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You have probably seen news recently about the amount of overtime being paid by the City. The current kerfuffle was prompted by a report from the Controller’s Office to the Budget and Fiscal Affairs Committee, which warned that overtime for the current fiscal year is on track to be the highest on record and will exacerbate the current budget deficit.
Generally speaking, relying on overtime is a poor business practice. First, most overtime pay must be paid at a premium rate. Also, most managers will tell you that the productivity of workers declines when pressed to work longer hours, something that has been supported by most academic research.
The City’s reliance on overtime is nothing new. According to the Monthly Operating and Financial Reporters, the City has consistently clocked over 1,000 full-time equivalents (FTEs) in overtime for the past twenty years. However, it began to ramp up significantly in the last administration, reaching a high of 1,862 FTEs last year. While there are still three months left in the current fiscal year, it appears that overtime may top 2,000 FTEs this year.1
Three departments account for almost all of the overtime: police, fire, and solid waste. Here are the year-to-date numbers through December.
There have been two fundamental reasons for the City’s reliance on overtime. The most important is the inability to recruit. That has been a chronic problem with the police and solid waste departments primarily because fewer young people are interested in the types of jobs available in those departments. The shortage in the fire department was more the result of the previous administration’s feud with the firefighters and a toxic contract dispute.
The second reason is unexpected and exogenous events, such as hurricanes. The Controller’s report notes peaks in overtime, which occurred in the aftermath of the Derecho and Beryl storms. You notice a similar spike in FY2008-2009, which corresponds to Hurricane Ike. In addition, the current administration was forced to conduct an extensive investigation after it was discovered that the police department has dropped over a quarter of a million cases with little or no investigation.
With the exception of the years during the Parker administration, the City’s budgets have consistently and grossly underestimated the amount of overtime the City would spend in the upcoming year. During the Turner administration, its budgets consistently underestimated the number of overtime FTEs, averaging a 33% discrepancy, with the last budget missing the mark by 47%. However, the City is on track to miss the budget projection this year by a whopping 63%, primarily due to the two storms, the HPD scandal, and, I suspect, the fact that a newly elected City administration has only a few months after taking office to put together its first budget.
However, even if we exclude exogenous events, the City must do a better job of managing its overtime. Part of that would be to adopt a realistic budget, ensuring we do not have unanticipated overtime costs at the end of the year. Additionally, we should set aside a portion of our budget each year to cover the inevitable costs associated with weather events. Given the financial exigencies the City is facing, we can no longer afford to be sloppy with our budgeting or incur any overtime that is not absolutely necessary.
Note 1 – All data in this report comes from the City’s Monthly Operating and Financial Reports. At the end of each calendar quarter, this Report includes a citywide schedule of the City’s full-time equivalents.
Bill King is the former mayor of Kemah, Texas. He served on Texas gubernatorial commissions studying the aftermath of both Hurricanes Rita and Ike. In 2006, he served on a task force appointed by the County Judges of Harris, Galveston and Brazoria Counties to revise the region’s evacuation plans in the wake of the disastrous Rita evacuation. In 2006, the National Hurricane Conference awarded him their Outstanding Achievement Award for his work in this area. In 2009, he was one of the founding directors of the Gulf Coast Community Protection and Recovery District, which initiated the process of attempting to build the Ike Dike.