Breast Cancer Research StampMillions Raised for Research, but Better Cost Recovery Criteria Needed Gao ID: GGD-00-80 April 28, 2000
The breast cancer research stamp was the first stamp ever issued by the Postal Service to raise money for a nonpostal purpose--in this case medical research on breast cancer. The stamp is a "blockbuster" commemorative stamp that costs 40 cents, or seven cents above the cost of a regular first-class postage stamp. The Postal Service is authorized to deduct from the seven-cent surcharge its costs to print, sell, and distribute the stamp. GAO found that it is unclear how much it cost to develop and sell the stamp because the Postal Service did not track these expenses. Postal officials said that these costs were inconsequential or immaterial and it would have been too expensive to track them. In March, the Postal Service reported that the bulk of its costs to develop and sell the stamp through the end of 1999 was $5.9 million. About $5.4 million of these costs were recovered through the 33-cent first-class portion of the stamp, and the remaining $482,000 had been recouped from the surcharge revenues. GAO was concerned that the Postal Service had not formalized its criteria for determining what costs would be recouped from the surcharge revenue and was not consistently applying its informal criteria, which changed over time. In response to GAO's recommendation, the Postal Service indicated that it would formalize and consistently apply its cost recovery criteria. The Postal Service plans to recoup costs from the surcharge revenue that were over and above the costs normally incurred with a "blockbuster" commemorative stamp issue or a new postal product. The U.S. Mint's experiences offer lessons that may be applicable to semipostals, because there are many similarities between the two. In the mid-1990s, GAO reviewed the commemorative coin program and found that some coins were unpopular and did not sell well. GAO also found that as the number of commemorative coins proliferated, the market became saturated and sales fell. As sales fell, the U.S. Mint was unable to cover its costs on some commemorative coin programs. GAO summarized this report in testimony before Congress; see: Breast Cancer Research Stamp: Millions Raised for Research, but Better Cost Recovery Criteria Needed, by Bernard L. Ungar, Director of Government Business Operations Issues, before the Subcommittee on International Security, Proliferation, and Federal Services, Senate Committee on Governmental Affairs. GAO/T-GGD-00-137, May 25 (11 pages).
GAO noted that: (1) on March 16, 2000, the Service reported that the bulk of its costs to develop and sell the BCRS through December 31, 1999, was $5.9 million; (2) according to the Service, almost all of these costs would have been incurred with any blockbuster commemorative stamp issue and have been recovered through the 33 cents that constitutes the First-Class postage portion of the BCRS; (3) in a March report, the Postal Service Office of Inspector General (OIG) identified $836,000 in costs that it believed were attributable to the BCRS program and not previously identified by the Service; (4) after reviewing a draft of OIG's report, the Service agreed that $488,000 of these costs were incurred exclusively on behalf of the BCRS program, and included them in its reported $5.9 million in BCRS costs; (5) the Service and OIG had not, as of March 31, 2000, resolved their differences over the remaining $348,000 in costs identified by OIG; (6) the Stamp Out Breast Cancer Act did not provide quantitative measures for evaluating the effectiveness of the BCRS as a fund-raiser; (7) however, the act provided that the BCRS would be voluntary and convenient, and it would raise funds for breast cancer research; (8) to these ends, BCRS has been successful; (9) the BCRS had raised about $10 million for breast cancer research by the end of 1999 and is expected to raise more by the time sales are scheduled to conclude; (10) with respect to appropriateness, about 71 percent of adults responding to the public opinion survey GAO commissioned, and most of the key stakeholders GAO spoke with, believed that it is appropriate to use semipostals issued by the Service to raise funds for nonpostal purposes; (11) GAO does not believe that the Service has the authority to issue semipostals on its own volition without specific legislation authorizing it to do so; (12) although the act gave the Service the specific authority to issue the BCRS, it was silent with regard to the appropriateness of the Service issuing additional semipostals for other causes; (13) postal officials have stated that in the absence of statutory authority to issue semipostals, it is unclear whether selling such stamps would be consistent with the underlying statutory and regulatory authorities governing the Service; and (14) GAO does not interpret the Service's underlying statutory authority as authorizing it to establish postage rates and fees for a particular stamp at a level that exceeds its postage value for purposes of generating revenue for contributions to a charitable cause.Recommendations
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