Mayor Jim Kenney’s administration is in the final stages of developing a plan to reduce spending on overtime pay, after the city spent a record $200 million in the last fiscal year.

By the end of the month, Philadelphia is expected to deliver to the state board that oversees city finances a proposal that outlines how it will reduce overtime costs in each department and monitor such outlays. It comes as that board, the Pennsylvania Intergovernmental Cooperation Authority (PICA), has voiced concern that the city exceeded its annual overtime allocation for 10 straight years, and as Philadelphia faces a dire financial situation due to the coronavirus pandemic.

Kenney himself acknowledged the poor outlook for city finances on Tuesday as he warned that the budget he proposes in March for the next fiscal year is likely “not going to be pretty.” But the administration has defended overtime spending as necessary to maintain city services, and cited the pandemic response and civil unrest as the reason for high overtime spending in the fiscal year that ended June 30.

Even with a reduction plan, city employees will continue to work overtime — which can significantly boost their pay. The city currently projects spending $176.8 million in overtime in the current fiscal year; the police department, fire department, prisons department and streets department typically spend the most.

PICA would like the city to put an end to consistently outspending its annual overtime projections by providing plans for each department to reduce its overtime. In the last fiscal year, for example, the city spent $34.8 million more than it budgeted for overtime.

The Kenney administration has already increased its overtime projection for the current fiscal year, by adding $24 million for the fire department in a transfer approved by City Council this month. Officials said that amount was necessary to maintain services. But spokesperson Mike Dunn says the city is on track to stay within its current allotment. He noted that the administration views overtime as neither good nor bad, but as a tool that is sometimes needed.

“In some areas, the administration has identified areas where less overtime will be pursued; in others, maintaining or expanding overtime to deliver services is necessary,” Dunn said.

But overtime costs continue to stack up. So far this fiscal year, for example, the city dealt with civil unrest following the fatal police shooting of Walter Wallace Jr. in West Philadelphia as well as the costs associated with running the presidential election and monitoring demonstrations while votes were being counted.

Dunn said the city spent about $15.9 million on police overtime for protests between Oct. 26 and Nov. 9 — some spurred by Wallace’s killing and others related to the election. And overtime costs for running the election itself have not yet been totaled.

PICA’s oversight powers are somewhat limited, but its board requested an overtime reduction plan as a condition on its approval of the five-year spending plan in July. “Some measures had to be put into place so that it doesn’t keep growing every year,” said PICA executive director Harvey Rice.

While the city had initially cited a lack of police overtime for court appearances and special events during the coronavirus pandemic as a source of potential savings, Dunn said the pandemic response and civil unrest in June contributed to the highest-ever overtime spending in the last fiscal year.

Those issues have continued. Streets Department overtime spending was high over the summer, for example, as sanitation crews worked to catch up with a backlog of trash pickup due to staffing shortages and increased volume as residents stayed home.

“As the city works to maintain service levels, particularly for vulnerable Philadelphians, while our workforce grapples with health and child care challenges, overtime remains a useful tool for getting work done,” finance officials wrote in a first quarter budget report.

Rice said PICA has asked for specific reduction plans, the designation of one person responsible for monitoring overtime across all departments, and a penalty for departments that cannot stay within their overtime budgets.

Those actions would allow PICA to “really delve into every department and follow every department on a monthly basis,” he said.