In the Matter of the Petition by

PAMELA O. BUTLER
8245 Rich Road, SE

at

East Olympia, WA 98540-9998

P.S. Docket No. DCA 01-152

APPEARANCE FOR PETITIONER:
Ronald L. Gates
1704 Milwaukee Drive
Port Angeles, WA 98363-1106

APPEARANCE FOR RESPONDENT:
Susan Houser
Labor Relations Specialist
United States Postal Service
P.O. Box 90204
Seattle, WA 98109-9401

Petitioner, Pamela O. Butler, filed a Petition requesting a hearing under the Debt Collection Act after receiving a Notice of Involuntary Administrative Salary Offsets stating the Postal Service’s intention to make deductions from her salary to recover for a shortage occurring in her flexible credit.

At Petitioner’s request, an oral hearing was held. The parties, witnesses and court reporter were at the Tacoma Processing and Distribution Center in Tacoma, Washington, and the Hearing Official participated by telephone from the Judicial Officer Department in Arlington, Virginia. The parties presented documents and testimony of witnesses and made oral closing arguments after the presentation of evidence was concluded.

The following findings of fact are based on the documents submitted and the testimony of the witnesses at the hearing.

1. Petitioner has been the postmaster of the East Olympia, Washington Post Office since 1993. East Olympia is a small, busy post office, the volume of business done by the post office having increased substantially during Petitioner’s tenure. (Transcript of Hearing, Pages ("Tr.") 11-12, 25-26, 29-30, 44, 48-49, 89-90, 101-102; Respondent’s Exhibit ("RX") 16).

2. The post office is run by Petitioner and two postmaster reliefs (PMRs). Petitioner is responsible for the main stamp stock of the office, and she has assigned herself a flexible credit (drawer) of stamps and other postal accountable paper because she conducts transactions with customers at the window. (Tr. 14, 19, 45, 74).

3. At the end of each business day, Petitioner was to deposit cash from her drawer in the bank and retain in her flexible credit no more than $100 in cash for use to make change the next morning. It is a violation of Postal Service policy to retain more than $100 in cash in the drawer, but it is not unusual for small, busy post offices, such as Petitioner’s, to do so. It would have been difficult for Petitioner to handle business in the morning if she kept only $100 in her drawer from the previous day. (Tr. 15-17, 46, 55-56, 79-80, 133, 135, 137-139; RX 1, 19 (Postal Service Handbook F-1, Post Office Accounting Procedures, November 1996, updated through September 7, 2000, Section 151.2)).

4. On January 20, 2001, Petitioner counted her flexible credit and found that the stock and cash in her credit was $1,991.05 less than the post office records reflected should have been on hand. She counted the credit by herself, and she signed both the "Supervisor" and "Employee" blocks on the PS Form 3294, Cash and Stamp Stock Count and Summary, on which she recorded the results of the count. At the time of the count, before she conducted any business, she had $192.87 in cash in her credit, about $112 in bills and the rest in change. (Tr. 18, 41, 54, 59, 122, 126-127, 133; Petitioner’s Exhibit ("PX") F; RX 11).

5. She counted the flexible credits of the other two employees and the main stock, but she did not find an overage that could explain the shortage in her flexible credit. She entered the $1,991.05 shortage as a suspense item in the post office’s accounts, as Postal Service procedures required, and promptly reported the shortage to the Inspection Service on PS Form 571, Discrepancy of $100 or More in Financial Responsibility, as Postal Service regulations require her to do. (Tr. 18, 38, 58-60, 70, 120; PX G; RX 12, 13).

6. By letter dated February 5, 2001, Respondent demanded that Petitioner pay the amount of $1,991.05 (Tr. 13, 68; RX 9).

7. Petitioner requested that the debt be reconsidered, but Respondent denied relief (Tr. 20-21, 48, 61-62, 68; RX 10, 20).

8. On April 4, 2001, Respondent issued Petitioner a Notice of Involuntary Administrative Salary Offsets seeking payment of $1,991.05 (RX 5, 6). Petitioner filed a request for hearing.

9. During the Christmas season in 2000, and in previous years, Petitioner had allowed one of the PMRs to apply postage meter strips to parcels from the postage meter associated with Petitioner’s flexible credit. Petitioner and the PMR set up an assembly line for parcels where Petitioner would weigh the parcel to determine the postage, take the payment from the customer, record the transaction in her accounts and write the amount of postage on the corner of the parcel. She would then give the parcel to the PMR, who would set the manual meter for the amount of postage Petitioner had written on the parcel, issue a postage meter strip for the amount of postage and apply the meter strip to the parcel. The office only had one meter, and by teaming in this manner, Petitioner was freed from interrupting her transaction to run the manual meter for each parcel, and customers were served more quickly and efficiently during the busy Christmas rush. (Tr. 32, 78, 91, 105, 117-118, 129).

10. Postal regulations bar employees from sharing access to their stamp credits: "Do not allow any employee, supervisor, or postmaster to have access to the stamp credit of another employee." (Postal Service Handbook F-1, Post Office Accounting Procedures, November 1996, updated through September 7, 2000, Section 426.2 (2); Tr. 33, 78-79).

11. Except for one, previous audits of Petitioner’s credit back to 1997, ten counts in all, had been within tolerance (within $50 over or under the amount of stock she should have had on hand, which was generally between $2,000 and $4,000). In the audit of January 14, 2000, Petitioner had an overage of $72. She placed that amount in trust as required by Postal Service regulations. Respondent’s officials recognized this as a good record of audits. In all but two of the counts, her cash on hand had exceeded $100, averaging between $150 and $160. (Tr. 38-39, 46, 122; PX A-1, A-2; RX 2).

12. Petitioner is held in high regard by her superiors and is an honest, conscientious employee. She has a good record of enforcing Postal Service requirements at East Olympia. She audits the PMRs regularly, safeguards the spare keys to their drawers according to the F-1 Handbook requirements, makes sure they do not have access to the other’s credits and follows required procedures for handling of money orders. During her time as East Olympia Postmaster, Petitioner has received many Postal Service awards for meritorious service and for her achievements as a postal manager. (Tr. 27, 35-37, 83, 88, 102-103, 108-109, 118-119, 121; PX B, C, D, E, H). There had never been any problems with financial reporting or record keeping at East Olympia before this shortage (Tr. 95).

13. The regulations governing liability of Postal Service employees for losses to their accountabilities appear at Section 14 of the F-1 Handbook:

"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 (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 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.

141 Other Employees’ Liability

The postmaster or responsible manager consigns
postal funds and accountable paper to other career
employees. Employees are held strictly accountable
for any loss unless evidence establishes that they
followed the postal procedures established when
performing their duties." (RX 19 (Postal Service
Handbook F-1, Post Office Accounting Procedures,
November 1996, updated through September 7,
2000, Section 14)).

There is no dispute as to the amount of the shortage Petitioner discovered in her flexible credit on January 20, 2001: $1,991.05. She counted it herself and had the opportunity to recount the credit, and she could have had one of her PMRs count the stock with her (Finding 4). She complains that she asked for help from her superiors to address the shortage, but she has shown no evidence that employees from other offices would have been any more successful than she in finding any error that might have accounted for the shortage. Therefore, Respondent has established that it suffered a loss in the amount of $1,991.05 from the accounts of the East Olympia Post Office.

Petitioner, as postmaster, will be charged with the full amount of the loss unless evidence shows that she enforced Postal Service policies and procedures in managing the East Olympia Post Office and followed applicable procedures in managing her flexible credit (Finding 13). The evidence in this proceeding shows that Petitioner is a responsible, conscientious manager, who is well regarded by her superiors and who has received numerous awards from management in recognition of her management success (Finding 12). She enforces Postal Service policies and procedures in managing her office (Finding 12), and when she discovered the shortage at issue, she followed all the proper accounting steps as required by Postal Service procedures (Finding 5). This shortage is the first financial reporting or record keeping problem during her seven-year tenure at East Olympia (Finding 12). This is strong evidence that Petitioner should be relieved of the debt because as a manager she enforces Postal Service policies and procedures and she follows established procedures in managing her own flexible credit.

Respondent points to two circumstances as evidence that Petitioner has failed to enforce Postal Service policies and procedures. First, Respondent argues that her retention of more than $100 in cash in her flexible credit at the end of the day violates Respondent’s requirements (Findings 3, 4, 11). However, Respondent’s accounting witness conceded that it would be difficult to run Petitioner’s busy office the following morning with only $100 in cash and that it was not unusual to find that small, busy post offices retained more than $100 (Finding 3). Finally, although such retention violated Postal Service requirements, Respondent has not suggested how that violation could have had any bearing on the shortage in Petitioner’s flexible credit account.

The second circumstance Respondent has identified is Petitioner’s allowing the PMR to issue postage from a meter associated with Petitioner’s flexible credit (Finding 9). Postal Service regulations bar one employee from having access to the credit of another, and technically, the PMR had such access to Petitioner’s flexible credit as the meter postage she issued came out of Petitioner’s assigned accountability (Findings 9, 10). However, the "access" to Petitioner’s flexible credit was accomplished under Petitioner’s immediate supervision, and the PMR never had access to anything other than the meter. Furthermore, even if the PMR issued and applied more postage to a parcel than Petitioner had recorded and received payment for, Respondent would not have incurred a loss, although Petitioner’s flexible credit would have reflected a shortage. The extra meter postage could not have allowed a customer to obtain further postal services and thus does not reflect a loss to the Postal Service.

Notwithstanding the two instances Respondent has presented, on balance, Petitioner has been shown to be a responsible manager who enforces Postal Service policies and procedures in managing the East Olympia Post Office. Accordingly, she is entitled to be relieved of the shortage at issue. The Petition is sustained. Respondent may not collect the claimed debt from Petitioner’s salary.

                                                                                       Norman D. Menegat
                                                                                       Administrative Judge