Connecting state and local government leaders
Agencies have struggled to recruit and retain workers, but it’s not uncommon for them to hold jobs open in order to shift salary dollars around in their budgets to cover other costs.
One of the biggest public sector stories in the last several years has been the difficulties that states and localities have had in recruiting, hiring and retaining the workforce needed to deliver services promised to residents.
This seems like an entirely bad news story. But there’s another side to it. While workforce shortages make life hard, the money available for empty jobs doesn’t just disappear. Instead, in most places, it can be diverted to other needs and, as a result, benefit agencies when it comes time to make every budgeted dollar count.
Consider Plant City, Florida, a community of about 40,000 in the middle of the state. “The police department wanted $167,000 worth of tasers for 60 officers that weren’t in the original approved budget,” recalls Diane Reichard, the chief financial officer there. Since there were many vacancies in the department, the city used a portion of those unpaid dollars to purchase the tasers after obtaining city commission approval and city manager authorization. Additionally, the police department was able to purchase some software for $80,000, which was also paid with unspent salary funds.
The understaffing of the public sector remains a significant problem and most states and localities are taking multiple steps to fill available jobs. Still, the allure of extra dollars to fill budget gaps can lead some places to leave vacancies open.
“It’s not unusual for an agency to put off filling vacant positions even when people could be recruited for them,” says Leslie Scott, executive director of the National Association of State Personnel Executives. “I don’t think anyone would argue that some vacancies are held over longer than necessary for the funds that can be spent for other purposes.”
“This isn’t a secret in the world of budgeting or human resources, but it can easily be missed by others,” Scott adds.
Reichard indicates that this isn’t the case in Plant City. “I’ve heard about places that budget their full salaries just like they’re going to use them, but they’re putting in for five or 10 percent of their personnel budgets that they know isn’t going to be spent,” she says. “It’s what you call creative accounting.”
For places that need people in the jobs they have on the books, of course, manufacturing a kind of slush fund by purposefully keeping them unfilled can be a hazardous path.
Says Nik Kovac, budget and management director of Milwaukee, “The curse is that the money is budgeted for people to deliver a service, but the people aren’t there. And then there can be a blessing from a purely fiscal perspective because unfilled vacancies can be carried forward to use for other things.”
But Kovac also warns of a “double curse.”
“If a city can’t deliver the service and winds up spending the money to use contractors or temporary employees or pay remaining employees’ overtime to do those jobs, that can cost more than the money they’re getting for the vacant positions,” he says.
Budget offices in some places make efforts to block agencies from playing vacancy games. In Louisiana, for example, the budget office attempts to eliminate positions that have remained open for more than a year according to Jay Dardenne, the state’s commissioner of administration.
“We’re not going to let unfilled vacancies continue year after year,” he says.
Of course, agencies are inclined to push back when budget offices tell them they should drop job openings. “If they give up the position, they don’t have the money to use for other purposes,” says Dean Mead, a partner at the accounting and consulting firm Carr, Riggs & Ingram and for many years assistant director at the Governmental Accounting Standards Board.
What’s more, when agencies do keep vacancies open for an extended stretch, they run the risk of losing funding for those positions. It’s tough enough persuading city councils and legislators to allocate cash for more jobs and it may be even harder to make that case after it’s been demonstrated that the agency can live without them.
This practice can make it difficult to know whether or not vacancies are real—as most are—or if they are kept on the books to provide a pool of cash for other purposes. This means that the use of vacancies as a measurement of a state or locality’s ability to fill jobs can be problematic. Matthew Brown, director of the Indiana State Personnel Department, is particularly concerned about the issues with interpreting public sector job vacancy data.
“Vacancies aren’t necessarily a good measure of the functioning of agencies because some of it isn’t planned to be used for jobs in the first place,” he says. “The vacancy rate is truly dependent on what an organization uses the vacancies for.”
Brown offers up alternatives for determining the success an agency is having in hiring and retaining people. “There are better measures that might be somewhat more useful,” he says, “including time to hire, time to fill jobs, average tenure and how long people are staying in jobs. Each of those things help you to identify problems and trends. Vacancy rates are really a squishy measure, and overreliance on squishy data is a bad thing.”