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The BIG BANG of Payroll and Overtime costs

New Yorkers, we have a problem. The way retirement benefits are calculated impacts taxpayers for years. This burden causes great fiscal stress to municipalities and has the end game of reduction in services. You want those potholes fixed? You need to get your elected leaders to reduce overtime and pay reasonable wages.

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The BIG BANG of Payroll and Overtime costs

  1. 1. To help you understand the impacts of payroll, overtime and benefits, take a look at this expenditure sheet from the City of Plattsburgh (September 28, 2012). Note that the Police Department has 25% in overtime costs and the Fire Dept has 18% in overtime costs (bottom right side). Now, take a look at the changes from 2011 to 2013 in the wage reports of a one city police officer. In just two years, you'll see a jump of $23,093 in wages earned. Across the state of New York this is a trend that adds costs to taxpayers long after the officer has retired. It's not little costs either, many municipal employees make three times as much money (or more) when they retire than the average person makes during their working life.
  2. 2. The average yearly wages for Clinton County residents is $24,676. The retired City DPW supervisor, Kevin Murphy earns $62,037 every year. That means that during his retirement, Kevin Murphy earns 60% more NOT WORKING than the average person in Clinton County makes working. According to sources in Albany,there's an "unspoken"practice ofallowing municipal employeesthatare close to retirementto work as much overtimeas possible in their last three years ofservice.To understand why this is done,Iwentto the Office ofState Comptroller for answers.It's the lastthree years ofemploymentwhen earnings tendto be the highestand when you add in increasedovertimein the lastthree years ofservice,an employee who normally made $60,000 per year can look like they made (or averaged) $80,000 a year.This boosts their retirementbenefits which is good for them butbad for taxpayers. Essentially the entire state ofNew York has wage earners in the averagecategoryofearnings (statewide averageis $32,282 per year)paying for a "ghostforce"ofretired employees that make 2 to 3 times more money as retirees than the people thatare paying them! Data from the New York State Office of the Comptroller: Final Average Salary (FAS)  1 Your pension is based on your years of credited service and your final average salary (FAS). FAS is the average of the wages you earned during any 36 consecutive months of service when your earnings were highest. This is usually the last three years of employment. If your date of membership is June 17, 1971, or later, the wages in any 12-month period used in the FAS calculation cannot exceed the earnings in the preceding 12-
  3. 3. month period by more than 20 percent. Any amount in excess of 20 percent is excluded from the computation of your FAS. The calculation of your FAS can include, but is not limited to, the following types of payments. In some cases, certain restrictions may apply.  Regular salary;  Overtime earned in the period used in the FAS;  Holiday pay;  Non-compensatory overtime earned for each year in the FAS period;  Longevity payments (maximum of three), if earned in the years used in the FAS calculation; and  Payment for up to 30 days of accumulated unused vacation if your date of membership is before April 1, 1972, and if your FAS is based on the 36 months of earnings immediately preceding your retirement. We need to make city leaders be: 1) Accountable for payrolland overtime costs to reduce the burden on taxpayers. 2) Required to limit or eliminate overtime in the lastthree years ofservice 3) Willing to Hire adequate staffto eliminate overtime or hire contractor staffto eliminate overtime. 4) In controlofpayrollcosts to allowthe entire city to enjoy city services 5) Able and accountable to recognize thatmore taxpayer money is spent on payrolls and overtime than on needed city services. The question ofthe day is,howdo we make city leaders take actions thatreduce the burden for taxpayersin payrolland overtime? Whatdo you think? I'll be away for two weeks,but,I'll be back in March with more analysis. Stay tuned... John Citibois 2016 Sources: NewYork State Office of the Comptroller City of Plattsburgh website (supporting documents from Common Councilexpenditure sheet)