The Postal Service, like almost all federal entities, has strict legal limits on how much executives can be paid. There are a few exceptions however. Every year, the Office of the Postal Inspector General performs an audit to ensure that the agency remains in compliance. With this year’s findsDeputy Assistant Inspector General for Finance and Pricing, Alan MacMullin spoke with the Federal Drive with Tom Temin.
Tom Temin: Mr. MacMullin, nice to have you here.
Alan MacMullin: Thanks. It’s great to be here.
Tom Temin: And that report is annual by law or you just want to make sure you’re aware.
Alan MacMullin: Well, we just like to make sure the Postal Service is on top of its executive compensation. It is therefore in fact a discretionary work, which we initiate ourselves, generally annually, but which can vary from one year to another according to certain priorities of our office.
Tom Temin: Has this ever been a problem in the past, or if there is a bunch of people making way too much money?
Alan MacMullin: We have identified some issues in the past, but not so much that Postal Service employees are making too much money, but some errors in some of the reports required by the Postal Service to Congress on these limits.
Tom Temin: OK, so tell us specifically what you were looking at in this current version, then?
Alan MacMullin: Of course, yeah. There are therefore two main types of limits for executive compensation, the first being that of the executive, that of the executive schedule. And so it’s the salary system given to the highest rank, the appointed officials within the executive branch of the United States. So that totals approximately for the calendar year 2021, it was approximately $221,000. So think about your cabinet-level officials here, your secretary of the treasury, secretary of defense, those people are capped at about $221,000. Additionally, there is a bonus exception. These executives therefore cannot exceed the salary of the Vice President of the United States. So looking at calendar year 2021, again that was about $256,000. Now, too, the postal service is a bit different. They have, they get a critical position exception. So that gives them up to 12 officers or employees in critical leadership positions, they can earn a total annual compensation of up to 120% of that of the Vice President of the United States. So for calendar year 2021, that was about $307,000.
Tom Temin: It would be like, if they were to hire someone from UPS or FedEx with a background in logistics, and who could make a lot of money, would that incentivize them at least to do public service, basically?
Alan MacMullin: Exactly. This enables them to be more competitive in the market than almost that of the private sector.
Tom Temin: So what did you find? Are they generally compliant? And are they in compliance with required salaries and reports?
Alan MacMullin: Yes, so we found no issues this year regarding compensation, the Postal Service has complied with all applicable laws regarding maximum compensation. We found only a few reporting issues during the year. Thus, the Postal Service is required to report to Congress on any employee receiving compensation in excess of these limits. It is included in their complete annual statement of postal operations. This is their annual report to Congress. Thus, the information on the remuneration which had to appear in this declaration was, in some cases, incomplete and inaccurate.
Tom Temin: You had about 10 people from the executive list there who didn’t report. Were these substantial discrepancies or what was the problem with these 10 people?
Alan MacMullin: I wouldn’t call them substantial differences. The total, if you put it all together, was just over $30,000 for bonuses that were excluded. And that covers all those employees, and then about 10,000 and their excess income that was reported there. This happened primarily because the Postal Service did not include payroll adjustment data in the compensation information reported. And there were also some clerical errors and typos in the reporting process that we found.
Tom Temin: We were talking with Alan MacMullin. He is Deputy Assistant Inspector General for Finance and Pricing at the US Postal Service. So I’m sniffing out some possible recommendations here, and then more on the administrative front than the fact that they’re paying people a million dollars.
Alan MacMullin: Yeah. So, I mean, basically we recommended that their financial reporting team coordinate better with their payroll team to make sure all the adjustments are incorporated. And so they’ve committed to doing new reports that include those payroll adjustments so that they have that information at the time of the reports. We also asked them to revisit the process and see what they can do to avoid clerical errors and typos. They have also agreed and committed to adding quality control reviews to the process, and they are updating their standard operating procedures accordingly.
Tom Temin: And who has the discretion to make the bonuses go higher if need be for critical position exceptions and that sort of thing? Is it all up to the postmaster general? Or do any of the governing bodies that seem to surround the Postal Service have a say?
Alan MacMullin: Yes, no, the Postal Service Board of Governors will actually approve these bonuses for these employees.
Tom Temin: OK. So what else do we need to know about it? I mean, it’s interesting that the salaries are similar to the executive, because every time you talk to a postal executive, the first thing they say is that we’re not an agency federal. But they really are. I mean, you really are, aren’t you?
Alan MacMullin: They operate very much like the federal government. And as you said, there are only a few exceptions provided to them to try and retain and recruit various executives into key positions. It’s a bit more competitive with the private sector.
Tom Temin: And while we have you, there are a few Postal Service annual financial reports to Congress in the coming months. What should we watch out for when these are issued?
Alan MacMullin: Yes of course. So the postal service and in November we will be issuing their 10k. And this is a full report of its financial performance for the year. This will therefore contain more detailed information on compensation, as well as other information on its financial performance and operations. Additionally, the Postal Service will release its annual report, as mentioned, to Congress in December, for calendar year and fiscal year 2022.
Tom Temin: And from what we can discern some of the changes made statutorily and operationally under Louis DeJoy, the balance sheet appears not to be so drained for the Postal Service seems that the basic finances are improving. Is it too early to predict? Or do you think that is what is happening?
Alan MacMullin: Well, I think we’ll see in the 10k, that the Postal Service is in a different fiscal position than it was before. So I’m really looking forward to reviewing the financial information when it’s released and audited in November.
Tom Temin: Okay, but you can’t buy stocks anyway. And regardless of what the footnotes say, but I also wanted to ask you a quick question about your work, you have awards in your title. What is the IG looking at with regards to pricing given that everything is a fixed statutory price approved by the Board of Governors that the Postal Service charges?
Alan MacMullin: So yes, so in fact the postal service has been given more authority over its price, over the pricing of its products, but those are regulated by the Postal Regulatory Commission. Thus, whenever price changes occur, the Postal Service must submit information to the Postal Regulatory Commission, which issues advisory opinions on the subject. As the cost and price department, we effectively review the various information provided to the PRC so that we can ensure that the information provided by the postal service to the regulator is reliable.
Tom Temin: Alright, well, we’ll pay attention to those price increases and ask you if they make a good justification. Alan MacMullin is Deputy Assistant Inspector General for Finance and Pricing at the US Postal Service. Thank you very much for joining me.
Alan MacMullin: Thanks. Appreciate it. It’s good to be here.