Postal execs living large as mail service cut back
CNN broke the story about a $1.2 million home bought as part of the USPS relocation program for its top executives to make it easier for them to move. You can see the 8,400 square foot home and all its features at Realtor.com, including an indoor swimming pool, six bedrooms, and six baths on five plus acres. I called the Realtor, Novella Taylor, for comments about the home's value and prospects for sale, but she was told not to make any comments to reporters by the listing corporation Cartus Relocation. I'm waiting for an email or callback from them.
Taking a closer look at the numbers, this program has lost about $54 million dollars for the USPS. According to CNN the average loss per home the postal service bought in 2008 was $58,000 and it bought more than 500 homes in 2008. That's a total of about $29 million in losses for 500 homes in 2008. In addition the story indicated that 1,022 homes were bought as part of the program in 2007 and 2008, but the losses in 2007 averaged just $50,542. For the remaining 522 homes that's a total loss of about $26 million. Add those together and you find that the USPS has lost $54 million just on its relocation program. With that level of loss for just one program, do you still wonder why the USPS is bleeding red?
Of the 1022 homes the USPS purchased, 14 cost between $1 million and $2.8 million according to the CNN story. The average purchase price in 2007 and 2008 was $257,874. The USPS plans to cap the amount of the relocation benefit in the future to $1 million.
Other U.S. government agencies do have relocation programs, but they don't buy million dollar homes. For example the FDA limits its relocation assistance to homes under $330,000. While the USPS may be semipublic and not supported directly by U.S. taxes, we, as taxpayers, certainly have to pay a lot more for stamps and see the possibility of fewer mail delivery days because of this type of money mismanagement by the postal service.
Postmaster General John Potter neglected to mention this program, and probably a lot of others when he was testifying before Congress and said, "The Postal Service, like the rest of the economy, is experiencing a severe financial crisis, and I'm here today to ask for your help to protect America's postal system." In that hearing, Congress was considering cutting back mail delivery because of the economy. With these kinds of loses, it sounds more like mismanagement to me.
Update: Author Billie Bierer, who lives next to the house in question agrees. She wrote me by email, "If the Post Office was my company, I would reorganize and discontinue this perk. However, what the Post Office did was put a $1,000,000 top limit on house purchases. Not the act of tightening a budget in my opinion." She doesn't know how much the USPS paid for the house because she says the Realtor will not disclose that information. But she told me that house originally listed for $2.9 million, then for $1.7 million. Now it's listed for $1.2 million.
Lita Epstein has written more than 25 books including "Reading Financial Reports for Dummies."