The V.I. Budget Crisis, Part 10: Chronic Overtime

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What the USVI Spends On, Proportionally. (Click on image for larger view.)
What the USVI Spends On, Proportionally. (Click on image for larger view.)

Is there room to cut bloat in the V.I. government to help fill its crippling structural deficit?

Most large government agencies are starved for funds, not overfunded. But if we look closer, there may be room for surgical cuts that can move the deficit in the right direction and set an example by leading from the top. It is possible to have bloat and waste while struggling to meet urgent needs. While rank and file employees are not very well paid, those at the top; commissioners, contracted consultants, authority heads, the governor and senators; all do very well. The Office of the Governor appears to be much better funded than most similar entities. (See:The V.I. Budget Crisis: Parts 8 and 9.)

But cuts to the governor, commissioner’s pay and the Legislature, while symbolic, would not be enough by themselves to make much difference. Is there fat to trim anywhere else without cutting services or personnel?

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What about overtime? Many government departments have been plagued with excess overtime, persisting over many years. More than one audit has found a chronic lack of documentation to prove the overtime work actually happened.

A common managerial rule of thumb recommends overtime be kept below five percent of payroll.

The V.I. Police Department alone spent more than $14 million just on overtime last year – around 28 percent of its total payroll. The Bureau of Corrections had overtime costs approaching $5 million for 2016, or 27 percent of payroll. The V.I. Fire Service had more than a million dollars in overtime. That’s more than $20 million per year for overtime for three agencies – as much as the entire budget for the Legislature.

With some officers making more than their regular salaries in overtime, it may be possible there is at least some abuse and padding of overtime that could be eliminated.

The VIPD does not tolerate fraudulent time sheets. In 2011, V.I. police arrested and charged 29-year veteran Mervin Ford for billing for overtime at the exact same time as he was teaching classes at the University of the Virgin Islands. On the one hand, the VIPD arrested the man, sending a clear message that the department treats this as a criminal matter. On the other hand, the VIPD press release on the arrest said an investigation found Ford “was issued and received payroll checks for the same hours based on his employment contract with UVI and as reported to the VIPD, during the period of August 18, 2008 through May 14, 2011.” So he got away with it for three years and was caught because of the unambiguous proof, based on government records showing he billed for time he was also billing UVI for. Why did it take three years to discover an officer was not at work? Is there any check on falsifying overtime sheets other than having dozens of students and UVI officials witnessing an officer openly working somewhere else while claiming to be at work for the VIPD? Would Ford have been caught at all if he simply sat at home collecting phony overtime instead of creating a crystal clear paper trail? Is it reasonable to believe Ford began falsifying overtime only the day he began working at UVI and not at any point earlier in his 29 years on the force?

That said, V.I. police have a very difficult job which they generally perform with great professionalism, despite limited resources. They are underpaid for the job they do. It is natural and understandable for anyone, especially someone who makes less than they should, to maximize their annual pay where they can: Natural, but fraudulent and illegal.

The VIPD recently cut back drastically on overtime, as an austerity measure. Some are concerned it could make the streets less safe. But if the choice is between laying off or furloughing officers and eliminating high-cost overtime, getting rid of overtime seems like a better option.

And even with drastic cutbacks, an internal VIPD directive photographed and published in the V.I. Consortium indicates that lesser-paid officers can still get up to 16 hours of overtime every two weeks. On a $40,000 per year salary, 16 hours of time-and-a-half pay every two weeks would amount to an additional $12,480 per year. That is roughly 30 percent above base salary. Is that a draconian cut?

These departments are chronically short staffed, making the problem difficult to solve. At the same time, V.I. police officers and others have for years relied upon large amounts of overtime to make ends meet, which makes it harder to solve the problem. People have a direct, personal financial stake in not solving it.

Police, the Fire Service and the Bureau of Corrections have all been up front about their high overtime costs during budget hearings. But other, larger agencies may have less prominent but potentially equally expensive overtime issues.

Audits have consistently found limited documentation of overtime in emergency services and elsewhere in the V.I. government.

The most recent V.I. Inspector General audit of the V.I. Fire Service, back in 2001, found poor documentation for its overtime.

The most recent V.I. Inspector General audit of the Health Department, issued in 2000, uncovered more than $2.2 million in overtime paid to employees over a two-year period, much of it without documentation or approval – about $1.1 million per year – and found serious discrepancies in monitoring and calculating overtime. The report suggested that some of the incorrect overtime computations might exist in the overall payroll system of the V.I. Government. The Health Department’s FY 2017 budget projected $1.14 million in combined overtime/holiday and other differential pay, or about 8.9 percent of its local payroll. In contrast, the Health Department’s federal funding budget shows $24,000 for overtime/holiday and other differential pay, out of salary costs of $6.5 million; or about 0.4 percent.

The most recent V.I. Inspector General audit of the Public Works Department, issued in 1999, also found serious issues with documentation of overtime.

A lack of documentation and the possibility of some fraud does not mean people are not really working overtime. No doubt most of it is real work.

These audits were some time ago and before the implementation of digital financial management systems in the government. They are out of date. But there are no recent audits concluding that these issues have been fully resolved.

One possible way to cut back on overtime and put remaining overtime under closer scrutiny might be for the governor or appropriate officials to direct that overtime can only be paid if there was prior specific approval before each overtime shift is scheduled, combined with documentation beyond a time sheet to verify that the work was actually performed, such as checking in at intervals while on patrol. If an employee made a strong case that he or she had no choice and verified the work was performed, the government would still have to pay for the work. But if the burden were very clearly on the employee to prove the work occurred and was proper, and to get advance approval, it seems likely there would be less overtime.

All of the above is not enough

What the USVI Spends On, Proportionally. (Click on image for larger view.)
What the USVI Spends On, Proportionally. (Click on image for larger view.)

If you take all the things discussed so far to their most draconian extent: eliminating emergency services overtime altogether, saving $20 million; paring the Legislature’s senatorial allotments back by half, saving $3 million; and taking a hatchet to the Office of the Governor’s budget, cutting it in half- you might be able to reduce spending by $28 to 30 million. That would be significant, but not enough to balance the budget. And those cuts are unrealistic. Drastic overtime cuts would mean at least some level of lost services and reduced public safety. Achieving the long-time goal of fully staffing these agencies would reduce overtime while increasing regular payroll costs by a smaller amount, reducing the savings. Relatively low pay has been one of the main obstacles to filling all the open government posts now and paring employees back to their base salary will not help with recruitment.

To fully bridge the structural deficit through cost cutting, overtime, the Legislature and Office of the Governor are helpful but not where the big spending is found. In a $1 billion budget, the V.I. Education Department is by far the biggest item, with $167 million from the V.I. budget and another $38 million in federal funding. But V.I. schools are struggling. Local funding is lower now than in 2007. Is there really money to be had? Its budget presentations to the Legislature for the past several years make no mention of overtime and there is no recent local or federal audit mentioning overtime, making it difficult to estimate its role, if any, in overall V.I. overtime expenditures without a lot more information. But if you compare the V.I. Education Department with stateside school districts of a similar size, there are some areas that appear comparatively high and might be worth a look, while leaving teacher salaries and school maintenance costs alone.

Next: Part 11: Education Is Where The Big Spending Is

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