Review of City Overtime Costs and Oversight September 2014

Audit Date: September 24, 2014
Audit Categories
  • Other
Controller: Alan Butkovitz
Audit Tags
  • Employee Benefits,
  • Finance,
  • Overtime

Executive Summary

For Immediate Release
Sept. 24, 2014

Contact: Brian Dries

Controller Butkovitz Finds Overtime Costs
Placing Heavy Burden on City’s Pension
City Controller’s study found $700,000 could have been saved from selected departments if additional staff were hired instead of paying costly overtime

Review of City Overtime Costs and Oversight

PHILADELPHIA – City Controller Alan Butkovitz today released a report of City overtime costs and oversight that found $700,000 could have been saved if there were additional staff to work regular shifts, instead of paying costly overtime.

Of the five city departments reviewed for overtime costs in 2013, there were 26 employees selected who earned a significant amount of their total earnings from overtime compensation. All but five of these employees earned more in overtime than their base salary during this year.

The Controller’s report determined that when employees within the City’s older pension plan, “J”, work the extra hours, it costs a staggering 219 percent more to pay for these employees due to the higher pension liability.

“Collectively, these departments could have saved the city hundreds of thousands of dollars if they had additional workers rather than paying expensive overtime,” said Butkovitz. “The hidden costs for payroll taxes and pensions drive up the overtime expenditures.”

In one instance, costs for a counselor in the Department of Human Services who is in the city’s older pension plan, amounted to nearly $220,000. If the department had hired another counselor instead of incurring the overtime, it would have expended only $58,000.

“While the premise has been to cut positions as a means to saving money, we found that this was not the case in 2013,” said Butkovitz.

For three of the five departments, which included Public Health, Human Services and Records, the Controller found that staffing levels were decreased over the years, but the mandatory work requirements remained the same. This consisted of Human Services maintaining child-care staff to youth ratios at the Philadelphia Juvenile Justice Service Center and Public Health employees tasked with constant cleaning at the Health Centers and the Sexually Transmitted Disease Center.

“These are tasks that the City must maintain to provide public safety and proper health conditions at our facilities,” said Butkovitz. “However, management has a fiduciary duty to taxpayers to control costs and ensure services are being provided in the most economic manner.”

“City agencies and the Administration need to create useful productivity indicators to measure the efficiency with which staff complete tasks and ensure that overtime needs are real,” said Butkovitz. “While there is no one perfect system that fits all circumstances, agency management needs to be mindful that overtime is costly.”

The Departments selected for the Controller’s review of overtime costs included the Department of Health, Department of Human Services, Managing Director’s Office, Records Department and the Philadelphia Water Department.