Postal Service Shows Profit of $304 Million

WASHINGTON — A combination of cost-cutting and a good interest rate on the investment of excess cash brought the U.S. Postal Service a $304.6-million profit for the year that ended Sept. 30, Postmaster General Preston R. Tisch reported Tuesday.

The 1986 budget projected a break-even year, and Tisch characterized the surplus as “close to our break-even mandate.” The Postal Service lost $251 million a year earlier.

Next year’s budget was calculated without a rate increase, but several Postal Service board members said at a meeting Tuesday that a $305-million surplus on a $30-billion budget is cutting it close.

“Its a long way from being a huge profit,” board member John N. Griesemer said.

The agency actually lost $1 billion on operations in 1986 but made up the difference with $317 million of interest income and $716 million that Congress provided to subsidize postage for nonprofit organizations and certain publications.

Tisch pointed to a 34.4% reduction in overtime pay that was possible despite a 5.8% increase in mail volume to 147.6 billion pieces.

Overtime was reduced because new labor agreements allowed new workers to be brought in at a lower wage scale than current employees, he said.

Even with interest rates falling, postal money managers were able to get an average return of 9.32% on their investments, bringing in $84 million more in interest than was planned.

The board approved raising Tisch’s salary to $88,800 a year and approved pay raises averaging 3% for about 40 other executives.