The New Orleans Sewerage & Water Board shelled out $3 million worth of unauthorized overtime payments in 2013, the result of poor budget monitoring and payroll controls, the Office of Inspector General said in a report released Wednesday.
IG Ed Quatrevaux’s office looked at one year’s worth of payroll data, taking a random sample of 88 employees out of the agency’s 1,025 hourly and salaried staff members.
Based on that sample set, the report estimates that the S&WB spent nearly two-thirds of its 2013 overtime budget on work that was not authorized under Civil Service Commission rules.
At the same time, it says, the agency paid another unauthorized $1.5 million in so-called standby pay to employees who were on call, though not necessarily working, during the same period.
S&WB employees are each limited to 416 hours of overtime in a given year under Civil Service Commission regulations. Standby pay can be earned only when an on-call employee has to remain on or so close to a job site that “he cannot use the time effectively for his own purposes.”
Cedric Grant, who became executive director of the S&WB in 2014, after the period reviewed in the IG’s report, said the agency “is taking corrective actions to implement changes to its overtime management. S&WB has already developed and implemented overtime monitoring controls to ensure that employees are working within the overtime limits necessary to maintain continuous service and meet customer expectations.”
Together, overtime pay and standby pay constituted nearly one-quarter of the S&WB’s $47 million payroll expense for 2013.
The additional overtime and standby pay allowed employes to significantly boost their overall compensation. The 10 employees earning the most overtime pay added between $60,000 and $70,000 each to their annual income in 2013, according to the report.
In one instance, an employee earned an additional $35,009 in overtime pay for working 1,275 overtime hours, 859 hours over the limit. In another case, an employee earned $20,492 in standby pay even though he was never called to work during those on-call hours and received no overtime in 2013.
The report also cites two instances in which employees earned overtime and standby pay simultaneously and another in which an employee earned 16 hours of standby pay on a day when he also recorded sick leave and annual leave, a violation of S&WB policy.
The agency did not receive advance approval from the Civil Service Commission authorizing employees to exceed eight hours of overtime in a workweek, the IG’s report says.
When questioned by auditors, S&WB managers said the agency did not agree with the Civil Service rule about overtime and did not follow it because “it was impractical to follow these rules” given staffing constraints and service needs, the report says.
The 2013 overtime budget overrun occurred during a year in which the S&WB raised water rates 10 percent and posted an operating loss of about $39.6 million.
The IG’s report recommends that the S&WB put controls in place to keep tabs on the spending and also that the agency request waivers from Civil Service when necessary.
It also recommends that the S&WB create a new process for estimating its overtime budget that allows department heads to propose their own overtime amounts.
Finally, the report calls for the elimination of standby pay altogether.
“S&WB management and department heads should collaborate and re-evaluate their staffing plans to ensure that employee workloads are efficient so that employees are not required to be ‘on call,’ ” the report says.
Grant said he is “committed to right-sizing this essential public utility so that it is run efficiently and in the best interests of our ratepayers and the public at large.”
He said that providing “vital round-the-clock water, sewer, drainage and public safety makes overtime and standby a necessity” but that the agency, as recommended, will seek a waiver for employees to work more than the number of permitted overtime hours. He rejected the call for eliminating standby pay.
Grant said he also is “beginning an analysis of work schedules and crew sizes to ensure that jobs are not being over staffed.”