Audit Shows Port Authority Spends Millions On Overtime Costs

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NEW YORK — The Port Authority of New York and New Jersey is spending millions of dollars on overtime despite management’s claims that their business model makes fiscal sense, according to an audit released Wednesday by New York Comptroller Thomas P. DiNapoli.

“Overtime flows like water at the Port Authority and management has no clear strategy to achieve its own benchmarks and goals for curbing costs,” DiNapoli said. “Every agency in this state is tightening its belt. Before the Port Authority asks for more money to fund its operations, the agency should take a long, hard look at whether its business model for managing overtime really makes sense.”

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The audit comes just before the Port Authority is scheduled to vote on major toll and fare increases it says are needed to fully fund its $33 billion ten-year capital plan.

Port Authority employees accounted for 71 of the top 300 pension earners in the New York State and Local Retirement System, with top annual pensions ranging from $125,612 to $196,768, according to the comptroller’s office. The audit revealed that most of these retirees were in positions that would receive a large amount of overtime creditable to retirement pensions. End of career compensation, which can be inflated by overtime, factors heavily into pension calculations.

During 2010, the Port Authority paid $85.7 million of overtime to 5,360 of its 6,977 employees, the majority of which was incurred by Port Authority Trans Hudson Railway (PATH) and the Public Safety Department. The audit, which covered calendar years 2006 through 2010, revealed that these two departments accounted for 66 percent of the $459.2 million in total overtime paid by the authority during that time period.

In those two departments in 2009, 24 employees had overtime earnings that exceeded 100 percent of their respective salaries. One employee earned a base salary of $107,878 and made an additional $153,530 in overtime, an average of 34 hours per week of overtime. Overall, 281 Port Authority employees made more than $50,000 in overtime, 66 made more than $75,000 and 18 earned more than $100,000 in overtime in that same year. 77 Port Authority employees had combined overtime and base salary compensation in excess of $175,000.

Despite a 2010 budget submitted to the governors of New York and New Jersey that specified overtime would be reduced by 20 percent from the prior year, overtime costs for 2010 decreased by only three percent from 2009. The Port Authority established an informal benchmark for each department that overtime should not be more than 15 percent of base salaries, yet the Public Safety Department (35.5 percent) and PATH (26.4 percent) each had overtime costs that, on average, doubled this limit over the period from 2006 through 2009. In total, there were 1,573 Public Safety Department and PATH employees who were paid overtime that exceeded management’s benchmark in 2009.

The audit found that Port Authority central office and department officials are not adequately managing and controlling overtime costs. Prior year expenditures set the base for the subsequent year’s budget, meaning that overtime inefficiencies are incorporated into the current and future budgets. Neither PATH nor Public Safety prepared plans to achieve their 20 percent reduction in overtime. If that specified reduction had been planned for and implemented, the Port Authority may have realized overtime savings of $12 million for 2010 as compared to 2009.

“The security demands placed upon the men and women of the Port Authority are immense. Public safety has been and will continue to be of primary importance,” DiNapoli said. “But Port Authority management set cost control goals, policies and overtime limits and then proceeded to fall asleep at the wheel. They’ve made minimal progress in containing these costs, which are too high given the current fiscal environment.”

DiNapoli recommended that Port Authority management:

  • Assess its business model and be proactive in the management and control of overtime costs. It should also study the use of overtime and the policies and oversight measures affecting overtime in order to identify actions to reduce overtime costs;
  • Develop and communicate plans, policies and procedures to achieve the 20 percent reduction of overtime called for in the 2010 budget;
  • Require PA departments to justify their annual overtime budgets each year, specifying the circumstances where limited and justifiable overtime use may likely occur and how these situations will be managed. They must also monitor department compliance with approved overtime budgets and scrutinize the propriety of the overtime expense;
  • Follow-up on the questionable overtime transactions identified in our audit and take corrective actions as appropriate, particularly regarding instances where consistent lack of justification and required approval was not documented.

This week’s audit follows a July audit which highlighted the Port Authority ‘s dependence on consultant contracts. In that report, DiNapoli found that the Port Authority did not have documentation to support $1.18 billion of $1.3 billion worth of service contracts and agreements and may be missing out on millions of dollars in cost savings. Both audits highlight that Port Authority ‘s claims of fiscal responsibility are seriously compromised by management’s failure to weigh alternatives in regard to personnel costs and in determining which hiring and staffing strategies are most cost effective.


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