A nearly $700,000 overrun in personnel costs, or 7.7% above the $18.1m budgeted for personnel in 2024-25, raised questions during the performance, audit and risk (Par) committee meeting on February 25.
It comes as the council reorganisation, dubbed transformation, clicks into its eighth month.
The restructure, beginning last July, was based on an overall 9% reduction of the 211 full-time equivalent (FTE) staff.
Many employees were asked to reapply for new jobs within a redefined departmental structure, leaving gaps for a time in some areas.
Council chief executive Alex Parmley told the Par meeting the 9% staff reduction was yet to be finalised, pending further appointments.
Meanwhile, the council has been plugging staff gaps — previously cited as "stretched resources" — while managing its business-as-usual activities.
A recent example is the Central Otago District Council governance adviser being seconded to ensure timely minutes, as the council last week again played previous minutes catch-up.
On February 25, mounting personnel costs were defended by director of support services Paul Hope and Mr Parmley.
A summary to the end of the second quarter of the 2024-25 financial year noted total council expenditure overall of $50.72m. This was $3.26m, or 6.9%, over budget.
Reasons cited in the report were personnel costs, depreciation for council assets and Project Reclaim.
The personnel budget for the first six months of the 2024-25 year was $8.93m. The actual spend was $9.61m.
Par independent chair Simon Neale said he was disappointed the council was again tracking to be be outside the budgeted end-of-year result.
"We’re looking at an $18m difference between what was forecast and where we actually land," he said.
"I, too, express concern in a year when we are planning less staff on board, that our personnel costs are already $700,000 over budget and forecast to be $1.4m over budget by the end of the year."
Mr Hope said a fuller discussion would require taking it out of the public forum, "but a lot of it was not unexpected".
"We had a number of people leaving the organisation after this new structure was announced.
"That does crystallize a lot of final costs like holiday pay where it’s all paid out," he said.
"It’s created a bit of a timing difference with the remuneration, where something that was semi-tangible has been realised."
Mr Neale said in light of the overrun, he expected personnel costs for the first quarter of 2025-26 to be less than the current $18m staff budget.
Mr Parmley said the council expected that in line with staff numbers coming down, based on the projected 9% reduction in FTE roles through transformation.
"I would say we’ve got other costs going up associated with staff though," he said.
"It’s not going to be a 9% reduction in our personnel costs.
"I would add to that, the 9% reduction isn’t all going to come in straight away.
"I would expect we’ll be looking at a reduced personnel cost," Mr Parmley said.
This week Mr Neale told the Oamaru Mail it was never ideal to see personnel costs above budget.
"The reason I raised it and expressed concern [is] we’re six months into the second year of a transformation project."
He did not wish to "throw anyone under the bus" but he was expressing concern, Mr Neale said.
Given the explanations last week of timing and cost lag, he would be keeping an eye on it.
This included if the staff budget for 2025-26 was projected above the current $18m budget.
"If the [staff] budget forecast comes out with a 19 or 20 in front of it, we’ll be asking some questions," he said.
