Trends to Watch in State and Local Government – 2016

        • 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