GAO-12-72R, Potential Financial Effect on the U.S. Postal Service of Increased Voting by Mail


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Increased Voting by Mail' which was released on October 20, 2011. 

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GAO-12-72R: 

United States Government Accountability Office: GAO: 

October 20, 2011: 

The Honorable Thomas R. Carper: 
Chairman:
Subcommittee on Federal Financial Management, Government Information, 
Federal Services, and International Security: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

Subject: Potential Financial Effect on the U.S. Postal Service of 
Increased Voting by Mail: 

Dear Mr. Chairman: 

The United States Postal Service (USPS) is in a serious financial 
crisis and has not generated sufficient revenue to cover its expenses 
and financial obligations as mail volume continues to decline. You 
requested that we examine how much additional revenue could result 
from the increased use of voting by mail--that is, more registered 
voters receiving and casting ballots through the mail. Currently, all 
states use voting by mail to some degree, most commonly in the form of 
absentee ballots mailed to registered voters who cannot, or choose not 
to, vote in person on Election Day.[Footnote 1] However, Oregon and 
Washington now administer elections solely through mail voting. 
According to a 2009 U.S. Election Assistance Commission (EAC) study, 
about 23.7 million ballots, or 17.7 percent of all votes, were cast by 
mail in the 2008 presidential election.[Footnote 2] 

This report documents information on the revenue potential of 
increased use of voting by mail that we presented to your office on 
August 17, 2011. This information is based on our estimate of the 
effect increased voting by mail could have on USPS's volume and 
revenue, details of which are described below; our review and analysis 
of reports on the trends in voting by mail, states' and localities' 
experiences with mail voting, and attitudes and voting patterns of 
registered voters; and meetings with USPS, EAC, the National 
Association of Election Officials, the National Association of 
Secretaries of State, and state and local election officials regarding 
costs and other issues related to voting by mail. We conducted this 
performance audit from July 2011 through October 2011 in accordance 
with generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings 
and conclusions based on our audit objectives. We believe that the 
evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

In summary, we found that voting by mail has limited potential for 
providing USPS with additional revenues substantial enough to affect 
its deteriorating financial condition because of the small potential 
increase in volume relative to total mail volume, the low profit 
margins on election mail, and the lack of strong nationwide support 
for voting by mail. 

We found the potential for additional revenues was limited, in part, 
because the volume of election mail would be relatively low even if 
mail voting were implemented nationwide in presidential elections. To 
gauge the potential impact of increased voting by mail under one 
possible scenario, we estimated the election mail volume that could 
have resulted if the 2008 presidential election had been conducted 
solely by mail. Our estimate assumed 190 million outgoing ballots--one 
for each registered voter in 2008--and 134 million returned, completed 
ballots--the number of voters who actually cast ballots in the 2008 
election--resulting in 324 million pieces of mail, or about two-tenths 
of 1 percent of USPS's total fiscal year 2009 mail volume of 177 
billion pieces.[Footnote 3] Given that mail volume has declined an 
average of nearly 14 billion pieces a year since fiscal year 2008, the 
additional election mail would be unlikely to alter the current trend 
of declining mail volume, particularly when taking into account that 
presidential elections occur every 4 years.[Footnote 4] 

We estimate that not only would this amount of election mail have 
minimal impact on mail volume but, more importantly, it would not 
significantly increase USPS's revenues. Election ballots sent to 
voters typically are mailed using either Nonprofit Standard Mail or 
First Class Mail rates, depending on a number of factors, including 
the information contained in the ballot, whether the ballots are 
presorted, and how local postal officials interpret the mail 
classification standards.[Footnote 5] Voters must generally use First 
Class postage to return completed ballots. To account for the use of 
the two different rates for outgoing ballots, we estimated revenue 
using both. According to our estimates, an all-mail 2008 presidential 
election could have generated revenue ranging from $224 million using 
Nonprofit Standard Mail rates to $415 million using First Class Mail 
rates, representing less than 1 percent of USPS's total fiscal year 
2009 revenue of $68.1 billion.[Footnote 6] 

Although we were able to estimate potential revenue had the 2008 
presidential election been conducted solely by mail, we were unable to 
assess the extent to which this additional source of volume and 
revenue would have mitigated USPS's financial loss in 2009. Election 
mail is currently processed using a variety of mail classes, and USPS 
does not separately account for costs attributable to election mail as 
it does for individual classes of mail, such as First Class or 
Standard Mail. However, USPS officials told us that they make little, 
if any, profit on election mail, depending on factors such as whether 
it is sent First Class--one of the most profitable classes of mail for 
USPS--or Nonprofit Standard. The class of mail that includes the 
Nonprofit Standard rate is, on average, unprofitable, with the revenue 
that USPS receives for this class covering only 82 percent of the cost 
USPS incurs delivering it. 

USPS officials stated that the Postal Service views the processing and 
delivery of election-related materials more as a required public 
service than a revenue opportunity. USPS plans to submit a proposal to 
the Postal Regulatory Commission by the end of 2011 to create an 
Election Class Mail rate, which would offer a flat rate for mail up to 
3.3 ounces per piece and the features of First Class Mail, including 
forwarding and return service, but at a lower price than First Class 
Mail. USPS officials have not yet made public the price of postage for 
Election Class Mail but have stated that it would be less than current 
First Class rates and more than Nonprofit Standard Mail rates. USPS 
officials said that they calculated the new rate based on the amount 
of revenue they would need to cover their costs for delivering and 
processing this mail at First Class service standards. Officials 
added, however, that although the rate would be designed to just cover 
costs, the actual amount of profit or loss will not be known until 
USPS implements the rate, and that several factors could affect 
profitability, including the following: 

* Actual costs of processing and delivering election mail. Even though 
the rate would be designed to enable USPS to break even on election 
mail, the cost of providing First Class service may be more than the 
revenue generated from the reduced new Election Class Mail rate in any 
given election year due to variables such as ballot weight. First 
Class rates are more expensive since USPS provides additional services 
such as mail forwarding and return of undeliverable mail. If the new 
rate is too low, it may not generate enough revenue to cover the costs 
associated with such services. 

* Amount of postage voters put on completed ballots. USPS officials 
have stated that voters--who are generally responsible for providing 
postage on completed ballots--sometimes apply no or insufficient 
postage to ballots and that election jurisdictions sometimes refuse to 
reimburse USPS for the costs of delivering these ballots. 
Nevertheless, USPS has a policy to deliver voter-cast election mail 
even if it lacks proper postage. Therefore, another factor that could 
affect the profit or loss of a new Election Class Mail rate might be 
the extent to which ballots are returned with inadequate postage and 
how this issue was factored into the development of the new postal 
rate. 

Finally, the willingness of the public and election officials to 
increase the use of voting by mail appears questionable, further 
reducing the potential to deliver profits for USPS. A 2010 national 
survey conducted jointly by the California Institute of Technology and 
the Massachusetts Institute of Technology found that all-mail 
elections are supported by an estimated 14.7 percent of the 
population--less support than for every other election reform 
presented in the survey, including making Election Day a holiday and 
voting over the Internet.[Footnote 7] EAC and representatives of state 
and local election jurisdictions we spoke with echoed this lack of 
support. EAC officials said that voters in some regions of the country 
would be particularly reluctant to adopt voting by mail because voting 
is seen as a community event. The Executive Director of the National 
Association of Election Officials agreed that there is little national 
interest in voting by mail, citing concerns such as voter fraud and 
security. In addition, voting by mail could be more expensive than a 
traditional election; election officials from Nevada's Clark County 
informed us that they estimated that the cost of conducting an all-
mail special congressional election would be $75,000, while a 
traditional 1-day election would cost only $33,000.[Footnote 8] 
Finally, EAC and local election officials told us that USPS's proposal 
to reduce delivery frequency from 6 to 5 days a week could affect 
states' and localities' willingness to conduct elections by mail due 
to concerns about timely ballot delivery. 

We provided a draft of this report to USPS and EAC for comment. USPS 
provided written comments, which are reproduced in enclosure I. USPS 
agreed with our finding that voting by mail has limited revenue 
potential and stated that it considers Election Mail a required public 
service rather than a large revenue opportunity. USPS noted that it 
will continue to work with election officials to develop creative 
solutions to enhance the service offering for election mail. EAC had 
no comments. 

We are sending copies of this report to the appropriate congressional 
committees, the Postmaster General, the Executive Director of EAC, and 
other interested parties. If you or your staff have any questions 
about this report, please contact me at (202) 512-2834 or 
stjamesl@gao.gov. Contact points for our Offices of Congressional 
Relations and Public Affairs may be found on the last page of this 
report. 

Additionally, Heather Halliwell, Assistant Director; Samer Abbas; 
Katie Hamer; Amy Rosewarne; and Mindi Weisenbloom made key 
contributions to this report. 

Sincerely yours, 

Signed by: 

Lorelei St. James: 
Director, Physical Infrastructure Issues: 

Enclosure: 

[End of section] 

Enclosure I: Comments from the United States Postal Service: 

Gary C. Reblin: 
Vice President, Domestic Products: 
United States Postal Service: 
475 L'Enfant Plaza SW Room 5100: 
Washington, DC 20260-8095: 

October 7, 2011: 

Ms. Lorelei SL James: 
Director, Physical Infrastructure Issues: 
United States Government Accountability Office: 
Washington, DC 20548-0001: 

Dear Ms. St. James: 

This letter is in response to the draft report titled 'Potential 
Financial Effect on the U S. Postal Service of Increased Voting By 
Mail'. 

As indicated in your draft report, the Postal Service agrees that the 
revenue potential of increased use of voting by mail has limited 
potential for providing the USPS with additional revenues substantial 
enough to affect its current financial condition. The increased Vote 
by Mail volume would be minor relative to total mail volume. The 
Postal Service considers Election Mail a required public service 
rather than a large revenue opportunity. 

In regards to increased use of Vote by Mail, the Postal Service has 
been working closely with state and local election officials and will 
continue to promote and support their use of Vote by Mail. There is 
nothing more basic to our national democracy than a citizen's right to 
vote; and the Postal Service' role in today's voting process is 
fundamental. Through the U.S. mail system, voters both domestic and 
abroad, gain access to the full range of election-related 
communication including polling place notifications: election notices; 
voter registration materials; and perhaps most importantly - mail-in 
ballots. 

The Postal Service is proud to be part of the democratic process and 
will continue to work with election officials to develop creative 
solutions to enhance the service offering for election mail. 

If you need further assistance, or any further information, please 
contact Steve Monteith at 202-258-6983 or via email at 
steven.w.monteith@usps.gov. 

Sincerely. 

Signed by: 

Gary Reblin: 

[End of enclosure] 

Footnotes: 

[1] Absentee voting is broadly defined as casting a ballot in advance 
of an election, usually by mail. All states and the District of 
Columbia have provisions allowing voters to cast their ballot before 
Election Day by voting absentee, although they vary in terms of who 
may vote absentee, whether the voter needs an excuse, and the time 
frames for applying and submitting absentee ballots. For further 
discussion of election administration, see GAO, Elections: The 
Nation's Evolving Election System as Reflected in the November 2004 
General Election, [hyperlink, http://www.gao.gov/products/GAO-06-450] 
(Washington, D.C.: June 6, 2006). 

[2] U.S. Election Assistance Commission, The 2008 Election 
Administration and Voting Survey: A Summary of Key Findings 
(Washington, D.C.: November 2009). The Help America Vote Act of 2002 
established the EAC as an independent, bipartisan commission charged 
with developing guidance to meet the act's requirements, adopting 
voluntary voting system guidelines, and serving as a national 
clearinghouse of information on election administration, among other 
things. 42 U.S.C. 壯 15321 et seq. 

[3] The actual incremental increase in mail volume would be lower from 
this overall increase since a substantial number of ballots are 
already mailed to voters and returned through the mail. 

[4] Additional opportunities for an increase in election mail volume, 
which we did not assess as part of our analysis, include presidential 
primaries, congressional primaries, and midterm elections; other state 
and local elections; and nonballot election mailings such as 
instruction materials or sample ballots. We chose a presidential 
election as the focus of our analysis because it is national in scope, 
has relatively high voter turnout, and would thus likely demonstrate 
the maximum revenue potential of voting by mail from a single election. 

[5] The National Voter Registration Act of 1993 allowed election mail 
to be sent using reduced Nonprofit Standard Mail rates, but did not 
exempt such mail from having to meet Nonprofit Standard Mail rate 
presorting, quantity, and other requirements. See, 39 U.S.C. �3629. 
Some USPS officials have interpreted the act to allow all election 
materials to qualify for Nonprofit Standard rates and subsequently 
allow their local election jurisdiction to use the reduced rate, while 
other postal officials have required local areas to use First Class 
rates for sending out election materials. 

[6] We made our calculations assuming 190 million ballots were sent to 
voters and 134 million were returned by voters. If registered voter 
turnout had been 100 percent during an all-mail 2008 presidential 
election, the additional election mail revenue would have ranged 
between $299 million and $490 million, still less than 1 percent of 
total fiscal year 2009 revenue. We assumed a weight of 4 ounces for 
ballots sent to and returned by voters. Revenue projections would be 
lower if we had assumed a lighter ballot weight. Additionally, voters 
in areas that conduct elections solely by mail usually have the option 
of placing their completed ballot in designated drop boxes instead of 
returning them through the mail. A Washington State election official 
informed us that 12 percent to 18 percent of voters in King County--
the state's largest election jurisdiction representing 30 percent of 
the state's vote--typically submit their ballots in a drop box rather 
than through the mail. 

[7] R. Michael Alvarez, Thad E. Hall, Ines Levin, and Charles Stewart 
III, Voter Opinions about Election Reform: Do They Support Making 
Voting More Convenient? (July 14, 2010). Along with the reforms 
already mentioned, respondents in the survey were asked whether they 
supported or opposed the following election reforms: automatically 
registering all citizens over 18 to vote; allowing people to register 
on Election Day at the polls; requiring all people to show government-
issued photo identification when they vote; and moving Election Day to 
a weekend. The order of the reform questions rotated across 
respondents. 

[8] Clark County is Nevada's most populous county and home to Las 
Vegas. 

[End of section] 

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