Local Governments Refocus Spend on Workforce and Technology

Amid ongoing COVID-19 concerns, state and local governments saw new fiscal pressures around a remote workforce and technology needs according to Cherry Bekaert LLP’s 10th Annual Local Government Survey. The survey is administered to state and local government finance and accounting professionals, reflecting on how they are responding, or planning to respond, to a wide range of issues from workforce and benefits, impacts on budgets, to the use of technology and the effects of COVID-19.

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Workforce Needs

The survey revealed shifts altering traditional governments’ workplace culture. More than 50% of survey respondents have telecommuted, and are likely to continue doing so for the next 12 months. Some entities will allow a hybrid work environment even after the pandemic is over, providing employees with greater flexibility.

State and local governments are struggling to attract new finance and accounting employees, and a virtual work option would help offset or mitigate losses from an aging workforce by attracting attention from younger generations wanting more flexibility in their work structure. The survey also revealed the greatest turnover for government employees was retirement.

Healthcare and other benefits were positively received this year by survey-takers, with two-thirds of respondents indicating governments have implemented measures to lower the healthcare costs for both the entity and employees, including adding wellness programs and better incentives.

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Use of Technology

The survey confirms technology continues to be a main priority as governments advance their own internal efficiency, connectivity and productivity. The majority of respondents believed the increased use of technology will be necessary to keep costs under control. In larger entity respondents (of $250M+ in revenue), there was a decrease in overall IT-related full-time employees’ year-over-year.

Most respondents (70%) felt only somewhat prepared for a cyber-attack. In looking at data breaches, 68% of respondents experienced an actual or attempted data breach of some type, and 71% were deliberately perpetrated by an external party.

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Other Key Findings

  • Although 82% of respondents believe the increased use of technology will be necessary to keep costs under control, 51% of the respondents still require paper based or manual steps for internal administrative processes.
  • While insufficient budget or funding was identified as the main barrier to implementing new technology, respondents were almost twice as concerned about having enough budgeted funding for the replacement of aging city infrastructure.
  • 45% of the respondents received less than $10M in Coronavirus Relief Funds.
  • 74% of respondents have not started or have just begun the implementation process of GASB 87.

“As the federal government enacts new mandates in response to COVID-19, the trickle down affect is considerable on state and local levels. Local government entities will need to continue to transform the way they budget and oversee their workforce and operations,” said John Gilberto, Government Services Leader.

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