If a measuring tape (or plumb line) is held at the center back neck and allowed to hang it will hang in a straight line until it makes contact with your derriere. It you held the tape against your body to take a measurement the distance would likely be longer. Garments which hang straight down from the neck usually need to be corrected. This method transfers the amount removed to the top of the garment. It is easy to do and will maintain the correct grain line (both vertical and horizontal grainline) in the finished garment. The cross grain of your hem will remain perpendicular to the lengthwise grain below the alteration.
To determine how much fabric to remove, pin out the excess fabric from the small of the back until the garment is hanging plumb. This means that the hem is not drooping at the center back. The side seams are hanging plumb. And/or there is no bunching of fabric at the back waist.
Measure the amount of fabric that was pinched out.
On the pattern draw a line perpendicular to the lengthwise grain (at waist level) from the center back to the waist line.
From the neck shoulder junction draw a line parallel with the center back down thru the first line you drew
Trace the stitching line over the shoulder and down to the armhole notch on the back pattern only.
Cut on line from center back waist to line that runs up to the neck shoulder junction, down the shoulder, to the armhole notch. At the locations of the blue arrows cut to the stitching line but not through the stitching line.
Slide and overlap the center back section down by the amount you need to remove. The upper back section will slide up and under the shoulder seam allowance. The armhole seam allowance will reposition itself as needed.
Source: Fitting & Pattern Alteration (1992)by Liechty, Pottberg, & Rasband pages140-143.