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Thursday, August 18, 2022
HomeNewsArchivesPAYROLL COSTS EATING UP LABOR’S BUDGET

PAYROLL COSTS EATING UP LABOR’S BUDGET

Personnel costs have eaten up so much of the Department of Labor’s budget, little is left over for supplies and utilities.
Such problems, however, aren’t new to the department, testified Commissioner Sonia Jacobs Dow at the Senate Finance Committee’s budget hearing in Frederiksted on Tuesday.
Dow said the department receives more than $12 million from 27 different federal grants, but step increases to unionized employees in 1994 and 1998 have pushed payroll costs to the point that there is no money to pay rent, utilities, supplies, equipment purchases and maintenance.
An example of high personnel costs cutting into other areas are programs supported by the Government Insurance Fund, Dow said.
"The Division of Workers Compensation, in particular, operates without a copier, fax machine, and until recently, without computers," Dow said.
Because the division has no copier, she said department employees have spent hours and days in the offices of law firms copying workers compensation documents because the files must always be accompanied.
"While the attorney’s staff actually duplicates the documents for which clients are billed, the DOL employee must remain with the file at all times," Dow explained. "You can imagine the cost to the department in lost productivity."
Also, Dow said, the government is required to expend an amount equal to 10 percent of personnel costs funded by federal grants. She said the money technically budgeted by Labor for payroll is instead transferred to other agencies, notably the Office of Management and Budget, to cover the administrative costs of processing grant applications and implementation.
Even though Labor writes, monitors and manages all of its federal grants, Dow said, it is not allowed to use federal funds to cover the costs within the department itself.
"We do not believe OMB and other agencies provide the Department of Labor with services that demand such a big bite of the funds we raise through federal grants," Dow said. "If the Department of Labor cannot sustain its own operations with federal grants awarded for department initiatives, it is preposterous to expect that we can sustain the operations of the federal government."
The department is seeking $643,257 from the general fund for fiscal year 2000, which is less than 15 percent of its total budget, Dow said. Federal and Government Insurance Funds make up the balance of the total $2.4 million budget. After some reorganization, the Dow said the department was able to save $156,000
Adding to the department’s problems is that the Government Insurance Fund has a negative balance of $154,000, Dow said. Based on an unaudited Department of Finance report, Dow said that outstanding bills from 1983 to 1999 amount to more than $6.5 million.
On Aug. 25, Finance officials said they would not approve payments for workers’ compensation claims because the fund is negative, Dow said.
"The ill health of this fund is directly attributed to the failure of government agencies to pay into the fund," she said. "So the saga of the Workers’ Compensation program continues. The prognosis is not good."
Also testifying at the hearing were representatives from the Public Employees Relations Board. PERB Chairman Aubrey Lee said the board’s goals for FY 2000 are to reduce the use of costly off-island arbitrators and instead use ones familiar with local workplace issues.

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Personnel costs have eaten up so much of the Department of Labor’s budget, little is left over for supplies and utilities.
Such problems, however, aren’t new to the department, testified Commissioner Sonia Jacobs Dow at the Senate Finance Committee’s budget hearing in Frederiksted on Tuesday.
Dow said the department receives more than $12 million from 27 different federal grants, but step increases to unionized employees in 1994 and 1998 have pushed payroll costs to the point that there is no money to pay rent, utilities, supplies, equipment purchases and maintenance.
An example of high personnel costs cutting into other areas are programs supported by the Government Insurance Fund, Dow said.
"The Division of Workers Compensation, in particular, operates without a copier, fax machine, and until recently, without computers," Dow said.
Because the division has no copier, she said department employees have spent hours and days in the offices of law firms copying workers compensation documents because the files must always be accompanied.
"While the attorney’s staff actually duplicates the documents for which clients are billed, the DOL employee must remain with the file at all times," Dow explained. "You can imagine the cost to the department in lost productivity."
Also, Dow said, the government is required to expend an amount equal to 10 percent of personnel costs funded by federal grants. She said the money technically budgeted by Labor for payroll is instead transferred to other agencies, notably the Office of Management and Budget, to cover the administrative costs of processing grant applications and implementation.
Even though Labor writes, monitors and manages all of its federal grants, Dow said, it is not allowed to use federal funds to cover the costs within the department itself.
"We do not believe OMB and other agencies provide the Department of Labor with services that demand such a big bite of the funds we raise through federal grants," Dow said. "If the Department of Labor cannot sustain its own operations with federal grants awarded for department initiatives, it is preposterous to expect that we can sustain the operations of the federal government."
The department is seeking $643,257 from the general fund for fiscal year 2000, which is less than 15 percent of its total budget, Dow said. Federal and Government Insurance Funds make up the balance of the total $2.4 million budget. After some reorganization, the Dow said the department was able to save $156,000
Adding to the department’s problems is that the Government Insurance Fund has a negative balance of $154,000, Dow said. Based on an unaudited Department of Finance report, Dow said that outstanding bills from 1983 to 1999 amount to more than $6.5 million.
On Aug. 25, Finance officials said they would not approve payments for workers’ compensation claims because the fund is negative, Dow said.
"The ill health of this fund is directly attributed to the failure of government agencies to pay into the fund," she said. "So the saga of the Workers’ Compensation program continues. The prognosis is not good."
Also testifying at the hearing were representatives from the Public Employees Relations Board. PERB Chairman Aubrey Lee said the board’s goals for FY 2000 are to reduce the use of costly off-island arbitrators and instead use ones familiar with local workplace issues.