Louisville’s new mayor, Greg Fischer, released a report today, indicating that taxpayers spend nearly $14 million a year on unplanned overtime pay for city workers; some of which can be reduced with better management and long-term changes to union contracts. This is significant, since the city is projecting a $12 million deficit in the current fiscal year ending June 30, and a $20-30 million deficit in next fiscal year.
Prepared by the city’s Chief Financial Officer and Director of Human Resources, the review found that more than one in five city employees increase their base pay each year by at least 15 percent with overtime – and some city employees are doubling their salaries. The overtime issues stretch across most city departments.
“With the serious budget problems facing our city, the old ways of planning and managing overtime need significant changes,” Fischer said. “Some overtime will always be necessary to keep the city operating, such as when a major snow storm or flooding hits; however this report shows that we have several opportunities to reduce costs.”
In total, the city spends $23 million on overtime each year. Scheduled overtime — that which is either contained in collective bargaining agreements or through state laws — accounts for about 32 percent of overtime, or $7.2 million.
For example, by state law firefighters work 56 hours a week and thus overtime pay is factored into paychecks. In the libraries, for example, anyone who works on Sunday receives overtime pay — even if that is the only day of the week they work — because it part of their contract.
Unscheduled overtime accounts for nearly $14 million and is spread across most city departments, and the report concluded that, if certain changes are made in the coming year, unplanned overtime could be cut by 10 percent in the new fiscal year, resulting in a $1.3 million savings. If long-term changes are made to union contracts in the coming three years, unscheduled overtime could be reduced costs by up to 30 percent.
The report highlighted that employees can work fewer than 40 hours of regular time a week but still be paid overtime because sick and vacation time count as time worked under many union contracts. About 25 percent of unscheduled overtime was worked by employees who also used sick time in the same pay period in which they earned overtime.
The report concludes that three of the factors driving overtime include:
- City departments being understaffed yet still expected to meet the same levels of services as years past;
- A delay in filling vacancies. It can often take two to six months to fill openings in city government, which means other employees have to work overtime to cover for vacant positions;
- Collective bargaining agreements which allow for sick, vacation and other leave to be considered as time worked. Those agreements are not in line with the federal Fair Labor Standards Act, which recommend overtime be earned after 40 hours worked.
“Department managers rely on overtime to accomplish the expectation of ‘doing more with less’ which has been our mantra for over 15 years,” the report states. “As budgets continue to shrink, we must establish realistic expectations for service delivery.”
WHAS-11’s Adam Walser reports:
The report makes eight recommendations for reducing overtime. The short-term items, those which can be accomplished during the next six to 12 months, include immediate training for city leaders on how to better manage overtime and review of the hiring process to determine ways to reduce delays. Longer term recommendations including changes to personnel agreements including, where applicable, negotiating union agreements.
A large percentage of Louisville city employees is unionized, and today’s announcement by Mayor Fischer is sure to spark a response from the unions. Of the more than 1,200 employees compensated in excess of 15 percent of earnings, all by 35 are union members. "These practices have been permissible for decades and accepted for decades, but the times have changed," said Fischer.
Mayor Fischer has indicated that he will be meeting with union representatives to ask for new and amended agreements to handle this problem, and predicted dire consequences if an accommodation cannot be reached. "There have been some cities that declared bankruptcy. There are others that are teetering on the edge of bankruptcy. We are not going to allow that to happen her in our city. So we have to take action," said Fischer.
Stay tuned for picket signs around Metro Hall.
Read the Overtime Report, 7 pages, .pdf
Read the list of overtime payments, 19 pages, .pdf
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