Overtime DeJa Vu at PAT

Member Group : Allegheny Institute

(August 20, 2014)–October 2006: An article in a Pittsburgh newspaper
revealed the top earners at the Port Authority (PAT) and noted that
in addition to the salaries for top administrators, there were
several operators who were able to work enough overtime to boost
their earnings to place them near the top of the charts. The article
named three of these operators, all of whom earned at least 36
percent of their total compensation through overtime. The CEO at the
time stated "Some overtime is built into schedules, because it’s less
expensive to pay overtime than to replace someone in the middle of a
route…And with funding up in the air, it’s difficult to do proper
manpower planning. You don’t want to end up hiring people that you
can’t keep and foot the bill for benefits."

August 2014: An article in a Pittsburgh newspaper revealed the top
earners at PAT and noted that "six of the eight highest paid [PAT]
employees were drivers, some of them racking up about $80,000 in
overtime…" The article names the three top earning drivers; based
on what the article identifies as base pay ($54,579), overtime
earnings for those three drivers represents 60 percent of total
compensation. In fact, the top three had earnings of over $130,000.
A PAT official stated "We strategically chose not to
fill…positions. We didn’t want to go through the process to hire
and train people if we have to lay them off later" and the official
and a member of the board noted that the uncertainty of state
transportation funding played a critical role in the decision making

What is interesting to note is that in both articles–written eight
years apart and by two different newspapers–two of the top three
compensated drivers were the same people (unless there were different
people with the same name hired as PAT operators, which is possible).
It is a reasonable assumption that in the intervening years when
there was no media coverage those two operators remained among PAT’s
top earners, with earnings surpassing $100,000 per year.

Working a lot of overtime to boost earnings is not uncommon in the
public or private sectors. In fact, local governments here and
across the nation are trying to cut back on the practice so that
workers cannot take on large amounts of extra work in order to
increase their earnings in the final years of employment so as to
enrich their pension, a practice known as "spiking". Even in places
where there is no uncertainty about funding streams one can see
employees catapulting to the top of a highest paid list by working

Typically the most senior employees get the first right of refusal
for overtime assignments, especially under collective bargaining.
According to PAT, no more than 95 hours of earnings in a two week
period can be used in pension calculations–that is to say no more
than 15 hours of overtime in a two week period. The annual pension
benefit is determined by multiplying 2.25% times the number of years
of service times the average of the highest four years of earnings
adjusted for the maximum overtime limit. Note that 15 hours of
overtime per two weeks over the course of a year is equivalent to 585
regular hours of pay. For the drivers in question this means they
will have boosted their pay for pension calculations from $54,579 to
over $70,000. That means for an employee with 35 years of service,
the annual pension will be $55,000 instead of $43,000. This on top
of the massive amounts above base pay earned over several years of
extraordinary levels of overtime pay.

If PAT’s argument for so much overtime work is the inability to do
proper manpower planning because of lack of state funding, then the
arrival of Act 89 transportation funding means the onus is now on the
board and the administration to plan for adequate manpower. That Act
became law in November of 2013, and the Authority is hiring drivers
now according to the most news accounts. More new drivers should mean
less overtime for other drivers. And, as new hires will have to meet
more stringent age and service requirements for full pension benefits
and will receive only three years of PAT-paid retiree healthcare
coverage (as opposed to the pre-2008 benefit structure that only
required 25 years of service to receive pension and health benefits),
the presumption is that the benefit structure of the new hires will
gradually reduce the long-term liabilities of the Authority.

The hefty use of overtime might make good business sense for very
short periods when there is an expectation of an increase in revenue
that would enable more hiring or when qualified applicants are not
readily available. But when one employee is earning enough in
overtime on a sustained basis to hire two entry level people it
should set off alarm bells. In order to earn nearly $80,000 in
overtime in one year at time and a half pay, an employee would have
to work almost 70 hours per week every week during the year. That is
clearly not a good situation from a driver alertness stand point and
it means there are a lot of other drivers who should be sharing in
the overtime. Seniority rules that create such an over use of
overtime by a few individuals are not in PAT’s best interest.

It would be better to scale back service and reduce the need for
drivers than to utilize very limited resources in such a profligate
manner as the overtime debacle portrays.

Another way to avoid these overtime episodes and the increased legacy
costs of the Authority would be to contract out service to providers
who would cover benefits for their workers on their own. That would
minimize the need to train drivers and then go through the separation
process within PAT if service demand were to drop. It is far past the
time when PAT should be outsourcing a part of its bus service to
private carriers or to regional transit agencies. The new PAT board
should be investigating this possibility as a way to reduce its
legacy costs and as a way to reduce its dependence on state taxpayers
and Turnpike users for subsidies.

Jake Haulk, Ph.D., President
Eric Montarti, Senior Policy Analyst

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