While the economy overall may be slowly recovering, public-sector budgets won't see much relief until a year or more after the U.S. economy finally stabilizes.

“[The public sector] is always at least a year and a half or two years behind the rest of the economy when it comes to recovery,” says Sarah Perry, risk manager for the City of Columbia, Mo.

Municipalities, she explains, have to base budgets on the numbers they have on hand; they can't project variables like tax hikes or other revenue increases into the budget.

“We have always been very careful, fiscally,” says Perry, and that prudence has paid off. “We're not like other public entities that have had massive layoffs.”

In Columbia, “the pension battle continues,” Perry adds. Public entities, she notes, are among the few organizations that still have pension programs—although many do not have defined plans for funding them in a beleaguered economy.

Columbia is still paying pensions but also taking a harder look at funding and the retirement-eligibility process, she says.

In Gainesville, Ga., “we did have some layoffs, but thankfully not nearly as many as some public and private organizations have had to face,” says Cindy Mallett, the city's human-resources and risk manager.

Scaled-back budgets forced Gainesville, just north of Atlanta, to cut some of its social-services programs, raise taxes, lay off some 25 public employees and make other city workers take monthly furloughs. The public workforce has been reduced by some 10 percent since 2009.

But the economic situation is brightening: In November the city council approved a one-time payment of $1,000 each for all full-time public employees (who had not seen a pay raise since 2007).

The move stemmed from an unexpected budget surplus that was some $1.3 million higher than expected; the city attributed it to taxes and municipal court fines that brought in nearly $400,000 more than was projected, as well as to money-saving efforts by city departments, like police and firefighters, which spent nearly $800,000 less than expected due to their own fiscal mindfulness.

Mallett says she's pleased the city's cost-conscious efforts haven't been in vain.

“I don't know that it's so much the economy is improving—or that we have, over the last couple of years, tried to make some choices that would put us in a better position.”

About the future, she says, “I'm cautiously optimistic.”

Special Reports /

Forward-Thinking, Cost-Conscious Strategies Bolster Slashed Budgets

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