The Looming Crisis in Public Finance Staffing

When I started in the public sector over twenty years ago, it was a competitive market with a long and slow climb up the ranks to get to higher positions. Even prior to Covid, I was still working in place that had several 25–30-year employees that were toward the end of their career. Covid, helped to accelerate the pace of those employees exiting the market and now the ones that have lingered around are exiting the market.

Those trends have left a wide-open market with a lack of experience and a limited desire by public finance staff to move to a new market to take on new positions. This makes it challenging to fill key roles, especially with staff that have the knowledge needed to step into challenging roles that require technical knowledge.

Public finance is a cornerstone of government operations. However, the aging workforce, declining interest in public sector careers, and competition from the private sector has created a staffing crisis. Both the Government Finance Officers Association (GFOA) and the American Institute of CPAs (AICPA) have published critical insights into this issue, highlighting current challenges and suggesting paths forward. Below is a summary of those key findings from the studies, risks associated with them and how governments can mitigate them.

The Current Landscape of Public Finance Staffing

The public finance sector is grappling on two fronts: high demand for skilled professionals and insufficient supply to meet it. 

1. Increasing Demand, Declining Workforce

GFOA data reveals that demand for public finance professionals surged by 92% from 2019 to 2022, yet the sector has seen net employment losses since 2019. AICPA adds that fewer accounting graduates are pursuing Certified Public Accountant (CPA) certifications, further straining the talent pool. 

2. Retirement-Driven Turnover

Nearly one-third of public finance professionals will reach retirement age within the next decade. The AICPA study emphasizes that this trend is not unique to government but has a more severe impact in the public sector due to longer tenures and a heavier reliance on senior staff. 

3. Structural Challenges

Public finance offers fewer managerial roles compared to private finance (4% vs. 18%), which limits career advancement opportunities and discourages long-term commitment from early-career professionals. 

4. Diversity Strengths and Gaps

Women and Black professionals are well-represented in public finance, accounting for 61% and 17% of the workforce, respectively. However, men and Hispanic individuals remain underrepresented, highlighting opportunities for more inclusive recruitment strategies. 

Future Risks of Staff Shortages

Without intervention, the public finance workforce shortage could lead to systemic risks that compromise government efficiency and accountability: 

1. Operational Risks

A lack of experienced staff could delay financial reporting, increase audit risks, and reduce compliance with regulatory requirements. We have witnessed the delays in governmental audits post Covid, as governments and audit firms struggle to keep up with industry needs. 

2. Economic Recovery Challenges

Public finance professionals are central to managing federal recovery funds and implementing local economic development projects. Staffing shortages could impede these efforts, slowing community recovery and infrastructure growth. 

3. Knowledge Drain

The retirement wave will exacerbate the loss of institutional knowledge. Both GFOA and AICPA stress the importance of knowledge transfer programs to prevent this loss from derailing operations. 

4. Talent Migration

The private sector continues to lure professionals with higher salaries, faster hiring processes, and clearer career pathways. Without competitive compensation and advancement opportunities, the public sector risks losing its most skilled workers. 

Compensating for Workforce Shortages: Strategies for the Future 

Addressing the public finance talent gap requires a multi-faceted approach that incorporates insights from both GFOA and AICPA. 

1. Streamline Hiring Processes

- Faster Recruitment: GFOA notes that public sector hiring often takes six months, compared to 21 days in private finance. Simplifying hiring processes can make public finance roles more attractive. 

- Modern Recruitment Tools: Use social media and targeted campaigns to reach younger and more diverse candidates. 

2. Enhance Compensation and Benefits

- Competitive Salaries: The AICPA highlights that public finance salaries lag private sector counterparts by an average of 17% for accountants. Closing this gap is essential to attract talent. 

- Signing Bonuses: Both studies suggest offering signing bonuses and financial incentives for candidates pursuing CPA certifications. 

3. Expand Career Development Opportunities 

- Managerial Pathways: Public finance employers should create more managerial roles and leadership tracks to address perceptions of low career ceilings. 

- Training and Tuition Assistance: The AICPA emphasizes investing in employee development, including tuition assistance for accounting degrees and CPA exam preparation. 

4. Promote Diversity

- Targeted Recruitment: Focus on recruiting underrepresented groups, particularly Hispanic individuals and men, to broaden the talent pool. 

5. Strengthen Academic Partnerships

- University Engagement: Encourage higher education institutions to include public finance and governmental accounting in their curricula. The AICPA study highlights the decline in students exposed to these fields, which contributes to the CPA shortage. 

- Internship Programs: Paid internships can introduce students to public finance early and encourage them to consider it as a career. 

6. Retain Existing Staff

- Flexible Work Options: GFOA and AICPA stress the importance of work-life balance, which is a competitive advantage for the public sector. 

- Burnout Mitigation: Recognize and compensate staff for additional workloads during shortages to prevent turnover. 

Long-Term Implications and Opportunities

While the challenges are significant, they also present an opportunity to modernize public finance and make it a more attractive career choice. 

- Technological Integration: The AICPA study suggests that leveraging technology, such as automation in routine tasks, can reduce workload pressures and improve efficiency. 

- Branding Public Finance Careers: Highlighting the impact of public finance on community development and economic recovery can attract service-oriented professionals. 

- Building Resilience: Transferring knowledge and training newer staff members within the organization will be crucial to ensure continuity in operations.. 

The staffing crisis in public finance is not just a numbers game—it’s a challenge that threatens the effectiveness of government operations and the wellbeing of communities. Insights from GFOA and AICPA underscore the urgent need for governments to adapt, offering competitive compensation, streamlined hiring processes, and robust career development opportunities.  

By addressing these challenges proactively, public finance can transition from a state of crisis to one of opportunity, becoming a field that attracts and retains the brightest minds dedicated to public service. Investing in public finance staffing today is an investment in the long-term fiscal health and stability of governments and the communities they serve.