USPS SERVES US Act Proposes Annual Rate Cap Tied to Inflation, Penalties for Bad Service, and New Customer Advocate Office

The "USPS SERVES US Act" is on the table, and it’s looking to give the U.S. Postal Service a major operational and financial tune-up. At its core, this bill, if passed, would change how postal rates are set by linking them to the Consumer Price Index (think: the government's main measure of inflation) but with a potential annual cap that could be 0.5% below inflation, or another figure set by the Postal Regulatory Commission (PRC), as detailed in Section 2. Plus, Section 5 states that rate hikes could only happen once every 12 months. A big kicker? If the USPS doesn't hit its service targets – like getting your mail delivered on time – the PRC could effectively ground future rate increases for those specific mail products that are lagging, according to Section 3.

Your Stamp Money: How Prices Might Change and Where Savings Could Come From

This bill digs deep into how the USPS manages its money and sets prices. Section 2 ties future rate adjustments for mail and services to the Consumer Price Index (CPI) for All Urban Consumers over the previous year, minus a default 0.5 percent, or another percentage the Postal Regulatory Commission (PRC) might set with a public explanation. The PRC would have 60 days after the Act passes to get these new rules in place. For anyone tired of frequent price jumps, Section 5 limits these rate changes to no more than once every 12 months. This means if you're running a small business that ships products or sends out marketing mail, you'd have a more predictable cost landscape.

What about mail services that aren't paying their own way? Section 6 allows the USPS to propose rate increases for these "non-compensatory" classes, but there are strings attached: the cost-per-piece for that mail class can't go up by more than the annual limit, and the USPS must have met all its performance targets for those specific products in the previous year, without fudging the numbers or lowering the goalposts. So, if magazines (often a non-compensatory class) aren't being delivered reliably, their rates can't just be hiked to cover losses without service improvements. Furthermore, Section 8 specifies that any "retained earnings" (profits the USPS keeps) must come from genuine efficiency improvements or cost reductions, not just from higher prices. And to top it off, Section 12 adds a new objective for the USPS: to actively work on maintaining and increasing the volume of market-dominant mail (your everyday letters and marketing mail), while making sure these services still contribute fairly to the Postal Service's overall institutional costs.

Holding Their Feet to the Fire: Service and Your Voice

Accountability is a major theme here. Section 3 empowers the PRC to impose sanctions if the USPS fails to meet its performance targets for a mail product, as long as the failure isn't due to a natural disaster or some other uncontrollable event, lasts for at least a year, and the USPS doesn't have a credible improvement plan. The sanction? A reduction in how much the USPS can raise rates for the affected products. So, if your First-Class mail delivery has been consistently subpar for over a year with no good fix in sight, the next stamp price increase might be smaller, or even paused, for that service.

Section 4 gives the PRC more teeth to scrutinize USPS plans. If the Commission believes a USPS initiative amounts to a significant change in service that should be reviewed (like widespread post office hour reductions or mail processing plant closures), even if the USPS doesn't formally propose it as such, the PRC can order the Postal Service to explain itself. If the explanation isn't good enough, the USPS has to justify the change in a formal hearing. There's a notable check on this, though: the USPS Board of Governors can unanimously vote to reject a PRC decision within 60 days. If they don't act or can't reach a unanimous decision, the PRC's order stands. This gives the Governors significant override power.

To make sure everyday users have a seat at the table, Section 9 mandates the creation of an Office of the Customer Advocate within the PRC. This office will represent the interests of the general public in all PRC proceedings, especially those concerning market-dominant products like letters and flats. They can even investigate issues with competitive products if it concerns fair cost allocation or cross-subsidization. The complaint process is also getting an overhaul under Section 10, requiring the PRC to act more quickly, generally within 45 days if no significant motions delay things. And if the USPS is found to have charged an unlawful rate, Section 11 allows the PRC to order a kind of reimbursement by reducing future price increase authority for that product until the amount overcharged is effectively recouped by mailers. If the USPS unreasonably delays a complaint proceeding, the PRC can tack on an additional penalty.

Behind the Counter: Smarter Data, Clearer Rules, and a New Look at Retirement Funds

Several sections aim to refine the nuts and bolts of postal regulation and financial management. Section 7 requires that all established objectives (like efficiency and service quality) be applied to each specific class or type of mail service and product, ensuring a more granular level of accountability. When it comes to defining what's what, Section 13 adds new criteria for the PRC to consider when classifying products as market-dominant, emphasizing factors like simplicity for users and the educational or cultural value of the mail, referencing specific existing objectives in section 3622(c).

To get a better handle on future needs, Section 14 directs the PRC to develop its own, independent model for estimating mail demand within 120 days. This model must be created without relying on the Postal Service's existing models and will involve public input, aiming for a more objective forecast for planning and rate-setting. Finally, a significant financial shift is proposed in Section 15 for the Postal Service Retiree Health Benefits Fund. It allows a portion of this fund – starting at 25% and potentially rising to 30% after five years – to be invested in index funds, similar to those available in the federal employees' Thrift Savings Plan (TSP). A new Postal Service Retiree Health Benefits Fund Investment Committee, including the Secretary of the Treasury, the Chair of the USPS Board of Governors, the Chairman of the Federal Retirement Thrift Investment Board, and two presidential appointees with relevant expertise, will oversee these investments. This aims to potentially improve the fund's long-term financial health, which is crucial for postal retirees.