By Robbie Ward
TUPELO – City overtime paid to hundreds of employees in the last 11 years could have covered half of the cost of the $12 million Tupelo Aquatic Center, which officially opened this weekend.
But while Tupelo city employees received $6.1 million in overtime payments in calendar years 2003-2013, overtime paid in the last three years has dropped dramatically.
The 41.4 percent decrease in average overtime paid from 2011-2012 compared with the previous eight years has resulted from a concerted effort to curb the expense as the city wrestled with recession-related budget constraints. This includes a reduction of nearly $500,000, or 59 percent, from the high in overtime costs in 2009 to the low point in 2012.
A Daily Journal analysis of Tupelo city records of overtime paid during the 10-year period to city employees suggests that prior to the overtime reduction focus in 2011, a widespread, institutional acceptance of overtime existed with little administrative effort to control the added personnel costs.
Overtime expenses examined for 2013 include each month except December.
The city’s overtime policy dating to 2000 requires all department heads to approve any overtime in advance.
Until recent years, one of the most glaring examples of the city’s culture of overtime appeared in fire stations throughout the city. Tupelo Fire Department scheduling literally planned for nearly each employee to accrue 14 hours of overtime every two-week pay period.
Most years prior to 2011, firefighters routinely earned thousands of dollars in overtime. Some years, a few firefighters earned close to $20,000 in overtime.
During the last decade, the fire department paid $2.3 million in overtime expenses, the second-highest among all departments.
“I had some firefighters making more than captains because of overtime,” said Thomas Walker, Tupelo Fire Department chief since 2009.
Yet after the overtime focus began three years ago, the fire department alone has cut overtime an average of 96.2 percent. This translates to about $277,557 per year in savings.
Bloated overtime in city government can divert tax dollars from priorities such as infrastructure improvements, street overlays, improved parks and other quality of life areas.
During flush economic times, overtime isn’t as big an issue. But during challenging economic times, such as the recent recession, local governments must look closer to trim costs as sales tax and other revenues shrink. Overtime – generally defined as paying employees 150 percent of their regular pay rate for time worked each week exceeding 40 hours – is one of those areas.
From fiscal years 2008-2009, sales tax decreased by $1 million in Tupelo.
Tupelo Water & Light paid the most overtime during the last decade at $2.8 million. Johnny Timmons, longtime TW&L director, says the nature of his department’s duties requires considerable overtime. Employees respond to emergency situations that cannot wait until the next workday to resolve.
“I feel like electricity and water are like your lifeblood,” Timmons said. “That’s something that has to have attention immediately.”
Water & Light has three employees on call daily for after-hours emergency situations. Usually, one or two of those employees handle emergency calls. Some employees request more on-call duty than others with family obligations and other off-work activities. Timmons said he doesn’t mind who works the overtime as long as trades among employees are between workers receiving the same pay level.
Routinely each year, a couple of Water & Light employees earn $10,000 to $13,000 in overtime, while many others bring in a few thousand dollars in overtime.
One non-emergency employee, a janitor, for the utility department sticks out related to overtime pay. He earned 32 percent of his pay in overtime this year, along with 28 percent in overtime in 2012. Timmons acknowledged the overtime looks high but said paying it makes more sense than hiring a second full-time employee or outsourcing to service providers that also charge higher rates for after-hours work.
The janitor works at the department’s Front Street location during business hours and afterward at the customer service building on Court Street.
“He goes up there and cleans up after hours,” Timmons said. “He’s got a full plate for one man.”
The Tupelo Police Department spent $658,581 in overtime costs in the last decade. Police Chief Bart Aguirre, appointed to his position in October, said the department schedules more officers to work in high-traffic areas during holidays and during special events, such as former First Lady Laura Bush’s recent visit to Tupelo.
He said some overtime occurs for reasons the public may not think about. For example, when an inmate in the Lee County Jail arrested by Tupelo police requires medical care for sicknesses or injuries, Tupelo police must provide security while the prisoner receives hospital treatment.
“Sometimes we have to bring in extra folks to watch them,” he said. “We can’t leave shifts short-handed.”
City records show $157,401 in reimbursements of police overtime during fiscal years 2008-2013 from state and federal grants for different programs, along with $31,842 in fire department overtime reimbursed by Department of Homeland Security in fiscal years 2011-2013 to assist with emergencies in other locations. Department reimbursements during fiscal years, which run from Oct.1 to Sept. 30, aren’t subtracted from the overtime cost analysis since this data is based on calendar years.
Portions of Water & Light overtime paid for employees to assist in Paducah, Ky., during an ice storm in 2009, Timmons said. Exact amounts were not available.
Overall, these three departments, along with Parks and Recreation and Public Works, comprise 96.1 percent of all overtime for calendar years 2003-2013.
Looking at overall Tupelo city overtime costs during the 10-year period hides remarkable success with curbing extra personnel expense in recent years.
Plans to improve began when former Mayor Jack Reed Jr. managed to recruit Lynn Norris back to Tupelo government in 2010. He worked for the city from 1985-1998 in the dual role of city clerk and chief financial officer. Reed split the two positions, appointing Kim Hanna to city clerk and Norris as CFO. With a high volume of day-to-day duties, city clerks often have challenges finding time to step back and analyze big-picture financial trends related to city expenses and income.
With personnel costs comprising 62.9 percent of the city’s $31.2 million general fund budget for fiscal year 2010, Norris identified overtime as a potential way to lower personnel expenses. He and Reed met with department heads whose budgets come from the city’s general fund and asked them to look for ways to decrease overtime. Water & Light does not receive income from the general fund, getting its revenue from customer payments.
Results from these meetings and efforts of two particular department heads led to a 41.4 percent decrease in the city’s overtime when comparing average annual overtime expenses in the years of 2010 and prior to average overtime of years afterward, the time of increased focus on overtime spending.
Fire chief Walker met with Reed and Norris and then set out to find a way to cut overtime significantly. Otherwise, his department risked less preferable options of laying off firefighters or even closing a fire station.
After 10 days of researching options, Walker returned with a creative plan to nearly eliminate all fire department overtime that involved adjusting work schedules to a 19-day workweek. In exchange for ending most overtime, Walker convinced city leaders to increase firefighters’ pay by 3.25 percent to help soften the blow of lost overtime.
New scheduling has led to a 96.2 percent decrease in average annual overtime when comparing calendar years including the change with the prior seven years. While many firemen grumbled initially about the scheduling change, they all kept jobs.
“We got the costs down to what they wanted, nobody lost their jobs and service didn’t decrease,” Walker said.
In Public Works, then-director Sid Russell faced the task of lowering overtime in 2010 with 65 employees, three fewer than the previous year. Research in lowering overtime convinced Russell to change his department from a five-day to four-day workweek.
Since beginning this change, Public Works sliced overtime by 46.7 percent and operates with 55 employees, 13 fewer compared to 2010 levels.
After Russell retired in October, Public Works returned to a five-day workweek at the recommendation of Don Lewis, newly appointed chief operations officer and former director of Parks and Recreation. He said the five-day workweek may cost the city more money but will allow public works employees to assist with projects on Fridays.
Lewis said his method to limit overtime in Parks and Recreation involved granting compensatory time to employees. This allows employees working overtime during a busy week to take time off during slower periods, usually during winter.
Comparing average annual overtime of Parks and Recreation after 2010 to the seven years prior, it had a 9 percent increase in overtime, the city department with highest overtime increase. The Police Department showed a 4.8 increase using the same comparison but likely has a lower increase after including overtime grant reimbursements.
Lewis has said in recent years city events on Friday evenings and on weekends lead to overtime costs in Parks and Recreation.
Norris said city overtime expenses now appear much more in line with what he considers reasonable. However, trends in city personnel costs continue to cause him concern.
Norris believes the city should aim for personnel costs to mirror the city’s percentage of sales tax revenue as part of the overall general fund, 55.6 percent for fiscal year 2013. Personnel costs for the same year, which ended Sept. 30, amounted to 61.35 percent of the city’s income, hovering in a range Norris considers unsustainable in the long term.
For the current fiscal year, the city’s budgeted personnel costs equal 63 percent of the city’s general fund budget. These personnel costs do not reflect threats of potential future increased health care premiums or any raises for employees, who last received a cost of living increase in October 2011.
Ideally, Norris said the city would achieve a healthier level of personnel costs through attrition and an improved local economy that increases sales tax revenue. Without the city freezing some positions as workers retire or otherwise leave city jobs, a decrease in city tax collections could potentially lead to layoffs.
Mayor Jason Shelton acknowledges strides the city’s financial team and department heads have made by limiting overtime costs and said he and Norris continue to evaluate areas to cut expenses throughout city government. Some of Shelton’s campaign promises of increasing quality of life in Tupelo and attracting more middle-income families will likely have price tags attached, increasing the need to cut existing costs.
Shelton said he’s exploring the impact of paying off some existing city bond debt with a portion of the city’s $18.4 million budget reserves. This would lead to less low-interest debt payments each year, creating more money for other priorities. But it would also shrink city reserves that could fund future projects or emergencies.
Discussing fiscal challenges for the city, Shelton returns to the importance of more middle-income residents moving to the city and developments that add residential homes.
“If we put 20 new homes in a vacant field, then they’re going to shop here, eat here and pay property taxes on land with a higher value,” he said.
Correction: December 16, 2013
An earlier version of the story incorrectly described the total analysis period as 10 years. The correct description is 11 years. This error did not affect any data analysis.