MARK

STRONG: Welcome to e-learning. Today, Im going to go over the Postal Services post plan, starting with some history on what brought us to this point, choices we had to make, and the actual structure of the post plan. You will never know how much the executive board and I have struggled with how to deal with this plan. In the end, we felt it was better to be involved and have input with the plan than to be left behind with no say at all. Given the alternatives we faced, the choices of having input have resulted in a far better plan

than the initial plan we were briefed on. There will continue to be updates and changes, but for today, this is the post plan. Sometimes tough choices have to made and wont always be popular, and this is one of them. Probably the single most changing event was the proposed CFR 241 change that was implemented on December 1st. This change allowed the Postal Service to staff a post office with any postal employee. So lets talk a little bit about the history that got us to this point. On March 31st, 2011, the Postal Service filed a change to CFR part 241. There are numerous changes to this proposal, but the two most important to postmasters was a consolidation and the fact that any postal employee could be used to staff a post office. On May 23rd, the APW contract was ratified. Within that contract was the introduction of the PSEs, and the PSE 3, who could be used for any new work. On May 23rd, League and NAPUS filed a formal complaint with the PRC to stop the proposed changes that were introduced on March 31st. And finally, on July 2011, the U.S. Postal Service pulled the two major items out of the proposal for that CFR change. Remember I said that the CFR change had numerous proposals. But within it, the two that were our main concern and the two that we filed a complaint on was the consolidation and the staffing of post office. So the Post Office continued their proposal, but they pulled those two major items from the PRC notification. On August 11th, the PRC dismissed our original complaint since the Postal Service pulled the two items that we had filed a complaint on. The PRC stated we could renew that complaint if the Postal Service submitted the changes again. On September 1st, 2011, the League office received a copy of 2012 operational initiatives. That PowerPoint was 22 pages long. Within that PowerPoint, I want to share four slides with you. Note that the PowerPoint was dated September 1st, 2011. This slide shows the release of the final two rules that has not even been finalized yet that was dated September 1st, and those two final rules had not even been finalized. Those were the ones that were pulled from the July initiative from the U.S. Postal Service. This slide talks about the high cost of 1

labor in the low-activity post office, as well as the potential cost structure changes after the last two rules are finalized. And this slide speaks of the ESA 6EAS, excuse me, 16 and below, which we know are the 15,000 post offices often talked about during closing. Also, the APW contract proposed rule change allowed for the post office management structure change. At this time, we had no postmaster positions to compete with the low-wage PSE. On October 26th, 2011, the Postal Service filed the final rule with the Federal Register, amending regulations with regard to post office closing. These are the two rules that were pulled from the proposal in July of 2011. These proposed changes would become effective 12/1/2011. On November 7th, League and NAPUS jointly filed to renew the complaint we had filed previously. We asked that the complaint be expedited since the final rule was to be implemented 12/1/2011. Unfortunately, on November 30th, 2011, the PRC denied the complaint and the final rule went into effect on 12/1. Lets talk a little bit about the history of closures. As we can recall, in July of 2011, the Postal Service announced the closing of 3,750 offices. At the same time, the Postal Service requested an advisory with the PRC on the retail optimization initiative, the RAOI. About that same time, we were starting to read numerous articles in national papers quoting postal leadership, stating that the 3,750 was just a start, that there was going to be another 4,000 offices closed after that. And in fact, they said by 2015, nearly 15,000 would be closed. On December 15th, a moratorium for closures was put into effect up until May 15th. Right after that, on December 30th, the PRC advisory on the retail access optimization stated that the initiative was flawed. We, in fact, had done an excellent job of laying out the problems with the RAOI. We had won a small victory. On February 23rd, the Postal Service announced it would continue the administrative work for closing post offices so after May 15th, post offices could be closed. On February 23rd, they also gave notice to the clerks that were impacted by plant closures and gave them RIF notices. If no legislation, post offices and plants will be closed after May 15th. About this same time, in the newspapers we started reading articles from senators and congressmen about the pay of postmasters. In fact, from Senator Durbin, he commented that the closing of post offices wasnt the problem. It was the fact that postmasters were paid $60,000-70,000 in very low activity offices. On February 8th in the Federal Times, the Postmaster General was quoted as saying, well soon be issuing a framework for a revised retail strategy that we hope will accommodate many of the concerns that we have heard. Mr. Donahoe had -- that quote was from a meeting that Mr. Donahoe had 2

with the Board of Governors. The bottom line is that restructuring was going forward with or without us being a part of the discussion. It was decision time. On January 2012, the League and NAPUS actually tried to get a second tier pay for vacant post offices. So those postmasters going into vacant offices would start at a lower pay. We could see the writing on the wall and we were trying to head it off. Later that same month, League and NAPUS were briefed on the post plan. So after the briefing, we had alternatives to discuss. We could take legal action with both the PRC and court. If we decided to do this, it was all-in. Once we started that legal action, we were not going to have a chance to sit down and discuss alternatives to the post office with their post plan. We could take legislative action, as we had with the closing of rural post offices. And we had done a wonderful job with talking to the senate, congress, and even our customers about the need for rural post offices. What we hadnt done is we hadnt saved postmasters. We had saved post offices. We had saved universal service, but we had not saved the postmaster. The second problem was telling congress and our customers that APW PSE is not as good as the postmaster would mean we would have two fights: the APW as well as the U.S. Postal Service on the Hill. The Post Office was going forward with PSEs or with an alternative that we could offer, and career employees were not going to be on the table. So with advice from counsel, we decided to try and save what we could of over 17,000 jobs. Lets talk a little bit about the background and structure of the post plan. Currently, there are 17,728 post offices that would be impacted by the post plan. I want to make three key points, and Ill talk more about the levels a little bit later in the presentation. One, we were able to keep post offices open. Two, we saved almost 8,000 career jobs, upgrading 3,807 of them to level 18 offices. And the last, although not career jobs, the twos and the fours will be PMRs and will not be PSEs. So heres how the post plan will work. Its going to allow some directional movement of postmasters to higher levels or through retirement options. Theres going to be RIF protection for two years for every impacted post plan postmaster. There will be an incentive-based VER retirement to be offered to all postmasters no matter what their level is. Those jobs that are being posted, those postmaster positions that are going to be posted, will have limited competition, meaning only postmasters can put in for those positions. This may be up to three rounds: two rounds of bidding for sure and possibly a third round to make sure that we get as many impacted postmasters moved up the ladder as we possibly can. 3

So lets talk a little bit about the post plan impact. Currently, there are 5,030 postmaster vacancies. 13,921 offices will migrate to the post plan. Of those 13,900 offices, there are 10,416 impacted postmasters. In 2012, 69.2% of those impacted postmasters are either optional -- are either available for optional retirement or VER retirement. In 2014, when the two-year protection runs out, 77.8% of the postmasters are either VER eligible for retirement or optional eligible for retirement. So lets talk a little bit about the post plan timeline. First there will be a PRC filing for an advisory. This is a national change from full-time offices to part-time offices requiring an advisory be filed with the PRC. Immediately following that filing, there will be a communication plan released both internally for post office employees, for the public, and for legislative. Impacted employees will then receive RIF notices. When they receive the RIF notice, the clock starts on the two-year protection. Incentive-based VER will be offered to VER and optional eligible postmasters at all EAS levels. All vacant positions will be posted with limited competitive area for postmasters only, at least two rounds and possibly three. Implement [inaudible] and vacant offices from June 2012 forward. First, theyre going to go to all offices that receive notice for review of closure and start their community meetings once again. After they get done with those offices, they then will start the post plan with the remainder of the vacant offices. After they exhaust the vacant offices, the post plan then will move on to encumbered offices. That will start approximately 2014. So lets talk a little bit more about the post plan structure. First, they review all post offices 16 and below using SOV and CSV to determine part-time and full-time offices. FY 11 data will be used. We have a separate e-learning training video on how to determine the level of your office using SOV or CSV with earned hours. Part-time, remotely managed post offices, RMPOs, are offices evaluated at 5.74 earned work hours or less. Offices 16 and below earning 5.75 or more will be reclassified as level 18 offices. All RPMOs report to a host postmaster. From earned hours of 0-1.99, it is a two-hour office staffed by a PMR. From 2-3.99, it is a four-hour office staffed by a PMR. 4-5.74 earned hours is a six-hour office staffed by an EPM, or a career postmaster. There is one exception. Those offices 25 driving miles from the nearest postal operated, retail facility will be a six-hour office regardless of the actual earned hours 5.74 or below. So lets talk about the window hours. If you are evaluated at two hours, you will actually be open 2.17. Earned hours of 2-3.99 will be a four-hour office, but will actually be open 4.33. And those

offices that have earned hours of 4-5.74 will be open 6.5. This is Monday through Friday. Saturday could vary a little bit from this. RPMOs four hours or less will be a non-career PMR. The starting salary will be $11.76 an hour. They will earn leave at one hour for every 20 hours worked per pay period. Beginning in 2014, Postal Service will provide eligible PMR employees who meet the requirement healthcare coverage under the Affordable Act of 2009. These non-career PMRs may apply for vacant career positions. The RPMOs that are staffed with EPMs that earn 4-5.74 hours, they will be compensated at $12.30 per hour. That is for newly hired RPMOs. Current incumbent postmasters will be provided leave and benefits consistent with current policies. Newly hired RPMOs will earn leave in effect at the time of hire. Our current pay -- our current pay negotiations have a new leave policy within it. Once the pay package for FY 11 through FY 15 is rolled out, then that leave policy will be in effect for any newly hired RPMO. EPMs can apply for other positions consistent with standard Postal Service policy. Post offices 16 and below that earn 5.75 or more will be upgraded to EAS 18 and above offices. Incumbent postmasters will receive upgrades and pay raises that are consistent with standard postal service policy. Post offices 18 and above becoming host post offices to RPMOs will receive upgrades and pay raises consistent with the current work service credit 150 policy. So lets summarize the post plan. Faced with the alternatives, we have protected universal service. We have protected rural post offices in this country. We have kept 17,728 jobs within our structure. We worked very hard to protect the impacted postmaster first and foremost, and will continue to do so. As I said at the start, there will be some changes and many more questions that come up as the Postal Service introduces the plan to the public, congress, and goes through the PRC advisory. The League will continue to work with postal headquarters to minimize the impact of future changes to postmasters. As changes roll out on the post plan, stay tuned to our broadcast email and our website for any future updates. I want to thank you for your time. May god bless the League of Postmasters.