Overtime paid to Philly city workers is out of hand and unnecessarily costing taxpayers money.
That’s the thrust of a new report released today by Philadelphia Controller Alan Butkovitz, who says hidden costs are to blame.
“General rule of thumb, the thinking has been, that if you substitute overtime for hiring people, you’re saving money,” Butkovitz said. “I’d say that the essence of this report is that you’ve got to look closely at the weeds.”
The Controller’s office studied 26 employees across five agencies who earned the highest overtime pay in 2013, more than $1 million.
But another $800,000 went to payroll taxes and, mostly pension payments for those workers.
Butkovitz says that’s because it costs the city more to cover added pension costs for employees under the city’s old retirement plan than it does to cover employees under the new one.
He says that disparity creates a situation in which it actually makes more sense to hire a second employee, than give the first one overtime.
“It depends on the seniority and particularly the pension status of those people who are going to be brought in on the task,” he said.
Although the report found that most overtime was legitimate, Butkovitz added that agencies should monitor overtime better and consider hiring new employees.
In response to the release, Mayor Michael Nutter’s press secretary Mark McDonald said, “the Nutter administration is always interested in new ideas and new ways that we can be more efficient.”
But McDonald also criticized the report for being “fairly lean on recommendations.”