In the Matter of the Petition by                                )
                                                                               )
RALPH E. BROWN                                                  )
P.O. Box 1352                                                         )
                                                                               )
         at                                                                   )
                                                                               )
Hot Springs National Park, AR                                )
    71902-1352                                                        )    P.S. Docket Nos. DCA 98-92-94

APPEARANCE FOR PETITIONER:                            D. J. Duncan
                                                                                Local APWU Representative
                                                                                100 Reserve Street
                                                                                Hot Springs National Park, AR 71902-1352

APPEARANCE FOR RESPONDENT:                         Larry Hensley
                                                                                Labor Relations Specialist
                                                                                United States Postal Service
                                                                                4700 McCain Blvd.
                                                                                Little Rock, AR 72231-9401

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Ralph E. Brown, challenges Respondent's intended deductions from his salary to satisfy alleged shortages of $270.73, $496.43 and $202.18 in Petitioner's accountability. After receiving three Notices of Involuntary Administrative Salary Offsets from Respondent, Petitioner filed petitions requesting hearings based on written submissions under the Debt Collection Act of 1982, as amended, 5 U.S.C. §5514. The matters have been consolidated for decision. Both parties submitted evidence and arguments on each of the three claims asserted by Respondent.

FINDINGS OF FACT

1. Petitioner was a Window Services Technician in the Hot Springs National Park, Arkansas Post Office. His duties included selling postage to customers, and he was assigned a window credit consisting of stamps and cash for that purpose. (Petitions; Response to Petitioner's Rebuttal, Exhibits 3, 4).

DCA No. 98-92

2. The stamps and cash in Respondent's window credit were counted on October 25, 1994, and the results recorded on PS Form 3294, Cash and Stamp Stock Count and Summary. A comparison of what the physical count showed he had on hand with what, according to the official records of the post office, should have been in his credit disclosed a $270.73 shortage. (Declaration of Richard L. McComber in DCA No. 98-92 ("McComber I"), Exhibit 1d). Petitioner signed the PS Form 3294 dated October 25, 1994, signifying his agreement with the count (McComber I, Exhibit 1d).

3. On February 10, 1998, Respondent issued Petitioner a Notice of Involuntary Administrative Salary Offsets, referring to the October 25, 1994 shortage and advising Petitioner that Respondent intended to collect the amount of $270.73 through deductions from his salary (McComber I, Exhibit 1b). Petitioner filed a timely Petition for review under the Debt Collection Act.

4. In an earlier count of Respondent's credit, conducted on March 8, 1994, Petitioner had had an overage of $531.83 (McComber I, Exhibit 1c).

5. In a July 6, 1994 count, Petitioner's credit had been found to be $1,195.54 short (McComber I, Exhibit 1c). Respondent asserted a claim for that amount, and a grievance was filed regarding its collection. Petitioner's union and Respondent reached a settlement of the grievance which called for Petitioner to pay Respondent one-half of the amount claimed. (McComber I, Exhibit 1e).

DCA No. 98-93

6. On November 7, 1996, Petitioner's credit was counted, and a shortage of $496.43 was discovered (Declaration of Richard L. McComber in DCA No. 98-93 ("McComber II"), Exhibits 1c, 1n).

7. On the previous day, November 6, Petitioner's credit had been counted, and an apparent overage of $10,032.41 had been discovered (McComber II, Exhibits 1c, 1m).

8. However, the large overage on November 6 resulted from errors Petitioner made in accounting for past transactions affecting his accountability. First, on July 24, 1996, after his last audit, Petitioner had accepted a check for $9,000 and entered it in the records in such a manner that it was erroneously shown as increasing his stamp sales and thereby reducing his accountability by that amount (McComber II ¶5 and Exhibits 1d, 1e, 1f, 1g). Additionally, Petitioner had, on two occasions, received stock from the office's unit reserve that he did not properly account for. Although he included the stamps in his inventory (and counted them on November 6), he had never taken the accounting steps necessary to increase his accountability to reflect the transfers ($760 on September 16, 1996, and $742.40 on October 25, 1996). (McComber II ¶¶ 6, 7 and Exhibits 1h, 1i, 1j, 1k, 1l). These errors understated the amount of stock he was responsible for, and when the prior errors were corrected and Petitioner's credit recounted on November 7, 1996, a shortage of $496.43 was accurately reflected (McComber II, Exhibit 1n).

9. Petitioner signed the PS Form 3294, Cash and Stamp Stock Count and Summary, dated November 7, 1996, signifying his agreement with the count and the corrections made and noted on the form (McComber II, Exhibit 1n).

10. On February 10, 1998, Petitioner was issued a Notice of Involuntary Administrative Salary Offsets advising him of Respondent's intention to collect the amount of $496.43 by offset from his salary (McComber II, Exhibit 1b).

11. Petitioner filed a timely Petition seeking review under the Debt Collection Act.

DCA No. 98-94

12. On April 16, 1996, Petitioner's window credit was counted, and a shortage of $202.18 was discovered (Declaration of Richard L. McComber in DCA No. 98-94 ("McComber III"), Exhibits 1e, 1f). Petitioner signed the PS Form 3294 showing a shortage in that amount, signifying his agreement with the count (McComber III, Exhibit 1f). A count earlier in the day on April 16 had disclosed a $721.88 shortage, but Respondent chose to assert only the smaller shortage shown on the later count (McComber III, Exhibit 1e ^1/ ).

13. The next count of Petitioner's credit, conducted on July 12, 1996, revealed an apparent overage of $443.63 (McComber III, Exhibits 1c, 1e). However, Petitioner's credit was recounted on July 22, 1996, after certain corrections were made to Petitioner's accountability, and it was determined that he actually had a shortage of $41.50 (McComber III, Exhibit 1d). Petitioner signed the PS Form 3294, Cash and Stamp Stock Count and Summary, dated July 22 signifying his agreement with the count and the corrections made and noted on the form (McComber III, Exhibit 1d).

14. On February 10, 1998, Respondent issued Petitioner a Notice of Involuntary Administrative Salary Offsets advising him of its intention to collect the amount of $202.18 by offset from his salary (McComber III, Exhibit 1b).

15. Petitioner filed a timely Petition seeking review under the Debt Collection Act.

General

16. Postal Service Handbook F-1, Post Office Accounting Procedures, April 1991^2/ , addresses employee liability for accountable financial losses:

"131 Postmasters

When an accountable financial loss occurs and evidence shows the postmaster conscientiously enforced USPS policies and procedures in managing the post office, the Postal Service grants relief for the full amount of the loss. When evidence fails to show the postmaster met those conditions, the Postal Service charges the postmaster with the full amount of the loss.

132 Other Employees

The postmaster consigns postal funds and accountable paper to other employees. Employees are held strictly accountable for any loss unless evidence establishes they exercised reasonable care in the performance of their duties." (Handbook F-1, Post Office Accounting Procedures, April 1991, Sections 131, 132).

17. A financial audit of the Hot Springs National Park Post Office, conducted by the Inspection Service in February 1993, disclosed that the office internal controls were weak in the areas of financial organization, accounting and reporting and that there were inefficiencies in the accounting unit (Attachment to Petitions).

18. The F-1 handbook then in effect allowed for the offsetting of an account overage against a shortage experienced in the same employee's account, so long as a relationship between the overage and shortage could be established (Handbook F-1, Post Office Accounting Procedures, April 1991, Sections 472.221, 472.222, 472.223).

19. Petitioner was assigned responsibility for the unit reserve stock on December 5, 1996, and thereafter he maintained the unit reserve stock as well as a separate credit (which he would supply from the unit reserve) for conducting transactions with the public (Declaration of Charlotte Browning).

20. Section 432.2 of the F-1 Handbook then in effect contemplated that at some small stations, a clerk would maintain the unit reserve as well as have a separate credit for customer transactions (as does Section 425.38 of the current F-1 Handbook), and Petitioner's job description contemplated that he would perform such dual functions (Response to Petitioner's Rebuttal, Exhibits 3, 4).

DECISION

Petitioner argues that the 1993 Financial Audit of the Hot Springs National Park Post Office (Finding 17) shows that management failed to enforce Postal Service policies and procedures. His argument continues that, therefore, under Section 131 of the F-1 Handbook's employee liability provisions (Finding 16), management (the postmaster) is responsible for the loss. He also argues that the inadequate financial management shown by the 1993 audit renders the existence and amount of the shortages suspect.

We need not address whether financial management failures of the postmaster might affect Petitioner's liability, because the Inspection Service audit is too remote in time to be an indicator of how the post office was managed at the time of Petitioner's first shortage (October 25, 1994), more than 18 months after the report was issued. Likewise, the audit report provides no basis for challenging the accuracy of the calculation of Petitioner's shortages. This is especially so as Petitioner signed all of the count summaries showing the shortages (Findings 2, 9, 12) and has raised no specific challenge to their accuracy in these proceedings.

Petitioner also argues that assigning him a window credit as well as responsibility for the unit reserve stock violates Postal Service requirements and is a defense to his liability for the shortages. However, such dual responsibilities are allowed at certain small stations and were contemplated in Petitioner's job

description (Findings 1, 20). Furthermore, Petitioner was not assigned the unit reserve stock until December 5, 1996 (Finding 19), and, therefore, the dual responsibilities could have had no effect on the shortages Petitioner experienced before that date.

Petitioner argues that for each shortage Respondent seeks to charge him with, he is entitled to a credit for an overage occurring in either an earlier or later count of his credit. Respondent's regulations provide for such a credit when a relationship between the overage and the shortage can be established (Finding 18).

In DCA 98-92, Petitioner argues that the $270.73 shortage discovered on October 25, 1994, should be offset by a credit for an overage of $531.83 disclosed in a March 8, 1994 count (Finding 4). However, intervening between those two counts was that of July 6, 1994, which revealed a $1,195.54 shortage (Finding 5). Petitioner has not suggested how the March 8 overage could be related in any way to the shortage of October 25, and the existence of the intervening substantial shortage (settled by Petitioner's union and Respondent (Finding 5)), makes it extremely unlikely that any relationship exists. This defense is rejected.

In DCA 98-93, Petitioner argues that he should receive credit against the $496.43 shortage of November 7, 1996 (Finding 6), for the $10,032.41 overage disclosed in the count of the previous day (Finding 7). However, Respondent demonstrated that the $10,032.41 "overage" was nonexistent and that once proper entries were made to Petitioner's accounts, entries that he should have made at the time the transactions occurred, there really was no overage to offset against the $496.43 shortage of November 7, 1996 (Findings 6-9).

In DCA 98-94, Petitioner argues he is entitled to credit against the $202.18 shortage of April 16, 1996 (Finding 12) for the overage disclosed in a count conducted on July 12, 1996 (Finding 13). However, once corrections were made to Petitioner's bookkeeping regarding his accountability and his credit was recounted on July 22, 1996, it was disclosed that he actually had a shortage in July and not an overage. Petitioner signed the PS 3294 for the July 22 count acquiescing in the count and the accounting corrections made and recorded on the form (Finding 13). Thus, there is no overage available to offset against the April 16, 1996 shortage.

In each of the shortages at issue in these proceedings, Respondent has demonstrated that it incurred a loss by showing that there was a shortage in Petitioner's credit. Respondent is not required to prove any dereliction or negligence on the part of Petitioner.

To avoid strict liability for the losses, Petitioner must provide evidence that he "exercised reasonable care in the performance of [his] duties." (Finding 16). He has not submitted any evidence on this point. Petitioner's representative stated in his pleadings that Petitioner exercised reasonable care, but those assertions were not supported by any sworn or other statements of persons, including Petitioner, shown to have knowledge of his performance. The representative's assertions in pleadings are not evidence. Furthermore, the history of accounting errors by Petitioner undermines any assertion that he exercised reasonable care in the handling of his credit. Accordingly, Respondent may collect the amount of the shortages by administrative offset from Petitioner's salary.

The Petitions are denied.

Norman D. Menegat
Administrative Judge

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1. There are two exhibits designated 1e attached to the McComber III Declaration. This reference is to the PS form 3294 dated April 16, 1996, and the following reference is to the Stamp Credit Examination Record.

2. Petitioner relies on provisions in Handbook F-1, Post Office Accounting Procedures, issued November 1996. However, the shortages at issue in these proceedings all occurred before that time, and, therefore, the provisions of the F-1 Handbook then in effect, the April 1991 edition, are applicable. However, on the points at issue herein, there is little difference between the provisions of the two editions of the F-1.