Connecting state and local government leaders
COMMENTARY | The dwindling number of qualified, government-savvy accounting professionals makes it imperative municipalities find new efficiencies sooner rather than later.
It has never been easy for state and local governments to lure top accounting professionals away from high-paying commercial industries. While exceptional benefits packages have proved successful, most municipalities can no longer afford to offer Cadillac-level health care, pensions and other benefits.
That recruiting challenge is exacerbated by an ongoing shortage of qualified professionals for critical accounting roles. Unfortunately, the deficit is unlikely to improve anytime soon. One National Association of State Treasurers study observes that 60% of public finance workers are over age 45 while less than 20% are younger than 35. A recent Government Finance Officers Association report notes that nearly one-third of the current public finance workforce will reach retirement age within 10 years.
As the workforce shrinks, however, the opportunities to become more efficient grow. Municipalities may overcome some challenges by evaluating new technology and staffing models. Although this kind of evaluation may not address some personnel shortages—such as police officers or firefighters—it can often help agencies meet the specialized demands of public sector financial management. The key is understanding what to look for to successfully bridge the expertise gap.
Technology Capabilities: What to Consider
Twenty-five years ago, a good-sized city might have had a chief financial officer, controller, budget director, accounting manager and accounts payable and payroll clerks. Today, those same cities have likely eliminated some of those middle positions, and remaining staff absorbed more responsibility. With fewer eyes to review and perform due diligence, the potential for unforced errors and risk increases.
Even simple errors can have significant impacts on decision-making. Delayed reports, untimely data and missed compliance deadlines force municipalities to react to fire drills rather than plan proactively. By increasing efficiencies and reducing errors, technology can help minimize the risks of having too few staff working too quickly. Yet having technology in place doesn’t guarantee that it’s lessening errors and workflow burdens as intended.
Municipalities often benefit by starting with an independent assessment of how their fundamental processes—payroll, accounts payable and invoicing, for example—compare to the rest of the industry from an efficiency standpoint.
Officials should keep in mind that improvements don’t always require expensive, large-scale technology implementations. In fact, many agencies fail to get a total return on investment from their existing systems. So, to assess technology options, state and local governments should:
- Evaluate whether existing technology is being optimized. A process-by-process approach that scrutinizes the efficiency of key financial functions can identify room for improvement. Agencies should ask questions about the technologies involved, such as when the system was last upgraded and whether the municipality is paying for maintenance on software or services that are not being used.
- Consider automating manual processes. Repeatable workflows involving paper forms are ripe for automation. For instance, departments that use direct deposit for payroll typically enjoy greater efficiency than those that use paper checks. Before automating, officials should ensure local policies and regulations support modernization efforts. For example, they should review local codes to ensure electronic signatures are acceptable.
- Take advantage of cloud-based financial solutions. For small to mid-sized municipalities, cloud technology usually affords more security and efficiency than maintaining an in-house data center. Consider the cautionary tale of one very small city with its own server. It faced a nightmare scenario when the server died during the city’s fiscal year-end reporting. Without a good backup, the city lost most of the prior six months’ financial activity. Although their enterprise resource planning provider recovered some information, city staff spent several months manually reentering accounts payable and other data—taking resources away from current-year needs.
Staff Qualifications: Why Government Accounting Expertise Matters
After assessing where and how technology can reduce financial management demands, agencies should conduct a similar appraisal of staff capabilities to determine the critical functions and roles that must still be filled to meet the public needs.
When it comes to filling those openings, it may be tempting to focus on professionals with the right accounting or finance experience, but municipal agencies must take a slightly different approach to evaluating accounting professionals and their staffing models than their commercial counterparts. To mitigate risk, these three requirements should be considered:
- Specialize in government accounting. Municipalities desperate for help may be tempted to excuse a candidate’s lack of government sector experience. They may even believe bringing in a non-government perspective is a good idea. However, that approach fails to recognize the vast difference between government and commercial accounting needs. Government accounting involves distinct questions, answers, knowledge and skill sets. An understanding of how funds interact, how councils work, how to appropriately measure ROI, what budgeting processes look like and other intricacies of public sector accounting is essential.
- Be an excellent cultural fit. The importance of this nuance can’t be overstated. Unlike in the commercial sector, government accounting professionals must be skilled at developing collaborative working relationships with a wide variety of stakeholders. No two government stakeholders have the same wants, needs or agendas. A knack for finding and communicating win/win scenarios is crucial.
- Be scalable and flexible. The ability to scale and flex full-time, part-time and seasonal staff as needs change is advantageous for municipalities. That might include having the means to scale up during budget or audit season, for instance, or offer equal rigor in meeting requirements for remote and on-site staff. Where permissible, alternative staffing models such as job-sharing or outsourced services may be an efficient way to garner the support of quality accounting professionals.
As the pool of uniquely qualified accounting professionals continues to shrink, the talent search will be particularly challenging for state and local governments. Outsourcing specific functions or roles is often a cost- and time-efficient option for overcoming barriers while also meeting public needs—an option that shouldn’t be overlooked.
A Fixable Challenge
There will never be a perfect time to analyze accounting workflows. However, the dwindling number of qualified, government-savvy accounting professionals makes it imperative municipalities find new efficiencies sooner rather than later. Fortunately, it is a very fixable challenge and there is still a tremendous opportunity to get—and stay—ahead of the curve.
Brian Camiller, Partner, CPA, leads the overall government industry practice at Plante Moran. Through the firm’s Government Accounting Professionals (PMGAP) group, Camiller and his team specialize in providing permanent or temporary accounting assistance to all types of government entities.
Mike Riffel, Partner, MPA, CGCIO, works with the team at Plante Moran to help governments around the United States modernize their technology. Riffel enjoys getting to know each municipality’s unique working environment and helping them achieve their strategic goals.