2021 State Overtime Spending Third Highest on Record

Connecticut state employee overtime spending increased 2.2% in fiscal 2021 to $239.9 million, the third highest on record.

The General Assembly’s nonpartisan Office of Fiscal Analysis’ FY 21 Agency Overtime Report shows costs increased more than $5 million last year despite fewer employees claiming overtime.

Agency overtime costs peaked at $256.1 million in 2015, falling to $219 million in 2016 and a record low $204.4 million in 2017.

Overtime spending has increased in every year since, hitting $228.2 million in 2018, $234.3 million in 2019, and $234.9 million last fiscal year.

The March 2021 CREATES report commissioned by the Lamont administration to evaluate workforce efficiency and identify potential spending reductions found Connecticut spends a higher share of payroll on overtime than neighboring states.

Overtime represents 10.9% of Connecticut’s total state payroll, compared with 5% in Massachusetts, 4.7% in New York, and New Jersey’s 4.2%.

Taxpayer Consequences

As overtime is allowed as a factor in calculating state employee pensions, the failure to control those costs drives up Connecticut’s long-term liabilities, with major implications for taxpayers.

Connecticut has almost $92 billion in long-term, unfunded liabilities—a $25,513 burden for every resident—including $41 billion in state employee pension obligations.

Those unfunded liabilities account for about one-third of the state’s annual budget, eroding spending and resources for core priorities such as education, healthcare, transportation, and municipal aid.

“The state must bring these costs more in line with neighboring states.”

2021 CREATES Report

The CREATES (Cliff Retirements Adding Efficiency, Accountability, and Technology to Economize State Government) report identified four main drivers of overtime: “suboptimal” scheduling, statutes and labor rules, agency vacancies, and employee absenteeism.

“The work rules restrictions agreed with the unions and legislation can lead to extremely high fringe benefit costs (e.g., for overtime, vacation leave, workers’ compensation, and perks),” the report notes.

“The state must bring these costs more in line with neighboring states, such as Massachusetts and New York, where the levels of overtime for the same types of services are lower.”

Cost Savings

The report found that workers’ compensation was the largest driver of absenteeism and overtime costs, adding that “reducing absenteeism from W.C. can free OT capacity.”

“Absenteeism rates for Connecticut state employees are high relative to the private sector and to other states’ governments,” the report notes.

“Additional investment in detecting and investigating fraudulent use of leave time would result in a significant decline in overtime.”

CREATES Report

“Additional investment in detecting and investigating fraudulent use of leave time would result in a significant decline in OT.

“Similarly, case management can help those employees who are injured recover faster and return to work sooner.”

The report adds that modernizing workforce management, capping pensionable overtime, and improving hiring processes and oversight of overtime and workers’ compensation practices “could generate $70 million to $100 million in cost savings and improve conditions for state employees.”

Overtime Spending: Top Five Agencies

Department	FY 2021 Overtime	FY 2020 Overtime	$ Difference	% Difference
Correction	$91.64 million	$78.78 million	$12.86 million	16.3%
Mental Health & Addiction Services	$50.9 million	$55.89 million	($4.99 million)	-8.9%
Developmental Services	$37.23 million	$39.15 million	($1.91 million)	-4.9%
Emergency Services & Public Protection	$32.14 million	$26.99 million	$5.16 million	19.1%
Children & Families	$10.77 million	$18.03 million	($7.26 million)	-40.2%

Source: State Office of Fiscal Analysis.

Prison Population Drops, Costs Rise

Three of the five agencies that account for 93% of all overtime spending posted decreases last year, while the Department of Correction and Department of Emergency Services and Public Protection both saw significant increases.

DOC costs jumped $12.9 million (16.3%) to a record $91.6 million last year, with 4,999 agency employees—226 fewer than 2020—earning an average $18,332 in overtime.

Annual DOC overtime costs continue to climb despite the state’s declining prison population—down 10% in fiscal 2021 to 9,010, a three-decade low.

Connecticut’s prison population has fallen 37% since 2017 while DOC overtime spending has risen 48%.

Since 2017, the number of people incarcerated in Connecticut prisons has fallen 37% while DOC overtime spending has risen 48%.

The CREATES report found that overtime accounts for 18% of DOC’s annual payroll, citing staffing levels and over capacity as factors.

The report recommends returning DOC staffing to pre-COVID levels and shutting three of the state’s prisons—capacity in 2020 was at 56%—to help address soaring overtime costs.

Other Agencies

The Department of Mental Health and Addiction Services’ annual overtime costs declined by $4.99 million (-8.9%) in fiscal 2021 and have increased 6% ($2.9 million) since 2017.

Overtime fell 4.9% (-$1.92 million) at the Department of Development Services last year and has decreased $6.37 million (-14.6%) over the past four years.

The CREATES report notes that DDS cut overtime spending—which accounted for 20.9% of the agency’s payroll—by 10% in 2020 by taking a number of steps, including filling vacancies and labor negotiations.

DESPP overtime spending increased $5.16 million in 2021 and is up 114% ($17.15 million) over the last four years, or about 20% of the agency’s total payroll.

Addressing state police staffing levels and reforming labor rules would reduce overtime spending at the agency according to the CREATES report.

18,092 state employees—234 fewer than fiscal 2020—were paid an average $13,262 overtime last year.

The Department of Children and Families cut overtime costs by 40.2% in 2021 (-$7.26 million) with spending down 50% (-$10.93 million) since 2017.

Outside the top five, 19 state agencies saw increases last year, led by the Department of Social Services, where overtime rose $1.89 million (61.7%). Fourteen cut spending, led by the Judicial Department (-$748,561; -36.7%).

Overtime costs at the top five state agencies have increased $32.34 million (17.4%) since fiscal 2017 while total overtime spending at all other departments has risen $3.23 million (23%).

Overall, 18,092 state employees—234 fewer than fiscal 2020—were paid an average $13,262 overtime last year, compared with fiscal 2017, when 17,504 workers were paid an average $11,675.

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For more information, contact CBIA’s Ashley Zane (860.244.1169) | @AshleyZane9.