In the Matter of the Petition by                         )
                                                                        )
GERTRUDE S. CAMPBELL                               )
P.O. Box 2212                                                 )
                                                                        )
              at                                                       )
                                                                        )
Starkville, MS 39760-2212                              )  P.S. Docket No. DCA 99-70


APPEARANCE FOR PETITIONER:                   Felix L. Bell, Sr., President
                                                                       District IV, NAPFE
                                                                       P.O. Box 9728
                                                                       Jackson, MS 39286-9728

APPEARANCE FOR RESPONDENT:               Willie Liddell, Jr.
                                                                       Senior Labor Relations Specialist
                                                                       United States Postal Service
                                                                       P.O. Box 99410
                                                                       Jackson, MS 39205-9401

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Gertrude Campbell, filed this Petition after receiving a Notice of Involuntary Administrative Salary Offsets, dated February 4, 1999, from her supervisor. This Notice stated the Postal Service’s intention to withhold $4,232.22 from Petitioner’s salary to recover for a shortage in the post office for which Petitioner was accountable.⁽¹⁾

A hearing was held in Starkville, Mississippi on April 7, 1999. The Postal Service presented testimony from Hazel Sanford, the Acting Manager of Post Office Operations and Petitioner’s supervisor; Jerry McLean, postmaster of a neighboring community, who was detailed as a postal systems coordinator to review financial matters in Starkville; John Graham (by telephone conference), also a postal systems coordinator; Danny Williams, a Supervisor of Accounting Services; and David Cage, a postal systems coordinator. Ms. Campbell testified in her own behalf, and also presented testimony from five clerks who worked in the Starkville Post Office at times pertinent to this case. Both sides also presented some documentary evidence, in addition to that filed with the Petition and the Answer. Both sides filed written arguments after reviewing the transcript of the hearing. The following findings of fact are based on the entire record, including observation of the witnesses and their demeanor.

FINDINGS OF FACT

1. Petitioner accepted financial accountability for the Starkville, Mississippi Post Office on January 22, 1997, when she became the officer-in-charge of that office. She became postmaster in October 1997. (Tr. 35-36, 201, 223; PS Ex. 1).⁽²⁾

2. On January 22, 1997, when the account was transferred from the former postmaster to Ms. Campbell, the total accountability was $320,029.09. This included all stamp stock on hand, plus various cash items. The stock was physically counted to arrive at that figure. Petitioner participated in that count, and signed PS Form 971, Certificate of Transfer, accepting responsibility. (Tr. 233-34; PS Ex. 1).

3. In April 1998, the Postal Inspection Service conducted a financial audit of the Starkville office "to determine whether internal controls are effective; revenue is properly collected, reported and deposited; expenses are reasonable and proper; assets are properly protected; and the Statement of Account fairly represents the results of the financial operation for the period reviewed" (PS Ex. 6; Tr. 16).

4. The Postal Inspectors’ report, dated June 2, 1998, found that many things related to financial matters were not being done properly. The report discussed these items in some detail, and also listed several recommended corrections. The inspectors did not attempt to identify any bottom-line shortage or overage for the office. (PS Ex. 6; Tr. 63).⁽³⁾

5. In July 1998, at Ms. Sanford’s request, a team of postal systems coordinators conducted a follow-up financial review of the Starkville Post Office, to determine what problems still existed, and to help "clear up any deficiencies" (Tr. 18-20, 85, 179). Their report, dated August 18, 1998, discussed several errors of various types, and noted procedures that needed to be corrected (PS Ex. 8). Like the postal inspectors, this group did not attempt to identify any bottom-line shortage or overage for the office (Tr. 63-64). The report includes the following statements: "The main stock was counted and found to be short a few items." (p. 2); "The stock level in the office was approximately $318,000." (p. 2); "After adjustments were made by the Postal Systems Coordinators using the identified trust, banking overages, and stock overages, the office’s suspense had been reduced to approximately $1,900, but to balance the trust to the Permit system suspense was increased to approximately $11,000 when the Postal Systems Coordinators left." (page 3). (PS Ex. 8; Tr. 93-94).

6. "Trust" and "suspense" are terms used to correct accounting discrepancies. When the origin of certain apparent overages or shortages cannot be immediately determined, overages are transferred to trust accounts and shortages are transferred to suspense accounts, so that the original accounts can be balanced. (Tr. 62, 152, 155-56).

7. The debt alleged to be owed by Petitioner is based on listings of the trust and suspense accounts for the Starkville office as of November 20, 1998 (PS Ex. 4; Tr. 57). These documents are computer printouts made by the District Accounting Office in Jackson, Mississippi, based on data that was entered into the system at Starkville (Tr. 65, 154). The first page of the report lists all trust account items, the second and third pages list all suspense items (Tr. 158-59). On December 2, 1998, Ms. Sanford met with Mr. Williams, Mr. Cage, Mr. Hodges (another accounting official), and Mr. Toler (another postal systems coordinator) (Tr. 28, 60). This group was unable to identify all of the items on either listing (Tr. 28, 156-57). They reached the dollar figure that is charged to Petitioner by reviewing all the suspense figures, eliminating some of them as not chargeable to Petitioner, then reviewing all the trust figures and subtracting the ones they believed appropriate from the final suspense figure (Tr. 159-60). PS Ex. 4 includes a second copy of the printed listings, on which there are numerous scratchouts, and numbers written in by hand. From this it can be determined that Ms. Sanford’s group reached the bottom-line figure in the following manner. They started with the total suspense figure - $57,504.95. From this they eliminated $1,688.79 - travel advances to other employees; $118.70 – something for which the former postmaster was responsible; $2,930.99 – a shortage in the postal store; and $36.35 – bank shortages attributable to other employees (Tr. 32-33, 160-62). This left $52,730.12 for which they deemed Petitioner to be responsible. Somehow, they determined that $48,497.90 of the trust listings could be offset, leaving $4,232.22 for which Petitioner should be charged. It is not completely clear how the $48,497.90 was arrived at. The total on the printed trust listing appears to be $29,485.62. Several items are scratched out, and the figure $28,751.02 is written in. To this, the hand-written figure $19,746.88 is added, making the total - $48,497.90.⁽⁴⁾

8. The bulk of the "shortages" making up the total $57,504.95 on the suspense list (PS Ex. 4) is in two line items, listed under accounting code 0767 – Employee Stamp Credit Shortage (Postal Service Handbook F-1, Post Office Accounting Procedures, p. 308). The first is $18,752.75, identified as a shortage in the unit reserve. This was based on an actual count of the stock, done by Mr. Cage and Mr. Toler in October 1998 (Tr. 188-89). The second is $26,880.00, identified on PS Ex. 4 only as "to correct acct???"

9. An additional $406.00 was added to the alleged debt, based on a bank statement received in October 1998, making the total $4,638.22 (Tr. 157). This $406.00 is reflected on another suspense listing printed by the District Accounting Office on March 17, 1999. It is listed under the heading – "Bank Shortage," with accounting code 0763, which is defined in Handbook F-1 (page 308), as an "amount reported by a bank as a deposit shortage."⁽⁵⁾ The only testimony about this came from Mr. Williams, who said:

"We took over standard field accounting making the reports for Starkville on September the 12^th of 1998, and at that time the bank statement was supposed to have been reconciled. However, when we received the statement in October it was off $406.80, and we maintained it for a couple of months and that amount remained constant, and we wound up having to put that in suspense and send it back to Starkville." (Tr. 157).

Contentions of the Parties

Petitioner makes several arguments. First, she contends that she asked her supervisors several times for some financial training for herself and other employees, and that no significant training was provided until recently, too late to avoid the problems that caused this current dispute. Second, she contends that there were significant record-keeping problems in the bulk mail unit of the Starkville office, that these problems existed before she took over, and that the bulk mail "Permit" account was never really balanced when the office was transferred to her. As to the $18,752.75 shortage discussed in Finding of Fact #8, she contends that this does not represent missing stock, but only her errors in making accounting entries (Tr. 235-36). As to the $26,880.00, also discussed in Finding of Fact #8, she testified at some length that this was the result of a clerk making an incorrect computer entry regarding sheets of 32¢ stamps (Tr. 216, 239-41, 246-48). A sheet contained 15 stamps, a value of $4.80 per sheet. Petitioner claims there were 400 sheets, so the total entry should have been $1,920.00. The clerk, however, entered $4.80 times the total number of stamps (6000), making the entry $28,800.00.⁽⁶⁾ The difference between this and the correct amount ($1,920.00) is $26,880.00. Petitioner says that when she discovered this mistake, she asked Mr. Cage what to do and he told her she would have to enter $26,880.00 into the suspense account as a shortage.

Respondent contends that Petitioner, as postmaster of the Starkville office, is responsible for financial management of the office. The reason that the financial records were in "mass disarray," Respondent argues, is because Petitioner failed to implement the corrective actions recommended in the postal inspectors’ June 1998 report, and again in the postal systems coordinators’ August 1998 report. Respondent also contends that Petitioner was adequately trained, and that her complaints about problems that existed prior to her taking over the office are not relevant, because the account was balanced when she accepted responsibility at the time of transfer in January 1997 (see Finding of Fact #2). Finally, Respondent argues that the Postal Service was generous in offsetting all the trust items, even though no one was sure that there was any relationship between trust items and suspense items.

DECISION

Postal Service Handbook F-1, Post Office Accounting Procedures (November 1996), Section 14, provides as follows:

14 Liability for Financial Losses

When an accountable financial loss occurs and evidence shows that the postmaster or responsible manager enforced U.S. Postal Service policies in managing the post office, the Postal Service grants relief for the full amount of the loss. When evidence fails to show that the postmaster or responsible manager met those conditions, the Postal Service charges the postmaster or responsible manager with the full amount of the loss.

Respondent’s burden of proof is to show that the Postal Service suffered a loss of stamp stock, or money, and that the loss occurred from an account for which the Petitioner was responsible. Respondent does not have to prove that some specific dereliction, or act of negligence, by Petitioner caused the loss.

Much of the hearing was devoted to the adequacy of Petitioner’s training, but the issue in this case is whether Respondent’s evidence is sufficient to prove a loss to the Postal Service of $4,638.22. I find that it is not. The crux of the case is the unidentified $26,880.00 "shortage" entered on the suspense list (see finding of Fact #8). If this is deleted, the total shortage is far below the total of the various overages that were offset against the shortage. Respondent presented no direct evidence as to what this $26,880.00 was. Mr. Williams opined that it represented a stock shipment that was received by Starkville but not entered into their computer as having been received, but he claimed to know nothing more about it (Tr. 175-76). There are no documents in the record, such as stamp stock shipping records and dates, to support this theory. Mr. Cage, when asked about the $26,880.00 entry, said that he did not know where it came from, but believed "it came from several items" (Tr. 193). When recalled after Ms. Campbell testified, however, he corroborated her story, at least in part. He remembered that sometime after they counted the stock in the fall of 1998, Ms. Campbell had asked him how to correct the error, as she described it, and that after discussing it with the district finance office, he told her to enter the amount as a suspense item (Tr. 272-276).

It is impossible to conclude with certainty whether the $26,880.00 entry represents a real shortage. Suffice it to say that Ms. Campbell’s explanation is plausible, there is no persuasive evidence to contradict it, and it raises substantial doubt that a net shortage existed in the Starkville office. This illustrates the Postal Service’s difficulty in proving its case. Respondent presented much evidence that financial records at Starkville were not maintained properly, and that no one could tell with any certainty what some of the trust and suspense entries were based on. Respondent argues that Petitioner is responsible for this, because a postmaster is responsible for the overall management of the office. That may well be true, but it is those records that Respondent is relying on to prove the original net loss of $4,232.22. Accounting discrepancies do not necessarily equate to "losses," and Respondent must prove an actual loss. Edward Sheehan, Jr., P.S. Docket No. DCA 98-391, December 11, 1998; Eulalia Anne S. Lee, P.S. Docket No. DCA 97-38, June 13, 1997.

The additional $406.00 debt alleged against Petitioner is a separate matter, because this amount was not placed in suspense until after the November 20, 1998 trust and suspense lists were offset against each other (see Findings of Fact #7 and #9). Merely placing an amount on a suspense list does not prove a loss, however, and the quoted testimony from Mr. Williams (Finding of Fact #9) is not a sufficient explanation to prove that the Postal Service has lost $406.00.

The Debt Collection Act is only a vehicle for recovering "losses," not a means to punish poor job performance. Because Respondent has not proved a loss, the Petition is sustained. Respondent may not collect $4,638.22 from Petitioner’s salary.

Bruce R. Houston
Chief Administrative Law Judge

1. A second Notice was issued to Petitioner on February 18, 1999, raising the amount of the alleged debt to $4,638.22.

2. References are to pages of the hearing transcript. Postal Service exhibits ("PS Ex._") refer to tabbed attachments to the Answer to the Petition. Petitioner's exhibits will be "Pet. Ex._."

3. The report does state that a "physical stamp stock inventory conducted April 27-29, 1998, disclosed a shortage of $9406.86." That number is not found anywhere else, however, nor was there any testimony about it.

4. The figure $19,746.88 was not specifically identified by any witness, but it probably has something to do with an error in accounting for stock that was destroyed (Tr. 243, 274-75).

5. This document is found in the case file as an additional exhibit submitted by Respondent on March 25, 1999.

6. Petitioner presented a computer tape, dated 09/22/98, which purports to show this erroneous entry (Pet. Ex. 6). Respondent questioned the authenticity of this document on cross-examination, but offered no evidence to disprove its authenticity.