The most familiar part of USPS’s retail network is the post office. In fiscal year 2015, there were approximately 26,600 post offices across the country, largely unchanged from fiscal year 2005 (see fig. 1). Post offices are a key part of USPS’s revenue stream—accounting for about 56 percent of USPS’s total retail revenue of about $19 billion in fiscal year 2015. Prior to the introduction of POStPlan, post offices were each managed by postmasters. USPS also uses other facilities to provide key services, such as selling stamps. Over the past decade, the USPS workforce has declined and changed in composition, but continues to account for almost 80 percent of USPS’s total operating costs ($58 of $74 billion in fiscal year 2015). From fiscal years 2005 to 2015, USPS’s workforce decreased from 803,000 to approximately 622,000 employees, or by about 23 percent (see fig. 2). During this period, career employees decreased (from approximately 704,700 to 491,900 or by about 30 percent), while non-career employees increased (from approximately 98,300 to 130,000 or by about 32 percent). Career positions—which are generally full time but also may be part- time—are eligible for annual and sick leave, health insurance, life insurance, and retirement benefits. Non-career employees supplement the career workforce and receive lower wages. They are not eligible for life insurance or retirement benefits, but some are eligible for specified types of health insurance upon hiring while others are eligible after serving at least 1 year. About 90 percent of USPS’s career employees—and some types of non- career employees, such as Postal Support Employees—are covered by collective bargaining agreements and represented through unions. APWU, one of USPS’s largest unions, represents over 200,000 USPS employees in the clerk, maintenance, motor vehicle, and support services employee “crafts.” The USPS-APWU 2010-2015 Collective Bargaining Agreement (CBA) contains various provisions that specify rules associated with the performance of bargaining-unit work (such as staffing the retail window and placing mail in customers’ post office boxes) by USPS employees. For example, the agreement specifies that USPS should assign new or revised positions that contain non-supervisory duties to the most appropriate employee craft and that USPS should consult with APWU before doing so. Two associations represent USPS’s postmasters, who are not covered by CBAs: NAPUS and NLPM. USPS is required to consult with these associations on planning, developing, and implementing certain programs and policies—like POStPlan—that affect them. In May 2012, USPS announced the POStPlan initiative. POStPlan sought to right-size USPS’s retail network of—at the time—26,703 post offices. Generally, POStPlan had two elements: reduce retail window service hours at some offices to better match actual customer use, and change the staffing arrangements at those offices to reduce labor costs. According to USPS officials, they informed APWU of POStPlan in May 2012, after announcing the initiative. To evaluate which offices may be appropriate for hour reductions, in December 2011, USPS analyzed the daily workload—as a proxy for customer use—at 17,728 offices. Through this analysis, USPS determined that it could reduce hours at 13,167 of these offices from 8- to 2-, 4-, or 6-hours of retail service a day. Post offices are classified into “levels” and, under POStPlan, these reduced-hour offices would be classified into a new set of levels that correspond with the number of hours of retail service they would provide per day (i.e., Level 2, Level 4, and Level 6). USPS also determined that the remaining 4,561 offices it analyzed should continue to provide 8 hours of retail service a day; USPS classified these offices as Level 18 offices. USPS planned for most of the reduced-hour offices to be managed remotely. That is, under POStPlan, Level 2, 4, and 6 offices would be considered “remotely managed post offices” (RMPO) and they would report to a postmaster at a Level 18 or above “administrative” post office. USPS created an exception for offices it considered especially isolated. These offices would not be remotely managed and would, instead, be called “part time post offices” (PTPO); all PTPOs would be Level 6 offices. According to USPS officials, Level 2, 4, and 6 RMPOs and PTPOs are the “POStPlan post offices;” Level 18 or above offices are not considered POStPlan post offices. USPS plans to review workloads at POStPlan RMPOs annually and, based on these reviews, may increase or decrease the number of hours of retail service at these offices. USPS also plans to review the workload at the Level 18 and above offices through USPS’s separate, pre- POStPlan processes, and based on the results, USPS may designate any qualifying office a POStPlan post office and reduce its hours accordingly if its workload justifies a reduction in hours. Regarding the staffing arrangements at these offices, USPS planned to replace career postmasters in the POStPlan post offices with less costly non-career or part-time employees, as shown in fig. 3. Level 18 offices would continue to be staffed by career, full-time postmasters. On July 9, 2012, APWU filed a labor grievance claiming the changes introduced by POStPlan violated provisions of the USPS-APWU 2010- 2015 CBA. USPS officials said they had the authority to modify the POStPlan initiative during the grievance procedure but decided to proceed with POStPlan implementation because they believed it was the proper operational decision for its customers, employees, and USPS. As a result, USPS continued with POStPlan implementation until September 2014, when—as discussed later in this report—an independent arbitrator issued a decision that resolved the grievance. Prior to the issuance of the POStPlan arbitration decision in September 2014, USPS had taken steps to reduce hours at almost three-quarters of POStPlan post offices. After announcing POStPlan in May 2012, USPS began implementation by reviewing its determinations on: (1) which offices would have reduced hours, (2) which were considered especially isolated, (3) which would be reclassified as Level 18, and (4) which would become administrative offices. In July 2012, USPS finalized those decisions and communicated the results to relevant field personnel, who had the opportunity to advise on any potential concerns that could not be identified at the USPS headquarters level. In September 2012, USPS began surveying residents of the affected communities to give them an opportunity to provide input before reducing their office’s hours. The survey asked whether they preferred USPS continue with its plan to reduce hours or whether they preferred USPS close their office and institute alternatives, such as relocating post office box service to a nearby office. In October 2012, USPS began holding meetings in the communities to communicate the survey results and consider feedback. Thereafter, USPS continued to conduct meetings and reduce hours at offices on a rolling basis, with the first reductions occurring in November 2012 and most occurring within the first year of POStPlan’s announcement (see fig. 4). Specifically, from November 2012 through August 2014, USPS reduced hours at 9,159 post offices, or at about 72 percent of the almost 12,800 that would ultimately have hours reduced under POStPlan. According to USPS officials, they implemented POStPlan on a rolling basis to make building modifications to some offices (to ensure that customers could maintain access to their post office box even with reduced hours) and to minimize the effect on POStPlan-affected postmasters. For example, implementing POStPlan on a rolling basis allowed affected postmasters more time to find reassignment opportunities, as described below. In addition to reducing hours at over 9,000 of the POStPlan post offices, USPS simultaneously took steps to make the necessary staffing changes and provide options for postmasters to separate from USPS or be reassigned to other positions ahead of a planned “reduction in force” (RIF). USPS announced a $20,000 separation incentive offer for all postmasters in May 2012, followed by a $10,000 offer in July 2014 to those POStPlan-affected postmasters who did not accept the first incentive offer. In May 2012, USPS also began periodically posting vacancies that POStPlan-affected postmasters could apply to, such as positions that became available as postmasters retired through the May 2012 separation incentive. Postmasters in offices set to become Level 6 offices could also opt to remain in their office and accept a demotion to the new, part-time position. According to USPS officials, as postmasters separated from USPS or accepted reassignments, USPS filled the positions according to its new POStPlan staffing arrangements. USPS initially intended to complete POStPlan implementation by September 2014, with any POStPlan-affected postmasters who had not separated from USPS or been reassigned to an alternate position as of this date to be separated via RIF. However, USPS extended this deadline twice during implementation—first to January then February of 2015—in order to, according to USPS officials, find reassignment opportunities for as many POStPlan-affected postmasters as possible. By September 2014, about 4,100 POStPlan-affected postmasters had separated from USPS and about 5,800 had been reassigned to a different position.