OIG: Update for Measuring Pension and Retiree Health Benefits Liabilities

Background

The U.S. Postal Service provides pension and health insurance benefits to its retirees. Postal Service employees participate in the Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS) pension programs. The Office of Personnel Management (OPM) administers these programs, including projecting future CSRS and FERS assets and liabilities for the federal government and Postal Service. Continue reading

NAPS: OIG to conduct unannounced financial audits

From the National Association of Postal Supervisors:

May 18, 2016
Attention Members,

The Office of Inspector General will be starting Financial Control audits at all postal facilities. Teams will show up unannounced with the attached letter.

Audits will consist of;
*Voyager Cards
*Money Orders
*Voided Transactions
*Excessive Refunds
*BMEU Indicators

naps-logoWhen the OIG performs these audits, it is vital that you have all documentation on hand.  It remains imperative that all documentation for the retention period is maintained for record keeping purposes.
If there are any issues with the audits, the OIG will contact the specific Financial Unit.  As stated earlier this week; District Leadership needs to be included with that process.  Once the OIG finishes this audit, the facility will be given recommendations and action items.  The turnaround time will be 7 days.

Click here to read letter to Area Vice Presidents

Source: The National Association of Postal Supervisors

OIG: After $56 million settlement, USPS spent another $11.2 million on improper bargaining unit work by supervisors

Even after the US Postal Service reached a $56.million settlement with the clerk’s union on the improper use of supervisors to do bargaining unit work, the USPS racked up an additional $11.2 million in payments for subsequent violations

In December 2014 the US Postal Service and the American Postal Workers Union settled a dispute about the use of supervisory employees to do the work of bargaining unit employees. The settlement resulted in a set of guidelines governing such work, and $56 million in compensation for APWU members for past violations. Continue reading

OIG: USPS Cost-Cutting Strategies ‘Not Sustainable’

From the American Postal Workers Union:

04/28/2016The Postal Service has cut labor costs by more than $10 billion since the Postal Accountability and Enhancement Act (PAEA) was passed in 2006, but its cost-cutting strategies are “not sustainable,” according to a recent report by the Office of Inspector General (OIG).

Labor costs declined by nearly 21 percent (when adjusted for inflation and excluding the pre-funding of retirees healthcare) and account for approximately 75 percent of the total reduction in expenses.

But “the tradeoffs among cost control, service quality, and modernization remain a concern for the Postal Service,” the report warned. The report, titled “Peeling the Onion: The Real Cost of Mail,” said cost-cutting measures included:

  • Substituting career workers with non-career employees at an average of 3 percent per year;
  • Decreasing work hours by an average of 2.8 percent annually;
  • Reducing wages by an average 3.1 percent per year;
  • Downsizing and restructuring the network;
  • Reducing the number of delivery routes;
  • Decreasing the use of air transportation;
  • Reducing capital expenditures, and
  • Lowering service quality.

The extensive use of non-career employees, who earn lower pay and receive fewer benefits than their career counterparts, is “problematic,” the report found. While turnover among career postal workers is less than 1.3 percent, the quit rate for non-career workers was 29 percent in fiscal year 2014, “perhaps due to low wages and low benefits,” the OIG said.

The high turnover among non-career employees “raises the question of whether the Postal Service can continue to increase its productivity if it has to deal with training and recruiting new employees constantly,” the report said. “Furthermore, the impact on service quality of increased use of non-career employees is unclear.”

“What is clear is that the impact of cost reductions on customer service has been considerable,” the OIG said. External First Class Measurement (EXFC) scores for a single piece of First-Class mail declined by nearly 6.71 percent for two-day service and by almost 38.60 percent for three-day service compared to the previous year – despite the implementation of more relaxed service standards in January 2015.

It’s the Pre-Funding

The report blames the PAEA-mandated pre-funding of retiree health benefits 75 years into the future as the “primary source” of the Postal Service’s financial problems, noting that pre-funding costs reached $49 billion between fiscal year 2006 and 2015. Eliminating the payments would have reduced total losses by 90 percent.

Nonetheless, “Overall, the Postal Service is doing better financially than sometimes reported in the press,” the OIG observed.

“If the Postal Service is to meet the commercial and universal service needs of America’s growing population, it must continually seek to improve customer service and be allowed to make appropriate capital investments to fully integrate its network with the digital world. Postal stakeholders and management need to develop ways and means for generating adequate revenue so that the Postal Service can build for the future,” the report concludes.

APWU President Mark Dimondstein urged management to rethink its strategy. “This report underscores concerns we’ve been raising for quite some time,” he said. “Cuts to service and jobs are hurting the people of the country and jeopardizing the future of our great national treasure.

“If management takes this report with the seriousness it deserves they will stop delaying America’s mail and make sure the Postal Service is properly staffed so that we can carry out our mission. In the end, the Postal Service is a service, not a business.”

Source: OIG: USPS Cost-Cutting Strategies ‘Not Sustainable’ | APWU

Was failure of methane detection system at Pontiac plant related to 5 employee deaths?

The USPS Inspector General has issued a report detailing the failure of the methane detection system (MDS) at the Pontiac, Michigan processing center. The OIG investigation was prompted by a complaint which “identified five employee deaths during a 14 month period”. The OIG report says “We have not correlated these deaths to the safety concern at this time, but are continuing work in this area. However, we are reporting this issue with the methane detection system for your immediate action.”

uspsoigThe Pontiac facility is situated on a “brownfields” site, which was formerly the location of a vehicle manufacturing plant that included a foundry. Among the numerous hazardous substances underneath the building are some that can produce poisonous, explosive methane gas. The building was designed so that any methane entering the building would be vented away, and a warning system (the MDS) was installed to monitor methane levels. The MDS was originally maintained by a contractor. In October 2014, the local USPS maintenance staff took over the management of the MDS system. Five months later, in March 2015, the system stopped working properly.

The OIG report says “Based on our observations and review of the MDS log book, the methane detection system has not functioned properly since March 2015.” It also says that USPS management agreed with the OIG findings and recommendations, but “stated there were never health concerns regarding the employees at the Michigan Metroplex.” The report doesn’t explain how management could have known that, given the lack of a functioning detection system.

The OIG recommended that USPS management:

1. Complete a review of the methane detection system to resolve any issues.
2. Establish an ongoing process to independently validate the results of the methane detection system on a periodic basis.

Management agreed with the recommendations, but said that the review would not be completed until May 31, 2016, while the target date for independently validating the MDS system is October 31, 2016.

USPS OIG David C. Williams announces retirement

US Postal Service Inspector General David C. Williams announced today that he is leaving the aganecy effective February 10. Here is the letter he sent to his staff today announcing his departure:

I would like to announce a new round of significant operational changes.

Actually I can’t do that… because I can’t think of what another round could possibly look like. You are perfect. And so…I am saying goodbye. My last day is Friday, February 19. You may remember I was eligible to go when my last appointment was renewed, but we were in the midst of a threatening financial storm and I promised to stick with you through it. I will remain on for short time as the Board of Governors name a new Inspector General for the organization. Continue reading

OIG: Curbing Workers’ Comp Abuses

From the USPS Office of Inspector General:

uspsoigDisability programs are vital for a nation that supports its citizens. In the United States, federal employees, including postal workers, who suffer employment-related injury or illness are entitled to workers’ compensation under the Federal Employees’ Compensation Act (FECA).

The U.S. Postal Service funds workers’ compensation benefits for employees who sustain job-related injuries. In fiscal year (FY) 2014, the Postal Service incurred over $1.3 billion in workers’ compensation expenses. In addition, the Postal Service estimated its liability for future workers’ compensation costs at nearly $17.1 billion. The U.S. Department of Labor’s Office of Workers’ Compensation Programs (OWCP) administers the workers’ compensation program and then bills the Postal Service for reimbursement.

While most compensation claims are legitimate, fraud and abuse do occur. The U.S. Postal Service Office of Inspector General (OIG) focuses resources on identifying claimants and providers who defraud the system. In FY 2014, OIG investigations saved the Postal Service more than $275 million in future workers’ compensation costs, and arrested 82 individuals for workers’ compensation fraud.

One recent successful case highlights the type of cases our agents investigate:

A postal letter carrier had been receiving workers’ comp benefits since 2001 after claiming total disability from a back injury at work. Investigators, however, discovered he had started a landscaping company shortly after his claimed injury and was routinely working at that company. Agents observed the individual driving a dump truck, operating a riding lawn mower and a tractor, and directing the activities of other individuals at customer properties. Undercover investigators also hired the former carrier to perform landscaping work for them, which they video recorded and presented as evidence to prosecutors and the Department of Labor (DOL). These activities exceeded the former employee’s stated limitations and he failed to inform the DOL of his involvement in this business, both of which resulted in his conviction and the termination of his benefits.

This successful investigation alone saved the Postal Service approximately $664,000 in future workers’ compensation payments. What suggestions do you have for preventing workers’ compensation fraud? And if you suspect fraud by either a Postal Service employee or provider, please contact our office at 888-877-7644.

Source: Curbing Workers’ Comp Abuses | Office of Inspector General

OIG Report Paints Bright Future for Postal Banking

From the American Postal Workers Union:
Clipboard0105/21/2015 – A report by the USPS Office of Inspector General (OIG) released May 21 outlines the next steps for implementing postal banking, in which post offices would offer basic financial services – providing affordable banking transactions to every zip code in the US, while strengthening the Postal Service.

The May 21 report titled, “The Road Ahead for Postal Financial Services,” states that expanding and enhancing existing financial services such as money orders, international money transfers, check cashing and bill payments could be accomplished without an act of Congress.

According to the OIG’s “conservative estimate,” this expansion could bring the Postal Service $1.1 billion in annual revenue within five years while serving  68 million Americans who either who don’t have bank accounts or who “rely on expensive services like payday lending and check cashing.” Some refer to these predatory businesses as “alternative financial services;” APWU President Mark Dimondstein calls them “legal loan sharks.”

While highlighting the impact postal banking would have on the financial health of the Postal Service, the OIG also recommends that the USPS focus on the affordability of the services it could provide.

Among the expanded offerings, post offices “could provide ATMs where recipients of government benefits could withdraw funds without paying a fee,” the report says.

Dimondstein praised the idea.  “It’s a no-brainer,” he said. “The Inspector General’s report confirms that the Postal Service can act now to provide consumers with affordable financial services while strengthening our trusted national treasure, the public Postal Service.

“We look forward to the day when people can get their checks cashed by their trusted neighborhood window clerk,” he said.

The APWU is a member of the Campaign for Postal Banking, a coalition of consumer, worker, financial reform, economic justice, community, civic, and faith-based groups that is organizing support for the concept. For more information, visit www.CampaignForPostalBanking.org.

Source: OIG Report Paints Bright Future for Postal Banking | APWU

NALC statement on OIG’s report regarding USPS financial services

The U.S. Postal Service’s Office of Inspector General (OIG) issued a report today on “The Road Ahead for Postal Financial Services.” Below is a statement from Fredric Rolando, president of the National Association of Letter Carriers:

NALC-LOGOThe OIG’s report contains interesting observations and recommendations on ways the Postal Service can begin to serve the needs of 68 million adults in this country who have either no access or only limited access to basic financial services.

Of particular interest are services that the Postal Service could immediately pursue since it already has the authority to provide such services as money orders, post-office-to-post-office money transfers, bill payment, check cashing, international remittances and automatic teller machine (ATM) access. These basic services would give a much-needed option to those with no alternative available in their communities.

Because post offices are located everywhere—urban centers, suburbs and rural America; not simply located according to profit models—they are a ready-made network for people to come to, to obtain affordable financial services administered by highly trained, experienced and trusted public servants. This infrastructure includes more than 30,000 post offices and is the largest, best-distributed physical network in the country.

This model has been successful in many other countries and has the potential, according to the OIG, to generate at least $1.1 billion of revenue annually, which would allow the Postal Service to continue its innovative efforts.

The OIG’s recommendations are a good place to start, and we urge the Postal Service to take steps to immediately pursue these opportunities to fill the unmet needs of those in underserved communities.

Source: NALC statement on OIG’s report regarding USPS financial services | National Association of Letter Carriers AFL-CIO