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Last Update: Jun 22nd, 2009

Overtime Costs the Taxpayers Much More

The recent hubub about the Sheriff's office overtime has been met with some criticism as well as the usual "aw, it wasn't that much". Whether you believe that $28.7 million is a lot of money is relative I suppose, but what most people don't understand is that the amount has to be multiplied many times to understand the true cost to taxpayers.

Overtime for goverment employees is a way of padding pensions. The amount that someone gets is usually some formula that takes an average of 3 highest year's salaries. So when a single employee works excessive overtime in a given year, their total compensation is used to compute the pension. So let's do a little math. Suppose the pension formula is that the yearly payment is 40% of an employees 3 highest salaries. An employee who makes $60K per year would get $24K per year in pension. Now suppose that employee made an additional $50K one year in overtime and $35k in another and $15K in another. So the employee has now raised the basis for the pension compensation to 93K, resulting in a $37K / year payment. The cost to the taxpayer is not just the $100K in overtime; its also an additional $13k per year for perhaps 25 years, or an additional $325K.

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