This California city spent $1.7M on unauthorized overtime for hundreds of employees — as it marched toward a massive $280M budget shortfall. Until a whistleblower brought the waste to light

Budget crisis

Houston added the overpayments are especially troubling due to current budget shortfalls, which 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.

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.

And the money itself?

"I don't know if we can recoup the money or not," Oakland Public Works Director Josh Rowan told CBS News Bay Area. "But I think the bigger issue is the perception damage."