Budgeting and Managing Wages, Salaries and Overtime

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Budgeting and ManagingWages, Salaries and
Overtime

• FGFOA Annual Conference
• Jacksonville, Florida
• May 18, 2008

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• David Pollard, CGFO
• City of Port St. Lucie
• OMB Director
• daveP_at_Cityofpsl.com
• 772-871-7391

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The Really Big s
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What costs more,,,,,,,,,,,,,, One Police Officer
with a salary of 50,000 Or,,, A New 500,000
Botanical Garden Park
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Police Officer Costs

• Salary 50,000
• Benefits Payroll Taxes 25,000
• Annual Depr. cost of Vehicle Equipment
  7000. (five year life)
• Operating Costs 8000
• Total Annual Cost 90,000

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New Municipal Botanical Garden

• Annual Depr. Cost for 500,000
  25,000 (20 year life)
• Annual Operating Costs 25,000
• Fraction of an FTE, replacement signs, etc.
• Total Annual Cost 50,000

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Where are the Big Bucks

• Personnel Costs
• PSLs General Fund Personal Services 82 of
  total
• Personnel Costs never go away always rise
• Personnel Costs are perfect example of the 80 /
  20 rule (Follow the Big Dollars)
• People are the toughest asset to manage

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Budget Salaries Accurately

• Budget Dollars and Hours
• Must be able to track costs (s) and usage
  (FTEs)
• Are there Union Contracts that control costs
• Are Annual Raises on the Employees review date,,
  or everyone on Oct.1
• Are there promotions or certifications projected

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Overtime Component

• Review Historical Trends
• Any new special projects
• Any change to staffing levels
• Holidays can generate overtime
• Vacancies can generate overtime
• Increasing Payrates drives OT cost
• Higher OT can impact benefit costs

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When is an FTE better than OT

• Using OT doesnt require addl capital equipment
  or some operating costs
• Some benefit costs climb with OT,, some do not

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Break-Even Point for Overtime
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Add Benefits to Break-Even Calculation
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Tracking and Managing Costs

• Budget Variances
• Price Unbudgeted payrate increases
• Promotions, certifications, job audits, degrees
• Quantity Additional Workhours
• Part-timers working addl hours
• Overstaffed
• Identify Positive Variance (vacancies)
• Track Savings

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The FTE Management Tool

• One Full Time Equivalent (FTE) is 80 hrs in a two
  week pay period (2080 in a year)
• Know your Budgeted FTEs
• Payroll Reports give the hours paid that are
  converted into actual FTE usage
• Include vacation, sick, etc

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FTE Variance Report
Variance of .01 FTE is due to Overtime
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The Workload Indicator Tool

• Use actual FTEs to calculate actual worked hours
• Use an overall best statistic for the general
  workload of a program ( of inspections)
• Divide workload indicator by hours
• Compare over time period watch for trends

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Workload Indicator Report
Inspections per Hour
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Staffing Ratio Management Tool

• Budgeted Staff Level can be tied to statistics /
  demographics
• Sworn Police Officers 1.75 officers per
  thousand of population
• Deciding the right ratio for your community is
  tough use crime rates, response times, special
  units, etc.

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Salary Studies

• Competitive Pay for Positions
• Advantages retain staff, recruit staff, boost
  morale
• Different Approaches to Pay Range Adjustments
• Bump Minimum
• Bump Minimum and Maximum
• Bump bottom ¼
• Wage Compression issue
• Local Market,, region, state or national

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A Raise or a Bonus

• Bonus in place of the raise
• Future years have lower costs

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Union Negotiations

• Raise or Bonus
• Amount
• Date of raise (Oct. 1 or Anniversary)
• Retro issue
• Cola / Merit / Steps (longevity)
• Benefits
• Pension
• Insurance Plans (employee contribution)
• Uniforms, shoes, Training (Degrees,
  certifications)
• Shift Choices, Shift Pay

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Summary of Cost Saving Ideas

• Use OT up to 27 hours instead of another FTE.
• Cap the pay scale for a job.
• Award raises on anniversary date.
• Bonus instead of Payrate raise
• Track FTE usage to control workhours
• Use workload ratios to set budgeted staffing