SLGE Helping state and local governments become excellent employers so they can attract and retain talented public servants. Mon, 12 Jun 2017 18:55:46 +0000 en-US hourly 1 Trends to Watch in State and Local Government – 2016 Fri, 08 Jan 2016 18:08:02 +0000 Read More]]>
    • State and Local Governments Hiring Temporary or Contract Employees.  42 percent of human resources managers reported that they had hired temporary or contract employees and 73 percent hired employees in the last year.  Recruiting and retaining employees was the top concern. Read more.
    • More Changes to Employee Health Benefits.  Although state and local government revenues have been improving, they are not keeping pace with costs.  Since 2009, more than half of state and local governments have made changes to their employee health benefits, most commonly increasing employee contributions.
    • Retiree Health Benefits Are Affected, Too. Retiree health benefits have been an important recruitment and retention tool, but they are less well funded than pensions. Learn more.
    • More local governments are shifting retirees to Medicare at age 65.  Just 6 percent of local governments have shifted retirees to a high deductible plan with a health savings account or from a fully insured to a self-funded plan, according to a survey of local government human resources managers.  Health benefit changes for new hires are more common. Read more.
    • More Volatility in Pension Plan Numbers.  Pension plan funding improved last year, with funded ratios rising to 74 percent in 2014.  The improved funding was the result of asset values rising faster than liabilities and higher payments of the annual required contributions by state and local governments. Learn more.
    • Funding improvements will be difficult to achieve if there are significant downturns in the stock market. In addition, there will be more volatility in the figures that are reported as all plans now report the market valuation of assets on a fixed date, as required by new Governmental Accounting Standards Board Statement 67.  Three different pension calculations are now needed for different purposes: (1) financial statements; (2) ratings agencies; and (3) budgets. Read more.
      To see the latest national and state trends in pension funding, employer contributions, asset allocations, and other quick facts, go to
Free Webinar: Auto Features in Public Sector Retirement Savings Plans Tue, 03 Jun 2014 15:30:12 +0000 Read More]]> When: Tuesday, June 10, 2014, 2:00 p.m. – 3:00 p.m. ET

What: The Center for State and Local Government Excellence is currently examining the use of auto features, such as auto enrollment and auto escalation, by state and local governments in the supplemental savings account plans they offer employees. Researchers found that anti-garnishment laws and fears that auto enrollment may lead to benefit cuts can stymie auto enrollment programs. However, they also found that strategies, such as working with employers to develop and implement auto enrollment; educating local government leaders about the importance of employee supplemental savings; and changes in state laws can facilitate the implementation of auto features.

The webinar will walk through the basics of auto enrollment and auto escalation; challenges facing governments that wish to implement auto enrollment programs; and practices to facilitate auto enrollment programs.


  • Study author: Paula Sanford, researcher, Carl Vinson Institute of Government at the University of Georgia
  • Gregory Dyson, senior vice president and chief operations and marketing officer, ICMA-RC
  • Joshua Franzel, vice president of research, Center for State and Local Government Excellence

Register now:

For more information: Anna Owen, 202-962-8085,

Recruitment, Retention and Succession Planning in Local Health Departments Tue, 12 Nov 2013 17:12:05 +0000 Read More]]> Retaining currently funded positions is even more important to local health department leaders than recruiting new and retaining existing employees, according to a new research by the Center and its research partner, the University of Illinois at Chicago School of Public Health (UIC).

Center Vice President of Research Joshua Franzel and Julie Darnell of UIC presented the research findings in an October 24 webinar. The project, which examined local health district (LHD) recruitment, retention, and succession planning practices, was funded by the Robert Wood Johnson Foundation.

Joshua Franzel reported that

  • many local health departments cut staff between 2008 and 2010
  • LHD executives are challenged to reward and promote valued employees due to human resource rules and procedures
  • the lack of opportunities results in retention challenges
  • some LHDs are using promising recruitment and retention practices, including planning ahead for future workforce needs; relying on data for planning and decision making; advocating for public service and public health; focusing on knowledge and expertise retention; and supporting robust professional development and leadership training programs.

Aaron Kissler of the Florida Department of Health, Gadsden County, pointed out challenges they face, including

  • salaries and benefits that can’t compete with those in the private sector
  • high retirement rates
  • uncertainties about funding from the state or outside grants

Kissler highlighted Gadsden County’s individual development plans as an effective staff development and retention tool. He shared examples of how they use employees from neighboring counties to cover gaps in staffing both to make the most of their resources and to contribute to staff development and training.

Julie Darnell presented research findings about succession planning. She reported that:

  • LHDs are filling senior positions approximately once every 1.3 years
  • the majority of LHDs are very concerned about finding well-qualified individuals to fill open positions
  • the vast majority of LHDs practice informal succession planning, rather than formal succession planning
  • the chief executives are responsible for driving succession planning and creating a workplace culture that values behavioral competencies
  • key tools to help foster staff and leadership development include stretch projects, cross-training/orientation, coaching, and structured leadership curricula

Barney Turnock, also of the UIC, discussed the need to look at the public health workforce in the context of the broader issues affecting the public sector workforce generally.

  • The decline in the size of the public health workforce is similar to reductions in the general public sector workforce.
  • While public health departments have increased in productivity in recent years, so, too, have the demands on them as a result of rising needs for community health and emergency preparedness and response.

View the full webinar.

Center President/CEO Kellar Keynotes Burlington, VT, Pension Forum Tue, 12 Nov 2013 16:03:33 +0000 Read More]]> Like many local governments, the city of Burlington, Vermont, has seen its funded status slip and its annual required contributions grow over the last decade. City leaders held a pension forum on November 5 to talk about the issues.

Former City Attorney Joe McNeill noted that the city had enhanced pension benefits in 2000, but two years later, it began to realize that it had taken on a commitment that would be difficult to sustain. The problem was magnified by the investment losses sustained during two recessions.

Keynote speaker Elizabeth Kellar, president and CEO of the Center, told attendees that Burlington would need to decide what changes to make to its retirement system based on its own needs and values. She said the city should keep employee recruitment and retention in view while crafting plan changes.

“You’re 70 percent funded. Most cities right now are about 73 percent funded, so you’re a little below average,” Kellar said. “It’s not a problem that can’t be solved.  Small changes, in many cases, can make a big difference over time.”

Kellar emphasized the importance of a clear pension funding policy that shows how and when pensions will be funded.  She noted that well-funded pension plans follow certain practices. They:

  • take a long-term approach to estimating investment returns
  • have employers that consistently pay the full annual required contribution
  • adjust their demographic and other assumptions as needed
  • have realistic full retirement ages
  • accumulate reserves when investments are strong
  • do not allow extraordinary income to be included in pension formulas
  • use long-term financial modeling to analyze pension benefits
  • have annual briefings from the plan sponsor and actuary

To learn more, read the Burlington Free Press story on the forum.

Webinar: Retirement in 2050: Generation Y Planning Thu, 03 Oct 2013 18:45:28 +0000 Read More]]> Join ICMA-RC and the Center on Thursday, Oct. 17, at 3:00 ET for a special webinar to kick off National Save for Retirement Week.

As Generation Y becomes a larger segment of the state and local government workforce, and compensation and benefits structures continue to change, now is the time for public employers to prepare.

  • How can employees supplement their retirement savings outside their traditional pension?
  • What should public employers consider when developing a financial education program?
  • What do we know about changes to retiree health care?

Join us for a conversation about what you may want to consider when helping younger employees plan for their retirement.

Speakers include Center President & CEO Elizabeth Kellar and Vice President of Research Joshua Franzel.

Register now.

National Save for Retirement Week (October 20-26) is a national effort to promote awareness about the importance of saving for retirement. Learn more at

Preparing Employees for Retirement Wed, 11 Sep 2013 15:31:35 +0000 Read More]]> State and local government employees considering retirement face many of the same pressures affecting private sector workers.

Pensions may replace less income in the future, health care costs in retirement continue to rise, and many retirees must make mortgage payments and support multi-generational households.

What can government employers do to better position their employees for retirement?

Center Vice President of Research Joshua Franzel recently tackled these issues in a presentation to the National Conference of State Legislatures (NCSL) 2013 Legislative Summit in Atlanta.

Franzel cited the findings of a report, The Evolving Role of Defined Contribution Plans in the Public Sector, he co-authored with Paula Sanford of the University of Georgia Carl Vinson Institute of Government in 2012.

Franzel’s key points included:

  • The role of supplemental savings, including supplemental defined contribution plans, will grow as reliance on pensions for retirement income declines. Governments can encourage retirement savings by establishing systems to automatically enroll employees and adjust contribution levels and investments as they progress through their career.
  • Employers should strive to strike a balance between providing varied investment options without overwhelming employees with too many choices.
  • As governments shift more responsibility for retirement savings to employees and retirees, financial education is more important than ever. Given the variations in education, experience, and situations of the government workforce, employers will need to develop a range of financial literacy programs.
  • Employers will also need to decide how extensive to make their programs — should they cover all aspects of an employee’s financial life (retirement, rainy day savings, credit management, mortgage, college savings, etc.) or limit their offerings to job-related benefits?


State Pension Reform Revisited Tue, 11 Jun 2013 19:10:23 +0000 Read More]]> State pension reform has been the topic of much discussion since 2009, when the effects of the economic downturn on state and local governments forced an examination of all aspects of their finances. Employee pensions, which are heavily dependent upon investment returns to fund benefits, have been under intense scrutiny ever since, and the result has been that more than 40 states have passed reforms to their public pension programs.

Most states that have adopted pension reforms have modified their existing defined benefit programs. Some changed their plan design from defined benefit to a combination of defined benefit and defined contribution, known as a hybrid.

The ability of a state government to reform its pension system depends on the nature of the issue that needs addressing and the political feasibility of passing reforms. In some cases, states have enacted pension reforms only to go on and address the same or another issue later on.

New York State

New York changed employee contributions and eligibility twice in two years.

In 2009, New York passed a law creating Tier V, which represented significant changes to the pension benefits system for state and local employees. It increased contributions, reduced benefits, and increased retirement ages for members hired on or after January 1, 2010.

In 2012, New York passed legislation creating a new tier (Tier VI) of pension benefits for employees hired on or after April 1, 2012.

Tier VI made further adjustments to each of these provisions and locked in Tier V provisions for those employees hired between January 1, 2010, and March 31, 2012.

Tier V Tier VI
Contributions 3% 3%-6% depending on employee salary
Benefits 1.66% for the first 20 years of service; 2% for years 21-30 1.75% for the first 20 years of service; 2% beginning in the 21st year
Eligibility 62 with 10 years of service 63 with 10 years of service

Thus, the second round of reforms increased benefit levels, offset by corresponding increases in contribution rates, and the age for retirement eligibility.


In 2003, Oregon moved from a defined benefit pension to a hybrid pension system for employees hired on or after August 29 of that year. The new Oregon Public Service Retirement Plan combined a traditional defined benefit pension with an individual account (defined contribution) component to make up the full retirement benefit.

Oregon went without further pension reform until 2013, when the state passed a law reducing COLAs for OPERS retirees. In this case, the state chose a different area of the overall benefits package to reform, rather than building on the 2003 reforms, which altered plan design.


The state of Michigan has undertaken the pension reform process twice for employees of the state’s Public School Employees’ Retirement System.

In 2010, the state passed a law that created a hybrid (DB/DC) plan for new hires. Newly hired employees were given the same benefit multiplier as the defined benefit plan, but were required to contribute more toward the funding of their benefits as well as participate in a mandatory defined contribution plan.

In 2012, another round of pension reform built on the earlier reforms passed, asking employees to accept reduced benefits or a change in plan design.

The reforms targeted two groups of Public School Employees: participants in the defined benefit plan (those hired between 1990 and 2010) and participants hired after 9/26/12. (Employees hired between 2010 and 2012 who participate in the hybrid plan were not affected.) Specifically:

Employees hired between 1990-2010 had two options:

  • keep their current contribution rates benefits and have their benefits frozen at a 1.5 percent multiplier (with 1.25 percent accrual for future years of service)
  • move into the DC plan and receive contributions of 4 percent from employers for future service (with variable employee contributions)

Employees hired after 9/26/2012 could choose between the hybrid plan and the defined contribution plan.

The examples presented in this article demonstrate that pension reform is an issue that is iterative and state-specific. Different benefit programs are targeted for reforms in different ways and, in a few cases, multiple rounds of reform aim to correct prior reforms, build upon new benefit designs, or target different areas entirely.


How Strong is Your Talent Pipeline? Thu, 30 May 2013 19:43:08 +0000 Read More]]> As the pace of retirements accelerates, government leaders are paying more attention to staff development.

“The future is speeding up,” Center President and CEO Elizabeth Kellar told attendees at a workforce session at the National Association of State Chief Information Officers Mid-Year Conference.

Kellar added that there are implications for recruitment practices and compensation packages. “Governments also will need to find ways to speed up learning,” she advised.

The panelists (chief information officers for the states of Tennessee, California, and Ohio) described the selling points of working for government:  “We have big toys, big problems, and a big opportunity to make a difference.”

They also recommended workforce development strategies for governments, including:

  • Grow your own talent
  • Develop career paths (no more dead end jobs)
  • Provide training that is geared to the specific knowledge, skills, and abilities the organization needs.
  • Partner with academic institutions
  • Ask vendors to help
  • Teach leadership skills
  • Provide training in procurement, project, and change management
  • Offer online courses
Center Summit Debates Widespread Changes to Retirement Plans Wed, 24 Apr 2013 14:28:59 +0000 Read More]]> FOR IMMEDIATE RELEASE
April 24, 2013

Widespread changes to retirement plans debated

WASHINGTON, DC – Aging workers and widespread changes to retirement plans challenge state and local governments.

Nationally recognized experts and practitioners gathered in Washington, DC, last week at the Future of Retirement Summit to examine how demographic, workforce, legal, financial, policy, and political challenges are changing local and state government retirement strategies.

The event was hosted by the Center for State and Local Government Excellence and moderated by Peter Harkness, founder and publisher emeritus of Governing magazine.

Center President and CEO Elizabeth Kellar opened the Summit on a cautiously optimistic note, pointing to the slowly brightening financial outlook for state and local governments as the economy recovers and stock market rises.

Kellar shared data from the Center’s annual survey of state and local government human resource professionals that measures workforce trends. The survey, which will be released next month, shows some improving conditions:

  • Pay freezes still top the list of workforce changes, with 33 percent of governments reporting them in 2013 compared with 51 percent in 2012.
  • Eighteen percent of respondents reported layoffs, down from 28 percent last year.
  • Staff development is the top human resources issue this year.

She noted that 44 states have made significant changes in their pension plans between 2009 and 2012 and that governments in 2013 still report a high rate of change to retirement and health plan benefits: 44 percent of survey respondents said their government made changes to retirement benefits this year, most commonly increasing employee contributions.

Speakers reminded the audience that cutting retirement benefits is not costless and that pension plans must be carefully designed to provide retirement security.  And while the rate of retirements from local and state governments is growing, so, too, is the list of skilled positions that are difficult to fill.

“You have a situation where we’re coming out of a period of pay and hiring freezes and governments need to hire workers, especially those with specific skill sets,” said Center Vice President of Research Joshua Franzel. “Governments are continuing to compete for talent with an ever-recovering private sector. You’re seeing rebounding government finances that might position these governments to be able to hire more, but at the same time the [cost of] benefits are crowding out their ability to pay competitive wages.”

Alicia Munnell, director of the Center for Retirement Research at Boston College, emphasized that public pensions are not as bad off as many assert.

“You have to be so careful to point out the heterogeneity of the outcomes,” she said, “because there’s an array of differences in the funded status, how well they’re managed, and the nature of benefits. We do have a lot of plans that are fairly well funded now, but we also have a lot that are poorly funded and they are going to be in trouble almost no matter what happens.”

She said that her estimates for 2011 (the most recent figures available) show that, even with the effects of the financial crisis, public pension plans are 75 percent funded. She emphasized that pension costs in 2010 were only 4.6 percent of state and local government budgets.

Her outlook is optimistic overall. “I don’t think of it as an area where we’re going to see failure after failure after failure. If anything, I’m hopeful that we’re working our way through it.”

She agreed with moderator Peter Harkness when he concluded that, with a few exceptions, “the ill health of public pension plans is greatly exaggerated.”

Robert Clark, Zelnak professor at the Poole College of Management, North Carolina State University, reviewed overall trends in public retirement plans. Although defined benefit (DB) plans still predominate in the public sector, after decades of increasing benefits, they are now retrenching through modifications and redesigns.

“Clearly there’s a one-way direction in these last 15 years that is continuing today,” said Clark, “increasing retirement ages, increasing vesting, and a variety of other things that make these plans less generous.”

He said there is a fundamental question about whether DB plans are right for every employee. Many states are saying “no,” but he cautioned that such changes have larger ramifications both for governments’ ability to hire and retain skilled employees and for taxpayers.

“We all believe that these plans affect worker decisions – attracting, retaining, motivating, and ultimately retiring workers. We all believe that the costs affect our tax rates. How do we put those together and think about that in an integrated system?”

The upshot? “Individuals, public employees, are going to look at the future and say, ‘I’ve got to take more and more responsibility for my own retirement income. I’d better think about how I’m going to do that.’”

Munnell added that as more governments introduce defined contribution (DC) plans or DB/DC hybrid plans, they must use the lessons learned in the private sector. “The evidence is pretty clear at this point that people do not accumulate very much in these plans,” she said. “They make [investment] mistakes, they don’t join, and they take out their money when they change jobs.”

It is critical that such plans in the public sector be well designed, since many public sector workers do not have Social Security to fall back on.

Steven Kreisberg, director of collective bargaining for the American Federation of State, County and Municipal Employees (AFSCME), suggested that the many public debates  can be a way to deflect public attention from the real issue: that a government may not have assets to cover its liabilities.

“It’s really about, how do we break promises to people?” he said. “A liability is nothing more than a promise. So when we reduce liabilities we’re talking about how can we break a promise? How can we do that legally under contract theory? And we rarely have discussions about the moral aspects of this. Because we don’t reach into people’s bank accounts and take money out. But for some reason it’s deemed acceptable to take people’s pension benefits — which they, in many cases in the public sector, paid for – at least paid for in part – but in all cases have earned by virtue of service.”

Louis Kosiba, executive director of the Illinois Municipal Retirement Fund (IMRF), pointed out that there are a number of factors that have led to IMRF’s 88 percent (market based) funded status:  an independent board of trustees, enforcement authority to collect employer contributions, a 7.5 percent investment assumption since 1992, and a sound actuarial approach. “We have a 100 percent funding goal,” he noted.

In a lively question and answer period, Robert Clark noted that workers with a short government career may leave with no retirement benefits other than their own contributions.  He added that there are unanswered questions about the decision many have made to raise the retirement age.  “If we raise the retirement age, they will stay.  Do we want that?”

Full video of the Summit and most of the PowerPoint presentations are posted on the Center’s website.


For more information: Amy Mayers,, 202-682-6102


2013 Outlook: States May Offer DC Plans for Some Employee Groups Fri, 12 Apr 2013 20:41:13 +0000 Read More]]> Most of the pension reforms states have passed since 2009 have made changes to their existing defined benefit plans.

The reforms have included modifications to the eligibility requirements or benefit levels. In a few cases, state and local governments have turned to hybrid plan designs, which add a defined contribution (DC) plan while preserving a defined benefit element.

Although there has been no general trend toward shifting employees to a defined contribution plan as the primary retirement benefit, some states are beginning to look at defined contribution plans as a primary offering for certain employee groups.

How will DC plans affect retirement security?

There are questions, however, about how a shift to DC plans would affect retirement security, since they are based on individual investment returns that can fluctuate over time and do not produce a guaranteed return. As such, most experts believe they must meet a few conditions.

Some of these conditions, outlined in a recent report, “The Evolving Role of Defined Contribution Plans in the Public Sector,” include:

  • making participation as simple as possible
  • equipping employees with the proper tools, education, and counseling to enable them to assume greater responsibility for the financing of their retirement income
  • bolstering retirement security with options for annuitization of benefits and periodic cost of living increases

For the employer, the conditions usually center around the issue of cost. An independent analysis is usually required to determine if closing a defined benefit plan and setting up a defined contribution plan will result in cost savings and, if so, when.

Montana and Florida consider DC plans

Two states are currently considering these issues as they seek to increase the role DC plans play in the retirement offerings for their public employees.

Some in the Montana legislature believe that the issue of whether to keep the state’s defined benefit plan intact or switch new hires to a defined contribution plan should be decided by state voters. A bill is currently making its way through the state legislature, which, if approved, would put a referendum on the state ballot in November 2014 that would ask voters to decide the issue. Significant debate is expected on this issue.

The Florida Senate has proposed SB 1392, a bill that would close the state’s defined benefit plan to new employees and enact a 401(k) plan for new hires. A similar bill was approved by its House last month and SB 1392 is now headed for a vote on the Senate floor. The respective bills do not enjoy unanimous support, with some lawmakers questioning the proposed savings that would result from closing the plan.

Defined contribution plans, while not approaching anything that could be described as a trend in pension reform, are gaining in popularity as other reforms increasing eligibility requirements, cutting benefits, and introducing hybrid (elements of defined benefit and defined contribution) plans have already been made. The cases in Montana and Florida will be important to watch as they could forecast similar scenarios in other states.