Analysis of the 2006-07 Budget Bill Legislative Analyst's Office February 2006

Department of Alcoholic Beverage Control (2100)

The Department of Alcoholic Beverage Control (ABC), established by constitutional amendment in 1954, administers the Alcoholic Beverage Control Act. Under the act, ABC has the authority to license and regulate the manufacture, sale, purchase, possession, and transportation of alcoholic beverages in California.

The Governor’s budget proposes $51.8 million for support of ABC in 2006-07, with the bulk of funding derived from the ABC Fund ($50.7 million). Included in this amount is $3 million for the Grant Assistance Program-representing a doubling of funding for local law enforcement recipients. In total, the proposed budget represents a 14 percent increase over estimated current-year expenditures.

Paid Overtime Budget

We recommend rejecting the request for $1.7 million for overtime cash payments. The proposal would allow the department to drive up personnel costs without any evidence that additional overtime hours are needed to meet workload demands. (Reduce Item 2100-001-3036 by $1,697,000.)

Background. The ABC has 165 sworn peace officers responsible for enforcement activities pertaining to its 76,000 licensees throughout the state. An additional 67 nonsworn positions handle license-related investigations. To accommodate workload in both the enforcement and licensing areas, ABC has historically used voluntary overtime compensated by compensatory time off (CTO). This past practice resulted in all personnel accumulating a total of about 25,000 hours of CTO annually (just over 100 hours per employee). In 2001-02, ABC began offering licensing and enforcement personnel the option to receive cash payment for overtime hours worked rather than time off. The use of paid overtime in the past four years has reduced the annual CTO balances to an average of 17,000 hours annually (less than 75 hours per employee). To date, the cash payment option has been funded from certain grant dollars. For instance, in 200­­5-0­6, ABC will receive about $500,000 in such grant funding to support about 12,000 hours of paid overtime. The ABC estimates that about one-quarter of its overtime workload is for special events, and the remaining amount is for routine duties.

Proposal to Fund Overtime Budget. The administration proposes a $1.7 million augmentation from the ABC Fund to increase the department’s paid overtime budget. This would support about 40,000 paid overtime hours annually. The ABC maintains that the expansion of the cash payment option is needed to further reduce CTO leave balances and to improve retention of sworn personnel.

Proposal Not Justified. The proposed funding for paid overtime hours far exceeds ABC’s average overtime hours. The requested funding level would increase the department’s overtime hours by more than 35 percent. The department, however, provided no workload analysis to justify any expansion of its current overtime hours. Instead, the requested number of hours was determined based on an assumption of how many overtime hours officers would be willing to work each month. In addition, the department’s proposal fails to account for the continued availability of grant funds and the preference of some employees for CTO rather than paid overtime. Finally, the department provided no rationale as to why the current approach to meeting its overtime needs is ineffective.

Recommend Rejecting the Proposal. We recommend the Legislature reject ABC’s request for $1.7 million in overtime funding. The proposal would allow the department to drive up personnel costs without any evidence that additional overtime hours are needed to meet workload demands.