May 31,2005

Chairman Grassley Keeps Focus on Financial Management at Postal Service

WASHINGTON — Sen. Chuck Grassley is keeping pressure on the Postal Service by asking for reports on how the Service is improving financial management following recent news of a possible postal rate increase and excessive payments by the Service when its employees relocate.

Grassley said he wants to shine the spotlight on the Postal Service to make sure anyincrease in the cost of stamps is not wasted by poor management. Earlier this month, Grassleycomplained about the Postal Service giving its employees an extra allowance for relocation expenses, totaling as much as $25,000, on top of reimburseable relocation expenses related to shipping household items or the sale of a home, for example. There is no requirement made of Postal Service employees to show that the extra allowance he questioned was used for relocation-related expenses.

Grassley is chairman of the Senate Committee on Finance. A copy of Grassley’s requestto the Inspector General for the Postal Service follows here, along with his May 4 news releaseregarding this issue.

May 31, 2005

The Honorable David Williams
United States Postal Service Office of Inspector General
1735 N. Lynn Street
Arlington, VA 22209-2020

Dear Mr. Williams:

Recently, as Chair of the Senate Finance Committee (Committee), I questioned thePostmaster General for awarding what I believe are unnecessarily generous miscellaneousrelocation payments to senior executives, some of whom moved only a few miles. In addition,recent reports by the Government Accountability Office (GAO) and in the press suggest that theUnited States Postal Services (USPS) is facing a major financial crisis.

At a time when the financial footing and operational structure of the United States PostalService (USPS) are being questioned and postal rates are increasing, it is essential that the USPS effectively ensure that it incurs only costs essential to effective operations. How the USPS manages its finances has a direct impact on the cost of postage to American citizens. The USPS recently proposed an increase in postage rates to replenish its escrow fund and a similar increaseis anticipated in 2006.

I understand that the USPS OIG is currently developing an overall strategic audit plan ofaction to implement current pending legislation that will require it to review the various systemsthat are used to allocate cost and revenue in the rate making process. Accordingly, as Chairmanof the Committee, I request that the USPS OIG provide this committee with the results of thoseaudits as they are completed to ensure that the rate increases are properly supported by datasystems. In addition, I ask that you determine whether efficiencies and cost savings the PostalService has realized over the past few years are appropriately factored into the rate makingprocess.

Thank you in advance and I greatly appreciate your continued assistance in ensuringaccountability in government.


Charles E. Grassley

For Immediate Release
Wednesday, May 4, 2005

Grassley Sends Postmaster General Questions About Executive Moving Expenses

WASHINGTON — Sen. Chuck Grassley is calling on the Postal Service to account forits practice of giving its employees extra payments for relocating and letting employees keep anyleftover money.

Grassley said that during fiscal years 2003 and 2004, the Postal Service made 265miscellaneous relocation payments of $10,000 each, totaling $2.65 million. Another ten suchpayments of $25,000 were made during the same time period. This is an allowance employeesreceive in addition to reimbursable expenses such as the shipping of household goods andexpenses related to the sale of a home.

“It’s irresponsible for the Postal Service to make these payments without accounting forhow the money is spent,” Grassley said. Last month, the Postal Service called for an increase instamp prices and other postal rates.

In a letter sent yesterday, Grassley challenged the assertion made by the PostmasterGeneral that relocation benefits are needed to induce talented individuals to move to challengingpositions in higher cost areas.

“The Postmaster General also says that talented individuals are rewarded for goodperformance with salary increases, so it doesn’t add up that runaway relocation expenses are alsoneeded,” Grassley said. “What’s more, sometimes relocation payments are being made toemployees moving only a few miles.”

Grassley is chairman of the Senate Committee on Finance. Here is the text of his letter tothe Postmaster General.

May 3, 2005

The Honorable John E. Potter
Postmaster General
United States Postal Service
475 L’Enfant Plaza SW
Washington, DC 20260-001

Dear Postmaster General Potter:

I am in receipt of your response to my March 30, 2005 letter inquiring aboutmiscellaneous relocation allowances and I must tell you, I am not pleased with your response. Infiscal years 2003 and 2004 alone you made 265 miscellaneous relocation payments of $10,000each. That’s $2.65 million, and that doesn’t count the 10 $25,000 payments you made during thatsame time period, or the relocation income tax allowance used to ensure that the employeereceiving the allowance can pocket the full allowance. And employees are not required to showthat they actually incurred any expenses that would justify these payments. That strikes me as irresponsible, especially because your response comes on the heels of the United States Postal Services’ (USPS) recent request to raise postal rates. I don’t see how you can justify a 10 percent increase in postage rates at the same time you are making payments of $10,000 or more to USPS executives. The American public does not want to pay more for postage so that you can give what amount to handouts to USPS executives.

You state in your response that because USPS Executive and Administrative Schedule(EAS) and Postal Career Executive Service (PCES) employees receive no locality pay, andreceive increases to salary solely based on performance, it is necessary to use relocation benefitsto induce talented individuals to move to challenging positions in higher cost areas. I don’t quiteunderstand that. If talented individuals are being rewarded for good performance, why do they need payments of $10,000, and sometimes more, as an inducement to relocate. In addition, as Imentioned in my previous letter, in the past, such payments have been handed out to individualswho have moved only a few miles.

Finally, I understand that both the Deputy Postmaster General, who received a $50,000miscellaneous relocation allowance in 2000, and the Senior Vice President for HumanResources, who received $25,000 miscellaneous relocation allowances in 1998, 2000, and 2001,for a total of $75,000, are both retiring soon and are each eligible for one final relocation uponretirement. I hope you can assure me that these individuals will not be receiving the samegenerous relocation allowances that they have received in the past. Even if a generous relocationpayment were necessary as an inducement to relocate, I don’t see how it benefits the USPS or theAmerican public to offer the same allowance upon retirement.

In closing, thank you for your attention to this important matter.


Charles E. Grassley

James C. Miller III, Chairman, USPS Board of Governors
David C. Williams, USPS Inspector General