Item - 2015.AU2.4

The Audit Committee recommends that:

1.  City Council request the City Manager to consider more proactive action in planning and authorizing overtime in City Divisions.

2.  City Council receive the report (April 22, 2015) from the Auditor General, for information. 

Since 2011 the Auditor General’s Work Plan has included a project in relation to continuous controls monitoring of selected City expenses.  The objective of the Continuous Controls Monitoring Program is to provide periodic reports to management which assist in proactively monitoring financial transactions, detecting unusual expenses and identifying areas where internal controls could be strengthened.

Since the initiation of this program in 2011, the Auditor General has been providing management with continuous monitoring reports on a periodic basis for their review and comments.

This current report provides the results of our review of City overtime costs, standby payments and mileage reimbursement costs from January 1, 2014 to December 31, 2014.  A separate report on 2014 staff absenteeism will be tabled at the June 26, 2015 Audit Committee.

Our analysis of 2014 staff overtime identified the following:

-           City overtime increased from $43 million in 2013 to $51.5 million in 2014 for an increase of $8.5 million or 19.8 per cent.  Overtime has increased in each of the past two years.  In 2013, the increase in overtime when compared with 2012, was $4.2 million or 10.8 per cent.  

-           The number of staff with overtime exceeding 30 per cent of their base pay increased from 105 in 2013 to 199 in 2014, an increase of almost 90 per cent.

-           Overtime in Transportation Services, Toronto Water and Solid Waste Management Divisions each increased by over one million dollars during 2014 when compared with 2013 levels.

-           Overtime in Employment and Social Services increased from 98,843 in 2013 to 769,659 in 2014, an increase of $670,816.  According to management the increase was due to the implementation of a new provincial information technology system for Ontario Works.  Costs related to this project were entirely funded by the Province.

-           Standby pay increased from $5.3 million in 2013 to $5.7 million in 2014, an increase of over seven per cent or $400,000.

-           Employee mileage reimbursements reduced by $100,000 in 2014.

From the inception of the Continuous Controls Program in 2011 City overtime expenses decreased until 2013 when overtime expenses rose by $4.2 million when compared with 2012.  According to management, a portion of the 2013 increase was related to severe weather related emergencies in the City

Management indicates that the 2013 winter storm effect continued in 2014 and significant overtime was spent in the aftermath and clean-up that continued in 2014.  In addition, extreme cold weather in 2014 also resulted in broken water-mains contributing to higher overtime in the Toronto Water Division.

The Auditor General’s 2015 Audit Work Plan includes a review of long term disability.  As part of this review, the impact of staff absenteeism on overtime will also be analysed.

Appendix 1 provides comparative details of 2013 and 2014 divisional overtime expenses.