fying period. The Comptroller General has ruled (B-148024, March 6, 1962) that under the present provision, such employees are excluded from protection. This exclusion is inconsistent with the basic intent of the salary protection law, which is to provide a 2-year period for adjustment to a lower salary standing. Protection should, therefore, be available to an employee on the basis of the highest salary standing held for the 2-year period. The amendment to subsection (c) provides a method of determining the protected salary rate in the case of employees who have been promoted or advanced in salary standing within the 2-year period. Under this provision, the protected rate is the rate which he would have attained in the lowest salary standing held during the 2-year period if no upward change in salary level had occurred during the 2-year period. Subsection (b) precludes collections from employees for payments made contrary to the interpretation of the Comptroller General discussed above. It also makes the extension of coverage effective immediately. CHART I POSTAL FIELD SERVICE CONVERSION RULES Each employee goes to same numbered rate in his level as his present rate; and At some rates, he moves to a higher rate if receiving longevities. Employees in PFS-1 through PFS-5: Advance one rate for each longevity. Employees in PFS-6 through PFS-18: If at seventh rate: Move to eighth rate if receiving one, two, or three longevities. At other rates or levels, longevities do not affect conversion. An employee who is not at the top scheduled rate of his level and who does not move to a higher rate because of longevities, retains credit for service since his last step-increase toward his next step-increase. Example: An employee not receiving longevities and at the first through sixth rate of PFS-1 through PFS-18 with 6 months of service since last step-increase has this service credited toward his next increase instead of full 3-year new waiting period. Employees being paid at rates higher than new rates under above rules are protected against loss. Mr. MURPHY. This concludes my prepared statement, and I apologize for taking so long to deliver it, but it is a little complex in certain areas, and I wanted to try to get the presentation in the record before we had questions. Thank you most kindly, Mr. Chairman. (The report of the Comptroller General, referred to above, follows:) REPORT ON REVIEW OF SELECTED RURAL DELIVERY SERVICE ACTIVITIES, The General Accounting Office has made a review of selected rural delivery service activities at the Post Office Department's Washington headquarters; the Cincinnati, Dallas, Seattle, and Wichita postal regional offices; and selected post offices in these regions. The review was made pursuant to authority contained in the Budget and Accounting Act, 1921 (31 U.S.C. 53), and Public Law 86-682 (39 U.S.C. 2206). The scope of our review, which was directed primarily to the identification of matters that appeared to warrant attention, is described on page 167 of the report. GENERAL COMMENTS Rural delivery service provides postal service, to the extent practicable, to individuals in outlying suburban and rural areas of the United States not served by city delivery or start route1 services. The rural delivery service is conducted primarily by rural carriers operating from all classes of post offices. Rural carriers use their own vehicles to deliver and collect mail from their patrons and provide additional services, such as the sale of postage stamps and the handling of money orders. A few rural carriers also transport mail between smaller post offices when other means of mail transportation are not available. As of June 30, 1960 and 1961, the Department employed about 30,000 regular and 28,000 substitute rural carriers, who served 31,000 rural routes totaling about 1.8 million miles. These routes provided service for about 9.2 million families, or 34.1 million individuals, through about 7.8 million rural boxes. During fiscal years 1960 and 1961, the rural delivery service costs were as follows: Star routes are operated by commercial carriers under contracts for the transportation of mail between postal units, and such contracts may provide for box delivery, collection, and other services normally furnished by rural carriers. The increase in cost during fiscal year 1961 was due, primarily, to a salary increase provided by Public Law 86-568, effective July 9, 1960. The Assistant Postmaster General, Bureau of Operations, is responsible for developing and implementing policies and instructions relating to delivery and collection operations of rural carriers. The policies and instructions relating to personnel administration, including compensation, are developed by the Assistant Postmaster General, Bureau of Personnel. At the regional level, the postal installations manager, a subordinate of the regional director, is responsible for implementation of the Department's instructions on rural delivery service activities. The Post Office Department officials responsible for the rural delivery service activities during the period covered by our report and the present incumbents of the positions are listed below. Our findings and recommendations are summarized below and discussed in detail in later sections of this report. Also included in the report are the Department's comments on these matters, transmitted to us by the Deputy Postmaster General in his letter dated January 8, 1962. Rural carrier basic salary compensation system Rural carrier basic salary compensation system results in wide variances in hourly earnings of rural carriers.—The rural carrier basic compensation system— which provides for a fixed amount of compensation regardless of route length plus an additional amount determined on the length of the route-results in wide variances in the hourly earnings among rural carriers. Our test of the hours used, in a representative 1-week period, to serve about 10 percent of the rural routes in the four postal regions visited by us showed that the estimated earnings of rural carriers ranged from $1.47 to $10.22 an hour, and averaged about $2.98 an hour. (We used step 1 of the rural carrier salary schedule to place the carriers on a comparative basis.) In contrast, other postal field servire employees who perform duties similar to rural carriers are paid on a time hasis at a uniform rate of $2.09 an hour (PFS-4, step 1). The basic rate of compensation for rural carriers appears to have little relationship to the time required to perform service except that consideration is given to the time required to perform service when heavy-duty allowances are granted. The salaries of most regular postal employees, other than rural carriers, are usually related to time required to perform their duties. We believe that the rural carrier pay scale should give adequate consideration to the time required to serve the route. Many factors other than the length of the route, such as number of patrons and pieces of mail and road and weather conditions, influence the time required to serve rural routes. Therefore, we believe that a pay rate structure that gives adequate cognizance to the time required to serve the route would be more realistic and more equitable than the system now used. The Department has also expressed doubt as to the reasonableness of the rural carrier compensation system and is evaluating the relationship between the work requirements and the salaries of rural carriers. Substitute and certain temporary carriers' salaries based on creditable years of service of regular rural carriers they are replacing.-Substitute carriers and certain temporary carriers receive the basic salary authorized for the regular 84357 0-62-pt. 1--11 rural carriers they are replacing, including longevity compensation to which the regular carriers may be entitled (39 U.S.C. 3543) rather than a salary based on their own creditable service. This method can result in as much as $1,134 a year additional compensation that substitute or certain temporary carriers may receive when the regular carriers have 25 years of creditable service. In contrast, salaries of other temporary rural carriers serving routes on which there are no regular carriers assigned and salaries of other substitute employees in the postal field service are based on the years of their own creditable service. Because most regular rural carriers have a considerable amount of creditable service, their salaries are near the top of the pay scale. Consequently, the basing of substitute and certain temporary carriers' salaries on the absent regular rural carriers' creditable service results in paying substitutes and certain temporary rural carriers on the basis of creditable years of service they have not earned and is costly to the Government. Moreover, this method is inconsistent with the treatment of other postal field service employees. Inequities in method of compensating substitute and certain temporary rural carriers for holidays.-We noted further that inequities result from the method of compensating substitute and certain temporary rural carriers for holidays. The provision that substitute and certain temporary carriers should receive the same salary as the absent rural carrier authorizes payment to the substitute carrier, in addition to the regular carrier, for a holiday when the substitute serves the same route on the day before and after the holiday. In contrast, when this condition is not met they do not receive holiday pay. Other substitute postal field service employees are paid at hourly rates which include a pro rata factor for holidays. We believe that payment on a pro rata basis would be more equitable, and we estimate that the cost to the Government would have been about $150,000 less during fiscal year 1960 if substitute and temporary rural carriers had been paid for holidays on a pro rata basis. We are recommending that, in connection with the Department's evaluation of the relationship between the work requirements and the salaries of rural carriers, the Postmaster General consider the inequities of the rural carrier pay structure disclosed by our review and on the basis of such consideration and evaluation propose to the Congress legislation to correct inequities. The Deputy Postmaster General has informed us that the Bureau of Personnel completed its study of rural carrier compensation and that the study group's findings and recommendations, designed to correct the inequities of the rural carrier pay rate structure, were being reviewed with the employee organization concerned. He has informed us also that resulting proposed legislative changes would be coordinated within the Department to assure a system equitable for all carriers and one which would be simpler to administer than the present salary schedules." See pages 157 to 161 for detailed comments on these matters. Need for improved administration of rural route consolidation program There is a need for more effective administration of the Department's program for determining whether rural delivery routes, on which vacancies occur, should be consolidated with other nearby rural routes. Although each consolidation would have resulted in recurring savings of at least $3,200 a year, we noted cases where the Department's disapprovals of consolidations recommended by regional offices were made without adequate operational justifications. We noted also that the Department directed that some vacant rural carrier positions be filled before regional feasibility studies had been made to determine whether the routes could be consolidated. We noted further that the Department's criteria for use by the regions for determining the practicability of rural route consolidation are not sufficient and that the studies made by a region did not take into consideration important factors that affect the operational feasibility of rural routes. Because rural route consolidations are prohibited by law unless the regular carrier leaves the service, future opportunities for making consolidations, with the resultant savings in cost of operations, on these routes may not occur for a considerable period of time. On Feb. 20, 1962. subsequent to the preparation of this report, the President of the United States proposed to the Congress legislation regarding salary systems of the Federal Government including the rural carrier salary system. Among other things, the President proposed to compensate (1) rural carriers on a work requirement rather than on a mileage basis. (2) substitute rural carriers on the basis of their own years of creditable service, and (3) substitute rural carriers for holidays on a pro rata basis. We are recommending that the Postmaster General have definitive criteria established for determining the feasibility of consolidation of rural routes when a vacancy occurs and that the Department make those route consolidations which are operationally feasible. The Deputy Postmaster General informed us that the Department agreed that the guidelines provided for the use of the regions on consolidation of rural routes should be amplified. He informed us further that the Department would initiate a study to review existing procedures governing operation of the rural delivery service and to establish a program for its effective administration. Detailed comments on this matter appear on pages 161 to 164. Need for improved administration of certain aspects of rural delivery service There is a need for improved administration of certain aspects of rural delivery service. We noted cases of noncompliance with instructions and errors in application of instructions which resulted in unnecessary delays in adjusting payments of heavy duty compensation for personal services and in providing relief for overburdened carriers, and of errors in determining amounts payable to carriers for equipment maintenance allowances on heavy duty routes. Within the four postal regions visited, we noted cases where postmasters were not preparing route evaluations, where errors were made in the preparation of route evaluations, or where appropriate action was not taken when route evaluations disclosed adjustment of compensation was necessary. As a result, heavy duty compensation payments were in error and there were unnecessary delays in providing relief for overburdened carriers. Our review of heavy duty routes in two postal regions disclosed cases where postmasters made inaccurate computations of equipment maintenance allowances, inaccurate counts were made of the number of potential stops in determining equipment maintenance allowances, or action was not taken to adjust the equipment maintenance allowance when the annual inspection showed that adjustment was needed. As a result, there were numerous errors in payment of equipment maintenance allowances to the carriers on certain heavy duty routes. Although the amounts were relatively small, we believe that these cases are another indication of the need for more adequate administration of heavy duty rural routes. We are recommending that, to expedite the authorization or adjustment of allowances to carriers serving heavy duty routes, and to provide prompt relief for overburdened routes, the Postmaster General have the regional directors take action so that adequate periodic reviews of rural carrier trip reports and determinations of the number of potential stops are made and that adjustments of compensation are promptly made. The Deputy Postmaster General informed us that the Department had revised or would amend its instructions to clarify, make more explicit, and to emphasize the responsibilities of postmasters regarding overburdened and heavily patronized routes. He informed us also that the Department would initiate a study to review existing procedures governing operation of the rural delivery service and to develop a program which would require prompt positive action by postmasters and provide for followup by regional officials to assure effective administration of all activities relating to the rural delivery service. See pages 164 to 167 for detailed comments on this matter. FINDINGS AND RECOMMENDATIONS Rural carrier basic salary compensation system Rural carriers receive two basic types of remunerations-salary for personal services and equipment allowance for use and operation of their vehicles. Salary is based on route mileage and carriers' years of service. Equipment maintenance allowance is principally based on route mileage. The following discussion pertains only to the rural carriers' remuneration for personal services. Rural carrier basic salary compensation system results in wide variances in hourly earnings of rural carriers.—The rural carrier basic compensation system, which provides for a fixed amount of compensation regardless of route length plus an additional amount determined on the length of the route, results in wide variances in the hourly earning of rural carriers. Our test of the hours used to serve about 10 percent of the rural routes in the four postal regions visited by us showed that the estimated earnings of rural carriers ranged from $1.47 to $10.22 an hour, and averaged about $2.98 an hour. (We used step 1 of the rural |