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52 | 2007 Annual Report United States Postal Service
Notes to the Financial Statements
In 2007, we recorded $880 million in workers’ compensation expense,
compared to the $1,279 million in 2006, and $838 million recorded in
2005. The effect of the changes discussed above is accounted for as a
change in accounting estimate, as defined by GAAP.
In addition to the cost of workers’ compensation claims, OWCP charges us
an administrative fee for processing claims. In 2007, the administrative fee,
which is included in the expense above, was $49 million, compared to $45
million in 2006 and $56 million in 2005.
Note 12 – Revenue forgone
Our operating revenue includes accruals for revenue forgone. Revenue
is forgone when Congress mandates that we provide mail services for
designated mailers at free or reduced rates. Congress then appropriates
money to reimburse us for the revenue that we have forgone in providing
these services.
We estimate the amount of services that will be provided during a given
year and forward a funding request to Congress. At the end of the year
we reconcile this request with the actual usage. Depending upon whether
actual usage is higher or lower than our estimate, we will request additional
funding or return the excess funding via a reduction to our next revenue
forgone funding request.
In 2007 we included $63 million of revenue forgone as operating revenue,
$99 million in 2006, and $109 million in 2005. We record requested
amounts as government receivables until the appropriations are received.
The Revenue Forgone Reform Act of 1993 authorized Congress to make
42 annual payments of $29 million each, beginning in 1994 through
2035. These payments are reimbursement for two purposes: services we
performed in 1991, 1992, and 1993 for which we have not yet been fully
paid; and for shortfalls in the reimbursement for the costs we incurred
for processing and delivering certain nonprofit mail entitled to statutorily
reduced costs from 1994 through 1998.
The future payments authorized by the Revenue Forgone Reform Act of
1993 total $1,218 million for which we calculated the present value, at 7%
interest, to be approximately $390 million and recognized the $390 million
as revenue during fiscal years 1991 through 1998. The discounted present
value of the remaining future payments as of the years ended September
30 was $353 million in 2007 and $357 million in 2006.
The total receivable for revenue forgone as of the years ended September
30 was $476 million in 2007 and $490 million in 2006.