The U.S. Postal Service has shaken up its Philadelphia-area management after a week of stories in the

Daily News

about late and missing mail deliveries.

Frank Neri, the Postal Service district manager for the Philadelphia metropolitan district, was replaced yesterday by Jim Gallagher, a veteran USPS manager, spokesman Paul Smith confirmed yesterday.

Gallagher "was postmaster here in Philly for six years," Smith said. "He's been in Philly virtually his whole career with extensive operational experience in both mail processing and operations."

Neri had held the post for more than three years, and presided over the opening of the Postal Service's high-tech mail-processing center in Southwest Philadelphia, which replaced the city's former sorting operation at 30th and Market streets.

Postal employees have told the Daily News of staff shortages and chaotic conditions at the plant. The American Postal Workers Union has accused managers of falsifying records about the volume of mail the plant handles in order to justify transferring employees to other facilities and restrictions on employee overtime.

Employees have reported similar problems in local post offices, including falsifying overtime records.

Asked if Neri's departure was related to the revelations in the Daily News, Postal Service spokesman Smith said that he didn't know but that postal managers "routinely can get assigned to other positions."

Smith said he did not know where Neri would be going.

Gwen Ivey, president of the Philadelphia-area local of the postal workers union, said yesterday that the problems with mail delivery won't be solved until the Postal Service adequately staffs its operations.

"The whole problem in Philadelphia is that there are not enough people in the system - from sorting to distribution, to window clerks at the stations, to delivery," Ivey said in a statement released yesterday.

"We can't get the mail to our public, or satisfy our customers at almost any level, because there just aren't enough of us," she said.

"And the problem is about to get worse because, instead of recognizing the extent of the crisis and fixing it, Philadelphia management is proposing to eliminate another 162 mail processors," she added.

She said she hopes to meet with Gallagher, Neri's replacement, on Monday.

On Oct. 24, Ivey filed a complaint with the USPS Office of Inspector General seeking an investigation of Philadelphia postal managers responsible for allegedly falsifying the daily mail count and hiding and destroying mail.

On Oct. 8, Neri announced that more than 800,000 work hours had been cut, representing a 23.7 percent reduction in overtime and a $27 million in savings.

This week, Neri called the Daily News stories "an embarrassment to dedicated employees."

But hundreds of customers told the Daily News about bad mail service, including bill-payers who were penalized with fees because payments never arrived, lab specimens and legal mail delayed, and watch parts destroyed or missing. *