Postal Commission Recommends an Increase in Rates for Charities

The Postal Rate Commission last week voted to recommend that non-profit postage be increased by 9.6 per cent, on average, for most letters and other pieces of mail. Rates for non-profit periodicals would rise by 8 per cent.

New rates could take effect as early as July.

The commission, an independent body that reviews all rate increases proposed by the Postal Service, advised substantially more-modest increases than the 11.3-per-cent jump that the service had proposed for letters and other mail. But the commission suggested that rates for non-profit periodicals be increased by more than the Postal Service recommended.

The service’s Board of Governors must now assess the commission’s decision; it may accept all or part of that decision, or reject it. The board is expected to take up the matter at its next meeting, in June.

Non-profit officials were angered by the commission’s decision on periodical rates. Charities would pay approximately 8 per cent more in postage, on average, for magazines under the commission’s plan, while postage on commercial periodicals would go up by only 4.6 per cent. The Postal Service had proposed an average increase of 3.6 per cent for non-profit periodicals.

“Non-profit publications are the most welcome thing in constituents’ mailboxes,” said Neal Denton, executive director of the Alliance of Nonprofit Mailers, which represents 200 organizations.

“To think that these mailers will pay more than their fair share is frustrating,” he said. “Non-profits must look for alternative ways to disseminate their educational information now. The Postal Service is getting too expensive.”

Earlier this year, when the Postal Service was devising its recommendations, several non-profit groups had complained that the Postal Service used inaccurate data in figuring out what new postal rates should be. In assessing the costs of processing non-profit mail, they said, the service used outdated information that does not reflect the savings that occurred when a new mail-classification system was adopted in 1996.

The commission agreed and in February asked the Postal Service to delay proceedings toward a rate increase until more accurate data could be obtained, but the service rejected the request. Forced to use the outdated information, the commission came up with its own equation to calculate non-profit mail costs.

Lobbyists for non-profit groups noted that more updated information is expected to be released soon. If it shows that the recommended rates are higher than they should be, given the costs of handling charity mail, they said that they may appeal to Congress, which can order the Postal Service to lower the rates.

The commission made clear it was worried about the information that it used to reach its decisions.

“We’re not comfortable with the non-profit cost data,” admitted Edward J. Gleiman, chairman of the commission. “It’s very conceivable that with updated cost figures, non-profit rates wouldn’t have gone up as much.”

Mr. Gleiman also chided the Postal Service for requesting a postage increase at all this year, when it has reported huge surpluses — more than $1-billion in each of the preceding three years. And, while the Postal Service had projected a deficit of $1.4-billion for 1998, it currently has a surplus of more than $1-billion.

The commission recommended that any postage increase be delayed until January 1999 at the earliest. It said it disagreed with the Postal Service’s argument that the service needs a rate increase this year so it can afford to purchase new equipment.

“The Postal Service is unlikely, in the absence of either the economy going into a free fall, a spending binge, or some very creative accounting, to incur any of the $1.4-billion loss it projected for fiscal 1998,” said Mr. Gleiman. “We believe the service may have seriously misestimated its need for a rate hike.”