FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Joyce L. Robertson, filed a Petition requesting a hearing under the Debt Collection Act of 1982, as amended, 5 U.S.C. §5514(a), 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 the unit reserve accountability for which she was responsible.

At Petitioner’s request, an oral hearing was held. The parties, witnesses and court reporter were at Respondent’s District Office in Oakland, California, 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 at the conclusion of the hearing.

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

FINDINGS OF FACT

1. Respondent employs Petitioner as a customer services supervisor. During the relevant time in 2001, she was responsible for the financial management of, and divided her time among, five stations in Oakland, California. (Transcript of Hearing, pages (“Tr.”) 159-160; Petitioner’s Exhibit (“PX”) 3).

2. Petitioner had been a finance manager for a number of years. She had been given the standard amount of training, 3-4 days, on the operation of the Postal Service’s retail and financial management computer system, known as POS ONE, on which transactions related to the unit reserve were recorded (Tr. 161). Generally, managers with similar training were able to operate the POS ONE system (Tr. 98). On April 13, 2001, Petitioner asked her manager for additional training on the POS ONE system regarding the stamp stock feature, but none was provided (Tr. 162; PX U).

3. At one of her stations, Station E, Petitioner was the custodian of the unit reserve. The unit reserve consisted of the stamps and other accountable paper that had been received by the station but not issued to window clerks or to floor stock. (Handbook F‑1, Post Office Accounting Procedures (November 1996), Section 413, Glossary). Petitioner had exclusive access to, and was responsible for, the stamps in the unit reserve. She was solely responsible for maintaining the official records of the station in which transactions affecting the accountability of the unit reserve were recorded. (Tr. 101, 159-160).

4. On April 20, 2001, Petitioner and another Postal Service employee counted the stamps and accountable paper in the Station E unit reserve. The count disclosed an overage. The unit reserve contained $9,413.41 more in stamps than the station’s records reflected should be on hand. (PX 6-9, P5-P8, T). After that count, the records of the station were adjusted to reflect the amount of stock on hand as counted, and the $9,413.41 was transferred into trust in the station’s accounts (PX K3, K4, Q).

5. On August 28, 2001, as part of a transfer of custody of the Station E unit reserve to another employee, Petitioner and her successor counted the stock in the unit reserve. The count revealed a shortage. The unit reserve contained stamps and other stock valued at $10,397.27 less than what should have been on hand according to the official records relating to the unit reserve. (Tr. 12-18, 29, 34, 168; Respondent’s Exhibit (“RX”) 4-A – 4-G; PX 10-12). Station E’s records were adjusted to reduce the official accountability of the unit reserve to the amount of stamps on hand, and a compensating entry in the amount of $10,397.27 was recorded in the suspense accounts of the office. (RX 4-H, 4-I; PX K4, K5).

6. Petitioner was issued a letter of debt determination and eventually a Notice of Involuntary Administrative Salary Offsets demanding repayment of the $10,397.27 shortage found in the August 28, 2001 audit (Tr. 49; PX 4, 5, M, N).

7. During her tenure as manager of the five stations, Petitioner let the number of suspense and trust entries increase dramatically. These were compensating entries made to adjust for deficiencies or imbalances in the stations’ accounts. It was Petitioner’s responsibility as the stations’ financial manager to research these trust and suspense entries and to find and adjust promptly the deficiencies in the stations’ accounts that led to the imbalances (Tr. 43-44, 61, 68). Failure to correct these deficiencies made management of the finances of the stations more difficult and could have led to accounting errors. Notwithstanding monthly notices from Respondent listing all of the outstanding trust and suspense entries and specific assistance provided by the Accounting Department in correcting financial discrepancies, Petitioner failed to take the steps necessary to make these corrections. As a result, there were many more suspense and trust entries at her stations than were acceptable, and hers were far older than allowed by Postal Service procedures. (Tr. 43-44, 46, 78-79, 97-98, 109, 169-170; PX V).

8. Eventually, in mid-2001, Respondent took steps to address Petitioner’s long list of unresolved suspense and trust entries, having given up on Petitioner ever taking the necessary steps to correct them. Respondent simply netted all the suspense items it attributed to Petitioner against all of the trust items, including the April 20, 2001 overage, attributed to her, lumping the accounts of all her stations together for this purpose. (Tr. 54, 55, 78-79, 91, 118-122; PX K-4, K-5). Once all the suspense and trust entries for all of the stations were netted, an overall balance in suspense (a shortage) of $10,275.84 remained (Tr. 91-92; PX 1, K-3). Respondent seeks to establish Petitioner’s responsibility for that amount (Tr. 91-92).

9. Postal Service regulations provide that the amount of stamps and other stock in the unit reserve should be limited to the amount normally sold by the station in 9 weeks (Handbook F-1, Post Office Accounting Procedures (November 1996), Section 422.211). Keeping larger amounts makes it more difficult to keep track of the stock and increases chances of error in stock transactions. During 2001, Petitioner routinely kept on hand in the Station E unit reserve much more than a 9-week supply of stamps. (Tr. 62; PX W).

10. Postal Service regulations establish the standard for liability of a custodian of a unit reserve for a loss to her assigned accountability:

“Employees are held strictly accountable for any loss unless evidence establishes that they followed the postal procedures established when performing their duties.”

(Handbook F-1, Post Office Accounting Procedures (November 1996), Section 141).

11. Postal Service regulations allow offsetting an employee’s prior overages against a current shortage under certain circumstances:

“When there is a balance for that employee from a previous overage within 1 year and a relationship is established, use this balance to offset part or all of the shortage.”

(Handbook F-1, Post Office Accounting Procedures (November 1996), Section 429.16, Handling Shortages, bullet 3).

DECISION

Respondent has demonstrated that on August 28, 2001, a $10,397.27 shortage existed in the unit reserve for Station E (Finding 5). Petitioner was the custodian of that unit reserve account (Finding 3). Proving the existence of the shortage in Petitioner’s account is usually sufficient to show that Respondent has suffered a loss in the amount of the shortage. However, in this case, Petitioner argues that she was entitled to the benefit of the $9,413.41 overage discovered in the Station E unit reserve on April 20, 2001 (Finding 4). She argues that it was improper for Respondent to apply that overage against any shortages from the other stations she managed. Applying the overage as she urges would substantially offset the August 28, 2001 shortage and would reduce the loss to Respondent.

However, although Petitioner argued that it was improper for Respondent to apply the April 20, 2001 overage to shortages at the other stations Petitioner managed because there was no “relationship” shown, she has failed to demonstrate any relationship between the April 20, 2001 overage and the August 28, 2001 shortage. After the overage was identified on April 20, 2001, the unit reserve accountability was restored to a balanced condition, and the overage was entered into a trust account (Finding 4). As of that adjustment, the records of Station E, maintained by Petitioner, reflected an accountability for the unit reserve that was exactly what was physically contained in the unit reserve. Petitioner has not suggested how any shortage developing thereafter in the unit reserve could be related to the April 20, 2001 overage. Accordingly, Petitioner has not shown she is entitled to an offset under the provisions of the F-1 Handbook set forth in Finding 11.

Respondent has established a loss in the amount of $10,397.27. Petitioner is strictly accountable for the loss unless the evidence shows that she followed Postal Service procedures in managing the unit reserve (Finding 10). It was her burden to demonstrate that she followed established procedures in managing the unit reserve, but she did not present evidence on this point. The evidence in the record does not demonstrate that she followed established procedures.

Petitioner argued that the financial record-keeping system, the POS ONE, was complicated and that she had been inadequately trained in its use. She received the same training as other financial supervisors, and she has not demonstrated that her training was inadequate (Finding 2). Although she requested additional training on the POS ONE in April 2001 (Finding 2), she has not shown that inadequate training had any bearing on the shortage of August 28, 2001.

Accordingly, Petitioner is liable for $10,275.84.[1] Respondent may collect this amount through involuntary deductions from her salary. The Petition is denied.

Norman D. Menegat

Administrative Judge

[1] Although the amount of the August 28, 2001 shortage was greater, Respondent seeks to recover $10,275.84 in this matter (Finding 8).