State auditors call out MCWD for ‘excessive’ overtime pay

·5 min read

THE Commission on Audit (COA) has called the attention of the Metropolitan Cebu Water District (MCWD) over its excessive payment of overtime pay to its employees that not only exceeded the water district’s approved budget but also exceeded payment ceilings set by the Civil Service Commission (CSC) and the Department of Budget and Management (DBM)

In its 2021 audit report, state auditors found that the overtime pay of some MCWD employees exceeded 50 percent of their annual basic salary.

COA found a heavy equipment operator with an annual basic salary of P235,116 receiving P122,849.55 in overtime pay, or 52.25 percent of his annual basic pay.

Another MCWD employee, a water and sewerage maintenance man, received overtime pay of P98,882.48 or 53.11 percent of his basic annual salary of P186,177.10.

State auditors said the payment of overtime in excess of 50 percent of the employee’s annual salary not only violated CSC-DBM Joint Circular 2 series of 2015, but was also not consistent with MCWD’s amended policies and guidelines on overtime services which was issued by its acting general manager on June 15, 2021 and took effect on July 1, 2021.

COA also found that the overtime services rendered in excess of the 50 percent limit were due to the lack of manpower at MCWD, as several employees had retired and not been immediately replaced.

To correct the matter, COA recommended that MCWD management strictly adhere to CSC-DBM Joint Circular 2, series of 2015 and its own policy on the limitations on the payment of overtime services to avoid a notice of disallowance.

MCWD agreed to this and to COA’s recommendation to hire personnel to fill positions that were vacated due to retirement.

MCWD also agreed to review the overtime reports provided by its departments and for any excess to be deducted and converted to Compensatory Time-Offs, if applicable.

They also plan to automate the monitoring of requests for overtime and ensure that their departments don’t exceed their overtime budgets.

Exceeds 5% limit

COA also found that MCWD’s overtime payment to its employees of P39.421 million in 2021 exceeded the allowable five percent of total personnel cost of P29.393 million, by more than P10 million.

This was contrary to provisions of CSC-DBM Joint Circular 2, series of 2015 that states that “total overtime payments made in a calendar year shall not exceed five percent of the water district’s total personnel cost for that year” and that “any grant of overtime pay in excess of the five percent limit shall be subject to approval of the DBM in accordance with existing budgeting and accounting rules and regulations.”

To address this, COA recommended, and MCWD agreed, to strictly implement the annual five percent personal service budget limit on overtime pay and to secure DBM authorization in case of excess annual overtime pay to ensure the availability of funds for other items of expenditure and to avoid disallowance of excess payments.

Beyond approved budget

State auditors also found that MCWD’s overtime expenses exceeded its approved budget for overtime payment of P19.828 million as stated in the water district’s Corporate Operating Budget (COB).

The COB is a detailed projection of all estimated income and expenses for the year and serves as the water district’s own appropriation law.

State auditors said MCWD’s actual overtime expenses run contrary to PD 1445, or the Government Auditing Code.

Section 4 of PD 1445 provides that “no money shall be paid out of any public treasury or depository except in pursuance of an appropriation law or other specific statutory authority.”

When COA auditors inquired with MCWD’s budget officer, they found that the deficient allotment was sourced out from unfilled positions that were appropriated under personal services. But state auditors added that there was no proof on file that the realignment for the budget deficit was approved, apart from the P2.543 million approved budget realignments that MCWD had made.

MCWD’s budget officials also explained that the requests for authority to render overtime do not pass through their office for verification of the availability of funds.

“This makes it difficult for the Division to monitor if the running balance of the approved budget is still sufficient before the approval of the said requests. The Finance Division revealed that the overtime pay is part of the basic payroll and are processed for payment since the overtime work has already been rendered,” state auditors added.

They recommended to MCWD to “stop the practice of spending overtime pay in excess of what is allocated or appropriated; and support any budget realignment/modifications to cover the deficiency of allotment for overtime pay.”

In response, MCWD officials tasked its Information, Communication and Technology Department to develop a program on the control of overtime spending.

The program will prevent any excess of appropriation of overtime cost per department unless there is an approved budget realignment.

On COA’s recommendation, MCWD also agreed to see to it that all requests for authority to render overtime pass through their Budget Division as a way to determine if there are available funds.

Pandemic, typhoon

On Friday, July 22, 2022, MCWD Acting General Manager Stephen D. Yee explained that the rendering of overtime of some personnel was necessary so as not to disrupt the services of the water district especially during the pandemic.

“The overtime was incurred mostly by personnel of the Operations Group who needed to be fielded 24/7 to operate and monitor pumping stations, monitor water level of reservoir and all water sources, ensure smooth operation of the whole distribution system as well as immediately do repair if there are leaking distribution lines to minimize service disruption and avoid water contamination and also implement scheduled maintenance works,” Yee said in a statement.

“These personnel have to work even during Holy Week, Christmas, New Year and all holidays of the year to ensure the delivery of services. When Typhoon Odette struck Cebu, these personnel were doing repair works 24 hours a day and also delivered water using water trucks to areas with low supply or those that do not have water yet due to the massive brownout,” Yee added.

He said the MCWD management continues to find ways to minimize overtime of employees and “employ other austerity measures to adhere to the observations of the commission.”

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting