State Cuts Overtime Spending by $37 Million

Connecticut government agencies cut overtime costs by $37.1 million in 2016 compared with the previous fiscal year, a critical step toward much-needed, long-term state spending reforms.
The Office of Fiscal Analysis reports the state spent approximately $219 million on overtime in 2016, or 14.5% less than fiscal 2015 when costs hit an all-time high of $256.1 million.

However, FY 2016 still represents a 9% increase since 2010, the year before Governor Dannel Malloy directed state agencies to cut overtime spending, setting a reduction goal of 10% or better.
This past fiscal year marks just the second time since 2010 that overtime costs decreased.
Overtime spending actually rose in 2011 and 2012, falling slightly the following year before jumping 14% in 2014 to $241.7 million.
The bulk of the 2016 overtime savings came from five agencies:

• Department of Correction: $21.4 million (23.9% decrease)
• Department of Developmental Services: $5.2 million (-10.3%)
• Department of Social Services: $3.4 million (-38.8%)
• Department of Children and Families: $3.2 million (-14%)
• Department of Emergency Services and Public Protection: $2.36 million (-11.3%)

Another 11 agencies reported increases in overtime spending, led by the Office of the Chief Medical Examiner, which saw a $151,389 (55.5%) rise.
The Department of Motor Vehicles and the Commission on Children were the only agencies that reported no overtime spending.

In last December's special budget session, the General Assembly approved a measure requiring OFA to regularly report on the use of overtime throughout state government.
The first report, released a month later, showed $119.1 million in overtime through the first six months of the fiscal year, on track to hit a total of $238 million.
Agencies then cut back over the last two quarters of 2016, with the highest percentage of savings coming in the final month.
State spending on overtime has a major impact on Connecticut's long-term fiscal health.
Many stakeholders, including CBIA and the Connecticut Institute for the 21st Century, are pushing for pension reform, including not counting overtime pay as wages in the last three years prior to retirement—the years on which pension calculations are based.
Controlling state employee pensions and retiree benefits—among the highest in the country—is a fiscal and economic imperative, with Connecticut facing billion dollar-plus budget deficits in 2017 and 2018.
Reducing the cost of government and Connecticut’s massive long-term liabilities is critical to restoring the state's economy and creating a stable environment for business investment and job creation.

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For more information, contact CBIA's Peter Gioia (860.244.1945) | @CTEconomist