Postage to go up 5.4%, or maybe not.

Nonprofits are facing a 5.4 increase in postage rate for 2006. But, before canceling mailings and reworking budgets, Congress might provide some relief.

The United States Postal Service (USPS) has filed with the Postal Rate Commission for an across-the-board 5.4 percent hike that would increase the price of a First Class stamp from 37 cents to 39 cents. For Standard Mail Nonprofit Enhanced Carrier Route, the cost of a letter 3.3 ounces or less would increase from 12.6 cents to 13.3 cents. For a presorted letter being sent via Standard Mail Nonprofit, rate it would increase from 16.5 cents to 17.4 cents.

The cost of a non-letter piece weighing 3.3 ounces or less for an enhanced carrier route would increase from 12.6 cents to 13.3 cents and the Standard Mail Nonprofit presorted rate would increase from 23 cents to 24.2 cents.

The hike for a piece weighing more than 3.3 ounces would be charged on a piece and pound rate, so the cost of sending a piece enhanced carrier route that currently costs 5 cents per piece and 37 cents per pound would increase to 5.3 cents per piece and 39 cents per pound. The cost of the same piece using the Standard Mail Nonprofit presorted rate is 11 cents per piece and 58.4 cents per pound and would increase to 11.6 cents per piece and 61.6 cents per pound.

Senny Boone, executive director of the Direct Marketing Association Nonprofit Federation in Washington, D.C., said that she hopes that in the end there will be no rate hike because Congress is working on legislation that will make the proposed hike unnecessary.

As part of the Postal Accountability and Enhancement Act, which includes a number of postal service reforms, there are two sections that could save the USPS approximately $4.6 billion.

The USPS is scheduled to pay $3.1 billion into an escrow account for civil service pension fund overpayments next year. Under a 2003 law, the federal government noted the USPS was paying too much into a civil service retirement fund. Congress agreed to reduce the required payments.

However, Congress told the USPS to establish an escrow account for these over payments until the matter is resolved. The USPS has said if there is no requirement to put the money into the escrow account it will withdraw the rate hike request.

The second section, if resolved, would save the USPS $1.5 billion. The USPS currently pays pension credits for postal workers' past military service, a fee that Neal Denton, executive director of the Washington, D.C.-based Alliance of Nonprofit Mailers, and others believe should be paid by the U.S. Department of the Treasury.

The Bush administration is opposing the two sections saying the money, at least from the escrow account, could be better spent to pre-fund future postal workers' health care costs.

Both the House and Senate versions of the Act would make the U.S. Department of the Treasury responsible for the military benefits. The Bush administration opposes this measure because it claims it would add to the federal deficit.

Denton said a more realistic hope would be that Congress reduces the escrow payment and the USPS reduces the rate hike to 4 percent or puts it off until a later date.

The House Government Reform Committee met on April 13 and released the bill to the full House to be scheduled for a vote. The Homeland Security and Governmental Affairs Committee in the Senate was also slated to discuss the bill during April and then release it to the full Senate for a vote.

Both Boone and Denton said if the escrow account payment is not eliminated, then next year the USPS will be back for yet another rate hike and that will continue each year until the payment is ended.

"The real challenge is going to be next year," Denton said, because if the escrow payment is $3.1 billion now, it will be much larger then.

"It will be the mother of all rate cases," Boone said of next year, should the escrow payment be allowed to stand. "We need reform and predictable rates."

Nonprofits are bracing for the worst, having heard more dire predictions of a double-digit hike. "We were aware of the pending rate hike," said Emily Whiffed, communications specialist with The Nature Conservancy in Arlington, Va. "We built a cushion in our budget to handle it." The Nature Conservancy. put in an additional 10 percent cushion for items sent out via the Standard Mail Nonprofit rate and 16 percent for First Class, Whitted said.

Carrie Martin, spokesperson for the Washington, D.C.-based American Red Cross said the organization also put a cushion in its budget, but over the course of the last few years, has moved some of its dealings with donors and prospective donors to the Internet.

Not only have newsletters been put on the Internet, but the organization also uses an email that updates those registered at the site on its activities. Martin said the update is sent to 700,000 people.

Standard Mail Nonprofit Enhanced Carrier Route

Current

Letters

Per Piece Rates
For pieces 3.3 ounces (0.2063 pound) or less

                            Entry Discount

                    None     DBMC     DSCF     DDU

Basic              $0.126   $0.105   $0.100   $0.094
High Density        0.102    0.081    0.076    0.070
Saturation          0.095    0.074    0.069    0.063
Automation Basic    0.111    0.090    0.085    0.079

Nonletters

Per Piece Rates For
pieces 3.3 ounces (0.2063 pound) or less

                            Entry Discount

                    None     DBMC     DSCF     DDU

Basic              $0.126   $0.105   $0.100   $0.094
High Density        0.110    0.089    0.084    0.078
Saturation          0.104    0.083    0.078    0.072

Piece and Pound Rates

For pieces more than 3.3 ounces (0.2063 pound). Each
piece is subject to both a piece rate and a pound rate.

                   Per Piece

Basic              $0.050
High Density        0.034
Saturation          0.028

                   Per Pound (includes entry
                   discounts if applicable)

                    None     DBMC     DSCF     DDU

Basic              $0.370   $0.270   $0.245   $0.213
High Density        0.370    0.270    0.245    0.213
Saturation          0.370    0.270    0.245    0.213

Note:

(1.) The residual shape surcharge of $0.20 per piece applies
to items that are prepared as parcels or are not letter-size
or flat-size.

2. Automation letters that weigh up to 3.5 ounces receive adiscount
that equals the applicable nonletter piece rate (3.3 oz.or less)
minus the applicable letter piece rate (3.3 oz. or less).

Proposed

Letters

Per Piece Rates
For pieces 3.3 ounces (0.2063 pound) or less

                            Entry Discount

                    None     DBMC     DSCF     DDU

Basic              $0.133   $0.111   $0.106   $0.100
High Density        0.108    0.086    0.081    0.075
Saturation          0.100    0.078    0.073    0.067
Automation Basic    0.117    0.095    0.090    0.084

Nonletters

Per Piece Rates
For pieces 3.3 ounces (0.2063 pound) or less

                            Entry Discount

                    None     DBMC     DSCF      DDU

Basic              $0.133   $0.111   $0.106   $0.100
High Density        0.116    0.094    0.089    0.083
Saturation          0.110    0.088    0.083    0.077

Piece and Pound Rates

For pieces more than 3.3 ounces (0.2063 pound). Each
piece is subject to both a piece rate and a pound rate.

                   Per Piece

Basic              $0.053
High Density        0.036
Saturation          0.030

                   Per Pound (includes entry
                   discounts if applicable)

                    None     DBMC     DSCF     DDU

Basic              $0.390   $0.285   $0.258   $0.224
High Density        0.390    0.285    0.258    0.224
Saturation          0.390    0.285    0.258    0.224

Note:

1. The residual shape surcharge of $0.211 per piece applies
to items that are prepared as parcels or are not letter-size
or flat-size.

2. Automation letters that weigh up to 3.5 ounces receive adiscount
that equals the applicable nonletter piece rate (3.3 oz.or less)
minus the applicable letter piece rate (3.3 oz. or less).