By Emily Stephenson

(Reuters) – The cash-strapped U.S. Postal Service will offer buyouts this summer to nearly all of its 45,000 mail handlers, part of a plan to consolidate operations at 140 mail-processing facilities in the next year.

The mail agency, which lost $3.2 billion in the first three months of 2012, plans to begin this summer moving mail-processing activities away from smaller sites to reduce annual costs.

As part of that plan, the Postal Service will offer $15,000 in two installments to full-time mail handlers who take early retirement or leave the agency, USPS spokesman Mark Saunders said on Friday.

Mail handlers are workers who load trucks and move mail containers between processing operations. Part-time employees also will be eligible for separation incentives in amounts based on the number of hours they work.

“The agreement with the Postal Service is intended to provide a financial cushion, and added peace of mind, for mail handlers who might be prepared to move on to the next chapter of their lives by leaving the Postal Service,” the National Postal Mail Handlers Union said on its website.

The Postal Service has been hit hard by tumbling mail volumes as more Americans communicate online and by massive payments for future retiree health benefits. The agency has asked Congress to let it end Saturday delivery and make other changes. In the meantime, USPS officials have been looking for ways to cut costs.

WASHINGTON, May 17 (Reuters) – The U.S. Postal Service will proceed with a plan this summer to shut mail-processing facilities as part of its cost-cutting effort but will spread out the closings to maintain overnight delivery of local mail.

The agency said on Thursday it would consolidate processing at 140 of its 461 sites by February 2013, moving processing from small facilities to larger ones, and shrink the area where customers can expect mail to be delivered the next day.

It uses the word “consolidate” and not “close” because many of the small processing centers also house retail windows and other services for post office customers.

A second round of closings, which would begin in February 2014, would consolidate an additional 89 processing sites, USPS Chief Operating Officer Megan Brennan said.

The agency previously said it would consolidate about 220 processing sites and end next-day delivery to reduce overnight work. After protests from lawmakers and businesses, USPS tweaked the plan to keep next-day delivery for a few years but said it must scale down its processing network as Americans send less mail.

“This two-phased approach essentially stretches our time-frame to implement the consolidation. It does so in a way that gives our customers and employees the time to plan and adapt to the changes we are making,” Brennan said.

The Postal Service, which does not rely on taxpayer funding, has been losing billions each year as rising Internet use erodes mail volumes and annual payments drain its cash.

WASHINGTON (Reuters) – The Postal Service said its loss widened to $3.2 billion in the first three months of 2012 and repeated on Thursday its warning that it will likely default on payments to the federal government unless Congress passes legislation offering some relief.

The agency, which does not receive taxpayer funds and has been losing billions each year as Americans communicate online, said it lost $2.2 billion in the same period in 2011.

Postal officials are pressing Congress to pass legislation that would allow the agency to move forward with its five-year business plan, including ending Saturday mail delivery. In the meantime, they have sought ways to cut costs.

The announcement came a day after the cash-strapped mail service said it was walking back a plan to close thousands of money-losing post offices and would instead slash operating hours at 13,000 locations with low traffic.

“We are aggressively pursuing new revenue streams and reducing costs in areas within our control,” Postmaster General Patrick Donahoe said in a statement. “These actions are not enough to return the Postal Service to profitability.”

The Postal Service lost $5.1 billion in fiscal year 2011 and was unable to make a massive annual payment for future retiree health benefits, which is required by law. The agency said much of the loss during the second quarter of 2012 came from setting aside funds for the $11.1 billion that is due this year.

Mail volume also fell 4.1 percent to 39.5 billion pieces from the same period a year earlier, as electronic communications drained both first-class and advertising mail.

WASHINGTON (Reuters) – The U.S. Postal Service said on Wednesday that it is abandoning for now its plan to close thousands of post offices in rural locations and instead will shorten their hours of operation.

The change represents a victory for U.S. lawmakers and rural communities who created a backlash against the cash-strapped agency last summer when it began considering more than 3,600 post offices for closure this year.

Rather than shuttering offices starting next week, when a self-imposed moratorium on closings was set to end, the plan is to cut the operating hours of 13,000 locations with little traffic to between two and six hours a day.

“We’ve listened to our customers in rural America and we’ve heard them loud and clear – they want to keep their post offices open,” said Postmaster General Patrick Donahoe. “There’s no plan for closings at this point.”

The new plan would save more money – roughly $500 million annually compared to $200 million under the old plan – and could placate some lawmakers in Washington who have been critical of the virtually bankrupt agency as it pushes for other controversial changes, such as ending Saturday mail or raising postage rates.

But lawmakers cautioned that removing the threat of thousands of closings should not dissuade Congress from urgently passing legislation to staunch the USPS’s annual losses of billions of dollars.

The Postal Service, which relies on sales of stamps and other products rather than taxpayer dollars, has been losing billions of dollars each year as Americans increasingly communicate online.

WASHINGTON (Reuters) – A bipartisan group of lawmakers is trying to drum up support in the House of Representatives to vote on a Senate-passed bill that would make it tougher for the Postal Service to close some facilities, in part by targeting representatives who may lose postal facilities and jobs in their districts.

The group hopes representatives who are concerned about the planned closures of post offices or mail processing sites under the Postal Service’s own cost-cutting plan will join them in pressing House leadership to hold a vote on the Senate bill.

The new push comes as the Postal Service intends on May 15 to lift its months-long moratorium on postal closings. The closures would eliminate middle-class jobs at a time when the United States is still struggling with high unemployment.

Officials had put that moratorium in place to give Congress more time to pass a restructuring of the Postal Service, which has been losing billions of dollars each year. The postal service does not receive taxpayer dollars but relies on the sale of postage and other products to pay for its operations.

Democratic Representative Peter Welch said he and Republican Michael Grimm will begin when Congress returns from recess next week by talking with House members from states with Republican senators who voted for the Senate bill last week.

“There were 13 Republican senators who voted for this, and we think many of them represent rural areas,” Welch said.

“That obviously indicates that the senators from those districts see the importance of rural delivery and the jobs.”

By Emily Stephenson

(Reuters) – The Senate advanced legislation on Wednesday that would allow the U.S. Postal Service to end Saturday mail after two years as part of efforts to overhaul the mail agency and prevent it from shuttering thousands of facilities next month.

The Postal Service has been losing billions of dollars each year due to the rise of online communications and high labor and other costs. Both houses of Congress have been working for months on legislation to restructure the agency and offer some relief.

The Senate voted 62-37 to pass its bill, which would also let the mail agency use about $11 billion in surplus funds in a retirement account to offer early retirement incentives as a means to reduce its workforce.

But while the bill was sponsored by a bipartisan coalition of senators, it faces a difficult challenge in the Republican-led House of Representatives. Leaders have yet to schedule a full House vote on the leading bill, which differs significantly from the Senate version, even though a committee approved it in October.

“This bill will bring the change that the post office needs to stay alive and serve the people and businesses of our country,” Independent Senator Joe Lieberman, one of the Senate bill’s sponsors, said before the vote.

“Now we’ve got to challenge the House” to pass a bill, he told reporters afterward.

April 18 (Reuters) – A U.S. congressional panel approved about $33 billion in cuts over 10 years from food assistance programs in a partisan vote t h at signaled Republican members’ preference to trim social programs instead of farm programs or defense spending this year.

The cuts advanced by the House of Representatives Agriculture Committee on Wednesday are expected to die in the Democratic-controlled Senate.

But the vote done by voice, in which several Democrats uttered irritable ‘nays’, showed that Republicans will push domestic spending cuts over defense cuts or tax hikes as they try to replace automatic cuts that take effect in January.

The committee’s proposal to tighten rules for qualifying for the Supplemental Nutritional Assistance Program (SNAP) and repeal a 2009 increase to the program instead of reducing subsidies for farmers also could show Republican priorities for a farm bill rewrite due this year.

“I would contend this entire process is a waste of time,” Representative Collin Peterson, the committee’s top Democrat, said in opening remarks.

“Taking a meat ax to nutrition programs that feed millions of hard-working families in an effort to avoid defense cuts is not a serious way to achieve deficit reduction,” he said.

Budget writers want to craft a plan that avoids about $98 billion in across-the-board, automatic cuts triggered by the failure of the debt-reducing “supercommittee” last year.

WASHINGTON, April 17 (Reuters) – The U.S. Senate voted on Tuesday to begin debating legislation that would allow the cash-strapped U.S. Postal Service to end Saturday mail delivery after two years.

The bill from Republicans Susan Collins and Scott Brown, Democrat Thomas Carper and Independent Joe Lieberman would also allow the mail agency to use surplus funds in a federal retirement account to offer retirement incentives and to explore developing its own health care plan.

The Postal Service has struggled to staunch billions in annual losses as consumers increasingly send email and pay bills online.

The agency, which relies on sales of stamps and other products rather than taxpayer dollars, has laid out its own cost-cutting measures but says it needs congressional action for many of its more drastic proposals.

Lawmakers have spent months crafting an overhaul but have fought over whether to allow USPS to close post offices, what to do about a massive annual payment for future retiree health benefits and other issues.

“There are many different views on how to save the Postal Service, but there can be no doubt that the Postal Service is in crisis,” Collins said before the vote.

“The Postal Service is vital to our economy. It is the linchpin of a trillion-dollar mailing industry.”

April 12 (Reuters) – The U.S. Postal Service has more mail-processing facilities, staff and equipment than it needs as mail volumes drop, a government watchdog said in a report calling on Congress to pass legislation that helps the agency address its dire financial situation.

“It is now abundantly clear that the postal business model must be fixed given the dramatic and estimated decline in volume, particularly for First-Class Mail,” the Government Accountability Office said in the report published on Thursday.

“If Congress prefers to retain the current delivery service standards and associated network, decisions will be needed about how USPS’s costs for providing these services will be paid.”

The Postal Service, which does not receive taxpayer money to fund its operations, has grappled with plummeting mail volumes as consumers increasingly send e-mail and pay bills online. High costs, including an annual payment to fund future retiree health benefits, have weighed heavily on its finances.

The agency lost $5.1 billion in fiscal year 2011, and officials say they need to cut annual costs by $20 billion by 2015.

WASHINGTON, March 27 (Reuters) – The head of the U.S. Postal Service (USPS) said on Tuesday that the agency could save about $7 billion a year by moving its employees from federal health plans to a separate benefits program, a proposal that drew skepticism from lawmakers.

The Postal Service, which does not receive taxpayer funds and lost more than $5 billion last year, has been scrambling to cut costs. The agency began floating the idea of taking over its retirement and health programs last August.

Postmaster General Patrick Donahoe told a House of Representatives subcommittee that eligible employees would be moved to the government-run Medicare program for the elderly and a massive annual payment to prefund retiree benefits eliminated under the proposal.

Donahoe said USPS-run plans would be better tailored to cover couples without children or single parents. Officials believe lower overall insurance premiums would reduce employee contributions to their health care, he said.

The Postal Service, which has a monopoly on U.S. mail service, has about 1 million employees and retirees. Postal unions have opposed a number of the agency’s cost-cutting plans, and Donahoe said the Postal Service is still negotiating with them on the health proposal.

Members of the subcommittee, which oversees the agency, questioned whether the move would mean higher premiums for employees and whether the agency might have less leverage than federal plans to negotiate prices down.

“I am quite skeptical that the Postal Service can or should manage its own health insurance system,” said Representative Elijah Cummings, the top Democrat on the subcommittee.