication-the practice of managing by executive fiat rather than by laws and contracts negotiated in good faith. It is quite simply a matter of respect.

I will end my statement there and submit the balance of it to the record.

[The balance of Hon. Charles A. Hayes' prepared statement follows:]


Looming on the horizon for the Postal Service is more privatization. People who attend these hearings on a regular basis have heard me express my deep-seated opposition to privatization.

When we met, Mr. Runyon, you assured me that you staunchly oppose privatization and are committed to pulling the Postal Service into a new era. I will hold you to that pledge.

I am deeply concerned about the effects of your restructuring plan on personnel. There are a lot of employees who fear that if they stay, they will find out next month that their jobs will be abolished. There is a growing mistrust and demoralization out there that is occurring among some of your most loyal and dedicated employees. Yes, they fear for their jobs; but just as importantly, they fear for the future of the Postal Service.

I look forward to your testimony and hope that you will address some of these


Chairman CLAY. I thank the gentleman.

Mrs. Morella.

Mrs. MORELLA. Thank you, Mr. Chairman. I've been looking forward to this meeting and welcome Mr. Postmaster General Runyon.

I'm pleased to listen to our new Postmaster General's testimony. Since being appointed Postmaster General, Mr. Runyon, you have certainly been busy trying to streamline the Postal Service, and I think that is why we have such a crowded room and people waiting outside to come in and to listen to what this plan is, because it has given rise to much speculation by employees, potential, former employees, and, of course, your customers.

Many letters that I have received from postal employees have indicated that they think reorganization is necessary but the way that down-sizing seems to be occurring suggests unfairness and concepts against established principles of personnel management and human resources.

A woman wrote to say that at age 56 she recently bought her first home. She entered the workforce late, and will barely make the 50/20 criteria for early out. She wrote to say that postal employees are being pushed out without knowing what jobs will remain and without proper assistance in making informed decisions.

Another person wrote to say that the manner and timing of the down-sizing just before elections and the holiday season, the time of the greatest mail volume, is the beginning of privatizing the Postal Service.

I bring these comments to your attention, Mr. Runyon, simply to say that because the plan has not been thoroughly considered rumors make it difficult for the employees to feel good about themselves or about their job, and I think therefore it also affects productivity as well as morale.

You said in your prepared testimony that you haven't finalized your field structure yet. I heard that you have now decided to keep the window of opportunity to take an early-out option open until November 20 rather than October 1. It is obvious that the early-out option has been taken by craft employees when it was thought that management employees should be reduced. I'm wondering whether some more planning should have occurred instead of what seems to be sort of band-aid or piecemeal kind of actions.

I do have some questions which I hope to ask after the testimony, Mr. Chairman, and I also thank you very much for being here. I would like, Mr. Chairman, to ask permission to have inserted in the record opening statements by some of my colleagues-Mr. Burton, Mr. Young, and Mr. Myers-and questions they may have for the Postmaster General.

Chairman CLAY. Without objection, all opening statements can be inserted in the record at this point.

Mrs. MORELLA. Thank you, Mr. Chairman. We have really looked forward to this meeting.

[The prepared statements of Hon. Don Young, Hon. John T. Myers, and Hon. Dan Burton follow:]


Mr. Chairman, I commend you for holding this oversight hearing to address the financial, service and management challenges facing the U.S. Postal service. Today, Postmaster General Marvin Runyon will testify before this committee. General Runyon, I look forward to hearing your testimony and comments during this proceeding.

Nine weeks ago, the leadership of the Postal Service launched the most dramatic restructuring initiative in the last 20 years. Under the guidance of Postmaster General Runyon, the Postal Service has implemented a bold and innovative plan de signed to overhaul an ailing postal system-a system which has faced many serious financial, service and management challenges in recent years.

It is important to note that many of the problems which now plague the Postal Service are not the sole responsibility of past or present leadership. The Congress and the administration are also to blame. Despite my vote to take the Postal Service off budget, the Postal Service has been required to absorb $9.1 billion in budget "hits" under successive omnibus budget reconciliation acts. These budget "hits" have hindered the Postal Service's ability to operate effectively.

In the 20 years since postal reorganization, the Postal Service's position within the marketplace has gradually declined. This is due, in part, to the following factors: successive budget "hits" by the Government; increased operating costs and postal rates; increased competition from the private sector; and technological advancements in the communications industry.

If the current restructuring initiative is to be successful, the Postal Service must be able to provide universal and timely mail service at reasonable rates throughout the United States.

Given the major structural and management changes now being implemented by the Postal Service, a number of questions must be addressed during this hearing: 1. How will the projected loss of 47,000 postal employees effect mail service? 2. How do veterans' rights apply in terms of the downsizing initiative?

3. Under the new management structure, what programs have been implemented to ensure reliable and timely service to all Alaskans including those in the bush? 4. Under the new management structure, Alaska's postal operations will report to an office in Denver, CO an office that is two time zones away!

Given the great geographic and weather challenges facing the Postal Service in Alaska, why wasn't Alaska assigned an "area" office?

Thank you, Mr. Chairman.


Mr. Chairman: Thank you for holding this Postal Service oversight hearing and I am especially pleased to welcome our Nation's 70th Postmaster General, Marvin Runyon, to the hearing today. I feel that Mr. Runyon is a very capable and effective man with a critic eye toward the future.

He has worked diligently throughout his years in private industry and most recently as Chairman of the Tennessee Valley Authority. Although he has been Postmaster General for just over 12 weeks, he has initiated a comprehensive restructuring of the Postal Service. Not since the early 1970's has the Postal Service undergone such change.

Mr. Runyon informed me of his reorganization plan to streamline the Postal Service and make it less bureaucratic while it was being formulated earlier this summer. I was concerned and still am with the impact of such dramatic changes. I believe service may suffer negative effects related to such large scale reduction of employees.

I understand Mr. Runyon's plan for the Postal Service allows it to better compete in the communications industry. His plan is specifically aimed at eliminating the projected $52 billion postal budget deficit which is certainly a smart business move. However, I hope he will continue to keep the best interest of all postal employees in mind as he moves forward with the Postal Service reorganization.

Thank you, Mr. Chairman and I look forward to hearing from Postmaster General Runyon.


I want to express my appreciation to the Postmaster General for taking the time to appear before the Post Office and Civil Service Committee today. Even though you will hear a great deal of criticism and complaining from members of this committee today, I think that your willingness to come up here and answer the tough questions will help create a positive relationship between you and the committee in the future. I hope that today's hearing will give you an opportunity to dispel the misconceptions about what you are trying to do at the Postal Service.

Many of my constituents have written or called to tell me that they are angry over slow mail delivery and other similar problems with the Postal Service. I received even more complaints the last time postal rates were increased. People in Indiana, and throughout the Nation as well, are just plain unhappy with the Postal Service. They are tired of ever-increasing postal rates unaccompanied by a corresponding improvement in service.

Mr. Runyon, in your short time in your new position, you have shown the American people that you are serious about improving the operations of the Postal Service. Many of the changes you are implementing are controversial, and you are already hearing from postal employees and others in the postal community who believe that they will be adversely affected. These are indeed tough choices that you are making, and I don't deny that there will be some pain in the short run. Nevertheless, I believe that you deserve an opportunity to move forward with your reorganization plans. Congress should not stand in your way. We as Members of Congress owe this much to our constituents, who have repeatedly told us that they want changes in the way the Postal Service does its business.

I look forward to your testimony, and to the following discussion, which I am sure will be quite lively, with the members of the committee.

Chairman CLAY. Mr. Moran.

Mr. MORAN. Thank you, Mr. Chairman. I do have a statement, Mr. Chairman.

I do appreciate very much your holding this hearing today. From the size of the audience, it was obviously very necessary, particularly from an informative basis, but for the committee to know the direction in which the Postal Service is going, and I certainly appreciate the work that you have done on behalf of the Postal Service and to protect its employees. Traditionally, this has been a place where employees can go and know that they are going to get fair treatment.

When Mr. Runyon was hired on July 14, he immediately announced his intention to create a leaner and more efficient Postal Service. We can't fault him for those goals. There is much room for improvement in the Postal Service, and there is a need to reduce its $2 billion operating deficit. I appreciate Mr. Runyon's efforts to streamline the headquarters functions and to reduce the bureaucracy of the Postal Service.

There remain, however, some very serious questions as to the means Mr. Runyon has used to reduce his workforce and the future

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