MONTREAL--(BUSINESS WIRE)--May 8, 2006--Many citizens across the United States and Canada are unaware of their municipality's struggle to control overtime in their efforts to contain taxes and maintain service levels. However, a new survey reveals just how pervasive of a problem it has become in government. This new survey, "Municipalities Challenged to Manage Budgets and Overtime," conducted by IDC Research and sponsored by Kronos(R) Incorporated (Nasdaq: KRON), found that more than 80 percent of municipalities exceeded their overtime budget at least once in the past five years. The survey also uncovered that when municipalities do exceed their overtime budget, it's by an average of 20 percent.
In addition to identifying how often and by how much municipalities are exceeding their overtime budget, the "Municipalities Challenged to Manage Budgets and Overtime" survey identified the impact on constituents. The top three consequences that are a result of municipalities exceeding their overtime budget are: the municipality forced to leave open positions unfilled (41 percent) such as police and fire personnel; delaying necessary expenditures (31 percent) including building schools and roads; and increasing taxes (30 percent).
"With federal contribution to state and local budgets decreasing, municipalities are faced with increasing pressure to manage their budgets and deliver critical services," said Stuart Itkin, chief marketing officer at Kronos. "Having worked with more than 800 state and local governments, we have developed the expertise and can provide the tools that enable these organizations to more effectively manage their workforces and control overtime. This minimizes the pressure to reduce staff or eliminate programs and services."
This survey was conducted among finance executives within municipal governments across the United States and Canada with an average population of one million citizens, an average operating budget of $2.2 billion, and an average of nearly 11,000 employees.
Labor as largest controllable expense
Similar to businesses across almost every industry including healthcare, retail, and manufacturing, government municipalities identify labor as their largest controllable expense. In fact, the "Municipalities Challenged to Manage Budgets and Overtime" survey found that labor represents more than 40 percent of an average municipality's operating budget. Being unable to control their labor budget has been a key factor in municipalities exceeding their operating budgets as a whole. The survey also found that, on average, the largest municipalities are exceeding their operating budgets by more than $230 million.
"Tax bases have not fully recovered in many regions, leaving local operating budgets extremely tight. And with labor comprising almost the majority of the operating budget, municipalities know that they must look to this largest controllable expense in order to effectively manage to budget. However, many are still struggling because they lack the tools they need in order to gain visibility and control over labor, specifically overtime," said Shawn P. McCarthy, program manager, U.S. IT Opportunity: Government & Education at Government Insights and IDC. IDC is a global provider of market intelligence, advisory services, and events for the information technology and telecommunications industries.
Benefits of effectively managing the workforce
With the acute need to manage labor, and specifically overtime, implementing technology that allows municipalities to effectively manage their workforce is a priority. In order to run more like a business, it is imperative that these municipalities rely on workforce management solutions to help them manage budgets and control overtime by reducing costs and improving productivity. According to survey respondents regarding the benefits of a workforce management solution:
- 51 percent stated that such a solution would help them be more productive and lessen their need to reduce staff.
- 37 percent stated that such a solution would allow for no increases in user fees and/or taxes.
- 31 percent stated that such a solution would help improve community confidence that tax dollars are being targeted and spent appropriately.
Case studies in controlling overtime
Fully appreciating the need to manage its workforce, innovative municipalities are turning to Kronos to help them achieve efficiency throughout their organization.
- With more than 6,000 employees in more than 32 departments, the City of El Paso, Texas, is using Kronos to empower them to adhere to its zero overtime policy. According to Linda Thomas, human resources director at the City of El Paso, "With the use of Kronos solutions, we have real-time access to labor data allowing us to proactively manage our workforce in instances such as overtime. Now, we are able to run like a business and provide our taxpayers with the service they desire."
- Managing 11 employee groups, 4,500 employees, and eight departments and boards -- including the Engineering, Community Services, Fire and Police Departments -- the City of London, Ontario uses Kronos to ensure consistent pay rules are applied across the entire organization, allowing all departments to accurately cost out labor. According to Mike St. Amant, City Treasurer at City of London, "Kronos' workforce management solution brings consistency, timeliness, and accuracy to complex pay rules established in our many union agreements, while also costing the hundreds of thousands of work orders produced on a yearly basis. This is critical to the effective management of the City's businesses and in controlling overtime."
Empowering municipalities through expertise
With more than 800 government customers, Kronos is leading the way in empowering municipal governments to manage overtime through automation and access to real-time labor data. With Kronos solutions, government organizations are proactively managing overtime expenditures to budget, tracking workforce expenditures to funding sources, complying with labor regulations, and enhancing risk mitigation. A sampling of such organizations includes: City of Atlanta; City of El Paso; City of Grand Prairie, Alberta; City of London, Ontario; City of Oklahoma City; City of Orlando; State of Colorado; and Volusia County.
Kronos made this announcement from the Government Finance Officers Association's (GFOA) annual conference being held in Montreal from May 7-10. Kronos is exhibiting in booth #213.
Survey Methodology
In February and March 2006, IDC conducted a survey of 63 city and 37 county governments across the United States and Canada. Kronos Incorporated sponsored this research effort. Respondents, who were all financial executives, were screened and qualified based on decision-making and budget authority within their municipalities. These municipalities surveyed had an average population of 1.1 million, average operating budget of $2.2 billion, and average employment of 10,962. The data was collected through a programmed questionnaire administered over the Web in the U.S. and Canada.
About Kronos Incorporated
Kronos Incorporated empowers organizations around the world to effectively manage their workforce. At Kronos, we are experts who are solely focused on delivering software and services that enable organizations to reduce costs, increase productivity, improve employee satisfaction, and ultimately enhance the level of service they provide. Kronos serves customers in more than 50 countries through its network of offices, subsidiaries, and distributors. Widely recognized as a market and thought leader in managing the workforce, Kronos has unrivaled reach with more than 30 million people using a Kronos solution every day. Learn more about Kronos at www.kronos.com.
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