Municipalities Face Challenges Replacing Their Finance Officers
The recent resignation of Governmental Developmental Bank of Puerto Rico President Javier Ferrer is just the latest example of challenges municipalities face finding replacements for key employees that often pop up when governments face critical financial decisions.
Ferrer had taken the lead in overseeing and advising on the debt of Puerto Rico’s government and Gov. Alejandro Garcia Padilla is now tasked with finding a qualified replacement in the midst of his commonwealth facing risks of downgrades to its investment-grade ratings. While most governments are not nearly the size of Puerto Rico, a void left by someone heavily involved with public finance can negatively impact municipalities big and small in their efforts to maintain fiscal order.
David Evertsen, a former city manager in Lewiston, Mont., who is now CEO of a government relations recruiting firm called Municipal Solutions, said his company has been busier than usual in 2013 helping fill public finance positions around the country. In a typical year, Municipal Solutions will handle two public finance openings, but in the last six months alone six of these jobs have been filled, Evertsen said.
“We’re seeing a huge uptick, said Evertsen, whose firm averages around 40 to 50 recruitments a year.
While turning to recruiting firms is one option to fill key public finance voids, governments can also turn to the organizations like the Government Finance Officers Association (GFOA) and International City/County Management Association, who have pages on their websites dedicated to job municipal finance job postings. Placing an ad for a position on the GFOA costs $150 for active members, $250 for associate members and $500 for non-members.
If possible, municipalities should make an effort toward having succession plans with a qualified assistant public finance officer ready to jump in should a key vacancy occur, according to Colin Baenziger, owner of Wellington, Fla.-based executive recruiting firm, Colin Baenziger & Associates.
“A lot of times you can plan ahead and see the retirements coming but not enough are doing it,” said Baenziger, a former village manager for Wellington whose firm since 2005 has hired slightly more than 70% of local government chief executives from municipalities that hired a recruiter in Florida, Virginia, North Carolina, Washington, Georgia and Arizona. “Local governments need to start preparing those succession plans because it can be tough recruiting for your next finance director.”
Bob Hoffmann, borough administrator for Westwood, N.J., since 2007, said more municipalities are opting to hire an interim finance administrator when openings are created due to the need to get vital work completed. He said having someone in place to handle finances is important both from an internal standpoint and when it comes to ratings from credit agencies. “You can’t go an extended period of time without a certified municipal officer in place,” said Hoffmann, who teaches sustainability and public purchasing at Rutgers University and is an executive board member of the New Jersey Municipal Managers Association. “It’s important from a rating agency’s perspective but it’s also important from a continuity standpoint.”
Part of the challenge for governments retaining and attracting qualified candidates is the fact that many have shifted from offering pension plans to a defined contribution model, according to Alan Schankel, managing director at Janney Capital Markets. Schankel said without defined benefit plans, municipalities need to get more creative and offer higher salaries with benefits like educational credits to successfully recruit solid candidates.
“It’s a huge problem to find talented people to serve in government,” said Schankel. “The pendulum is shifting toward the private sector.”
In addition to assisting with employment searches, Municipal Solutions also conducts compensation package studies for municipalities to determine whether adjusting pension models is needed. Evertsen is seeing a greater shift toward defined contribution plans with governments he consults.
“A lot of municipalities that have collective bargaining units are starting to see the repercussions od defined benefit plans,” he said. “Municipalities cannot continue to sustain these plans.”