OIG: USPS Exceeded Planned Overtime Costs In FY 2010 By $1.15B

Update: Last year PostalReporter.com reported that some USPS Districts are utilizing  temporary ‘change of schedules’ to avoid or circumvent paying employees overtime. As noted in two APWU grievance settlements: “Each of the Districts have apparently initiated a policy shift instructing supervisors to discontinue work on employees’ days off in an overtime status. In one such directive. being used for illustrative purposes, the Employer states, in part: …..no employees are allowed to work on their SDO… we will accomplish the tests through the schedule changes utilizing OOS [Out of Schedule] premium instead of full tour SDO [Scheduled Day Off] work pay…” USPS Using Temporary Schedule Changes To Avoid Paying Employees Overtime

For example: In the USPS Walnut Creek, California facility, management involuntarily changed SDOs of seven (7) Full-Time Clerks for a period of six months. The purpose of the change obviously is to provide additional staffing on weekends without utilizing overtime.  So, instead of paying the employees 8 hours of overtime for working SDO (six days)–employees are paid 8 hours at the overtime rate without working SDO (five days). Therefore ‘Out of Schedule’ Premium hours and pay are more than likely not reflected in the OIG’s audit report as overtime.

Below are highlights from the USPS OIG Audit on Overtime Usage:

“The Postal Service estimates the net savings from the VERA could be as much as $650 million from FY 2010 through FY 2012; however, because the workload and workforce were not aligned, there is an increased risk the Postal Service may not fully realize anticipated savings.”

We reviewed the Postal Service’s overtime usage in FY 2010 and found it paid $2.86 billion in overtime compared to $2.44 billion in FY 2009, representing an increase of 17.2 percent, or $419.5 million. We also determined that, although overtime usage increased, overall workhours were reduced by 77.3 million and costs by $1.51 billion during this period. According to management, this increase in overtime usage was due to a reduction in personnel, mail rerouting, and equipment deployment delays and updates. We found that these things contributed to increased overtime usage and that the Postal Service did not effectively plan for overtime usage as it exceeded its planned overtime hours by 67.8 percent in FY 2010.

Overtime Usage Increased
The Postal Service’s overtime hours used in FY 2010 exceeded overtime hours used in FY 2009 by 14.3 percent (or 9.6 million hours) at a cost of $419.5 million. In FY 2010, 39,220 employees left the Postal Service (20,897 from the voluntary early retirement authority (VERA)4 incentive and 18,323 through attrition) which contributed to these increases in overtime. While the reduction in personnel was an intended outcome of the VERA, Postal Service officials stated there were places that had more attrition than workload decreases and other places where there was not enough attrition to account for the decreased workload. They also stated that because Article 12 requires the Postal Service to provide up to 180 days notice, whenever possible, before moving employees, they could not match workforce to workload at the onset of the VERA.

In addition, we found that management used overtime to offset the increased workload at network distribution centers (NDC) that resulted from the national network conversion of bulk mail centers to NDCs.5 We also found that the Flats Sequencing System6 (FSS) deployment delays also contributed to overtime usage. See Appendix B for our detailed analysis of this topic.

The Postal Service’s overtime costs in FY 2010 were $2.86 billion compared to$2.44 billion in FY 2009. Total overtime hours increased by 14.3 percent (or 9.6 million hours) at a cost of $419.5 million. In addition, the Postal Service exceeded its planned overtime costs for FY 2010 by $1.15 billion. Overtime workhour costs accounted for approximately 7.0 percent, 5.7 percent, and 8.2 percent of total workhour costs in FY2010, 2009, and 2008, respectively. (see Chart 2)

. In addition, overtime workhours occurred in various functions including mail processing, city carriers, and customer service. Out of the 76,119,321 total overtime workhours, mail processing used 16,554,669; city carriers used 42,150,277; customer service used 11,487,753; and other functions used 5,926,622.

According to Postal Service officials, 20,897 employees took advantage of the VERA incentive. Of these, 18,028 were clerk craft and 2,869 were mail handler craft within the mail processing and customer service functions. From FY 2009 to FY 2010, the Postal Service experienced the most significant increases in overtime in mail processing consistent with the largest reduction in personnel as a result of the VERA.

While city carriers accounted for the largest number of overtime hours, their overtime usage did not increase as significantly as the other functions from FY 2009 to FY 2010.

The Postal Service exceeded its budgeted overtime hours by 67.5 percent in FY 2010

This occurred because management did not account for or make adjustments based on the reduction in personnel, equipment deployment delays or the impact of mail rerouting in the development of their FY 2010 plan. As a result, the budget for overtime and workhours was not accurate and the Postal Service may not have fully realized the anticipated cost savings resulting from the VERA and other operational efficiencies.Postal Service officials stated that they developed the FY 2010 plan during April and May 2009 and the VERA was not announced until August 2009.

Management did not adjust the plan based on anticipated personnel reductions associated with the VERA and, as a result, they did not budget for the additional overtime required to offset those reductions and maintain operations.With regard to mail rerouting, management stated they expedited their plans for rerouting the mail for the NDC conversion and redirected a large volume of mail to Pittsburgh, PA; Des Moines, IA; Denver, CO; and Memphis, TN facilities in a short period of time and used overtime to keep processing that mail.
Lastly, management stated the FY 2010 budget included savings from workhour reductions they expected to achieve from the deployment of FSS; however, since deployment was delayed, the Postal Service did not realize workhour savings.Headquarters officials held meetings with field personnel regarding FSS deployment and delays and provided a schedule showing delays beginning in mid-FY 2009. The mission of the budgeting process is to help management make informed choices about the provision of services and capital assets and to promote stakeholder participation in the process.Management should continually evaluate the program and financial performance and make adjustments that encourage progress toward achieving goals.

Management had knowledge of each of these changes prior to the beginning of the FY 2010 budget period and could have made the necessary adjustments to the budget to account for the impact on operations and overtime usage.

OIG Audit (PDF)

OIG Audit On USPS Overtime Usage FY 2010

10 thoughts on “OIG: USPS Exceeded Planned Overtime Costs In FY 2010 By $1.15B

  1. PO can’t do that. The Fed would have to do it for ALL federal employees. Not too likely, unless bozos like you vote more inept teabag fools in next election.

  2. Will the P.O ever get it. Raise the “high 3” to “high 5” and you will get civil service signing up for retirement without an incentive. That’s all

  3. Amazing in Harry Potter in TRANSFORMATION: BOLDLY INTO THE FUTURE April 5, 2002. Nine years late rand Harry got a golden severance package in his transformation into retirement or another endeavor. Tranformation boldly into the future has created less revenue due to a decline in mail volume and supply and demand factor with less demand for POSTAL PRODUCTS AND SERVICES.
    Daily USPS spends more money than it takes in. 2010 USPS exceeded planned OT BY 115 BILLION DOLLARS. What a plan? Per Harrys plan boldly into the future he refers to the Board of Governors as 11 individuals, nine of them, the governors are appointed by the President. In turn the governors seclect the PMG,AND ALONG WITH THE Deputy PMG, both of whom also serve on the board of governors. The board of governors is comparable to the board of directors of a publicy owned corporation. The board directs and controls USPS expenditures, joINs iN LONG Range planning and reviews the practices and policies of the Postal Service.. Harry Potter has fled the scene and the board of directors has failed the transformation plan details as announced by Harry Potter in Washinton DC, April 5 2002.
    When all is said and done mail volume cannot be conyroled and all the steps taken have failed to keep the USPS viable. Massive debt can only be brought under control by eliminating Sat. delivery which is massive waste in providing route delivery nationwide with a low revenue product which cost more to deliver resulting in massive loss due to increasing fuel cost for 193,000 vehicles and delivery personnel cost. Eliminating upper management tiers, consolidating districts, and eliminating areas( piss someone off in district and be sent to area to rectify by travelin area for needless observations) and consolidating community officies and there is still massive debt.
    The solution to a breakeven point at bottomline is to take the most contributing factor causing the debt and eliminate it:this being eliminating Sat. delivery. The reality is individuals and business do not depend on Sat. mail delivery for any facet of life in the INTERNET, EBUY-EPAY,DIRECT DEPOSIT, ELECTRONIC AGE OF BEING CONNECTED. FACE THE REALITY OF LIFE IN THIS DAY AND AGE. SATURDAY ROUTE MAIL IS AS OBSOLETE AS USING SMOKE SIGNALS IN THE AGE OF THE SMART PHONE.

  4. This is SOP everywhere in the PO. Managers that can only manage in the manner they were shown when they were first put in a management position by another know-nothing-about-managing dumb ass that couldn’t/wouldn’t do their job in craft so they were promoted to join the ranks of the other worthless pieces of crap that are and have been running the PO in the ground for decades. We all know it takes a certain number of employees to process and deliver mail to every address in the country. We also know that when mail volume is up, the numbers look better than when volume is down, but that doesn’t dramatically effect the number of workers it takes to accomplish that task. If a letter carrier is putting one piece of business mail in each box or 20 first class letters, that carrier still has to be there to do it. Does it change the bottom line? Yes, but can we just lay off the carrier to save money? NO! That is why a normal business model doesn’t work for the PO. Even the way the PO has to account for their cost of doing business doesn’t fit that model. The PO sells a stamp last year when gas prices were lower but may have to deliver that letter when they are up substantially. Doesn’t that sound like an accounting nightmare? Automation has increased the speed, accuracy, and in some cases the cost of processing the mail, but the system still requires workers that feed, fix, and operate that equipment along with those carriers that deliver the finished product. Management is the problem when it comes to controlling costs and they don’t have a clue. They don’t care about the cost as long as they can pad the paperwork and keep getting their pay increases plus bonuses while driving the PO further in the ground, all the while bellowing about the high cost of labor.

  5. EVERY WEEK we have tour 2 clerks being CALLED in2 hour’s early to stand around and talk to the other 20 clerk’s with NOTHING to do because we have NO MAIL VOLUME!!! I don’t blame the clerk’s…it is just PISS POOR MANAGEMENT!! Is no one keeping tract of the absolute stupidity and waste.!!!!!!


  7. As you can see by this report management doesn’t do a whole lot. So why did they do this report and tell us something we already know.

  8. Year in, year out, these CLOWNS keep doing the same things wrong.

    In the PRIVATE SECTOR that they keep trying to clone themselves
    after, they ALL would have been sh*t canned long ago….but NO, they
    will still be at work THIS YEAR, NEXT YEAR, AND THE YEAR AFTER THAT
    doing the same thing that they did last year….FAILING TO MANAGE.

    Of course, the entire problem is the fault of the lowly clerk, mail handler
    or city carrier….they came to work and PUT IN TOO MUCH OVERTIME
    don’t you know.

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