US Postal Service 2003 Annual Report Download - page 24

22 | 2003 annual report united states postal service
management discussion & analysis
outlook
Congress appropriated $587 million
for these purposes in 2002, and we spent or
committed $42 million of that amount. In
2003 we spent or committed an additional
$366 million. A majority of the spending this
year continued to go toward facility restoration
in Washington, DC and Hamilton, New Jersey.
During 2003, the Board of Governors
approved the Biohazard Detection System and
the Ventilation and Filtration System, which
totaled $573 million. We have scheduled
deployment of these systems to begin in early
2004 and to be completed by mid-2005.
To support these various detection, protec-
tion and decontamination systems, we have
requested a $350 million Congressional
appropriation for 2004, which has not yet
been authorized.
Expense Growth
We estimate that total expenses in 2004 will
be $66.8 billion, which is 2.9% more than our
2003 total expenses of $64.9 billion.
We expect personnel expense, including
workers' compensation and all other employee
and retiree benefits, to increase by $1.8 billion,
or 3.6% driven by the full year implementation
of PL 108-18, contractual salary and benefits
increases and health benefits inflation. We also
estimate that health insurance premiums will
increase by 10.6% in January 2004. In addi-
tion, 2004 is a leap year, and the one additional
delivery day will add $170 million to 2004
personnel expenses.
We estimate that non-personnel expense
will increase by $577 million, or 4.2%, due
to investments to update and improve
our information technology capabilities,
improve customer access and service and
upgrade our administrative support and
logistics infrastructure.
In addition to the absence of debt refinanc-
ing costs, we estimate that interest expense on
borrowing will decrease $304 million in 2004.
We also estimate interest expense on the CSRS
deferred retirement costs to increase by $161
million to a total of $277 million due to a full
year of operation under the Act.
Our expenses in 2004 would be 2.8%
more than in 2003 if the effects of debt refi-
nancing and the Act were excluded. While
interest expense savings of $336 million from
debt refinancing reduces expense growth in
2004 to 2.4%, total expenses increase by
2.9% because the CSRS reform savings in
2004 are less than 2003.
From 1971 through 1999, we had annual
expense growth of less than 4.0% only twice.
We expect that 2004 will be the fourth year
out of the last five that expense growth will be
less than 4.0%.
Our discussion in the Management
Discussion and Analysis represents our
best estimate of the trends we know
about, the trends we anticipate and the
trends we think are relevant to future
operations. However, actual results may
be different from our estimate.