oversight

U.S. Postal Service: Information on Post Office Closures, Appeals, and Affected Communities

Published by the Government Accountability Office on 1997-03-11.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Briefing Report to the Chairman
                  Subcommittee on the Postal Service
                  Committee on Government Reform
                  and Oversight
                  House of Representatives
March 1997
                  U.S. POSTAL SERVICE
                  Information on Post
                  Office Closures,
                  Appeals, and Affected
                  Communities




GAO/GGD-97-38BR
             United States
GAO          General Accounting Office
             Washington, D.C. 20548

             General Government Division

             B-275119

             March 11, 1997

             The Honorable John M. McHugh
             Chairman, Subcommittee on the Postal Service
             Committee on Government Reform
               and Oversight
             House of Representatives

             Dear Mr. Chairman:

             This briefing report responds to your request for information on the Postal
             Service’s closure of post offices.1 Local post offices have long been a part
             of American culture and business, but they have become increasingly
             expensive for the Postal Service to maintain.2 Nevertheless, the Postal
             Reorganization Act of 1970 provides that no small post office can be
             closed for economic reasons alone. In 1976, Congress added provisions to
             the 1970 act to govern whether and how the Service is to close post
             offices. This report provides information on (1) the Postal Service process
             for closing post offices, (2) the number of post offices closed since 1970,
             (3) the number of proposed post office closures appealed to the
             independent Postal Rate Commission (PRC) and the disposition of those
             appeals, and (4) selected attributes of affected communities for fiscal
             years 1995 and 1996.

             On February 28, 1997, we briefed the Subcommittee on the results of our
             work. As requested, this report summarizes the information we presented
             at that briefing.


             The 1970 act states that “No small post office shall be closed solely for
Background   operating at a deficit. . . .” (39 U.S.C.101(b)). For several years after the act
             was passed, Congress appropriated funds to reimburse the Postal Service
             for “public service costs” incurred in providing postal services in
             communities where post offices were not self-sustaining. The act provides
             for reductions in these appropriations over subsequent years. In 1976,

             1
              A post office closure is when the Service permanently discontinues the operations of an independent
             post office (IPO), eliminates its concomitant postmaster position, and provides the affected customers
             with alternative postal services, such as rural route services, community post offices, or highway
             contract routes (HCR).
             2
              We recently reported (Postal Service Reform: Issues Relevant To Changing Restrictions on Private
             Letter Delivery, (GAO/GGD-96-129B, Sept. 12, 1996)) that of 39,149 post offices, stations, branches, and
             other outlets, 17,702 (about 45 percent) reported total annual revenues that were about $1.1 billion
             lower than their total expenses in fiscal year 1995. Of these total outlets, about 28,000 were post
             offices headed by a postmaster and, according to the Postal Service, are subject to the statutory
             closing restrictions discussed in this report.



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                   B-275119




                   Congress amended the act to place a temporary moratorium on further
                   service reductions and specifically prohibited closing post offices that
                   served 35 or more families. While those specific provisions were only
                   temporary, other provisions included in the 1976 amendments remain in
                   effect today, and these affect the Service’s decisions to close or
                   consolidate post offices.3 These provisions state that before closing a post
                   office, the Service must (1) consider the effects on the community served,
                   the postal employees affected by the closure, and the government policy to
                   provide effective and regular postal services to all areas of the country, as
                   well as any economic savings to the Service resulting from the closure,
                   and (2) provide customers with adequate notice at least 60 days before the
                   proposed date for the closure and provide them with a written proposal to
                   close the post office and the findings that led to the closure decision. The
                   provisions established PRC as the appeals examiner for post office
                   closures. Specifically, the provisions state that any person served by the
                   post office may, within 30 days after the written notice of the proposed
                   closure is provided, appeal the proposal to PRC. PRC may affirm the
                   proposal or remand the entire matter to the Service for further
                   consideration. Upon remand, the proposed closure is suspended until the
                   Service has completed its reconsideration. The Service is not required to
                   notify PRC of the outcome of its reconsideration. The act requires PRC to
                   rule on the appeal no later than 120 days after receiving it.


                   The Postal Service has a detailed process for deciding whether to close a
Results in Brief   post office and for effecting the closure. The process is to include
                   obtaining and evaluating post office operational and community
                   demographic information, postal service delivery options, and comments
                   from customers who would be affected by the closure of a post office. The
                   Service has closed 3,924 post offices since 1970. PRC received the first
                   appeal of a proposed post office closure in 1978. Since the 1976
                   amendments, there have been 2,614 post office closures and 296
                   (11 percent) of these closures were appealed to PRC from 1978 through
                   1996. PRC affirmed the Service’s proposals on 170 (57 percent) of these
                   appeals; determined that it lacked jurisdiction for 31 (10 percent) of these
                   appeals, which allowed the Service to proceed as originally intended; and
                   remanded 58 (20 percent) of these appeals to the Service, usually due to
                   incomplete data. Selected attributes varied in communities where post
                   offices were either closed or were proposed to be closed but were

                   3
                    A consolidation is the replacement of a post office with a station, branch, or contractor-operated
                   community post office (CPO). Because the amendment’s provisions on post office closures and related
                   appeals equally apply to post office consolidations, for purposes of this report, all references to a post
                   office closure may refer to a closure or to a consolidation of a post office.



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                         B-275119




                         appealed in fiscal years 1995 and 1996. Attributes of affected communities
                         included population and number of businesses, and attributes of post
                         offices within these communities included level of postal service,
                         postmaster salaries, post office revenues, and annual operating costs. In
                         most cases, the annual operating costs of the closed post offices and those
                         proposed to be closed exceeded their postal revenues.


                         The Postal Service has a detailed process for closing post offices. To assist
The Post Office          its managers in deciding whether to close a post office, the Service
Closing Process          developed and issued the Post Office Discontinuance Guide (Handbook
                         PO-101), dated January 1, 1994, which provided policy guidance regarding
                         the appropriate procedures for closing a post office. The guide states that
                         three circumstances may prompt the Service to initiate a feasibility study
                         to determine whether to close a post office: (1) a postmaster vacancy;
                         (2) the emergency suspension of the operations of a post office; or
                         (3) special circumstances, such as the incorporation of two communities
                         into one.

                         According to the guide, under any of these circumstances, postal managers
                         may conduct a study to evaluate the post office workload and the service
                         needs of the community. In addition, postal managers are to

                     •   consult with county or city officials for information on population, area or
                         post office building historical significance, and growth trends within the
                         community;
                     •   consult with managers of the post office under consideration for closure
                         and nearby offices that may provide alternative service;
                     •   analyze and rank alternative postal services in order of practicality, costs,
                         and the maintenance of effective and regular service to the community;
                     •   hold public meetings, poll affected customers using questionnaires, and
                         propose alternative postal services at less cost; and
                     •   give customers written notice of Service proposals, decisions, and appeal
                         rights. (See br. section I.)


                         According to Service records, since fiscal year 1970, the Service has closed
The Number of Post       3,924 post offices, leaving 28,189 post offices open at the end of fiscal year
Offices Closed           1996. These closures averaged 218 per year during the 6-year period (fiscal
                         years 1970-75) before the 1976 amendments, while closures averaged 124
                         per year for the 21-year period (fiscal years 1976-96) after the
                         amendments. In fiscal year 1995, the Service closed 239 post offices—the



                         Page 3                                      GAO/GGD-97-38BR Post Office Closures
                    B-275119




                    highest number of closures since the early 1970s, when 385 post offices
                    were closed in fiscal year 1974. Service officials identified two conditions
                    that led to the large number of closures in fiscal year 1995. The first
                    condition was the Service’s 1992 early-out retirement incentive, which was
                    offered to most of its employees, including postmasters. The second
                    condition was the Service’s decision to address the accumulation of post
                    offices whose operations had been suspended due to various emergency
                    situations. Because of a backlog of potential closures stemming from
                    postmaster retirements and emergency suspensions of post offices, there
                    was a delay in closing many of these post offices until fiscal year 1995.
                    Post office closures diminished to 161 in fiscal year 1996.

                    We reviewed Postal Service and PRC records for 93 post offices that were
                    either closed or whose proposed closures were appealed in fiscal years
                    1995 and 1996. Of the 93 post offices, 50 were closed without appeal and
                    43 were proposed to be closed but were appealed to PRC.4 The records
                    showed that the closure process for 91 of the post offices was prompted
                    by postmaster vacancies—retirement, transfer, promotion, or death. For
                    the remaining two post offices, the records showed that the closure
                    process for one was prompted by the post office building’s lease expiring
                    and the other was prompted by the post office building burning. (See br.
                    section II.)


                    PRC received the first appeal of a Service proposal to close a post office in
The Number of       fiscal year 1978. Since the 1976 amendments, there have been 2,614 post
Appeals and Their   office closures and 296 (11 percent) of these closures were appealed to
Dispositions        PRC in fiscal years 1978 through 1996. Of these appeals, PRC affirmed the
                    Service’s proposals in 170 cases (57 percent) and determined that it lacked
                    jurisdiction in 31 cases (10 percent), which allowed the Service to proceed
                    as originally intended. PRC determined that it lacked jurisdiction in these
                    31 cases because 19 cases were not filed within the 30 days required by
                    law, and 12 cases dealt with issues outside its jurisdiction, such as the
                    relocation of a post office within the same community. PRC remanded 58
                    cases (20 percent) to the Service, usually because of incomplete
                    Service-provided records or other data deficiencies. Postal Service records
                    did not allow us to readily determine the status of the 58 remanded cases.
                    Of the remaining 37 cases (13 percent), the Service withdrew its proposals


                    4
                     These 43 proposed post office closures resulted in 44 appeals because one proposed closure was
                    appealed twice. Initially, the proposed post office closure was appealed. PRC remanded the first
                    appeal to the Service. Next, the Service proposed to close the post office again. Finally, a second
                    appeal was filed, and PRC affirmed the Service’s decision to close the post office.



                    Page 4                                                     GAO/GGD-97-38BR Post Office Closures
                         B-275119




                         to close 36 post offices before PRC had ruled on the appeals, and the
                         appellant withdrew the other appeal.

                         The act requires that PRC use the Service-prepared administrative records
                         to review appeals of Service proposals to close post offices. According to
                         PRC officials, they also used written arguments submitted by the appellants
                         and the Service. Also, we reviewed 44 appeals and found that PRC had
                         made its decision in each of these cases within the 120 days required by
                         law. (See br. section III.)


                         When information was available from Service records on post office
Selected Attributes of   closures and proposed closures that we reviewed, we obtained selected
Affected Communities     information on postal services provided to and demographic data for the
                         communities affected by these closures or proposed closures. These
                         communities had populations ranging from 30 to 2,143, with an average
                         and median population of 206 and 80, respectively; and businesses ranging
                         in number from 1 to 39, with an average and median of 6 and 5,
                         respectively. At the involved post offices, the communities received from
                         10 to 44 hours of window service per week, with a weekly average of 28
                         hours of service. The postmaster salaries for these post offices ranged
                         from $5,773 to $31,664 per year, an average of $13,664 per year. Except for
                         post offices in four communities, the annual operating costs of the post
                         offices exceeded their postal revenues. Also, for each community affected
                         by a closure or proposed closure, records indicated that the Service was to
                         provide it with less costly alternative postal services, such as establishing
                         a contract CPO. (See br. section IV.)


                         We interviewed Service headquarters and PRC officials responsible for
Scope and                evaluating post office closures and appeals, and we reviewed laws,
Methodology              regulations, policies, and procedures relating to closing post offices. We
                         obtained statistics on the number of post offices, the number closed, and
                         the number of appeals filed with PRC. We did not obtain statistics on the
                         number of closed classified stations, branches, and community post
                         offices because these postal facilities were not covered by the statutory
                         provisions for post office closures.5 We reviewed Service and PRC
                         documents on all 43 proposed post office closures that were appealed—1
                         proposed closure was appealed twice, resulting in a total of 44 appeals—in

                         5
                          The statistics we present in this report on post office closures do not agree with those the Postal
                         Service publicly reported prior to fiscal year 1995 because the Service’s statistics on post office
                         closures included not only the total number of closed post offices but also classified stations,
                         branches, and community post offices.



                         Page 5                                                      GAO/GGD-97-38BR Post Office Closures
                  B-275119




                  fiscal years 1995 and 1996. In addition to these 44 appealed closures, we
                  randomly selected and reviewed documents related to 50 post offices that
                  were closed without appeal in fiscal years 1995 and 1996. We reviewed
                  Service and PRC decision documents and, when available, obtained
                  selected information on postal services and demographic data for 93 of the
                  affected communities, and financial data for the affected post offices. We
                  also obtained information on the time taken for Service and PRC actions.
                  We did not verify the accuracy of Service and PRC records.

                  We did our work in Washington D.C., from August through December 1996
                  in accordance with generally accepted government auditing standards.


                  We requested comments on a draft of this report from the U.S. Postal
Agency Comments   Service and the Postal Rate Commission. We received written comments
                  from the Vice President and Controller of the U.S. Postal Service dated
                  March 6, 1997, and from the Chairman of the Postal Rate Commission on
                  February 27, 1997, which are reprinted in appendixes III and IV,
                  respectively. Both officials generally agreed with the facts presented in the
                  report. Their staffs also provided oral technical comments to clarify,
                  correct, and update some of the information in the report. We have
                  incorporated these comments into the report where appropriate.


                  We are sending copies of this briefing report to the Ranking Minority
                  Member of your Subcommittee, the Chairman and Ranking Minority
                  Member of the Senate Committee on Governmental Affairs, the U.S. Postal
                  Service, and other interested parties. We will also make copies available to
                  others on request.




                  Page 6                                      GAO/GGD-97-38BR Post Office Closures
B-275119




The major contributors to this report are listed in appendix V. If you have
any questions about this report, please call me on (202) 512-8387.

Sincerely yours,




Michael E. Motley
Acting Director, Government Business
  Operations Issues




Page 7                                     GAO/GGD-97-38BR Post Office Closures
Contents



Letter                                                                                                1


Briefing Section I                                                                                   10
                         Briefing Objectives                                                         10
Background               Statutory Provisions for Post Office Closures                               12
                         Statutory Provisions for Appeals of Post Office Closures                    14
                         Service Guidance on When a Post Office May Be Considered for                16
                           Closure
                         Postal Service Process for Closing Post Offices                             18

Briefing Section II                                                                                  20
                         Number of Post Office Closures, Fiscal Years 1970-96                        20
Number of Post           Events Prompting the Service to Initiate Its Closing Process,               22
Offices Closed             Fiscal Years 1995-96
                         Average Time the Service Took to Close Post Offices, Fiscal                 24
                           Years 1995-96

Briefing Section III                                                                                 26
                         Proposed Closures Appealed to PRC in Fiscal Years 1978-96                   26
Proposed Post Office     Appeals of Proposed Closures and Disposition of Appeals, FYs                28
Closures That Were         1978-96
Appealed
Briefing Section IV                                                                                  30
                         Community Demographics, Fiscal Years 1995-96                                30
Selected Attributes of   Postal Services Provided to The Communities, Fiscal Years                   32
Affected                   1995-96
                         Post Office Financial Data, Fiscal Years 1995-96                            34
Communities, Fiscal      Alternative Postal Services to Be Provided, Fiscal Years 1995-96            36
Years 1995 and 1996
Appendix I                                                                                           38
                         Case Study 1: An Appealed Decision to Close the Post Office in              38
Two Case Studies           Clarkia, ID
Involving Appealed       Case Study 2: A Nonappealed Decision to Close the Post Office in            38
                           Octavia, NE
and Nonappealed
Proposals to Close
Post Offices



                         Page 8                                     GAO/GGD-97-38BR Post Office Closures
                        Contents




Appendix II                                                                                     40

Post Office Closures
and Proposed
Closures Appealed,
Fiscal Years 1995-96
Appendix III                                                                                    42

Comments From the
United States Postal
Service
Appendix IV                                                                                     43

Comments From the
Postal Rate
Commission
Appendix V                                                                                      44

Major Contributors to
This Report




                        Abbreviations

                        COD        Collect on delivery
                        CPO        Community post office
                        FY         Fiscal year
                        HCR        Highway contract route
                        IPO        Independent post office
                        PO         Post office (same as IPO)
                        PRC        Postal Rate Commission


                        Page 9                                 GAO/GGD-97-38BR Post Office Closures
Briefing Section I

Background




      GAO            Briefing Objectives

                     Provide information on
                        The Postal Service process for closing post
                        offices
                        The number of post offices closed since
                        1970
                        The number of proposed post office closures
                        appealed to PRC and their disposition
                        Selected attributes of affected communities




                               Page 10                GAO/GGD-97-38BR Post Office Closures
                      Briefing Section I
                      Background




Briefing Objectives   Our objectives were to obtain information on (1) the Postal Service
                      process for closing post offices, (2) the number of post offices closed
                      since 1970, (3) the number of proposed post office closures appealed to
                      the Postal Rate Commission (PRC), and the disposition of those appeals,
                      and (4) selected attributes of the affected communities for fiscal years
                      1995 and 1996., e.g., information on postal services and demographic data.6




                      6
                       A post office closure is when the Service permanently discontinues the operations of an independent
                      post office(IPO), eliminates its concomitant postmaster position, and provides the affected customers
                      with alternative postal services.



                      Page 11                                                   GAO/GGD-97-38BR Post Office Closures
                Briefing Section I
                Background




GAO   Statutory Provisions for Post Office
      Closures
 The 1970 Act requires that no small post office be
 closed solely for operating at a deficit.
 The 1976 amendments imposed conditions on post
 office closures:
  The Service must consider effects on community
  served, postal employees, and postal services, and
  economic savings to the Service; and
  The Service must provide customers with its
  written proposals and findings.
  Customers may appeal the closure to PRC.




                Page 12                 GAO/GGD-97-38BR Post Office Closures
                           Briefing Section I
                           Background




Statutory Provisions for   The Postal Reorganization Act of 1970 (39 U.S.C. 101(b)) states that “No
Post Office Closures       small post office shall be closed solely for operating at a deficit. . . .” In
                           1976, Congress amended the act to place a temporary moratorium on
                           further service reductions and specifically prohibited closing post offices
                           that served 35 or more families. While these specific provisions were only
                           temporary, other provisions included in the 1976 amendments, which
                           remain in effect today, affect the Service’s decisions to close or
                           consolidate post offices.7

                           Under the 1970 act as amended, when considering whether to close a post
                           office, the Service must assess the impact on the community served, the
                           postal employees, and the postal services as well as any economic savings
                           to the Postal Service that would result from the closure. The Service must
                           notify affected customers at least 60 days before the proposed date for the
                           closure and provide them with its written proposal and findings. Any
                           person served by the post office involved may file an appeal with the
                           independent Postal Rate Commission (PRC) within 30 days after the Postal
                           Service provides written notice that it proposes to close the post office.




                           7
                            A consolidation is the replacement of a post office with a station, branch, or contractor-operated
                           community post office (CPO). Because the amendment’s provisions on post office closures and related
                           appeals equally apply to post office consolidations, for purposes of this report, all references to a post
                           office closure may refer to the closure or the consolidation of a post office.



                           Page 13                                                     GAO/GGD-97-38BR Post Office Closures
                 Briefing Section I
                 Background




GAO   Statutory Provisions for Appeals of
      Post Office Closures
      The 1976 amendments established PRC as the
      PO closure appeals examiner
       PRC is authorized to
        affirm the proposed post office closure, or
        remand matter to the Service for further
        consideration
       PRC is to use Service-prepared
       administrative record when ruling on an
       appeal




                 Page 14                 GAO/GGD-97-38BR Post Office Closures
                           Briefing Section I
                           Background




Statutory Provisions for   The 1976 amendments established PRC as the appeals examiner for the
Appeals of Post Office     closure of a post office. These amendments provided that PRC may affirm
Closures                   the proposal or remand the entire matter to the Service for further
                           consideration. In doing so, PRC must use the information in the Postal
                           Service’s prepared administrative record, which contains the analyses,
                           comments, and other justification for each proposed post office closure.
                           PRC is required to rule on the appeal within 120 days from the date the
                           appeal is filed with PRC.




                           Page 15                                   GAO/GGD-97-38BR Post Office Closures
                 Briefing Section I
                 Background




GAO   Service Guidance on When a Post Office
      May Be Considered for Closure
      The Post Office Discontinuance Guide specifies
      three circumstances that may prompt a study to
      consider whether to close a post office:
       A vacancy in the postmaster position
       An emergency suspension of a post office's
       operations
       Special circumstances




                 Page 16               GAO/GGD-97-38BR Post Office Closures
                           Briefing Section I
                           Background




Service Guidance on When   The Post Office Discontinuance Guide (Handbook PO-101) specifies three
a Post Office May Be       circumstances that may prompt Service officials to initiate a study to
Considered for Closure     determine whether a post office should be closed. These circumstances
                           are (1) a vacancy in a postmaster position arises due to promotion,
                           transfer, retirement, or death; (2) an emergency suspension of a post
                           office’s operations occurs due to circumstances such as a natural disaster,
                           sudden loss of the post office building lease when no suitable alternative
                           quarters are available, or severe damage to or destruction of the post
                           office building; or (3) special circumstances, such as the incorporation of
                           two communities into one.




                           Page 17                                    GAO/GGD-97-38BR Post Office Closures
                  Briefing Section I
                  Background




GAO   Postal Service Process for Closing
      Post Offices
      In January 1994, the Postal Service issued the
      Post Office Discontinuance Guide, which
         provides policy guidance on the appropriate
         procedures for investigations; public
         notifications of proposals and decisions; and
         the process for reaching decisions and
         appealing closures.
      Service documentation for each proposed post
      office closure is to become the administrative
      record in the event of an appeal.




                  Page 18                GAO/GGD-97-38BR Post Office Closures
                             Briefing Section I
                             Background




Postal Service Process for   In January 1994, the Service issued its Post Office Discontinuance Guide.
Closing Post Offices         According to Service officials, the guide is to help ensure that Service
                             procedures are followed, uniform processes are used, and consistent
                             documentation is prepared for each post office closure. The guide is also
                             to be used as a training tool and to assist postal field personnel
                             responsible for reviewing the status of post offices in their districts.

                             The guide covers the closure of IPOs. It provides policy guidance on the
                             appropriate (1) procedures for investigations to be undertaken, public
                             meetings to be held to inform customers of the Service’s plans, and
                             customer feedback to be obtained; (2) requirements for public notification
                             of Service proposals and decisions; (3) the Service’s process for reaching
                             decisions to close post offices; and (4) the appeal process and how the
                             Service is to respond to an appeal. The guide also provides samples of
                             necessary forms and reports that need to be prepared. The entire Service
                             documentation for each proposed post office closure is to become the
                             administrative record that PRC is required to use, as well as written
                             arguments submitted by appellants and the Service, when ruling on an
                             appealed proposed closure.




                             Page 19                                   GAO/GGD-97-38BR Post Office Closures
Briefing Section II

Number of Post Offices Closed




      GAO               Number of Post Office Closures, Fiscal
                        Years 1970-96
         Number of post office closures

         500




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                     AAAA AAAAAAAA AAAA   AAA   AAA 0 AAA AAA AAA
                                                       3  AAA       AAA   AAAA AAAA AAAA AAAA AAA   AAA   AAA   AAA   AAA   AAA   AAA   AAAA AAAA AAAA AAAA
           0   AAA   AAAAAAAA
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                                                AAA   AAA AAA AAA
                                                              AAA   AAA
                                                                    AAA   AAAA
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                                                                               AAAAAAAA
                                                                                    AAAAAAAA
                                                                                         AAAA AAA
                                                                                              AAA   AAA
                                                                                                    AAA   AAA
                                                                                                          AAA   AAA
                                                                                                                AAA   AAA
                                                                                                                      AAA   AAA
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                                                                                                                                  AAA   AAAA
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                                                                                                                                                 AAAAAAAA
                                                                                                                                                       AAAA
                70    71 72 73 74         75    76 77 78 79 80       81    82 83 84 85 86           87     88   89     90    91    92    93 94 95 96

               Preamendment closings            Postamendment closings (average 124 per year)
               (average 218 per year)
               Fiscal years




                                                      Source: Postal Service data.




                                                      Page 20                                                               GAO/GGD-97-38BR Post Office Closures
                         Briefing Section II
                         Number of Post Offices Closed




Number of Post Office    Through fiscal year 1996, the Service had closed 3,924 post offices, leaving
Closures, Fiscal Years   28,189 post offices open at the end of the fiscal year. Since 1970, the
1970-1996                Service has closed an average of 145 post offices each year. The number of
                         post offices closed during the 6-year period (fiscal years 1970-1975) before
                         the 1976 amendments averaged 218 per year, while closures for the 21-year
                         period (fiscal years 1976-1996) after the amendments averaged 124 per
                         year.

                         In fiscal year 1995, the Service closed 239 post offices—the highest
                         number of closures since the 1970s, when 385 post offices were closed in
                         fiscal year 1974. Service officials identified two conditions that led to the
                         large number of closures in fiscal year 1995. The first condition was the
                         Service’s 1992 early-out retirement incentive, which was offered to most of
                         its employees, including postmasters. The second condition was the
                         Service’s decision to address the accumulation of post offices whose
                         operations had been suspended due to various emergency situations.
                         These postmaster retirements and emergency suspensions of post offices
                         had caused a backlog in the post office closing process. As a result, many
                         of the affected post offices were not closed until fiscal year 1995. In fiscal
                         year 1996, post office closures declined to 161.




                         Page 21                                     GAO/GGD-97-38BR Post Office Closures
                                           Briefing Section II
                                           Number of Post Offices Closed




GAO               Events Prompting the Service to Initiate
                  Its Closing Process, FYs 1995-96
 Number of events
 70



 60          59



 50



 40



 30

                               22
 20



 10
                                                   5
                                                                    3                2                1                     1
  0
                                                                             di r




                                                                                                                        e
                                                                                            bu fice
                                                                                                 ed
    re ter




                                                                                te
                                                           sig er
                                          fe r
                                               d




                                                                               ed




                                                                                                                      as
                        ot r




                                                                d
         ed




                          ed




                                       ns ste
                     om te




                                            rre




                                                                             as
                                                              ne




                                                                                              rn
                                                         re ast
      as




                                                                                              of




                                                                                                                    le
      tir




                   pr as




                                    tra ma




                                                                            m
    m




                                                                                                                 st
                                                           m




                                                                                           st
                      m




                                                                          st
  st




                                                                                                               Lo
                                                                                         Po
                                                         st
                                       st
                    st




                                                                        Po
Po




                                                       Po
                                    Po
                  Po




      Types of events that initiated the closing process




                                           Source: Postal Service and PRC data.




                                           Page 22                                                        GAO/GGD-97-38BR Post Office Closures
                              Briefing Section II
                              Number of Post Offices Closed




Events Prompting the          We reviewed Service and PRC records for 93 post offices that were either
Service to Initiate Its       closed or whose proposed closures were appealed in fiscal years 1995 and
Closing Process, Fiscal       1996. The records indicated the Service initiated its closing process after
                              the following events:
Years 1995-96
                          •   Postmaster vacancies: vacancies included 59 retirements, 22 promotions, 5
                              transfers, 3 resignations, and 2 deaths; and
                          •   Emergency suspensions: suspensions included one post office building
                              with a terminated lease and another post office building severely damaged
                              by fire.

                              Postmasters may apply for other positions within the Service, including
                              other postmaster positions created by vacancies. Postmasters at small
                              post offices, such as the ones we reviewed, can apply for promotions to
                              larger post offices.




                              Page 23                                    GAO/GGD-97-38BR Post Office Closures
                                 Briefing Section II
                                 Number of Post Offices Closed




GAO   Average Time the Service Took to
      Close POs, Fiscal Years 1995-96
      Number of years from the event that initiated
      the closing process to the closure
      5

                                                                        4.4
                           4.1
      4




      3




      2




      1




      0
                          Appealed                                  Nonappealed
                          closings                                  closings

      Appealed and nonappealed closures




                                 Source: Postal Service and PRC data.




                                 Page 24                                          GAO/GGD-97-38BR Post Office Closures
                              Briefing Section II
                              Number of Post Offices Closed




Average Time the Service      Of the 44 Service proposed closures that were appealed in fiscal years
Took to Close Post Offices,   1995 and 1996, 19 had been closed at the time of our review. Data available
Fiscal Years 1995-96          for 18 of the 19 closures indicated that the process had taken an average of
                              4.1 years, ranging from 2.7 years to 9.8 years. For the 50 post office
                              closures we reviewed for the same period that were not appealed, the
                              closing process had taken an average of 4.4 years, ranging from 1.2 years
                              to 13.6 years. These times measure the closing process from when a
                              postmaster vacancy occurred or an emergency suspension of a post office
                              took effect to when the Service publicly announced the closure in the
                              Postal Bulletin.

                              A detailed analysis of the time taken by the Service to close post offices
                              was not within the scope of our review. However, we noted that the
                              Service’s procedures required numerous steps to be completed before a
                              post office was closed. Postal managers were to conduct a feasibility study
                              to determine whether to close a post office, which was to include an
                              evaluation of the post office workload and the service needs of the
                              community. Postal managers were also to consult with county or city
                              officials for information about population, area or post office building
                              historical significance, and growth trends within the community; consult
                              with managers of the post office under consideration for closure and with
                              nearby offices that may provide alternative service; analyze and rank
                              alternative services in order of practicality, costs, and the need to maintain
                              effective and regular service to the community; hold public meetings; poll
                              affected customers using questionnaires; propose alternative postal
                              services; and give written notice of Service proposals, decisions, and
                              appeal rights.




                              Page 25                                     GAO/GGD-97-38BR Post Office Closures
Briefing Section III

Proposed Post Office Closures That Were
Appealed



      GAO               Proposed Closures Appealed to PRC
                        in Fiscal Years 1978-96
        Number appealed
        35

                                                           31
                                           30
        30


        25
                   23
                                                                                                                      22    22
                                                                21
        20                                                                                                 19

                                     16            16
        15                                                                        14          14                14
                                                                                                    13
                                                                      12
                         10                                                 10
        10


         5                     4                                                         4

              1
         0
             1978 1979   1980 1981   1982 1983    1984 1985     1986 1987   1988 1989   1990 1991   1992 1993   1994 1995   1996
              Fiscal years




                                                 Source: PRC data.




                                                 Page 26                                                 GAO/GGD-97-38BR Post Office Closures
                            Briefing Section III
                            Proposed Post Office Closures That Were
                            Appealed




Proposed Closures           The first appeal of a Postal Service proposal to close a post office was filed
Appealed to PRC in Fiscal   in fiscal year 1978. Since the 1976 amendments, there have been 2,614 post
Years 1978-96               office closures, and 296 (11 percent) of these closures were appealed to
                            PRC from fiscal years 1978 through 1996. When considering appeals, the
                            1970 act, as amended, requires that PRC use the Service-prepared
                            administrative record. PRC officials told us that they also use written
                            arguments submitted by the appellant and the Service when ruling on an
                            appeal.




                            Page 27                                     GAO/GGD-97-38BR Post Office Closures
                            Briefing Section III
                            Proposed Post Office Closures That Were
                            Appealed




GAO   Appeals of Proposed Closures and
      Disposition of Appeals, FYs 1978-96
      Number of appealed proposals
      200


                  170

      150




      100




                                                                58
      50
                                                                                37
                                           31



       0
                Affirmed              Lacked jurisdiction    Remanded        Withdrawn
                  57%                       10%                20%              13%

               Type of disposition




                            Source: PRC data.




                            Page 28                                     GAO/GGD-97-38BR Post Office Closures
                            Briefing Section III
                            Proposed Post Office Closures That Were
                            Appealed




Appeals of Proposed         PRC’s dispositions of the 296 appeals filed through fiscal year 1996 are as
Closures and Dispositions   follows:
of Appeals, FYs 1978-96
                            Affirmed: PRC did not take exception with the Postal Service on 170, or
                            57 percent, of the appealed closure proposals. PRC ruled that the Service
                            complied with the requirements of the law and could proceed with the
                            proposed closures.

                            Lacked jurisdiction: PRC determined that it lacked jurisdiction for 31, or
                            10 percent, of the appealed proposed closures. PRC found that 19 of these
                            appeals were not filed within the 30 days required by law. PRC also found
                            that the remaining 12 appeals dealt with issues outside its jurisdiction,
                            such as a Service decision to relocate a post office within the same
                            community, a suspension of service, or a study of the feasibility of closing
                            a post office. PRC’s lack of jurisdiction regarding these appeals allowed the
                            Service to proceed as originally intended.

                            Remanded: PRC took exception with the Postal Service on 58, or
                            20 percent, of the appealed proposed closures. PRC ruled that the Service
                            did not comply with the requirements and suspended the proposed
                            closure. Postal Service records did not allow us to readily determine the
                            status of these remanded cases.

                            In remanded cases, the Postal Service may decide to withdraw a proposed
                            closure and not close the post office or correct the PRC-noted deficiency in
                            the record and proceed with closing actions. The Postal Service is not
                            required to go back to PRC and show that it corrected the deficiency before
                            closing the post office. (See app. I for a case study of a closure that was
                            appealed twice.)

                            Withdrawn: PRC did not rule on 37, or 13 percent, of the appealed proposed
                            closures because the Service withdrew its proposals to close 36, and the
                            appellant withdrew the other appeal.




                            Page 29                                     GAO/GGD-97-38BR Post Office Closures
Briefing Section IV

Selected Attributes of Affected
Communities, Fiscal Years 1995 and 1996



      GAO             Community Demographics, Fiscal
                      Years 1995-96

                                                       Data range

                               Low                          High              Average
       Demographics

       Population size
       (23 communities)          30                        2,143                     206

       Number of
       businesses                 1                           39                         6
       (77 communities)




                             Source: Postal Service and PRC data.




                             Page 30                                GAO/GGD-97-38BR Post Office Closures
                          Briefing Section IV
                          Selected Attributes of Affected
                          Communities, Fiscal Years 1995 and 1996




Community Demographics,   We reviewed Service and PRC records for 93 communities where post
Fiscal Years 1995-96      offices were either closed or whose proposed closures were appealed to
                          PRC in fiscal years 1995 and 1996. According to data available for 23 of
                          these communities, resident population size ranged from 30 to 2,143, and
                          averaged 206. The median population size was 80. Data available for 77
                          communities showed that the number of businesses ranged from 1 to 39,
                          and averaged 6. The median number of businesses was 5.




                          Page 31                                   GAO/GGD-97-38BR Post Office Closures
                    Briefing Section IV
                    Selected Attributes of Affected
                    Communities, Fiscal Years 1995 and 1996




GAO      Postal Services Provided to the
         Communities, Fiscal Years 1995-96
                                                       Data range
                                     Low                      High              Average
Type of service

Window hours                           10                      44                         28
per week
(93 post offices)

Transactions                            1                     157                         13
per day
(84 post offices)

General delivery                        1                      52                         13
customers
(56 post offices)

                    Source: Postal Service and PRC data.




                    Page 32                                          GAO/GGD-97-38BR Post Office Closures
                              Briefing Section IV
                              Selected Attributes of Affected
                              Communities, Fiscal Years 1995 and 1996




Postal Services Provided to   The hours of window service provided to the communities by the 93 post
the Communities, Fiscal       offices that were either closed or proposed for closure and subsequently
Years 1995-96                 appealed in fiscal years 1995 and 1996 ranged from 10 to 44 hours per
                              week, with an average of 28 hours per week. Retail services provided
                              during window service hours included the sale of stamps and money
                              orders; special services, such as registered, certified, insured,
                              collect-on-delivery (COD) and Express Mail; the acceptance and dispatch of
                              all classes of mail; and services to permit mailers and postage meter
                              customers.

                              Postal transaction data were available for 84 post offices. The number of
                              transactions per day for the post offices ranged from 1 to 157, with an
                              average of 13 transactions per day. The number of general delivery
                              customers for 56 post offices ranged from 1 to 52, and averaged 13.




                              Page 33                                    GAO/GGD-97-38BR Post Office Closures
                    Briefing Section IV
                    Selected Attributes of Affected
                    Communities, Fiscal Years 1995 and 1996




GAO      Post Office Financial Data, Fiscal
         Years 1995-96
                                                 Data range
                                Low                  High       Average
Type of data
(92 post offices)
Postmaster                    $5,773               $31,664       $13,644
salary
Revenue                         420                 58,891          8,827
Operating                      7,706                47,731         19,656
costs
Gain (Loss)                                                    ($10,829)




                    Source: Postal Service and PRC data.




                    Page 34                                   GAO/GGD-97-38BR Post Office Closures
                              Briefing Section IV
                              Selected Attributes of Affected
                              Communities, Fiscal Years 1995 and 1996




Post Office Financial Data,   We found complete revenue and operating costs8 for 92 of the 93 post
Fiscal Years 1995-96          offices in the affected communities. The postmaster salaries for these 92
                              post offices ranged from $5,773 to $31,664 per year, an average of $13,644
                              per year. Postmasters’ salaries were determined by the service level at the
                              post office they were in charge of operating.

                              Except for post offices in four communities, the annual operating costs of
                              the post offices exceeded their postal revenues. The revenue for the 92
                              post offices ranged from $420 to $58,891 per year, an average of $8,827 per
                              year. Revenue included receipts from the sale of postage stamps and other
                              services. Operating costs, which included the postmaster’s salary, fringe
                              benefits, and rental fees, ranged from $7,706 to $47,731 per year, an
                              average of $19,656 per year. The total yearly loss to the Service for
                              operating these 92 post offices was $996,314—an average loss of $10,829
                              per post office.




                              8
                               Operating costs included postmaster salaries.



                              Page 35                                          GAO/GGD-97-38BR Post Office Closures
                              Briefing Section IV
                              Selected Attributes of Affected
                              Communities, Fiscal Years 1995 and 1996




GAO   Alternative Postal Services to Be
      Provided, Fiscal Years 1995-96
      Number of communities
      60



      50
                   46


      40



      30


                                              22
                                                                   21
      20



      10

                                                                                         4

       0
               Rural route                Highway contract      Community            Other types
                                          route                 post offices         of services

               Type of postal services




                              Source: Postal Service data


                              The Service proposed to provide less costly alternative postal service to all
                              93 communities with post offices that were either closed or whose
                              proposed closures were appealed that we reviewed. According to Service
                              and PRC records, 46 communities were to receive rural route service or
                              rural route service with a cluster box unit. Twenty-two communities were
                              to receive service via a highway contract route (HCR). Twenty-one
                              communities were to receive community post offices (CPO). Four




                              Page 36                                          GAO/GGD-97-38BR Post Office Closures
Briefing Section IV
Selected Attributes of Affected
Communities, Fiscal Years 1995 and 1996




communities were to receive other forms of service, including classified
stations, and a combination of HCR delivery and CPOs.

A rural route provides delivery and retail services to customers in rural
areas. Service is usually provided to roadside mailboxes installed by
customers on the mail carrier’s line of travel. The carrier provides retail
services normally provided at post offices. Most transactions do not
require the customer to meet the carrier at the mailbox. Stamps by Mail
and Money Order application forms are available from the carrier for
customer convenience. Carriers will accept packages at the mailbox
without a customer being present, provided the postage is fully prepaid.
Special services such as certified, COD, and Express Mail may be obtained
from the carrier by leaving a note in the mailbox, along with appropriate
payment. Some rural routes provide service to neighborhood delivery and
collection box units9 rather than roadside mailboxes.

A CPO is a postal operation within a small community that is established on
a contractual basis where an IPO has been closed. A CPO provides the same
services as an IPO (a post office operated by a postmaster) except that a
CPO does not accept permit mail or set postage meters. The CPO bears its
community’s name and ZIP Code as part of a recognized mail address.

An HCR is similar to a rural route except that service is provided by a
contract employee rather than a career postal employee. A classified
station or branch is operated by a career postal employee, not a
postmaster, and provides the same services as an IPO, including accepting
permit mail and setting postage meters.




9
Neighborhood delivery and collection box units are secure, free standing units of individually locked
mail compartments installed and maintained by the Service at no cost to the customer.



Page 37                                                   GAO/GGD-97-38BR Post Office Closures
Appendix I

Two Case Studies Involving Appealed and
Nonappealed Proposals to Close Post
Offices
                        The following case studies include an appealed decision to close a post
                        office in Idaho after the postmaster had been promoted, and a
                        nonappealed decision to close a post office in Nebraska after the death of
                        the postmaster.


                        In April 1993, the Postal Service promoted the postmaster at Clarkia, ID, a
Case Study 1: An        community of approximately 60 residents, to another position. The
Appealed Decision to    postmaster vacancy triggered a review of Clarkia’s postal needs by the
Close the Post Office   Service. After holding a community meeting and polling customers by
                        questionnaire, the Service made its decision, known as a Final
in Clarkia, ID          Determination, to close the Clarkia post office. The Service posted its
                        Final Determination at the Clarkia and three nearby post offices on
                        March 6, 1995.

                        The Service was to provide less costly alternative service in Clarkia via a
                        contractor-operated community post office (CPO). The CPO would offer the
                        same retail services as the post office, except that it would not accept
                        permit mail or set postage meters. The number of service hours would
                        remain the same—24 per week. By closing the post office and establishing
                        a CPO, the Service estimated that it would save $8,299 annually.

                        On April 3, 1995, Clarkia residents appealed the Service proposal to close
                        the Clarkia post office to PRC. PRC remanded the proposal to the Service
                        because it found that the administrative record was incomplete and failed
                        to adequately address all of the residents’ concerns. Specifically, the
                        administrative record did not include copies of the initial questionnaire
                        sent to customers and an analysis of the responses.

                        On October 28, 1995, the Service issued a revised Final Determination for
                        Clarkia and posted it at the post office from October 28 to November 27,
                        1995. Residents again appealed that determination to PRC on November 24,
                        1995. On March 21, 1996, PRC affirmed the Service’s decision. The Service
                        officially closed the post office by publishing a notice to that effect in the
                        Postal Bulletin of September 12, 1996.


                        The postmaster at Octavia, NE, a community of 132, died on November 16,
Case Study 2: A         1994. Pending a review of the postal needs of the community, the Postal
Nonappealed Decision    Service continued to provide postal service at the post office by using a
to Close the Post       temporary clerk from another post office. After holding a community
                        meeting and polling customers by questionnaire, the Service posted its
Office in Octavia, NE

                        Page 38                                     GAO/GGD-97-38BR Post Office Closures
Appendix I
Two Case Studies Involving Appealed and
Nonappealed Proposals to Close Post
Offices




Final Determination, proposing to close the post office on December 28,
1995.

The Service proposed to provide delivery and retail services to Octavia via
rural route administered from a nearby post office. By closing the post
office and providing the alternative rural route service, the Service
estimated that it would save $13,019 annually.

No one appealed the Service’s decision to close the post office during the
30-day appeal period following the Service’s posting of the proposal.
Subsequently, the Service officially closed the Octavia post office by
publishing notice to that effect in the Postal Bulletin of September 12,
1996.




Page 39                                    GAO/GGD-97-38BR Post Office Closures
Appendix II

Post Office Closures and Proposed Closures
Appealed, Fiscal Years 1995-96

                             The following table shows the post office closures—appealed and
                             nonappealed—that we reviewed for fiscal years 1995-1996. At the time of
                             our review, all 50 of the proposed closures that were not appealed had
                             been closed, along with 19 of the appealed closures.


Post office         Closed       Appealed      Post office                   Closed           Appealed
Alcock, KY          x                          Moriah, NY                                     x
Austinville, IA     x                          Morrill, KY                   x
Benedict, MN        x            x             Morrison, IA                                   x
Bingham, NM         x                          New Almelo, KS                x
Boggs, WV           x                          Numa, IA                      x                x
Bovina Center, NY   x                          Oak, NE                       x                x
Bruington, VA                    x             Octavia, NE                   x
Burkhart, KY        x                          Oil Center, NM                x
Burr, NE            x            x             Oquossoc, ME                                   x
Cauthornville,VA    x                          Oven Fork, KY                 x
Clarkia, IDa        x            x             Pearson, WI                   x
Colburn, IN         x                          Plank, KY                     x
Cotesfield, NE      x            x             Prosser, NE                   x                x
Cottle, KY          x                          Regina, VA                    x
Culver, MN          x                          Rodman, IA                    x                x
Cundiff, KY         x                          Roscoe, MN                    x
DeGraff, MN         x            x             Rowletts, KY                  x                x
Eagle Harbor, NY                 x             Salem, NE                                      x
Eckhart Mines, MD                x             Sargentville, ME                               x
Erwin, SD           x            x             Saum, MN                      x
Estill, KY          x                          Sedan, MN                                      x
Filer City, MI                   x             Shade, OH                     x                x
Forest Grove, MT                 x             Shiloh, VA                                     x
Frazer, KY          x                          Silver Star, MT               x
Garrattsville, NY   x                          So. Westerlo, NY              x                x
Gypsy, KY           x                          Sodus Center, NY              x
Harlan, KS          x                          Spring Lick, KY               x
Haynesville, ME     x                          St. Joseph, KY                x
Hazelgreen, WV      x                          Strang, NE                    x                x
Hetland, SD                      x             Taintor, IA                   x                x
Hightown, VA        x                          Tanner, WV                    x
Hubbell, NE         x                          Tapoco, NC                    x
Huntley, NE                      x             Thousand Island Park, NY      x
                                                                                                   (continued)


                             Page 40                                      GAO/GGD-97-38BR Post Office Closures
                          Appendix II
                          Post Office Closures and Proposed Closures
                          Appealed, Fiscal Years 1995-96




Post office      Closed        Appealed           Post office             Closed           Appealed
Kemp, OK                       x                  Toronto, IA             x                x
Kinross, IA                    x                  Trevett, ME                              x
Lakeview, CA     x                                Trio, SC                x
Lamb, KY         x                                Twin Brooks, SD                          x
Lamero, KY       x                                Valley Home, CA         x                x
Leith, ND        x                                Walnut Grove, KY        x
Lewiston, NE                   x                  Walters, MN                              x
Lynch, MD        x             x                  Welty, OK               x
Macon, VA                      x                  West Rushville, OH                       x
Manchester, WI   x             x                  Westervelt, IL          x
Maryneal, TX                   x                  Weston, MI                               x
Max, MN          x                                Whitfield, MS           x
Millbrook, MI    x                                Wind Cave, KY           x
Mira, LA         x

                          a
                          This proposed closure was appealed twice.

                          Source: Postal Service and PRC data.




                          Page 41                                      GAO/GGD-97-38BR Post Office Closures
Appendix III

Comments From the United States Postal
Service




               Page 42        GAO/GGD-97-38BR Post Office Closures
Appendix IV

Comments From the Postal Rate
Commission




              Page 43           GAO/GGD-97-38BR Post Office Closures
Appendix V

Major Contributors to This Report


                         Gerald P. Barnes, Assistant Director
General Government       James T. Campbell, Assistant Director (retired)
Division, Washington,
D.C.
                         Sherrill Johnson, Assistant Director
Dallas Regional Office   Raimondo Occhipinti, Senior Evaluator
                         David Bennett, Evaluator




(240244)                 Page 44                                   GAO/GGD-97-38BR Post Office Closures
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