State Overtime Usage Could Reach $238 Million in FY 2016

01.06.2016
Economy

Good state fiscal management is essential to building employer confidence that Connecticut is the right place for long-term business investments that create jobs and wealth in our state. That’s why it’s worrisome that several state agencies continue to run up massive employee overtime bills.

overtime

Two state agencies accounted for more than half the employee overtime bill in the first six months of the fiscal year.

In last month’s special session, the legislature required its nonpartisan Office of Fiscal Analysis to report regularly on the use of overtime throughout state government.
The first such report was just released, and it should be setting off alarm bells throughout the Capitol.
Overtime can be a valuable tool in managing workload and workforce in both the public and private sector.
In some cases it can be preferable to creating additional positions that carry salary and benefit costs.
Thankfully, the legislature has given itself this useful tool to pinpoint the actual statewide OT costs so that it and the Malloy administration can make more informed decisions.
Here’s what the report found:
OT used from July 1 to December 30, 2015, totaled $119.1 million in charges to the General Fund.*
More than 17,130 employees used overtime in that period—equating to an average of $6,951 per employee.
If these figures are annualized across state government, assuming the same rate of usage to the end of the fiscal year on June 30, 2016, OT costs will swell to $238 million—with an average payout of $13,902 per employee.
Some agencies use more OT than others, and the OFA report pinpoints the highest OT payout per employee is at the Department of Mental Health and Addiction Services.
At the current rate, each DMHAS employee using OT could build up $21,738 in OT earnings on top of their regular pay on an annualized basis.

If these figures are annualized, overtime costs will swell to $238 million, with an average payout of $13,902 per employee.

Historically, some legislative reports gather dust. With a potential impact of $238 million, this report should be top of desk and top of mind in the legislature and the governor’s budget office so that these end-of-year numbers do not come to pass.
The OFA report follows the passage in June of one of the biggest tax increases in state history.
In addition, it comes at a time when reducing the cost of state government and Connecticut’s massive long-term liabilities for state employee pensions and retiree benefits is a fiscal and economic imperative.
Against this backdrop, many stakeholders—including CBIA and the Connecticut Institute for the 21st Century—have advocated reforming the state pension system by, among other things, not counting overtime pay as wages in the last three years prior to retirement—the years on which pension calculations are based.
This would prevent so-called pension spiking—running up overtime hours during the final three years of a state employee’s tenure.
Certainly, some level of overtime is legitimate, but so far, there hasn’t been enough analysis to determine how much is legitimate and how much is due to pension spiking or other questionable practices.
* The report did not track OT in the Special Transportation Fund, which is chiefly the Department of Transportation. DOT overtime can add tens of millions of dollars to total state overtime spending, with the highest amounts coming during heavy-snowfall winters, when plow crews work long hours to clear state roads.
 

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