SAN FRANCISCO (CBS SF) — The United States Post Office is bleeding red ink and likely discontinuing regular Saturday service, but the organization still had the money to fund a $2 million San Francisco conference for 400 executives this week.

Postmaster General Patrick Donahoe was in San Francisco Monday morning to deliver the keynote address at the National Postal Forum and outlined recent budget cuts that have led the U.S. Postal Service to reduce its workforce by 193,000 employees since 2006.

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“No other organization that I can think of—either public or private—has gone through a similar downsizing so rapidly and continued to function at a high level,” Donahoe said.

However, those cuts—as well as proposals to eliminate Saturday mail service and close more post offices—were what prompted a rally outside the convention center by dozens of current and former postal workers and their supporters who were upset with leadership attending the Moscone Center event.

Conference executive director Maureen Goodson, said this week’s conference is the one chance postal executives get all year to network with 3,600 of their most important clients, who paid a total of $22 billion in postage last year.

“The U.S. Postal Service isn’t doing them any good just staying at LaFont Plaza in headquarters. They need to meet their customers,” said Goodson.

Goodson defends the conference against critics who denounce its opening day golf game at the Harding Park Golf Course.

“It is a sponsored golf tournament by Siemens, one of our exhibitors. Everybody pays his own registration fee,” countered Goodson.

Goodson also defended a party at the Marriott Hotel as a thank you reception for its largest mail users.

Outside the conference, postal workers protested proposed service cuts, including ending Saturday deliveries.

The USPS said it is watching costs by sending 160 fewer employees to the conference than it did last year, and paying $155 for hotel rooms – a 40 percent discount.

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Outside Monday’s conference, David Welsh, a retired letter carrier in Daly City, said the move to five-day mail service will be a big blow to customers, particularly the elderly and disabled who could see delays in receiving prescription drugs.

“It’s going to be a big cutback,” Welsh said.

Postal officials have blamed a mandate instituted by Congress in 2006 requiring the agency to pre-fund its retiree health care costs as well as customers’ changing mailing habits as reasons for the downsizing.

Donahoe on Monday encouraged the mailing industry to use technology such as imbedded QR codes or augmented reality to improve the experience of customers who are increasingly relying on e-mails or other online means of communication.

“We must continue to work to drive innovation and leverage data and technology to improve the consumer experience and grow revenue,” Donahoe said. “Our challenge as an industry is to shape those moments when people are experiencing mail, and make them more powerful in the future.”

The protesters outside acknowledged the congressional mandate has prompted some layoffs and called for its removal, but argued that new technology was not a reason to cut the budget further.

“The Postal Service was there before the Constitution,” said Harvey Smith from the group Save the Berkeley Post Office. “This is an organization that survived the telegraph, survived the telephone, survived the fax … it’ll survive e-mail.”

The National Postal Forum runs through Wednesday at Moscone Center West.

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