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LET’S NOT BACKSLIDE ON TRANSPARENCY

The following is a Postal Perspective by Kate Muth, president of Muth Communications, who has covered postal topics for the past 13 years. The views expressed are solely the author’s. The PostCom Bulletin welcomes opposing views from responsible parties.

Two words we heard frequently during debate on the postal law we now know as PAEA were “transparency” and “accountability.” They were cited as the necessary cornerstones upon which to build a modern system of rate setting. We continue to hear transparency and accountability emphasized in the rulemaking processes that have moved through the Postal Regulatory Commission, such as the current rulemaking on periodic reporting (RM 2008-4).

How important are these two ideals to Congress? Well, accountability made it into the act’s name (the Postal Accountability and Enhancement Act). Transparency didn’t get in the title, but it is no less important. Indeed, it is the other side of the same coin. You can’t have accountability without transparency. You can only hold an organization and its people accountable if you can see what is going on. You need to know the goals or standards of the organization, and be able to measure its performance to those goals.

As Postal Regulatory Commission Chairman Dan Blair said in testimony to the House oversight subcommittee in February 2008, “Good data is the foundation that supports meaningful transparency and allows for careful and conscientious analysis and reports that provide real accountability.”

The challenge is to find the right balance between collecting the data necessary for transparency (released in understandable reports) without tying up precious Postal Service resources on unnecessary reporting requirements. The PRC docket on periodic reporting is attempting to hash this out, with parties offering their comments on ways to enhance the proposed rules around data collection and reporting. That this docket is playing out while Congress debates the proper oversight and accountability of another struggling industry makes the issues in this docket even more relevant.

I understand the challenges facing the Postal Service under this new law. It is asked to operate like a business, keep its price increases at an inflation-based cap and compete with established private sector companies in competitive products. Yet, it was given no new tools to control the largest portion of its costs. I’ve long supported a hands-off approach from Congress on operational issues, which Postal Service management is best suited to handle. But I also recognize that the Postal Service remains an entity of the federal government, one that has a government-granted monopoly on letter mail. The PAEA did not change this. This means the Postal Service is a public trust owned by the American people. We are the stakeholders in the USPS and, as such, have a right to know its finances, performance goals, service standards, network plan and its performance against all those standards and goals. The Postal Service needs to operate in the sunshine.

As a stakeholder, I’m beginning to worry that the Postal Service is backsliding on transparency. While it might be living up to the letter of the new law, it is not living up to the spirit. It’s now mid December, and stakeholders still have not seen the Postal Service’s integrated financial plan for fiscal year 2009. I understand that it made little sense to release a plan in September, when the USPS traditionally releases its financial plan, because Congress was still considering a bailout package to shore up the financial markets. I buy the argument that it was too hard to forecast given the uncertainty about the package’s passage. (In retrospect, it probably wouldn’t have mattered much. The bailout plan doesn’t seem to be helping the economy.)

But we are now almost a quarter of the way through the fiscal year and the Postal Service’s Board of Governors still has not voted on the plan. Pretty soon it will no longer be a plan. It will be results, which should make the vote a lot easier. Some might argue that the PAEA does not require the USPS to release an integrated financial plan at an open board meeting. Perhaps, but where is the transparency in that? If we don’t know the Postal Service’s financial targets for the year, how will we measure the success of cost-cutting efforts or revenue-generating plans? How do we know how well management is performing?  How do we hold anyone accountable? The integrated financial plan doesn’t need to include detailed trade secrets. It could be fairly general, as it has been in years’ past. But we need some kind of plan, so customers can gauge actual USPS results to its budget.

When PostCom surveyed its members just over a year ago to ask what types of data they would like the Postal Service to present in regular reports, the top two responses were “monthly supplements” and “comparisons to plan.” On the latter, mailers said they would find a comparison of the Postal Service’s actual results to its budget/plan to be more useful than just a comparison to the previous year. The Postal Service does not release its financial reports in this way, so companies use the integrated financial plan information to build a template for comparisons.

In this same vein, as the Postal Service adjusts its various quarterly and annual reports to accommodate its new Mail Classification Schedule, it must provide some comparison to the historical classification schedule for at least a couple of years. The recent Revenue, Piece and Weight (RPW) report has new “service categories” that do not match to the categories in RPW reports from previous years. This makes it difficult for stakeholders to measure results within product groups. For example, the 2008 fourth quarter RPW groups Standard Mail High Density and Saturation Flats and Parcels as one category. Enhanced Carrier Route is not broken out on its own as it was in past RPW reports. It’s hard to measure ECR to past years’ data. I know, we need to stop thinking about things the old way (as subclasses) and start thinking about them as products. Agreed, we do need to think about things differently. But a transition is necessary. Stakeholders need context and continuity to measure USPS results and performance.

Given the collapse of some venerable institutions this past year over risky investments and behavior, a financial approach of “just trust me” is simply not supportable. In fact, it is downright irresponsible. If the Postal Service doesn’t want to share its plans and data with its stakeholders, then get thyself as far out of the federal government as possible. Until then, stakeholders will continue to ask: What’s in your wallet?