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Got Overtime?
By Lynn Bashaw

The Sacramento City Auditor’s Office completed an Audit of Fire Department Overtime Use in February 2017. The objective of the audit was to assess the Fire Department’s administration and use of overtime, and to identify areas of risk and opportunities for potential savings.
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While “overtime” may have a bad reputation, it is not inherently bad. It can be a useful tool for managing temporary fluctuations in workload. However, if it is not effectively managed, excessive overtime could potentially lead to higher costs, employee burnout, and low morale. If it goes unchecked, overtime can also be a source of fraud and abuse by employees looking to boost their paychecks.

A fire department’s overtime use can be attributed to many factors, some of which include the department’s staffing model, the number of employees available to fill the shifts, the department’s roll call or call-back procedures, negotiated contract provisions, and the administration of overtime use. During our audit, we evaluated how all of these factors played a role in increasing overtime use and overtime pay at the Sacramento Fire Department.

We began our audit by attempting to answer some basic questions:
     
  • Why is the department using overtime? 
  • How much overtime is required and how much is discretionary? 
  • Are there limits on how much overtime a department employee can work?


INCREASING RELIANCE ON OVERTIME USE

Figuring out why the department was accumulating so much overtime was initially a bit of a challenge because it uses one system to assign daily shifts and a separate system to generate payroll. Once we got a handle on that process and were able to reasonably marry the two datasets together, we then sat with the person who administers the department’s daily staffing (roll call) and learned the ins and out of how the shifts get assigned. The roll call administrator explained that the fire department uses a “constant” staffing model for its suppression and medic shifts. This means that if a position is vacant for that shift (e.g., someone calls in sick or is on vacation), then another employee is called in on overtime to work that shift. This staffing model inherently generated overtime because there were never enough employees staffed to fill in for the number of people who called in sick or had been called away on other projects or assignments.

We then evaluated the department’s staffing levels to find out why they never seemed to have enough regularly scheduled employees to fill the prescribed shifts. By comparing the number of hired employees to the number of terminated or retired employees over the last few years, we found that the fire department’s hiring had not kept pace with the number of employees who were leaving the department on an annual basis. While overall attrition was relatively low, the number of employees hired did not make up for the difference. By not quickly replacing employees who left the department while also increasing the number of fire stations, the department had to fill the gap by bringing more and more employees in on overtime to fill the shifts.

The constant staffing model, combined with a staffing gap, led to increasing reliance on overtime use to make up the difference.


CHALLENGING THE STATUS QUO

The fire department argued that overtime was a more cost-effective way of filling the staffing gaps, rather than hiring additional firefighters. We challenged that assumption by comparing the cost of hiring a new employee to the cost of paying overtime. We found that, because of the significant number of overtime hours worked per year, hiring new employees in some instances was less expensive than paying overtime, but in general it was about even.

However, at the same time the department was relying on more and more overtime, we noticed that their “injury on duty” time and expense had started to creep up. We hypothesized that the number of hours worked by employees, in some cases more than 6,000 hours in one year, could potentially be unhealthy for the employees and could eventually lead to lower quality of life and low morale. The department had not established a limit on the amount of overtime an employee could work, and employees have a financial incentive to put in overtime hours.

Once we had answers to our first few basic questions on the department’s overtime use, we began to dig a little deeper into their operations, and we asked a few more questions:
      
  • Who monitors and approves firefighter overtime?
  • How does the department know that the overtime use is legitimate?
  • Is the department staffing its fire suppression and ambulance units in the most economical and efficient way to minimize reliance on overtime?


WHO NEEDS APPROVALS?

A robust system of internal controls is paramount for monitoring and managing overtime use. However, when we looked at the fire department’s internal controls surrounding overtime use, we found the department did not have an overtime policy, formal approvals of overtime were not adequately documented, and more than 100 employees had heightened user access to the staffing software. It was clear that the department’s overtime approval processes needed an overhaul. However, this was easier said than done.

The department’s staffing software had not been updated in several years and continues to present some challenges. The department is currently looking to upgrade its staffing system to capture electronic approvals of overtime use, which should significantly improve overtime accountability. As a result of the poor documentation and weak internal controls, we were unable to satisfactorily answer the question of who approves and monitors overtime.


“100 YEARS OF TRADITION UNINTERRUPTED BY PROGRESS”

While the title of this section is a funny anecdote from the fictional firehouse in the movie Backdraft, it aptly describes some attitudes towards change. It can often be challenging to see outside of the “that’s how we’ve always done it” bubble and look at things from a new perspective, especially when those practices are steeped in 150 years of tradition. Fire departments all over the country have been struggling with the challenge of keeping their time-honored traditions while embracing new technologies and developing innovative ways of deploying fire suppression and medical services.

We used the fire department’s dispatch data to evaluate the types of calls the department was receiving and the time of day the calls were being received to find out whether the department was deploying its resources in line with the demands for service. This data provided a great deal of insight into the contrast between the demand for fire suppression services and the demand for medical services. Figure 1 shows call volume by type from 2013 through 2015 in the City of Sacramento.

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Although the fire department historically responded mostly to fire-related calls, the data show that the overwhelming majority of calls during the audit period were not fire-related but rather medical in nature. Despite this shift, medical service is treated as the department’s side gig. Our audit highlighted the department’s need to address this shift in demand by evaluating how it staffs its fire-suppression units and ambulances. By using a data-driven approach and staffing where the need is greatest, instead of using a one-size-fits-all approach, we determined that the department could reduce costs and improve service delivery.

We also evaluated the types of employees the department staffs on its ambulance units. The current process assigns firefighter/paramedics to an ambulance rotation, where they rotate back and forth from an ambulance to a truck (or engine) every few weeks. If the fire department staffed lower-cost paramedics (non-firefighters) on the ambulance units, we estimated that the cost savings would be about $4.3 million annually.

We also suggested that the department reevaluate the number of employees it staffs on the truck and engine units, as these units had significantly lower utilization rates than the ambulance units. Staffing fewer personnel on the fire suppression units and moving them to ambulance units would shift those resources to where the dispatch data tells us they are needed most—medical-related calls—while also providing some relief to the employees on the busy ambulance units.


CONCLUSION

Overtime management can be a complex issue; public safety environments often have different overtime rules than those that apply to standard employees, outdated information systems may not capture all relevant data, requests for firefighter aid to emergency events all over the country (strike teams) can artificially increase overtime use, negotiated labor contract terms can add to the confusion over staffing assignments and payroll, and long-standing traditions can make employees and managers resistant to change. However, these are conversations that need to occur to continually move public safety departments towards enhanced efficiency, improved service delivery, and strengthened accountability.


ABOUT THE AUTHOR

Lynn Bashaw, CIA, CISA (Assistant City Auditor) – Mrs. Bashaw has been with the Sacramento City Auditor’s Office for the last five years. Here she has successfully leveraged over ten years of compliance and performance auditing experience to conduct in-depth and hard-hitting audits, with an eye towards collaboration and partnership. She is currently serving as the Assistant City Auditor, which requires not only a thorough understanding of complex auditing concepts, but also a keen ability to manage and supervise audit staff to bring out the best in each member of the audit team. Mrs. Bashaw holds a Master of Business Administration degree from Western International University and a Bachelor of Arts in Economics from California State University Sacramento. Mrs. Bashaw is a Certified Internal Auditor (CIA) and a Certified Information Systems Auditor (CISA). Mrs. Bashaw volunteers as a Board Member for the local IIA chapter and the local Toastmasters club.