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Audit flags Fire Department payroll practices; committee seeks follow-up
Summary
A City Services audit found the Fire Department used undocumented accrual adjustments and disproportionate vacation accruals that likely increased retirement payouts; auditors recommended policy changes and greater documentation, and the department agreed to work with unions and retirement services. The committee asked the department to identify other areas where practice may exceed MOU requirements.
The City Services Audit Division presented findings from its payroll audit of the San Francisco Fire Department covering fiscal year 2009-10, including testing of retirement lump-sum payouts, premium pays, acting assignments and payroll system configurations. The auditors said field work ran from Aug. 10, 2010, to March 15, 2011, and used a risk-based, statistically sampled review of pay records.
Auditors told the committee that the department adjusted vacation and sick-leave accrual banks for non-suppression employees using multipliers (for example, multiplying vacation balances by 1.5 and sick balances by factors between 1.2 and 3.08) to approximate suppression schedules, but could not point to documented policies, MOUs, or city mandates supporting those factors. From a sample of retiree payouts the auditors reported an average benefit of $6,541 per non-suppression retiree and projected roughly $150,000 in excess retirement payouts for the audit year; the department said that figure is an extrapolation from a small sample and disputed the precise total but agreed with the recommendation to stop the adjustment pending meet-and-confer with unions.
The audit also found suppression schedules permit higher proportional vacation accruals (600 vs. 400 hours), producing higher payouts for suppression retirees; using a proportional limit in the auditors' analysis produced a projected annual savings of about $146,000. Premium-pay practices were inconsistent: the hazardous-materials specialist premium is treated in the payroll system as an hourly-equivalent rate which produced variable biweekly pay and a modest net underpayment in the sample, and two sampled employees lacked required certification for hazardous-pay eligibility. CSA recommended configuring flat-rate premiums in the payroll system and reviewing prior payments.
The report identified documentation gaps for daily acting assignments and a small manual-entry error rate (10 errors in 3,888 pay records, average overpayment $63) that projected across the year to an estimated overpayment of about $44,000; auditors recommended automating time-entry interfaces and creating specific pay codes for long-term acting assignments. The Fire Department's deputy chief said the department cooperated with the audit, concurred with most recommendations and will collaborate with DHR, Retirement Services and Local 798 where bargaining is required.
Chair Campos directed the department to review whether other pay practices produce payments above MOU levels and to return with information and possible follow-up hearings.
