Effects of the Furloughs on the Use of Overtime

Executive Summary

Furloughs are seen as a way to reduce spending while averting the need for layoffs. In a previous report, the IGO found that while the savings derived from this strategy have been substantial, they are $11.05 million, or 8.25%, lower than the savings reported by the City.

One potential consequence of the furlough program might be an increase in the use of overtime by City departments. This could arise from a need, as employees take furloughs, to maintain mandated staffing levels for certain positions or to make up for lost productivity. Our review revealed that the furlough program has not resulted in a widespread increase in overtime worked Citywide. To the contrary, overtime worked declined 24 percent in the six departments most affected by the furloughs in the first six months of 2010, compared to the same period in 2009.

Another part of the City’s furlough cost cutting strategy has required employees to accept compensatory time instead of direct payment for overtime worked. The major effect of the substitution of compensatory time for direct pay overtime is to postpone payouts for overtime, whether in the form of payments or in paid time off, to future years. Since this provision was implemented, there has been a 144 percent increase, 201,000 hours, in the total compensatory time balance citywide. These 201,000 hours represent an estimated liability of $7.51 million that will need to be paid for in the next several years.