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    Background, Scope and Objective

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    Nick Reisman
    The document summarizes an audit of the Port Authority of New York and New Jersey's management of employee overtime costs. The audit found that the Port Authority had partially implemented recommendations to better manage overtime spending, including justifying annual overtime budgets and monitoring expenses. However, the Port Authority did not develop plans to achieve the 20% overtime reduction target or follow up on questionable overtime transactions identified in the previous audit. Overtime costs for the Public Safety Department and PATH totaled over $220 million in 2013, accounting for most of the Port Authority's $316 million in total overtime costs.

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    Background, Scope and Objective

    Uploaded by

    Nick Reisman
    9K views4 pages
    The document summarizes an audit of the Port Authority of New York and New Jersey's management of employee overtime costs. The audit found that the Port Authority had partially implemented recommendations to better manage overtime spending, including justifying annual overtime budgets and monitoring expenses. However, the Port Authority did not develop plans to achieve the 20% overtime reduction target or follow up on questionable overtime transactions identified in the previous audit. Overtime costs for the Public Safety Department and PATH totaled over $220 million in 2013, accounting for most of the Port Authority's $316 million in total overtime costs.

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    The document summarizes an audit of the Port Authority of New York and New Jersey's management of employee overtime costs. The audit found that the Port Authority had partially implemented recommendations to better manage overtime spending, including justifying annual overtime budgets and monitoring expenses. However, the Port Authority did not develop plans to achieve the 20% overtime reduction target or follow up on questionable overtime transactions identified in the previous audit. Overtime costs for the Public Safety Department and PATH totaled over $220 million in 2013, accounting for most of the Port Authority's $316 million in total overtime costs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    9K views4 pages

    Background, Scope and Objective

    Uploaded by

    Nick Reisman
    The document summarizes an audit of the Port Authority of New York and New Jersey's management of employee overtime costs. The audit found that the Port Authority had partially implemented recommendations to better manage overtime spending, including justifying annual overtime budgets and monitoring expenses. However, the Port Authority did not develop plans to achieve the 20% overtime reduction target or follow up on questionable overtime transactions identified in the previous audit. Overtime costs for the Public Safety Department and PATH totaled over $220 million in 2013, accounting for most of the Port Authority's $316 million in total overtime costs.

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    December 19, 2014

    Mr. John Degnan


    Chairman
    Port Authority of New York and New Jersey
    225 Park Avenue South
    New York, NY 10003-1604
    Re: Management and Control of
    Employee Overtime Costs
    Report 2014-F-3
    Dear Mr. Degnan:
    Pursuant to the State Comptrollers authority as set forth in Section 7071 of McKinneys
    Unconsolidated Laws of New York, we have followed up on the actions taken by officials of the
    Port Authority of New York and New Jersey (Port Authority) to implement the recommendations
    contained in our prior audit report, Management and Control of Employee Overtime Costs (2009S-87).
    Background, Scope and Objective
    The Port Authoritys mandate is to promote and protect the commerce of the bi-state port
    and to undertake port and regional improvements not likely to be financed by private enterprise
    or to be attempted by either state alone. It manages a network of aviation, ground transportation
    infrastructure, and seaport facilities organized in the following departments: Aviation; Tunnels, Bridges
    & Terminals; Port Commerce; Port Authority Trans-Hudson Railroad (PATH); Construction; Real Estate
    and World Trade Center Development; and Public Safety. The Port Authoritys 2013 operating budget
    was $3.5 billion, including $1.04 billion for payroll costs for 7,401 staff.

    Authority base salary costs for calendar years 2011 through 2013 totaled $1.71 billion,
    while overtime costs totaled $316.3 million. The Public Safety Department and PATH accounted
    for most of this overtime. Public Safety Department overtime totaled $165.8 million and its base
    salary cost was $455.3 million (36.4 percent). PATH overtime totaled $55.4 million and its base
    salary cost was $259.5 million (21.3 percent).

    For 2013, the average base salary per employee for the Public Safety Department and
    for PATH was $79,957 and $70,311, respectively. Considering overtime and base salary, the total
    average compensation per employee for the Public Safety Department and for PATH was $115,514
    and $85,970, respectively.
    Our prior audit determined that the Port Authority did not manage and control its
    employee overtime cost. We found that the Port Authority had overtime transactions that lacked
    the proper prior approvals and justification. In addition, we found the Port Authority did not
    meet the 20 percent overtime reduction goal established in its 2010 budget to the Governors
    of New York and New Jersey. Finally, the informal benchmark established by the Port Authority
    requiring its departments not to exceed 15 percent of base salaries was not met either.
    The objective of our follow-up was to assess the extent of implementation, as of September
    17, 2014, of the four recommendations included in our initial report.
    Summary Conclusions and Status of Audit Recommendations
    We found that Port Authority officials have made progress in implementing the
    recommendations contained in our prior audit report. Of the four prior audit recommendations,
    one was implemented, two were partially implemented, and one was not implemented.
    Follow-Up Observations
    Recommendation 1
    The Authority needs to assess its business model and be proactive in the management and control
    of overtime costs. It should also study the use of overtime (e.g. overtime necessitated by employee
    absenteeism) and the policies and oversight measures affecting overtime in order to identify
    actions to reduce overtime costs.
    Status - Partially Implemented
    Agency Action - The Port Authority documents do not demonstrate that it assessed its business
    model. However, the Port Authority has adopted a number of measures to be proactive in
    overtime management. These include:
    Training in November 2011 on a standardized overtime approval process and the use
    of the Overtime Request Form for overtime pre-approval, justification, verification, and
    documentation.
    The creation in 2014 of an Overtime Steering Committee, which is charged with overseeing
    and evaluating needs and usage of overtime.
    A pilot program involving the Office of Medical Services, effective March 3, 2014, where
    employees can get medical services over the weekends.

    -2-

    Recommendation 2
    Develop and communicate plans, policies and procedures to achieve the 20 percent reduction of
    overtime called in for the 2010 budget.
    Status - Not Implemented
    Agency Action - The Port Authority did not develop policies and procedures that address the 20
    percent reduction called for in the 2010 budget.
    Recommendation 3
    Require Authority departments to justify their annual overtime budgets each year, specifying
    the circumstances where limited and justifiable overtime use may likely occur and how these
    situations will be managed. Monitor department compliance with approved overtime budgets
    and scrutinize the propriety of the overtime expense.
    Status - Implemented
    Agency Action - The Port Authority requires individual departments to justify their annual overtime
    budget each year. It has also implemented a number of measures to monitor and scrutinize
    the propriety of overtime expenses. These include creating an Overtime Steering Committee,
    prioritizing urgent projects for overtime use, analyzing budget vs. actual expenditures,
    projecting overtime hours by department, listing of titles and departments expected to incur
    overtime, analyzing overtime variances in hours, and establishing accountability over sick
    leave.

    Recommendation 4
    Follow up on the questionable overtime transactions identified in our audit and take corrective
    actions as appropriate, particularly regarding instances where consistent lack of justification and
    required approval was not documented.
    Status - Partially Implemented
    Agency Action - Port Authority officials could not provide any evidence that it followed up on the
    transactions identified in our audit or the decision that no corrective action was warranted.
    At the closing conference they claimed that documentation supporting their review of
    the questionable transactions was not available due to the changes in administration and
    staff.
    Major contributors to this report were Abe Fish, Christine Chu, James Eugene, Daniel
    Bortas, and Jean-Renel Estime.

    -3-

    We would appreciate your response to this report within 30 days, indicating any actions
    planned to address the unresolved issues discussed in this report. We thank the management
    and staff of the Port Authority for the courtesies and cooperation extended to our auditors during
    the process.
    Very truly yours,


    Carmen Maldonado
    Audit Director
    cc: R. Sudman, Audit Director
    Levine, Assistant Director
    Division of the Budget

    -4-

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