Los Angeles - Payroll &
In 2015, the City of Los Angeles employed more than 56,000 employees and paid out more than $4.88 billion in payroll outlays, including $553 million in overtime. In that year, there were 2 departments whose use of overtime were clear anomalies based on their number of employees and total OT spend - the Los Angeles Fire Department (LAFD) and the Los Angeles Department of Transportation (LADOT).
Despite being 5th and 7th in employee count, LAFD and LADOT were 1st and 4th in OT spend - with LAFD's average of $50,618 per employee in overtime blowing away the next-highest department by a factor of 4.
LA Departments by Employee County
LA Overtime by Department
Official Response - DOT
Based on the analysis of the data, and a tip to the City's waste, fraud and abuse line that managers in the Sign Painting section of the Department of Transportation were allowing extraordinary levels of overtime to go unchecked in the unit, the Controller's office did an audit of overtime in the Department of Transportation.
The impacts of the audit were immediate - the group of employees in the Street Painting section decreased their use of overtime by nearly 35% in the 6 months following the audit, as compared to the prior 6 months.
Additionally, the initial data mining lead to a broader investigation around overtime controls in the Department of Transportation, which identified a variety of weaknesses that lead to substantially more payment of overtime than was demonstrably necessary for the function of the department.
In 2016, the Department is on track to reverse a 5-year trend of increasing per-employee and overall overtime outlays, primarily due to implementing the findings of the audit.
The full audit is available here.
Official Response - LAFD
While the OT spend at DOT was both anomalous and ultimately rooted in poor controls and some measure of abuse, LAFD was an even-more-shocking, but very different, case.
Overtime at LAFD is, to put it mildly, a major expense. LAFD spent an average of $50,618 per employee on overtime in 2015. The proprietary, fee-funded Department of Water and Power and Los Angeles World Airports are 2nd and 3rd with $14,906 and $10,613 per employee, respectively.
Additionally, use of overtime in LAFD is characterized by both a substantial "middle class" of OT earners - those earning $30 - $60,000 per year, within one standard deviation of the $50,000 average - as well as a large "upper class" of those earning substantially more than the median.
In 2015, 420 LAFD employees earned more than $100,000 in overtime, and 19 earned more than $200,000. One Fire Captain made $311,316 in overtime on top of a $120,829 salary, for a staggering total of $448,594 in overtime pay.
Unlike LADOT, however, the explanation here did not appear to be a question of abuse or violation of policy. Indeed, upon inquiry, a Commander at the LAFD informed the Controller's office that the employee with $311,316 in overtime did, in fact, obey all policies and procedures regarding overtime.
Los Angeles uses what is called a "constant staffing" model, which intentionally keeps firefighter positions open and uses overtime to make up for the missing employees. LA Firefighters also work 24 hour shifts, quite understandably earn 24 hours of overtime for every day they spend battling a forest fire, and are allowed, under departmental policy, to pick up as many additional shifts as needed to ensure that each station is sufficiently staffed despite the artificially low number of firefighters.
The problem, the Commander continued, was much more banal than a conspiracy of abuse.
While the constant staffing model always comes with vacancies, LAFD is understaffed to the brink of collapse. The City Council had not approved new classes of firefighers nearly as quickly as the Department needed, and the department had suffered substantial attrition due to retirement and injury. Despite LA's population growing by nearly 30,000 a year, LAFD employed just 24 more staff in 2016 than 2013 - and fewer sworn officers.
The conclusion of this investigation was this: Los Angeles was spending more to not hire new firefighters than they could have spent to hire a sufficient number of officers, which would also have the added benefit of reducing the wear and injury risk for current officers, and reducing the number of officers forced to take injury retirements.
Armed with this data, LAFD and the Mayor were able to go to the City Council and push for a new class. On April 28, 2016, 48 newly minted firefighters graduated from LAFD academy and joined the ranks, and more classes are coming down the pipeline. While overtime will continue to be a major outlay for the Department, this deeper analysis showed the policies and practices in place that lead to the anomalous number, and provides a blueprint for more thoughtful containment of total payroll costs in the future.
Good analysis must begin with good numbers, but it can't end there - it requires human investigation and understanding to translate analysis into actionable recommendations and outcomes. In this example, a raw analysis identified two substantial outliers in use of overtime in Los Angeles, but deeper investigation revealed two dramatically different root causes and ultimate solutions.