Sick absence rates among council staff were at their highest since 1990, the local government auditor for Northern Ireland said.
An average of 15 days were lost per employee during 2017-18.
Heavy reliance by some local authorities on agency workers increased the bill for temporary staff to £26 million, the report said.
Auditor Pamela McCreedy said: “The monitoring and management of sickness absence levels continues to very challenging for councils.
“Staff welfare must be protected, along with the efficient and effective delivery of front-line services to the public.
“With no indication of overall improvement, I have decided that councils could benefit from a more detailed report in this area and I will work with the comptroller and auditor general of the Northern Ireland Audit Office to commence a study in this area this year.”
A smaller number of councils with enhanced powers have been created following a major shake up of local government.
Absenteeism varied significantly between councils, with six reporting reduced absence levels from the previous year and five reporting increases.
Antrim and Newtownabbey Borough Council recorded the lowest number of days lost while Newry, Mourne and Down District Council recorded the highest.
Increases were attributed to a rise in long-term sickness absence because of conditions like severe depression, musculoskeletal problems and stress.
Local councils employed the equivalent of more than 10,000 full time staff.
They also spent £26 million on agency workers, an increase of £1.7 million from 2016/17.
The watchdog added: “While I recognise that the use of agency staff is necessary to cover seasonal service demands, the ongoing over-reliance on agency staff, by some councils, to perform work that could be done by employees increases the risk that value for money cannot be delivered.”
Overall, councils are in a financially strong position and managed their finances well in 2017-18, the auditor added.
Reserves have increased since the new councils were formed.
The auditor said it was important councillors were clear about the reasons for the level of reserves being held and what they may be used for.
The 11 local councils spent a total £936 million providing services to the public, an average of £473 for every person in Northern Ireland.
They received income of £862 million, 70% of which was from district rates.