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Because tax revenues never go far enough, local governments are always looking for ways to save money while still providing needed services.

One strategy to consider is outsourcing the financial management functions to a qualified, independent third party. Hiring an outside provider gives management more time to focus on the municipality’s goals, strategy and overall management of day-to-day operations. 

The practice, which is becoming more common across many industries, generally aligns around complex, compliance related duties that require a high level of specialization or coordination. Outside advisors who work with municipalities can be more proficient in financial accounting, reporting and advisory needs such as financing, capital planning and budget management. These advisors enhance the knowledge and skills of management and staff as they work with them.

There are many benefits to outsourcing, but an important reason for using an outside service provider lies in personnel. When people who retire or leave for other reasons are not replaced, their institutional knowledge leaves with them. In addition, other employees need to pick up the slack, taking time away from other important tasks.

When a new individual is hired, it takes time to get them up to speed. Having an outside advisor to confer with shortens the learning curve and aids in continuity. As an added benefit, the municipality does not have to provide employee-related benefits such as paid time off, health insurance or retirement benefits.

Employees who are still on the governmental unit's payroll also benefit. The outside company’s knowledge is available for ongoing help with day-to-day operations and recurring questions, promoting their individual growth and professional development.

There are many other benefits to outsourcing, which we’ll go into in Outsourced financial management, part 2.

For more information on this topic, or to learn how Baker Tilly municipal specialists can help, contact our team.

Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities.

Daniel A. Hedden
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