We recently reviewed a 2022 GFOA article titled “Meeting Demand for State and Local Public Finance Jobs” that discussed the current difficult environment regarding the local government finance labor market.
Many of the problems we laid out back in 2019, such as the increasing pay disparities between the public and private sectors, lack of regard for the finance function from governing boards, high turnover already present in the industry, and added complexities to the job have only gotten worse due to the aging workforce and the Covid-19 pandemic.
The GFOA article also popped up a few issues we hadn’t really considered.
For one, the perception of public finance careers is that of a low ceiling. As the GFOA points out, 18% of positions in the overall finance sector are management, compared to only 4% in state and local public finance. It remains difficult to attract talented, ambitious finance professionals not interested in ending up in city or county manager roles. Another cause of the openings in the public sector comes from the protracted hiring process. While the average position in the private sector takes about 3 weeks to fill, the process for filling public positions can take as long as 6 months. Finally, unnecessary degree requirements reduce the available talent pool. Many required degrees or certificates for entry-level positions are not pertinent to the day-to-day and could be eliminated or reduced. In addition, local governments increasingly find themselves behind the curve in terms of on-site work requirements vs the public sector.
Without proper financial control and adequate staffing in finance positions, things can quickly get out of hand. A lack of adherence to internal controls can lead to funds being paid out without proper administrative oversight and possibly without basic legal authority. Lack of oversight can also lead to troublesome and even a little bit embarrassing situation, such as not even knowing how much money you have on hand. Across the state, late audits can jeopardize your financial stability, your ability to issue debt, and in the future may even lead to the State’s withholding sales tax distributions.
Some simple (and some not so simple) solutions are out there that could alter the current trajectory. Allowing candidates to prove job readiness through skills/competency tests or the completion of past coursework, rather than through strict degree requirements, could broaden the available talent pool. Investing in the development and continuing education for non-bachelor’s workers is a great way to develop the next generation of public-sector finance professionals, in-house. Boulder County, Colorado removed degree requirements from entry level accountant and analyst positions. This enabled the county to tap into a larger talent pool as well as provide job-specific training that was more focused on the day-to-day responsibilities of the position.
Similarly, building out career tracks, both managerially and individually, ensures that talent sticks around. Individual contributor tracks, such as those used by the private sector in finance and tech, allow for growth not tied to people management. Highlighting cumulative impact on the community also allows employers to emphasize non-salary growth. The public sector also must catch up to the private sector in terms of remote and hybrid work. While you can’t handle money off-site, many other finance functions can be accomplished remotely. Allowing employees more autonomy over their work, whether that be with remote and hybrid options or even a switch to a 4-day work week would go a long way towards attracting talented candidates looking for greater work-life balance than what the private sector provides.
Job-sharing programs between localities would be another way to reduce the supply shortage while at the same time supporting incumbent workers and providing opportunities for career development. If two localities don’t have the need for a new full-time finance professional on their own, an interlocal agreement to “share” an employee would fill the void in the work to be done while ensuring that they’re able to hire a qualified person to fill their need.
It seems that for the most part, managers understand the importance of the finance function and the staffing difficulties. We need to get governing boards talking about these issues and understanding the structural issues that need board attention to fix. Can we get these issues on an agenda for the annual NCLM and NC-ACC meetings, where a broad group of elected officials can see that the issues go beyond any one municipality?
The principal author of this post is our Finance and Management associate AJ Jessup. Please click here for our disclaimer, click here to learn more about our local government finance practice, and click here to send us an email.