This sounds like a math problem on a standardized test: If the amount of mail processed in fiscal year (FY) 2018 declined by 5 billion pieces and total number of workers used to process mail declined by 5,000 career employees (with workhours also dropping by 4.3 million), how much did overtime costs decrease?
Answer: They didn’t. Overtime costs to process mail increased by $257 million (31 percent) in FY2018 from the previous year. What happened?
Our latest audit report looked at the U.S. Postal Service’s management of mail processing overtime in FY18 and determined that the USPS did not effectively manage mail processing overtime costs in FY 2018. It planned for total mail processing overtime costs of about $732 million, but actually incurred $1.09 billion, a difference of 49 percent.
USPS uses overtime to give it flexibility in operations. But it must manage overtime efficiently, given its impact on costs. Overtime is paid at 1.5 times an employee’s hourly rate. Another category of overtime – penalty overtime – is paid, under specific conditions, at double the employee’s hourly rate.
The Postal Service planned for about 18.5 million overtime workhours and 767,000 penalty overtime workhours for FY 2018. The actual overtime workhours used were 26.7 million (44 percent over plan), and the actual penalty overtime workhours used were 1.7 million (126 percent over plan). This occurred, in part, due to implementation of an employee scheduling tool at the beginning of FY 2018, which we discovered needed some finetuning.
The Postal Service is currently rolling out an updated version of the scheduling tool that should better set the standards for employee schedules and complement levels.
Our report also cited opportunities to address management oversight to prevent unauthorized overtime, reduce grievances, and increase employee availability.
What thoughts or ideas do you have for helping to rein in overtime costs?