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Postal Service Exaggerated the Savings It Collected From Cutting Employee Compensation, Audit Finds

The agency hasn’t accounted for the costs associated with cutting pay and reducing benefits, GAO says.

JANUARY 24, 2020, Eric KATZ, Senior Correspondent


The U.S. Postal Service has overestimated how much it saves from cutting employee compensation, according to a new audit, because it has failed to include new costs associated with high turnover and increased overtime. 
     As a result of cutting pay for new employees and offering an increasing number of workers non-career positions that earn less generous benefits, USPS has reported about $10 billion in savings between fiscal years 2016 and 2018. The Government Accountability Office, however, could only substantiate $8 billion of that total and found even that amount likely overstates the actual savings. Without a better read on the true impact of its personnel cost cutting, the auditors said, the Postal Service will be ill-informed as it makes future financial decisions. 

     USPS had 77,000 fewer employees in 2018 than it did 10 years earlier, though most of its job cuts came in the first half of that period. The agency has mostly added jobs in recent years due to an increase in delivery points and more labor-intensive package delivery. It has slashed a total of 300,000 jobs since 1999. In addition to the job cuts, USPS has sought to reduce compensation costs by lowering pay for new career employees. Under new collective bargaining agreements, for example, a new city letter carrier hired in 2016 would see a starting salary of $37,000, compared to $48,000 for someone hired previously. Wage growth has also slowed to 1% per year for postal employees, compared to 2.3% in the private sector. GAO said it was unable to verify $2.3 billion of the savings USPS claimed from the pay reductions due to insufficient data. 

     The Postal Service has also hired more non-career employees who can be more easily laid off, face less certainty in their schedules and receive less generous benefits. They now make up 20% of the USPS workforce, up from a 10% cap under previous labor agreements. Postal management has claimed $8.2 billion in savings from this change between 2016 and 2018, but GAO said that number was actually $6.6 billion. 

     USPS’ third method of cutting personnel costs stemmed from reducing its share of employees’ health insurance premiums from around 84% to around 74%. The Postal Service said it achieved $1.6 billion in savings from that reduction, but GAO said it was $1.4 billion.  

     Postal management failed to consider several factors in determining its savings, GAO said. Non-career employees generally work more hours than their career counterparts, the auditors found, including more overtime and premium pay hours like Sundays. Lower-paid career workers also worked more and in many cases performed more overtime. USPS also compared the average pay for new non-career employees to median pay for career employees at all levels, rather than the career employees' starting salaries. USPS therefore estimated a gap of $25 per hour between career and non-career employee pay, whereas GAO said the difference was actually closer to $8 per hour when accounting for all factors. 

     Some stakeholders, such as union officials, told GAO the less attractive non-career positions have created recruiting difficulties and the less experienced workers are less productive. Postal management, however, denied those assertions. GAO found USPS was struggling with turnover, with 3% of employees leaving each month. The Postal Service denied that pay rates were affecting turnover, but GAO found in fiscal 2018 that 4.2% of workers at the lower pay rate left each month compared to 0.36% of those at the previous, higher rate. A USPS inspector general report found the Postal Service spent $30 million on non-career employee turnover costs in fiscal 2017. 

GAO warned the errors could lead to poor decision making. 

“     Given that USPS regularly evaluates and manages employee compensation in its labor negotiation, as well as overall budget planning, without guidance on what factors are necessary to consider when developing employee compensation cost estimates, USPS risks making ill-informed decisions about whether to maintain, or make additional, changes to compensation,” they auditors said.

Postal management disagreed that the agency had exaggerated its savings, but agreed to incorporate more factors into calculations going forward. The GAO report follows 2018 findings from the USPS inspector general that found the agency realized just 5% of its projected savings by eliminating overnight delivery of regular, first-class mail and pushing back some of its two-day delivery to a three-day window. 

The Postal Service, which advocated the changes to enable the closure or consolidation of nearly 200 processing plants, estimated it would save $1.6 billion but instead saw just $90 million. 

Postal Service Sees More Cuts to Workforce Costs to Avoid Running Out of Money by 2024
In new strategic plan, postal management lays out a dire financial picture.
JANUARY 16, 2020 

 

 

The U.S. Postal Service is on a course to run out of funds in five years and is calling on Congress to provide legislative reforms, including changes to employee compensation, to avoid that fiscal calamity. 
USPS can regain its financial footing by 2024, the mailing agency said in a newly released five-year strategic plan, if it receives new flexibilities from lawmakers and its regulatory body. It plans to make changes internally as well, primarily by orienting more of its business toward e-commerce delivery and offering new digital services. The 245-year-old Postal Service promised to innovate more quickly and adapt to future platforms, rather than just its traditional physical delivery network. 

Those changes alone, however, will not save the Postal Service, the agency said. It has lost nearly $78 billion since 2007, about three-quarters of which resulted from a statutory requirement to prefund health benefits for future retirees. USPS made clear its situation is dire. 
“The most significant issue facing the Postal Service today is that our business model is unsustainable,” Postmaster General Megan Brennan and Chairman of the USPS Board of Governors Robert Duncan said in a joint letter accompanying the business plan. “This is due to increasingly conflicting mandates to be self-funding, compete for customers, and meet universal service obligations under highly regulated and legislated constraints.” 

While the Postal Service hopes to grow revenue through package services—the agency said it would deliver all e-commerce shipments locally within 24 hours and anywhere in the contiguous United States within two business days—its market share has begun to decline as private sector companies and shippers have expanded their delivery networks. USPS said it will attract new customers by expanding services, such as growing the use of 24-hour self-service kiosks. 
The Postal Service will also continue to squeeze costs out of its workforce, pledging to reach new collective bargaining agreements with employee unions that provide more favorable terms to the agency. It will enhance its pay-for-performance for non-union workers to better reward top employees. In the last decade, USPS has slashed 84,000 career positions in favor of creating lower compensated non-career posts. The agency has also established a new tier of lower-earning career workers. Still, postal management said retirement pensions and retiree health care make up 35% of its personnel costs, which continue to rise faster than inflation. The Postal Service said it must have legislative changes to those cost drivers or identify “other means of financing.” It previously detailed a 10-year business plan to Congress in which it floated dramatic changes to employees' pay and benefits. 

USPS also promised to give employees better technology to carry out their jobs, such as equipping all workers with smart devices, and to improve oversight of worker safety. 
To avoid defaulting on critical, day-to-day expenses, the Postal Service plans to provide a much larger offering of e-government services. The agency expects total mail volume to drop by 18% over the next five years while the number of addresses it must deliver to will increase, meaning USPS will lose more money for each delivery it makes. USPS projected a $4 billion loss in just the controllable part of its business in fiscal 2020, though it is currently working with the Postal Regulatory Commission in hopes of winning the right to increase its prices more quickly.   

In their letter, Brennan and Duncan said lawmakers must answer a fundamental question to preserve the future of the nation’s mailing agency. 

“What would you like the Postal Service to become and how would you like to pay for it?” they asked.  

                               taken from the GovExec Today, article by Eric Katz

PMG BRENNAN DELAYS RETIREMENT:
copied from GovExec.com & keepingposted.com (from Betsy Vick)                      1/7/2020


The head of the U.S. Postal Service indefinitely delayed her retirement on Monday, pushing the deadline to find the next postmaster general past the end of the month. 
To facilitate the search and transition process, the governors announced Jan. 6 that the Postmaster General has agreed to delay her retirement date.
"We are grateful to the Postmaster General for her continued commitment to the Postal Service, and share her confidence in the Postal Service's strong leadership team members who will ensure that we continue to deliver for the American people," said Board of Governors Chairman Robert M. "Mike" Duncan.
The decision by Megan Brennan comes as stakeholders across the postal universe have issued a variety of demands for the USPS board of governors as it engages in its candidate search. The American Postal Workers Union, which represents more than 200,000 USPS employees, held a rally at the mailing agency's Washington headquarters on Monday to encourage the board to choose a new postmaster general who will refuse to issue any sweeping cuts to service. APWU, partnering with 83 organizations that make up the Grand Alliance to Save Our Public Postal Service, delivered a petition with 350,000 signatures calling on the board to name a new postmaster general committed to maintaining universal service and blocking any effort to privatize the agency. 
The rally came as Brennan was set to step down by Jan. 31, after a 33-year career and five-year tenure as postmaster general. The board of governors announced later Monday, however, that Brennan would remain in the job as it continued its search for replacement. The board is in the midst of a "thorough, nationwide search for a successor" to replace Brennan, who agreed to delay her retirement to "facilitate the search and transition process," the board said in a statement. 
Dave Parternheimer, a USPS spokesman, said there is no date by which the search must be completed, noting only that a "nationwide search is underway" and the governors will make an announcement at the appropriate time. 
 

 

PMG Retires
United States Postal Service Announces R[...]
Microsoft Word document [13.7 KB]

 

Fiscal Year 2019 Mitigating Factors Information Released

You will find two different pieces of information on the National UPMA website.    One has to do with the mitigating factors process and the other has to do with the mitigating factors submission timeline.

 

For more information visit the www.Unitedpma.org website.

 

Thank you

 

Frank Augustosky

Membership Director

United Postmasters and Managers of America

NPA RATINGS SCORES REQUIRE MITIGATION?

 UPMA provides training on Mitigating NPA factors on our website, www.unitedpma.org. Click on Resources, then Educational, and then scroll through the various educational resources to find the Mitigation module. You must be a UPMA member to access the training. Sign in requires your membership number and first two initials of last name. Your membership number is printed just above your name on label of each UPMA Leader magazine. Good luck!

It was announced today that our Postmaster General, Megan Brennan, has decided to retire on January 31, 2020.    While we wish Megan well in her retirement, I want to say personally and professionally that she will be greatly missed by myself and the UPMA organization.    Whether it was at one of our conventions, legislative summits, or any other meeting that she attended, or that I was invited to attend, I feel she was always gracious and open and honest with me and with us as an organization.   Megan always took extra time to answer questions, have her picture taken with groups, or individuals, and to make sure that as much as possible everyone felt their issues were addressed.   Obviously it is too early to know who the next individual to hold the title of Postmaster General of the United States will be; however, rest assured that I will work hard on behalf of UPMA to forge a partnership that is beneficial to both the members of UPMA and the United States Postal Service going forward.
Again, we wish Megan all the best and we wish her a long, happy and fulfilling retirement.

Dan Heins, National President                                                           10/19/2019

 the Hatch Act

The Hatch Act restricts federal employees from taking part in political activity, defined as any activity directed at the success or failure of a political party, partisan political group, or candidate in a partisan race. 

RURAL CARRIERS LABOR DEAL RATIFIED: Copied USPS Link 
The National Rural Letter Carriers' Association (NRLCA) membership has ratified a new three-year labor contract with the Postal Service. The contract covers approximately 131,000 employees represented by the union. Highlights of the agreement include annual general wage increases, a reduction in the employer share of health premiums, additional operational flexibility to use rural carrier associates, and enhanced health benefits for eligible non-career rural carrier employees. In addition, the agreement includes a comprehensive memo of understanding on the implementation of a rural carrier standards study. The new agreement runs through May 20, 2021. For more info: https://link.usps.com/2019/08/06/labor-deal-ratified-2/                                            8/19/2019

Redundant reporting

Plans are in place to create survays and action plans to help reduce our redundant reporting requirements. Stay tuned aand keep your fingers crossed.

 

A project from the Eastern Area Level will be looking to see how we can reduce some of the organizational drag that meetings/telecoms, emails, and reports have on our day-to-day operations.  This project is being sponsored at a national level by Mr. Dave Williams, our Chief Operating Officer, and in the Eastern Area by Dr. Joshua Colin, our Area Vice President, and Ms. Angela Curtis, our Area Manager of Operations Support.
 
The plan is to identify Non-Value Added (NVA) meetings, emails, and reports that ultimately take time away from engaging our employees and our customers.

 Please contact Mari Beth Kirkland at 440-821-4667 or email at: mari_kirkland@yahoo.com to give candid feedback. This is the only way that we can truly identify root causes to our organizational drag. Thank you advance for your assistance.                                      8/1/19

 

Headquarters developed a Lean Communication Team. Their mission is to reduce emails, telecoms, programs, and redundant reporting.

Mr. David Williams, COO, heads this up. Each district in the country has one UPMA member and one NAPS member.

      A survey went out for all EAS employees. We received hundreds of responses. This included alot of comments and suggestions. David Williams, COO, has determined that we spend 2 hours a day on emails, 2 hours a day on programs, and 2 hours a day on telecoms. 

     Northern Ohio District Manager, Sharon Young has been very receptive to this. She has instucted, all departments to quit sending out emails, except Safety. They will send emails to the POOMS, and the POOM'S determine what to send out. To date, on an average, Northern Ohio EAS employees are receiving 41 less emails a day. 

     The next project is eliminating surveys and survey content. We do not need to certify completion of duties a second time.  

 

In the future I will be working on reducing telecoms. 

Ohio Valley District team members are Karen Garber for UPMA and Chris Bruno for NAPS. 

 

Mari Beth Kirkland                                                                                              8/7/2019

Have you tried Informed Delivery ?

Once again at our National Convention we heard the PMG ask how many had signed up for Informed Delivery. She was encouraging everyone to get and use it. Check out www.usps.com today to learn more.                                                     8/19/19

UPMA Pay Package 6-28-18.pdf
Adobe Acrobat document [153.6 KB]
NAPS EAS Pay Package 6-28-18.pdf
Adobe Acrobat document [133.2 KB]
information on USPS phones
USPS Phones.docx
Microsoft Word document [12.3 KB]

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