Public sector finance departments are responsible for safeguarding public resources, meeting complex reporting requirements, preparing for audits, managing grants, and helping leaders make sound financial decisions. Today, many are being asked to do this with fewer experienced professionals and on tighter timelines.
Workforce shortages are a structural risk affecting operations, financial reporting, compliance, internal controls, employee morale, and public trust on more than a temporary basis. For finance leaders, the issue is whether the organization has the capacity, expertise, and resilience to meet its mission when staffing levels fluctuate.
Why Is the Shortage Structural, Not Temporary?
Public sector workforce shortages are being driven by long-term forces, including retirements, private sector competition, and rising operational complexity, particularly in finance and accounting.
One significant challenge is the loss of institutional knowledge. When long-tenured employees retire or leave, they take with them years of practical experience related to financial systems, grant management, audit readiness, reporting requirements, and organizational culture that can be difficult to replace.
Government employers also compete with the private sector for candidates with in-demand skills such as accounting, finance, cybersecurity, data analytics, and grant management. Private sector employers often offer higher compensation, greater flexibility, and remote work options that governmental entities may struggle to match.
Meanwhile, expanded federal grant programs, heightened compliance requirements, evolving accounting standards, and demands for transparency require finance teams to do more with fewer resources. The result is persistent strain that may go unnoticed until significant operational problems emerge.
What Are the Real Financial & Operational Risks?
Workforce shortages used to be considered a human resources issue. Today, they should be viewed as enterprise risks. Staffing gaps can delay financial close, audit preparation, grant reporting, and regulatory filings. When experienced personnel are unavailable, organizations may rely on manual workarounds that increase error risk and weaken controls.
A situation at Milwaukee Public Schools shows how staffing and reporting challenges can produce significant consequences. In 2024, the district projected a reduction of approximately $43 million in state aid after reporting errors resulted in prior-year overpayments.1 The issue was linked to delayed and incomplete reporting within an understaffed finance function that relied on manual processes and outdated systems.
The consequences extended beyond the funding reduction. State reviews identified broader financial management deficiencies, leading to corrective action plans, governance reforms, increased oversight, and extensive audit recommendations.
The situation also shows that capacity challenges can persist long after an initial error occurs. In 2025, Milwaukee Public Schools again missed reporting deadlines, prompting the Wisconsin Department of Public Instruction to withhold additional state aid while required reports were completed and reviewed. Although district leadership later reported significant progress and previously withheld funds were released in early 2026, the experience underscores a key lesson: workforce shortages and institutional knowledge gaps can become enterprisewide risks.
The impact extends beyond compliance. Finance leaders consumed by daily operations may have less time for strategic planning, modernization, and process improvements. To fill this gap, remaining employees may carry heavier workloads, which may lead to increased burnout, lowered morale, and compounded turnover.
Proactive Responses
The City of Hollywood, Florida, offers an example of a proactive response to workforce continuity challenges. Beginning in 2020, elevated retirements and resignations created institutional knowledge gaps and difficulty filling technical and operational roles amid increased competition for talent.
Rather than relying on one solution, the city implemented a workforce strategy that included sign-on bonuses, expanded recruiting, technology-enabled hiring and onboarding, promotion of benefits and work-life balance, and investments in employee satisfaction and retention. These efforts improved hiring efficiency and helped reduce disruption from employee turnover.
Workforce continuity remains an active management priority for the city. The city’s 2024 Strategic Plan identifies Employee Development and Empowerment as a core focus area, with goals tied to recruitment, retention, training, and engagement. However, recent performance data suggests workforce pressures continue.
In fiscal year (FY) 2025 reporting, citywide vacancy rates increased from 8.95% to 10.05%, while sworn police officer vacancy rates rose from 1.7% to 3.48%, the highest level reported in five years.2
The city continued investing in engagement, with wellness program participation more than doubling year over year. In addition, the city also continued adjusting authorized staffing levels to respond to operational demands. For FY 2026, Hollywood increased its authorized workforce positions and subsequently approved additional staffing adjustments.3 4
An important lesson is that workforce shortages are rarely solved through a single initiative. Even organizations that improve recruiting, onboarding, and retention must keep adapting to changing labor markets.
Do Traditional Strategies Still Matter?
Even in the age of artificial intelligence (AI), recruitment and retention remain foundational. Professional development, succession planning, targeted hiring incentives, cross-training, and process improvements can support long-term stability. Automation and standardization can reduce administrative burdens and improve efficiency, while cross-training lessens dependence on individual employees.
However, these strategies often require significant time and investment before measurable benefits are realized. Hiring qualified governmental accounting professionals can take months, and developing a level of expertise in fund accounting, grants management, audit preparation, and reporting can take years.
For organizations experiencing immediate staffing shortages, traditional approaches may not provide sufficient relief on their own.
Flexible Capacity as a Strategic Tool
Increasingly, public sector organizations are supplementing traditional workforce strategies with flexible capacity models. Shared services, temporary staffing, project-based support, and selective outsourcing can address critical needs without permanently increasing headcount.
Government Outsourced Accounting Services can help maintain continuity during transitions or vacancies. Common services include financial close support, reconciliations, grant accounting, financial statement preparation, audit readiness, and interim leadership.
The value goes beyond adding personnel. External professionals can bring focused governmental accounting experience with minimal onboarding. These arrangements have the potential to strengthen continuity, support internal controls, reduce risk, and allow internal staff to focus on higher-value work.
These solutions can be part of a broader workforce strategy and not as replacements for internal talent. The goal is to support employees, maintain service levels, and preserve resilience while long-term workforce development plans continue.
Looking Ahead
Public sector workforce shortages are likely to remain a long-term challenge. Protecting financial operations, maintaining compliance, safeguarding public resources, and preserving public trust should be top of mind for finance leaders who view shortages through a strategic risk management lens.
Milwaukee Public Schools illustrates why workforce challenges are more than a hiring issue. Reporting deficiencies within an understaffed finance function led to state aid reductions, regulatory scrutiny, audits, corrective action plans, and oversight. It is clear that staffing shortages, knowledge gaps, and outdated processes can become enterprisewide risks.
The City of Hollywood’s experience demonstrates that even proactive organizations with innovative recruitment and retention strategies continue to face workforce pressures. Building sustainable organizational capacity that adapts to labor market realities while maintaining consistent service delivery shows that this issue is more than simply finding employees.
Workforce resilience is a component of financial resilience. Staffing capacity, succession planning, process documentation, cross-training, and technology are as much risk mitigation strategies as they are operational best practices. To be resilient, organizations will need to balance investment in people, processes, technology, and flexible support models that can strengthen capacity while protecting service delivery and accountability. The goal is to create systems, processes, and partnerships that sustain the mission when staffing fluctuates.
How Forvis Mazars Can Help
If you have any questions or need assistance, please reach out to a professional at Forvis Mazars. Explore our Government Outsourced Accounting Services and download our Public Sector Priorities for additional insights into embracing change and preparing for what’s next.
- 1“State Releases $8M to MPS Previously Withheld for Financial Mismanagement,” wpr.org, January 16, 2026.
- 2FY 2025 Year-End Performance Report, October 1, 2024-September 30, 2025, www.hollywoodfl.org.
- 3Resolution No. R-2025-337-A Resolution of the City Commission of the City of Hollywood, Florida, Establishing the Number and Type of Authorized Positions for Each Department and Office for the Fiscal Year 2026, www.hollywoodfl.org, September 25, 2025.
- 4Resolution No. R-2026-125-A Resolution of the City Commission of the City of Hollywood, Florida, Amending the Number and Type of Authorized Positions and Adjusting the Assignments of the Authorized Positions for Each Department for Fiscal Year 2026 as Previously Established by R-2025-337, www.hollywoodfl.org, April 15, 2026.