May 6, 2025
Unauthorized overtime payments cost the City of Oakland nearly $1.7 million over a period of several years, the city's auditor reported. Meanwhile, the California city faces an estimated budget shortfall of $129 million this year, according to local reports.
An investigation was kicked off following a whistleblower complaint in July 2023. It was found, between January 2018 and May 2024, the city overpaid 526 employees across two departments due to an incorrect formula in the payroll system.
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"This issue of excessive overtime pay warrants the city's immediate attention because taxpayers have essentially been incurring significant costs that were never approved," City Auditor Michael Houston said in a news release Feb. 20.
Here's what the situation means for taxpayers.
Budget crisis
The overpayments are especially troubling due to current budget shortfalls, which Houston says have prompted the city to look "under couch cushions for spare coins."
Lifelong Oakland resident Dion Baker says it's hard to hear about years of overspending while the city lays off workers and slashes public safety spending.
"A bit of frustration and a bit of sadness because trust for leadership in general, I'd say, is a little low," he shared with CBS News Bay Area.
The city has also cut off millions in funding to community organizations who provide social services to those in need, according to the local broadcaster.
"What I read and see on the TV, what's going on right now, people like me, I'm scared to death," John Hutchinson told CBS News Bay Area. The 88-year-old resident is homebound and says he relies on Meals on Wheels not only to feed himself but for social interaction.
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Interim Oakland Mayor Kevin Jenkins vowed to get to the bottom of the situation.
"What I'm going to do is have a talk with the auditor and see what the best course of action is moving forward," Jenkins told reporters.
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Next steps?
There's concern the overpayment discovery may simply be the tip of the iceberg. Houston fears even more excessive overtime pay might be found outside of the two departments and the specified time frame named in the report.
City officials were unable to explain the nature of the incorrect payment formulas, the report says. Houston recommended city officials review overtime formulas for all employees.
But not everyone is so confident in Houston's findings. According to The Oaklandside, Jestin Johnson, city administrator, told the council an outside expert is being hired to double-check the auditor's findings. Oakland's finance director Erin Roseman says her office won't change overtime formulas until this third-party analysis is complete.
Clarification, March 26, 2025: Oakland's budget shortfall is estimated to be $129 million this year, according to local reports.
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Danielle is a personal finance writer based in Ohio. Her work has appeared in numerous publications including Motley Fool and Business Insider. She believes financial literacy key to helping people build a life they love.
