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February 10, 2015

 

To: House Committee on Labor & Public Employment

Rep. Mark Nakashima, Chair

Rep. Jarrett Keohokalole, Vice Chair

 

From: Grassroot Institute of Hawaii

President Keli’i Akina, Ph.D.

 

RE: HB 558 — RELATING TO OVERTIME

 

Dear Chair and Committee Members:

The Grassroot Institute of Hawaii would like to offer its comments on HB 558, which would limit overtime compensation for public employees to only those hours worked in excess of forty hours per work week. The bill further excludes hours taken as paid time off from the calculation of the forty hours.

The problem of overtime abuse has recently become an important issue in a state that is working to become more efficient in its operations and improve accountability to taxpayers. A study by the Grassroot Institute of Hawai found that state and county governments paid at least $77 million in overtime in FY 2014. The state paid nearly $60 million in overtime pay last year, with the departments of public safety, transportation, and health making up the largest proportion of overtime pay.[1]  The County of Kauai paid $7 million in overtime, and Maui County paid almost $10 million in overtime last year.

While we recognize the importance of having sufficient staff to fill key roles—especially when the safety and health of our citizens are at stake, it is undeniable that a portion of the overtime costs is due to departmental inefficiencies and employees who are able to “game the system” to significantly inflate their base pay. A KHON report2 found corrections officers who were able to nearly double their salary, taking it from a base of $52,536 base to $104,169 via overtime. Other offenders who were able to greatly increase their pay, often going from five figure to six figure salaries at the expense of the state, were state hospital RN’s ($80,000 base plus $40,023 in overtime), another level of corrections officer ($46,548 base plus $75,573 in overtime), and a state hospital psychiatric technician ($38,556 base plus $27,272 in overtime).

A separate investigation of overtime abuses at the Hawaii State Hospital found multiple examples of coordinated and intentional efforts on the part of employees to inflate their pay via overtime loopholes.[2] Using a combination of sick leave and overtime benefits, six employees were able to cost the state nearly 7400 hours of overtime (totaling more than $200,000 in overtime pay) in 2013 alone.

In addition to the abuse of public trust that is taking place through such examples of overtime fraud, there is also the effect on the quality of work produced in this matter. In the case of the Hawaii State Hospital report, the prevalence of overtime abuse led to staff shortages, affecting the overall quality of care provided and endangering both staff and patients.

The proposed bill takes important steps towards curbing overtime abuse by closing two of the major loopholes in granting overtime—the ability to gain overtime for a partial workweek and the use of sick leave to “boost” a work shift into the overtime category.

Transparent and accountable government must include a willingness to respond to such corruption when it comes to light. This is not only because the state has a responsibility to the taxpayers, but also because allowing fraud to continue has a correspondingly negative effect on the quality of the services provided. Until waste and the incentive to “game the system” are eliminated, we will continue to drain the state budget and foster mismanagement at every level of government.

Thank you for the opportunity to submit our comments.

Sincerely,

Keli’i Akina, Ph.D.

President, Grassroot Institute of Hawaii


 

1 Study available at http://wwww.openhawaii.org

2 Available at http://khon2.com/2014/11/06/overtime-abuse-allows-some-public-employees-to-double-triple-their-salaries/.

3 See http://www.hawaiifreepress.com/Portals/0/Article%20Attachments/hshfinalreport%202014-0897.pdf and http://news.heartland.org/newspaper-article/2014/12/05/hawaii-state-hospital-employees-game-overtime-system.