An Examination of Employee Benefits Cost Control Strategies in New Jersey Local Governments

Abstract

Employee benefits are an essential and costly component of the compensation and human resources management system. This research effort surveyed 118 New Jersey local governments on benefits cost management strategies. The results indicate that the majority of local governments are utilizing displacement strategies that shift or impose costs onto either taxpayers (higher taxes) or employees (outsourcing, higher co-payments) in contrast to structural solutions that address the macro-level financial variables that influence either the demand or supply side of benefits finance (i.e., self-insurance, benefit consortiums, or service regionalization).

Only a quarter of the strategies employed entailed structural solutions. Recommendations are provided to enhance the effectiveness of benefits plan cost-control strategies, including systematic needs assessment and technical assistance.