A 2006 survey by IDC research reported that more than 80% of municipalities exceeded their annual overtime budget by an average of 20%.

It’s been a decade, but I am hard-pressed to believe that number has improved with age.

Labor is the top cost for municipalities, comprising roughly 40% of a town or city’s annual budget. When that budget gets blown there are a few ways muncipalities commonly respond.

• 41% of the time municipalities are forced to leave positions unfilled, such as fire fighters and police officers
• 31% of the time, they delay necessary expenditures, such as road improvement or school maintenance
• 30% of the time…they raise taxes

Putting some meat to the stats, consider one sample New York town of 7900 residents whose police department alone budgeted for $1.47M in overtime expenses. Assuming they fall in line with the 80/20, that means this small New York town spent $294,562 in overtime costs beyond what they’d budgeted.

Related Blog: Keys to Reducing Overtime Costs for the Mid-Market Employer

These have dramatic ripple effects across the community, impacting a town or city’s desirability as a place of residence, location to grow a business, or send kids to school. And with the deteriorating subterranean infrastructure in states like New York, the need for a ready labor force is only going to increase.

What’s the solution?

Does this mean we adopt a zero-overtime policy? Probably not the first step. The problem is not with administering overtime. It’s the unnecessary overtime that pushes municipal payrolls beyond their anticipated budgets and into the “20% club”.

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Unnecessary overtime occurs when supervisors assign workers to overtime shifts when there are other options available. Unnecessary overtime can be avoided by:

• Assigning shifts to employees with hours below the overtime threshold
• Increasing skills and competencies to grow the pool of workers available for skilled positions
• Having systems and notifications in place to alert managers and supervisors when they are making shift assignments that will result in overtime expenditures
• Real-time access to labor data

Part of the problem in excessive municipal overtime resides in a lack of available and reliable labor data to help shift-builders to make smart decisions. Lack of data forces supervisors to make assumption based decisions. Decisions on assumption always carry a cost and a risk.

Related INFOGRAPHIC: What’s the Real Cost of Poor Employee Leave Management?

Two technologies have been successful in helping municipalities get a greater grasp on their workforce. When propoerly executed, they open the opportunity to reduce overtime pay by upwards of 32%.

1. Integrated online time tracking and scheduling: When scheduling systems are integrated with online employee time tracking software, supervisors enjoy real-time labor analytics when assigning workers to extra shifts. With proper scheduling constraints built-in, shift architects can make deliberate decisions on when to assign overtime once other regular-pay options have been exhausted.
2. Electronic timeclocks are another way of tracking employee time and providing an on-demand and accurate report of hours-worked per employee. Knowing which employees are bordering the overtime threshold is essential when making decisions that stay within budget and reduce overtime cost.

There is a real cost to paper-timesheets and manual calculations. Municipalities serious about making efforts to reduce overtime costs have some options to explore now that weren’t around ten years ago.

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