March 5, 2004 

 

In the Matter of the Petition by

 

LINDA WEBB

18404 Lake Worth Blvd

 

at

 

Port Charlotte, FL 33948-9479

 

P.S. Docket No. DCA 03-354

 

APPEARANCE FOR PETITIONER:

William Brown

12 Mount Run

Tinton Falls, NJ  07753-7674

APPEARANCE FOR RESPONDENT:

Cindy Beierlein

Labor Relations Specialist

United States Postal Service

2203 N. Lois Avenue, Suite 1042

Tampa, FL  33607-7142

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

            Petitioner, Linda Webb, filed a Petition for Hearing, after receiving a Notice of Involuntary Administrative Salary Offsets, dated August 29, 2003.  This Notice stated the Postal Service's intention to withhold $2,112.60 from Petitioner's salary to recover a shortage in an account for which Petitioner was accountable.

            A hearing was held in Fort Myers, Florida on February 11, 2004.[1]  The Postal Service presented testimony from the officer-in-charge of the Punta Gorda, Florida Post Office, and a financial analyst from the District Accounting Office.  Petitioner testified on her own behalf and also presented testimony from the former Punta Gorda Postmaster.  Both parties relied on documents that had been filed previously, and Petitioner submitted one additional document at the hearing.  The following findings of fact are based on the entire record.

FINDINGS OF FACT

            1.  Petitioner has been a Postal Service employee for twenty-three years, has been a supervisor for at least ten years, and has been the custodian of the unit reserve stock at the Punta Gorda, Florida Post Office for approximately seven years (Tr. 62, 75).[2]

            2.  The Punta Gorda office operates under a segmented inventory accounting (SIA) system, which means, in part, that stamps are sold to the public from a segment known as the “retail floor stock” or the “store,” for which no individual employee is accountable.  Stamps are supplied to the floor stock from the unit reserve, for which Petitioner is accountable.  As the supervisor in charge of financial matters, Petitioner is responsible for controlling, managing, and recording transfers between the unit reserve and the floor stock account, although she is not personally accountable for shortages in the floor stock.  (Tr. 20, 25-27, 31, 41, 58, 80).

            3.  On December 6, 2002, Petitioner and a subordinate employee began an audit of the retail floor stock, which is required to be done every three months.  Because they found a large overage, they did a second count.  The count was completed on December 10, 2002, and showed an overage of $8,363.01.[3]  (Tr. 25-26, 29, 76, 90; Answer, pp. 45-57 (same record also submitted as PS Ex. 5)).

            4.  Immediately after discovering this large overage in the retail floor stock, Petitioner and her subordinate also audited the unit reserve account and found it to be short $4,730.46.  This count was completed on December 11, 2002.[4]  (Tr. 25-26, 29, 57, 76-77; Answer, pp. 17-25 (same record also submitted as PS Ex. 4)).

            5.  At the conclusion of the two audits, Petitioner reported the shortage and overage to the postmaster.  On January 14, 2003, the postmaster issued Petitioner a Letter of Demand for $4,730.50.[5]  (Tr. 57; Answer, p. 42).

            6.  On January 28, 2003, Petitioner sent the postmaster a memorandum in response to the Letter of Demand.  She stated that there were a “multitude of errors” that caused the large overage and shortage that were discovered on the December audits.  Primarily, she stated that there were times when she gave stock from the unit reserve to the floor without entering the transactions into the POS system, the computer system for managing stamp stock.  She cited several specific items and amounts, and conceded that she was “at fault for not following procedures.”  (Answer, p. 40).

7.  Sometime thereafter, the postmaster submitted a PS Form 2130, Claim for Loss, to the District Accounting Office, stating his conclusion that stamps had been issued from the unit reserve to the floor stock without being entered into the POS.  A Claim for Loss requests that an apparent shortage be “written off,” without any employee being charged for a loss.  A March 6, 2003 memo from the postmaster to the accounting office lists items totaling $4,730.44 as being “given to the store but not recorded as taken from the vault.”  (Tr. 34-35, 58; PS Ex. 8; Answer, p. 3).

            8.  A financial analyst from the District Accounting Office reviewed the December 2002 audits of the unit reserve and the retail floor stock and compared the inventory lists and count sheets line by line.  There are a great many items on each list for which the physical count of what was present does not match the amount on the inventory.  Wherever the analyst found an overage of a specific item in the floor stock that matched a shortage of the same item in the unit reserve, i.e., same denomination and same type of stamp, she gave Petitioner credit by offsetting the overage against the shortage.  This resulted in reducing the alleged loss from $4,730.46 to $2,112.60.  She did not credit any other part of the floor stock overage toward the unit reserve shortage.  Therefore, the remaining floor stock overage - $5,745.15, was placed in a trust account.  (Tr. 26-31, 50; PS Exs. B and 3-5).    

            9.  A March 14, 2003 memo from the Accounting Office to the postmaster explained the offset discussed above and directed that, if there was no other information on which to base an additional offset, action should be taken to collect the $2,112.60.  No action was taken for some time, apparently because the postmaster was reassigned to another position.  Eventually, on August 29, 2003, the new officer-in-charge issued Petitioner a Notice of Involuntary Administrative Salary Offsets for $2,112.60.  (PS Exs. B, D and H; Notice of Involuntary Administrative Salary Offsets attached to Petition).

            10.  On June 10, 2003, the Manager, Customer Services, issued Petitioner a Letter of Warning for unsatisfactory performance, for failing to follow prescribed procedures in issuing stamp stock from her unit reserve, i. e., she did not enter the transactions into the POS system at the time stock was issued.  The letter cited the results of the December 2002 audits.  (PS Ex. E).

            11.  Although the retail floor stock is normally supplied only from the unit reserve, there are occasions when stamps may be acquired from another post office or branch, in order to fill a customer’s need when the custodian of the unit reserve is not available.  There are no records of any specific instance when this occurred at the Punta Gorda Post Office, although Petitioner and the former postmaster recalled that it did happen on at least one occasion.  At no time after the large overage was found in December 2002, or while the postmaster’s “claim for loss” was being analyzed, did anyone attempt to determine whether some other post office or branch had a corresponding shortage.  (Tr. 27, 50-51, 72-73, 84).

DECISION

The standard for determining an employee’s liability in a case such as this provides that employees to whom postal funds and accountable paper are consigned “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), §141.

Respondent’s burden of proof in a case of unexplained shortage is to show that a loss occurred from an account for which the employee is accountable.  Respondent is not required to prove any specific dereliction, or act of negligence, by Petitioner.  When a properly conducted inventory, or audit, shows a stock shortage relative to a previously established balance, this constitutes proof of loss unless other evidence raises sufficient doubt about the accuracy of the inventory or the previously established balance, or otherwise suggests that there may have been no actual loss. 

            In this case, there is no dispute over the accuracy of the December 2002 audit, but Petitioner contends that there was no loss to the Postal Service, because the shortage in her unit reserve should be completely offset by the larger overage in the retail floor stock.

            The general rule on offsetting overages against shortages is that an offset is not appropriate unless the evidence establishes a probable relationship between the two, i.e., that the overage and the shortage represent the same stamp stock.[6]  Petitioner argues that a sufficient relationship is established in this case because the two audits were done at nearly the same time, that any overage in the retail floor stock almost certainly had to come from the unit reserve, that there is no record of stamp stock from some other source being shipped into the retail floor stock between September 18, 2002 (the date of the last previous audit) and December 6, 2002, and the fact that she remembers shipping stock to the floor without making the required entry into the POS system.  In response to Respondent’s contention that this entire matter is the result of her failure to follow proper procedures in managing her account, she acknowledges that she accepted the Letter of Warning because she failed to make the POS entries, but argues that this tends to show that there was no actual loss.

            Petitioner is supported by the former postmaster, who testified that he still believes that the unit reserve shortage was just a “paperwork” shortage, not a real loss of revenue to the Postal Service (Tr. 58-59).

Respondent’s position is based on the detailed examination performed by the financial analyst of the two December 2002 audits.  Respondent contends that the analyst gave Petitioner credit for as much of the overage as possible by matching specific items (see Finding #8), but that without any documentation from Petitioner to prove her claim that she issued specific stock to the floor without making the computer entries to reduce her unit reserve, there is no basis to simply assume that the entire floor stock overage is related to the unit reserve shortage.  Respondent also notes that the amounts of the overage and the shortage are quite different, and argues that this is another reason not to assume that they are related.

            Petitioner’s argument is more persuasive.  Petitioner’s insistence that she issued stock to the floor without making POS entries to reduce her unit reserve accountability is not just speculation.  It is known to have happened, as evidenced by the postmaster’s March 6, 2003 memo and the Letter of Warning (see Findings #7 and #10).  It is also known that the retail floor stock overage far exceeded the unit reserve shortage, and that the $8,363.01 overage in the floor stock was generated sometime between September 18 and December 6, 2002.  In the absence of any record of a shipment into the floor stock from some source other than Petitioner’s unit reserve during that time, the postmaster’s memo and the other facts cited by Petitioner are sufficient to demonstrate a probable relationship between the shortage and the overage. 

As often happens in cases of this nature, Respondent has demonstrated that Petitioner did not always manage her accountability properly, and may not have done all she could have to investigate the cause of the shortage and overage.  This does not equate to proving an actual loss to the Postal Service, however, and Respondent has not carried its burden of proving that the Postal Service lost $2,112.60.

            The Petition is granted.  Respondent may not collect $2,112.60 from Petitioner’s salary.

 

 

                                                                        Bruce R. Houston

                                                                        Chief Administrative Law Judge

 


            [1]  The hearing was conducted by the undersigned Administrative Law Judge via speaker telephone from Arlington, Virginia.  All other participants, including the court reporter, were present in a conference room at the hearing site.

[2]  References to the hearing transcript are “Tr._.”  References to documents filed by Respondent with the Answer will be by page number, as “Answer, p._.”  Later documents filed by Respondent will be identified as “PS Ex._.”  

[3]  Records showed that the accountability was $35,305.39, but $43,668.40 was actually present.  The next previous audit of the retail floor stock was done on September 18, 2002, and showed a small shortage (Tr. 91; Answer, p. 1).

[4]  Records showed that the accountability was $221,509.67, but only $216,779.21 was present.

[5]  There is no explanation for the additional 4¢, but it is insignificant.

[6]  Handbook F-1, §429.16.