Malloy orders crackdown on state overtime costs
http://www.rep-am.com/news/connecticut/580902.txt
Sunday, August 28, 2011 3:12 AM EDT
BY PAUL HUGHES REPUBLICAN-AMERICAN
HARTFORD — State workers made $911 million in overtime pay in the last four years, including more than $230 million last year.
Now, Gov. Dannel P. Malloy is ordering agency heads to cut down on overtime costs. While he is not setting specific targets or limits, the governor’s budget director says an overall reduction of 10 percent is achievable.
Agencies, boards and commissions have already spent $42.2 million on overtime since the current fiscal year started on July 1.
Malloy is turning his attention to overtime because state employee unions have just approved a package of concessions and labor savings. He is requiring each agency to submit a plan for reducing overtime to his budget office
The Office of Policy and Management must approve each plan, and its staff will be tracking each agency’s overtime spending and reporting on its progress toward meeting its reduction goal every four weeks.
“I have said we have got to able get to 10 percent statewide overall, but probably we can go more than that. I just don’t know how much more. It will depend on the agencies,” said Benjamin Barnes, the head of OPM.
The governor announced his overtime directive during a meeting of agency heads last week. Barnes anticipates OPM will send out instructions to agencies soon. His staff will help each agency devise its plan.
“We want to work with each agency to have a real plan that we can hold them accountable,” Barnes said.
OPM will also be informing agencies whenever an employee’s overtime pay exceeds 50 percent of his or her base pay, or an agency’s overtime spending surpasses 5 percent of its payroll. In each instance, the agency will be required to justify that spending.
“I think I am not trying to discourage overtime where it is appropriate. I am trying to discourage overtime where it is inappropriate,” Malloy said.
He also is trying to reduce pension costs because overtime is included in pension calculations. The recently ratified labor agreement extends this practice through 2022.
“I have never hidden that I was concerned about overtime expenses, particularly in a system where overtime counts for pension credit,” Malloy said. “In a system where that does not happen, overtime is frankly a good investment. In a system where it is counted in a pension calculation, it can be overly burdensome.”
Barnes said OPM is going to evaluate the implications of overtime on pensions.
Overtime costs vary. The largest departments with 24-hour operations have the highest costs, while some smaller agencies have next to none.
The Department of Correction is the overtime leader. Correction officers and other agency employees collected $264 million in overtime in the last four years.
The Department of Mental Health and Addiction Services spent $171.5 million on overtime since 2008, and the Department of Developmental Services shelled out $189.3 million.
The predecessor of the Department of Emergency Services and Public Protection had a four-year total of $98.4 million. The state police account for the overwhelming majority of that overtime, including $17 million last year.
Workers in the Department of Children and Families got $79.3 million in overtime in the last four years. The Department of Transportation paid another $64.3 million.
The Judicial Department is also a 24-hour operation. It spent $15.1 million on overtime since 2008.
The Department of Correction and the administration are taking steps to reduce overtime costs. Last year, the department spent $71.2 million on overtime. This year, overtime is $14 million and climbing.
The administration is trying to negotiate new work schedules with unions representing correction officers and supervisors. The two-year, $40.5 billion budget assumes savings of $10 million from realigning shifts.
“For more than three years, the agency has required managers to scrutinize and justify the use of all overtime,” said Brian Garnett, a spokesman for the department.
He noted the Gates Correctional Institution in East Lyme and the Bergin Correctional Institution in Mansfield are closing.
“This alone will have a marked decrease on the usage of overtime,” he said.
Garnett said the department is redeploying approximately 200 staff members from Bergin. This should also reduce overtime in other prisons, he said. The department is also reviewing the usage and scheduling of vacation time.
Overtime rules also vary according to union contracts. Barnes said each agency’s management team must pay attention to contract terms and take advantage of whatever allowances are made for controlling overtime.
“I will tell you that it is absolutely correct that the collective bargaining agreements tend to make it difficult to control how individuals get overtime, but if you reduce the aggregate amount, then you reduce the amount individuals have available to them,” he said.
If successful, this strategy could also help reduce pension costs because workers will have less overtime to count toward pension calculations.
State employees on the verge of retirement have routinely been able to use overtime to inflate their pay to increase their pensions. Some union contracts encourage pension-spiking.
Pensions are calculated on an average of employee’s three highest paid years of service in the pension plans that cover current workers. A newly established pension plan for workers hired after July 1 uses a five-year average.
The Connecticut State Police Union’s contract requires overtime be offered based on seniority. A sergeant who made $245,140 was the highest paid member of the state police in 2010. He made nearly $150,800 in overtime on top of his regular yearly pay of $85,000. Other payments made up the rest.
Upon retirement, this sergeant is going to receive a significantly higher pension than he otherwise might have received because of overtime.
The administration sought to remove overtime and other payments from pension calculations during the negotiations with union leaders on the recently ratified labor savings deal. It did not get that concession.
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