Legislature(2023 - 2024)ADAMS 519
02/22/2024 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Adjourn | |
| Start | |
| Overview: Department of Revenue Fy 25 Budget |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 268 | TELECONFERENCED | |
| += | HB 270 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 268
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making capital appropriations; making
supplemental appropriations; making reappropriations;
making appropriations under art. IX, sec. 17(c),
Constitution of the State of Alaska, from the
constitutional budget reserve fund; and providing for
an effective date."
HOUSE BILL NO. 270
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
^OVERVIEW: DEPARTMENT OF REVENUE FY 25 BUDGET
Co-Chair Johnson discussed the meeting agenda.
1:44:31 PM
ERIC DEMOULIN, ADMIN SERVICES DIRECTOR, DEPARTMENT OF
REVENUE, introduced the PowerPoint presentation "Department
of Revenue FY2025 Governor's Amended Budget Overview" dated
February 22, 204 (copy on file).
ADAM CRUM, COMMISSIONER, DEPARTMENT OF REVENUE, ANCHORAGE
(via teleconference), began the presentation on slide 2
titled "Agenda:"
• Department overview and introduction
• FY2025 Department budget priorities
• Year-over-year budget comparison
• Division budget overview
• Corporations and Authorities budget overview
• Position history
Commissioner Crum reviewed slide 3 titled "Department
Overview: Mission and Introduction
Mission: To Collect, Distribute, and Invest funds for
public purposes.
Values
• Integrity
• Stewardship
• Professionalism
• Empowerment
Agency Divisions
• Tax Division
• Treasury Division
• Permanent Fund Dividend Division
• Child Support Enforcement Division
• Commissioner's Office and Administrative Services
Corporations & Authorities
• Alaska Mental Health Trust Authority
• Alaska Housing Finance Corp
• Alaska Permanent Fund Corp
• Alaska Muni Bond Bank Authority
Statewide Items
• Permanent Fund
• Shared Taxes
• Retirement and Debt Service
• Dividend Raffle
Commissioner Crum reviewed slide 4 titled "Department
Overview: Organization." He pointed to the organizational
make-up of the department that contained 5 divisions under
the Commissioner's Office: Tax Division, Treasury Division,
Permanent Fund Dividend Division, Child Support Enforcement
Division, and Administrative Services Division. He listed
the Authorities and Corporations that also held a trustee
or board seat for the Commissioner. Alaska Mental Health
Trust Authority (AMHTA), Alaska Housing Finance Corporation
(AHFC), Alaska Permanent Fund Corporation (APFC), and the
Alaska Municipal Bond Bank Authority (AMBBA).
Mr. DeMoulin continued on slide 5 titled "Department
Overview: Statewide UGF Comparison." He indicated that the
graph depicted where the Department of Revenue (DOR) placed
in Undesignated General Fund (UGF) spend compared to other
departments. He advanced to slide 6 titled "Department
Overview: Total Budget by Fund Group
The FY2025 Governor's Amended Budget totals $464,870.1
in all funds and includes 835 PFT positions
• The increase from Adjusted Base totals $9,571.8
in all funds • $2,328.8 UGF • -$13.4 DGF •
$6,696.4 Other • $560.0 Fed
Mr. DeMoulin reported that the bar graph provided a visual
representation of how DOR's funding was comprised. He
pointed to Other Funds and noted it was the largest fund
group.
Co-Chair Edgmon was temporarily passed the gavel.
1:47:50 PM
Representative Hannan asked about the dramatic drop between
the FY 24 Management Plan and the FY 25 Governor's Adjusted
Base in the Other Category. She asked for more information.
Mr. DeMoulin responded that it was due to a technical
change item that caused the discrepancy. He relayed that it
was due to a decrease and multi-year reversal for AHFC
COVID and federal dollars.
Co-Chair Edgmon noted that it was the first year that DOR
stopped managing the Power Cost Equalization Fund (PCE). He
thought that some positions were eliminated. Mr. DeMoulin
replied that not managing PCE did not have a direct
correlation to DOR's appropriated budget. The change did
not warrant a decrease in staff or resources. He
highlighted slide 7 titled "Department Overview: Budget
Priorities
Child Support Enforcement Class Study Implementation:
The Child Support Enforcement Division has effectively
been managing vacancy rates of over 20 percent over
the last two years. The completion of our class study
was paramount in making these job classes more
attractive to potential employees and we've seen a
significant increase in applications through the last
recruitment cycle.
Permanent Fund Dividend Division: Over the last five
years, the division has seen operational increases as
with most other agencies. The USPS increased postage
rates, our service agreements and chargebacks from
other agencies have increased and we're seeing
increases for external support contracts.
Mr. DeMoulin believed that the reclassifications would
decrease the vacancy rate in the division within a few
months.
Representative Galvin understood that the job
classifications moved up two rankings and wondered how it
translated via percentages. Mr. DeMoulin recalled that it
was more than a 5 percent increase and closer to 15 percent
to 20 percent. He would follow up with the exact number.
Representative Galvin remarked that the increase made sense
to her considering the duties involved in the job.
1:51:42 PM
Mr. DeMoulin continued to discuss the Permanent Fund
Dividend Division increases.
Co-Chair Edgmon requested that the director speak to the
increases. He thought that most Permanent Fund Dividend
(PFD) deposits were electronic.
1:52:50 PM
GENEVIEVE WOJTUSIK, DIRECTOR, PERMANENT FUND DIVIDEND
DIVISION, DEPARTMENT OF REVENUE, responded that 80 percent
of Alaskans filed for the dividend online. However, 20
percent did not, and the division still engaged in a
significant amount of mail correspondence. In addition, the
division sent over 50 thousand paper warrants each year and
sent over 200 thousand 1099s per year. She deduced that at
.66 cents per piece of mail the costs added up. Co-Chair
Edgmon asked for the ratio of mail versus electronic
deposit. Ms. Wojtusik answered that over 500 thousand opted
for direct deposit versus 40 thousand to 55 thousand that
requested a paper check each year. Co-Chair Edgmon asked
for the percentage ratio. Ms. Wojtusik reiterated that over
80 percent file electronically, but some opted for a paper
check versus direct deposit.
Representative Stapp asked why not all 1099s could be sent
electronically. Ms. Wojtusik responded that Alaskans had a
choice between electronic or mail. Representative Stapp
asked how the process worked and if there was a default.
Ms. Wojtusik responded that a person had the choice by
checking a box and if not checked the division reached out
via email or phone call. Representative Stapp asked if it
was possible to default applicants into the electronic
system. Ms. Wojtusik responded "yes and no." She indicated
that an email address was not required on the application.
1:55:18 PM
Representative Hannan presumed that 20 percent amounted to
50 thousand warrants mailed. Ms. Wojtusik answered in the
affirmative. Representative Hannan appreciated the desire
for efficiencies but was grateful for the mail options for
those in the unbanked population. Ms. Wojtusik offered that
the division did incentivize online and direct deposit use
by issuing the warrant electronically two weeks earlier
than via mail.
1:57:45 PM
Mr. DeMoulin turned to slide 8 titled "Department Overview:
Tax Division
Mission: Collect taxes, inform stakeholders and
regulate charitable gaming.
FY2025 Governor's Amended Budget $19,193.3: $18,035.2
UGF, $951.3 DGF, $206.8 Other (94 PFT, 2 NP)
FY 2025 Governor's Amended Budget:
Tax Revenue Management System (TRMS) Anticipated
Contract Cost Increases +1,037.7 1004 General
Fund (UGF) Continues maintenance and support
contract.
Property and Production Tax Site Inspections and
Training +102.5 1004 General Fund (UGF) Increases
opportunities for staff to visit property tax and
oil and gas production tax sites to perform
accurate and timely assessments.
Economic Modeling Tools +96.5 1004 General Fund
(UGF) Provides the Economic Research Group (ERG)
with additional fiscal and economic modeling
tools.
Total + $1,236.7 million
Mr. DeMoulin addressed slide 9 titled "Department Overview:
Treasury Division
Mission: to manage the state's funds consistent with
prudent investment guidelines and Governmental
Accounting Standards Board (GASB) rules
FY2025 Governor's Amended Budget
$11,937.5: $2,264.8 UGF, $347.2 DGF, $9,325.5 Other
(41 PFT)
No Major Changes in FY2025 Governor's Amended Budget
Mr. DeMoulin highlighted slide 10 titled Department
Overview: Alaska Retirement Management Board
Mission: to manage the state's retirement and benefit
plan funds consistent with prudent investment
guidelines and Governmental Accounting Standards Board
(GASB) rules.
FY2025 Governor's Amended Budget:
$10,808.3: $10,808.3 Other
Maintain Investment Data Services
+150.0 +69.0 1017 Ben Sys (Other) +51.6 1029 PERS
(Other) +28.2 1034 TRS (Other) +1.0 1042 JRS (Other)
+0.2 1045 Nat Guard (Other)
Maintains financial data services such as Bloomberg,
Moodys Analytics, TradeWeb, and Fitch Solutions.
Add Previously Unbudgeted Costs for FY2023 Exempt 5%
COLA for Treasury Division
+235.9 +111.0 1017 Ben Sys (Other) +78.3 1029 PERS
(Other) +43.0 1034 TRS (Other) +1.5 1042 JRS (Other)
+2.1 1045 Nat Guard (Other)
Funds Treasury Division interagency receipts from
FY2023 HB226 5% COLA salary adjustments
Add Authority to Fund Interagency Receipts Added in
Treasury Division FY 2025 Salary Adjustment
+161.5 +75.7 1017 Ben Sys (Other) +54.8 1029 PERS
(Other) +29.6 1034 TRS (Other) +1.2 1042 JRS (Other)
+0.2 1045 Nat Guard (Other)
Funds Treasury Division interagency receipts from
FY2025 salary adjustments
Total $547.4
Mr. DeMoulin continued to slide 11 titled "Department
Overview: Permanent Fund Dividend (PFD) Division
Mission: to administer the Permanent Fund Dividend
program, assuring that all eligible Alaskans receive
timely dividends, fraud is prosecuted, and all
internal and external stakeholders are treated with
respect.
FY 2025 Governor's Amended Budget
$9,096.5: $383.8 DGF, $8,712.7 Other (64 PFT, 2 PPT, 2
NP)
Legal and Adjudication Services from the Department of
Law and Office of Administrative Hearings +90.0 1050
PFD Fund (Other) Maintains legal and administrative
hearing services as the Division experiences increases
in fraud and appeals.
Increased Postage Costs Due to Increased Federal Rate
and Mailings +70.0 1050 PFD Fund (Other) Maintains
postage and mailing services as the Division
experiences increases in United States Postal Service
(USPS) postage rates and additional mailings for
applicants opting for physical documents
Annual Life Cycle Computer and Equipment Refresh +52.7
1050 PFD Fund (Other) Supports a four-year refresh
cycle. Capital appropriations have been provided in
the past for this cost.
Call Center System Contract +10.0 1050 PFD Fund
(Other) Funds a call center solution shared with the
Child Support Enforcement Division
Total $222.7
Representative Hannan asked why the computer refresh was
not in the base budget. Mr. DeMoulin replied that the PFD
had typically financed its computer upgrades in the Capital
Budget. Representative Hannan asked whether the switch to
the operating budget will be ongoing and part of the base
budget into the future. Mr. DeMoulin responded in the
affirmative.
2:03:23 PM
Mr. DeMoulin moved to slide 12 titled "Department Overview:
Child Support Enforcement Division (CSED)
Mission: To collect and distribute child support.
FY2025 Governor's Amended Budget:
$27,867.4: $8,881.5 UGF, $50.0 DGF, $3.2 Other,
$18,932.7 Fed (192 PFT)
Child Support Enforcement Specialist Class Study
+1,275.4 +822.5 1002 Fed (Fed) +433.6 1003 GF Match
(UGF) +19.3 1004 General Fund (UGF)
A class study was implemented in December 2023 and
impacts 107 budgeted positions within the division.
Replace Estimated Reduction of Federal Funds for Child
Support Enforcement Net Zero
-292.0 1002 Fed (Fed) +292.0 1004 General Fund (UGF)
Fund change from federal to general funds due to an
increase in federal ineligible cases.
Call Center System Contract +40.0 +26.4 1002 Fed (Fed)
+13.6 1003 GF Match (UGF)
Funds a call center solution shared with the PFD
Division.
Total $1.315.4
Mr. DeMoulin spoke to the second item. He explained that
the item was a technical change in funding sources. The
change was associated with the Title 4 program in CSED and
the Office of Children's Services (OCS) in the Department
of Family and Community Services (DFCS) when CSED enforced
child support on behalf of children in custody of OCS. If a
case was deemed ineligible by OCS it was also reciprocally
ineligible in CSED.
Mr. DeMoulin continued on slide 13 titled ommissioner's
Office
Mission: The mission of the Department of Revenue is
to collect, distribute, and invest funds for
public purposes.
FY2025 Governor's Amended Budget:
$1,662.1: $687.8 UGF, $640.8 Other, $333.5 Fed (5 PFT,
2 NP)
Budget Existing Special Assistant and Policy Analyst
Positions
+456.7 1007 Interagency Receipts (Other)
Adds budget authority for existing Special Assistant
and Policy Analyst positions and aligns travel
authority with historical averages.
2:05:43 PM
Representative Hannan asked if the two new positions were
added when Commissioner Crum became commissioner. Mr.
DeMoulin responded in the affirmative. Representative
Hannan asked if both positions were currently filled. Mr.
DeMoulin responded that one employee had recently resigned.
Representative Hannan asked which position had resigned and
requested the individual's name. Mr. DeMoulin responded
that it was a Special Assistant II to the commissioner. It
had been filled by Lewellen Smyth in the Anchorage office.
Representative Hannan asked what the scope of the policy
analyst position was. Mr. DeMoulin replied that there were
not existing policy related positions in the department
currently, however, historically there had been policy
staff in the commissioner's office. He furthered that they
had eliminated a deputy commissioner position and added the
two new positions. The policy analyst position was
currently vacant.
2:07:59 PM
Commissioner Crum answered that the policy analyst position
was currently open. He noted that there were many issues
like energy issues where DOR wanted the capacity to
respond to questions and concerns rather than react.
Representative Hannan wondered whether the elimination of a
deputy commissioner position would show a deduction in the
budget. Mr. DeMoulin responded that the $454.7 thousand
was a cumulative representation of the additions and
decrements in staffing. The addition of a deputy
commissioner would have increased costs over $600 thousand.
Co-Chair Foster asked when the special assistant position
was filled. Mr. DeMoulin replied that it was filled but he
could not recall the exact hire date.
Commissioner Crum interjected that he did not remember the
exact date sometime last year.
Co-Chair Foster asked why the positions were not included
in the governor's original December 15 budgets as well as
many other items listed in the presentation. He believed
that many items should have been known at the time of the
original budget request. He believed that the items could
have been omitted from the original budget to make the
total of the budget request appear lower. Mr. DeMoulin
answered in the affirmative. He added that the budget
process with the Office of Management and Budget was
"iterative". The reason the item was delayed was to decide
on the funding source. Co-Chair Foster noted other items
that he thought should have gone into the initial December
th
15 budget request. He alerted all the departments that he
planned to bring the issue up more often when warranted.
2:12:06 PM
Co-Chair Johnson resumed chairing the meeting.
Representative Galvin understood the need for staff
regarding the energy issues the state was facing
particularly with the demand for modeling. She wondered if
the tax division had the adequate staff versus adding
positions in the commissioner's office. Commissioner Crum
responded that currently the tax division had sufficient
staff and was capable of performing the specific fiscal
modeling. He indicated that as the issues progressed, he
would work closely with the governor's office to ensure
there was enough capacity. He currently worked closely with
the Department of Natural Resources (DNR)and its
economists. The policy position within his office was
needed to ensure that DOR's fiscal modeling conformed with
statutes.
2:15:05 PM
Mr. DeMoulin continued to slide 15 titled "Department
Overview: Administrative Services Division
Mission: To provide efficient, cost-effective, and
customer-focused administrative, financial, budget,
human resources, procurement, and IT services.
FY2025 Governor's Amended Budget:
$3,355.4: $787.7 UGF, $2,090.2 Other, $477.5 Fed (20
PFT) Fund FY2024 Transfer of 4 IT Help Desk Positions
+499.2 1007 Interagency Receipts (Other) Adds budget
authority for existing positions transferred to the
department from the Office of Information Technology
in FY2024.
Add a Department IT Manager +192.4 +1 PFT 1004 General
Fund (UGF) Funds a department IT Manager to oversee
the Help Desk and coordinate department IT projects
and services.
Total $691.6 thousand.
Mr. DeMoulin continued to slide 15 titled "Department
Overview: Criminal Investigations Unit:
Mission: To enforce criminal laws and regulations
through investigation, public education, and provide
inter-law enforcement agency support through data
exchange and joint operations.
FY2025 Governor's Amended Budget:
$1,366.3: $868.1 UGF, $498.2 Other (8 PFT)
Fully Staffed Investigative Unit
+39.0 1004 General Fund (UGF)
The Criminal Investigations Unit consists of seven
Investigators and one support staff. The Unit has been
fortunate to be fully-staffed the past year and
anticipates this to continue for FY 2025. Personal
services authority is needed to fully fund the unit
and avoid a shortfall.
Co-Chair Foster shared that he received clarification
regarding slide 13 and the two new positions. He was
informed that the special assistant position was included
in the original budget but was listed as being under the
governor's amended budget, due February 15, 2024, on the
slide. He asked for clarity regarding when the items were
included in the budget. Mr. DeMoulin responded that the
presentation was a combination of what was included in the
amended and original budget reflecting the most recent
version of the budget request. Co-Chair Foster understood
that some items in the overview were new, and some were
not. Mr. DeMoulin answered in the affirmative.
2:17:53 PM
Mr. DeMoulin turned the presentation over to the Alaska
Mental Health Trust Authority (AMHTA).
STEVE WILLIAMS, CEO, ALASKA MENTAL HEALTH TRUST, ANCHORAGE
(via teleconference), introduced himself and noted that the
trust budget was already presented to the committee in
detail on January 31, 2024. He advanced to slide 16 titled
Department Overview: Alaska Mental Health Trust
Authority
Mission: To administer the Alaska Mental Health Trust
as a perpetual trust and to ensure Alaska has a
comprehensive and integrated mental health program to
support the needs of Trust beneficiaries.
Accomplishments: Granted more than $22.2M including:
• Boosting Beneficiary Housing and Homelessness
Services Across Alaska
• Advancing Effort to Transform Alaska's
Behavioral Health Crisis Response
• Helping Increase Access to Supportive Early
Childhood and Youth Mental Health Services.
Total $167 thousand.
Mr. Williams highlighted slide 17:
FY2025 Governor's Amended Budget:
$4,929.6: $4,929.6 Other (17 PFT)
Reverse FY 2024 Mental Health Trust Operating Budget -
4,652.2 1094 Mental Health Trust Admin (Other)
Technical reversal
FY2025 Mental Health Trust Authority Operating Budget
Recommendation
+4,819.9 1094 Mental Health Trust Admin (Other)
Alaska Mental Health Trust Authority recommendation
Total $167.7 thousand
Mr. Williams continued on slide 18 and slide 19 titled
"Department Overview: Long Term Care Ombudsman Office:"
Mission: To provide resident-centered advocacy
designated to protect the health, safety, welfare and
rights of Alaska seniors, age 60 and over living in
long-term care facilities. Figures in Thousands ($0.0)
Per AS 44.25.200(c)(6), the Alaska Mental Health Trust
Authority shall administer the office of the long term
care ombudsman.
Accomplishments: • 827 Facility Visits • 355
Complaints Investigated • 80% of Complaints Resolved
to the Satisfaction of the Resident
Challenges: • LTCO staffing hasn't increased for 10
years while the senior population and quantity of
assisted living and nursing homes continues to grow,
limiting their capacity for investigating complaints
Mr. Williams examined slide 19:
FY2025 Governor's Amended Budget:
$982.1: $553.3 UGF, $428.8 Other (6 PFT)
Long Term Care Ombudsman
+133.5 1037 General Fund Mental Health (UGF)
Maintains the office's ability to investigate
complaints and make site visits as Alaska's senior
population continues to grow. Item not included in the
Governor's Amended Budget.
Total $133.5 thousand
2:21:57 PM
Co-Chair Edgmon cited the organizational chart on slide 4.
He wondered how the budget decisions were made regarding
the quasi-independent organizations and the flow of the
process through the commissioner's office to OMB, etc. Mr.
DeMoulin responded that the corporations ran fairly
independently. He elaborated that he worked as a budget
coordinator and assisted on the technical items and
submitting the budget as well as the formal change record
detail request. Each quasi agency had its own budget
process. He asked the commissioner to describe his part in
the process.
Commissioner Crum interjected that he agreed with Mr.
DeMoulin's explanation as to how the process operated. He
merely passed on their requests to OMB and the governor and
did not deliberate the budgets.
Co-Chair Edgmon shared that he asked the question because
some capital budget items in the AMHTA were denied related
to homelessness and housing. He assumed that it was for a
legitimate purpose, but he wondered how it got decided
since the recommendations originated from the AMHTA board.
He appreciated the answer.
2:25:12 PM
Mr. DeMoulin turned the presentation over to the Alaska
Housing Finance Corporation (AHFC).
2:25:33 PM
BRYAN BUTCHER, CEO, ALASKA HOUSING FINANCE CORPORATION,
ANCHORAGE (via teleconference), introduced himself and
proceeded to slide 20 titled "Department Overview: Alaska
Housing Finance Corporation (AHFC):
Mission: To provide Alaskans access to safe, quality,
affordable housing.
FY2025 Governor's Amended Budget $109,561.3: $200.0
UGF, $40,068.5 Other, $69,292.8 Fed (314 PFT, 22 PPT,
14 NP)
Mental Health Trust Recommendation: Department of
Corrections Discharge Incentive Grants (FY16-FY25)
+400.0 +200.0 General Fund Mental Health (UGF) +200.0
Mental Health Trust Admin Authorized Receipts (Other)
Targets individuals exiting Department of Corrections
to provide immediate housing and support services to
successfully transition to community care and avoid
repeat incarceration.
Total $400.0 thousand
Mr. Butcher delineated that the request expanded the
Discharge Incentive Grant program, which had been
successful with recidivism rates dropping to 33 percent for
participants from roughly 66 percent overall.
Representative Coulombe inquired how the money was spent.
Mr. Butcher replied that the program had been primarily run
through vouchers and the focus was on housing. He believed
that housing helped stabilize the participants therefore,
reducing the likelihood of reoffending. Representative
Coulombe surmised that the voucher was used to pay rent, or
she wondered whether the program helped people get into a
new home or apartment.
2:29:29 PM
Mr. Butcher responded that it was a temporary program where
the AHFC worked with a few nonprofits and the housing was
only for a finite period of time.
Representative Hannan was confused regarding if the $400
thousand was spent over a ten year period and the request
was a renewal. Mr. Butcher replied that the amount was $100
thousand each year including previous years and the request
was for an expansion of the program into smaller
communities in the state. Representative Hannan asked how
many people the request would help and for how long. Mr.
Butcher responded that it was not yet known. He offered to
provide the information.
Mr. DeMoulin reviewed slide 21 tilted "Department Overview:
the Alaska Permanent Fund Corporation (APFC)
Mission: To manage and invest the assets of the
Permanent Fund and other funds designated by law.
FY2025 Governor's Amended Budget $28,344.8: $28,344.8
Other (67 PFT, 2 NP)
Six Percent Merit Increase +920.0 1105 Perm Fund Corp
Receipts (Other) Annual merit to address recruitment
and retention challenges. Incentive Compensation
+915.0 1105 Perm Fund Corp Receipts (Other) Fully
funds incentive compensation for investment and
operations staff. Equipment to Support Datacenter
Relocation +150.0 1105 Perm Fund Corp Receipts (Other)
Disaster recovery and business continuity needs for
the Corp's primary data center located in Anchorage.
Increase Volume of Travel to Forward Investment
Management Objectives +100.0 1105 Perm Fund Corp
Receipts (Other) Supports increases due to rising
travel costs across the nation and anticipated travel
to and from the Anchorage satellite office to ensure
ongoing team cohesion and high performance. Facilities
Rent, Training and Advisory Support +56.1 1105 Perm
Fund Corp Receipts (Other) Adjustment to the services
line including funding for rent and technology related
to the Anchorage office, additional consulting costs
driven by contractual increases and Board-driven
projects, and additional training for the Board of
Trustees
2:33:24 PM
Representative Galvin wondered why the merit increase was 6
percent and why it was necessary. Mr. DeMoulin deferred to
the APFC for the answer.
DEVEN MITCHELL, CEO, ALASKA PERMANENT FUND CORPORATION,
JUNEAU (via teleconference), replied that the 6 percent
merit increase, was a board driven target. He explained
that there was a different calculus for the APFC, and the
corporation could not be compared to other agencies, nor
could they compare to the salaries that existed in the
private financial sector. However, they strove to be as
competitive as possible for recruitment and retention of
employees that could provide the highest investment
performance. Representative Galvin asked what the current
vacancy rate for APFC was. Mr. Mitchell responded that the
vacancy rate was not bad" and was around 12 percent. He
added that the primary driver was retention. The
corporation wanted to remain comparable to other
governmental entities like the California Pension Systems
or sovereign wealth type funds. Representative Galvin asked
if new employees received defined benefits and whether that
was a factor in retention. Mr. Mitchell responded that the
class of investment employee was not as impacted regarding
defined benefits as operational staff that received more
modest salaries. The corporation's approach was to try to
retain quality employees that ensured a successful program.
Representative Hannan directed attention to the bottom two
items on slide 21 regarding the satellite office. She noted
the $100,000 increases in travel and $50,000 for rent and
technology. She asked if the request was the entirety of
the cost for operating the office, ignoring salary and
benefits, and whether the request represented permission
for the office.
2:38:32 PM
Mr. Mitchell responded that the numbers were not entirely
from the impact of the opening of the Anchorage office and
included some additional lease costs of approximately
$35,000 for current rental space. He added that some of the
travel cost related to the Anchorage office and was roughly
a 50/50 split between Anchorage travel and inflationary
increases in travel costs overall. He indicated that there
were financial impacts related to the Anchorage office, but
the request also included other costs. Representative
Hannan requested that the costs be parceled out for a clear
delineation of costs for the satellite office to determine
its return on investment considering it still needed
legislative approval. She remarked that in the following
fiscal year the state would like to see whether the
Anchorage office was worth continuing.
Co-Chair Johnson mentioned that she would gather the
information for the DOR Finance Subcommittee and make it
available to Representative Hannan and the rest of the
committee.
2:41:00 PM
Co-Chair Edgmon deduced that since the Anchorage office was
opened, the request was supplemental to the core operations
of the office. Mr. Mitchell replied that the corporation
used a one-time funding source for the cost of the rent and
the request was for office rent. The increments included on
the slide reflected the expense of opening the office. Co-
Chair Edgmon noted that the office was up and running. Mr.
Mitchell answered in the affirmative. Co-Chair Edgmon felt
that he did not have a clear picture of how the Anchorage
office was transacted and he would wait until he received
the subcommittee findings.
Co-Chair Johnson recalled that there was a prior discussion
of how the transaction occurred with the president of APFC
but was not fully discussed on the subcommittee level.
2:44:11 PM
Mr. DeMoulin continued on slide 23 titled "Department
Overview: APFC Investment Management Fees
Mission: To manage and invest the assets of the
Permanent Fund and other funds designated by
law.
FY2025 Governor's Amended Budget
$198,163.6: $198,163.6 Other
Investment Management Fees and Services +2,800.0 1105
Perm Fund Corp Receipts (Other) Funding needed to
support increasing gatekeeper fees, based on
anticipated commitments within alternative markets. In
addition, $200.0 supports reconciliation services and
increased tax advisory services in certain
international markets.
Total $2.8 million
Mr. DeMoulin advanced to slide 24 titled "Position History:
Statewide Trend." He offered that the slide was originally
presented by OMB and was included to show DORs operational
challenges. The following slides demonstrated its vacancy
impacts and mitigation measures. The graph depicted vacancy
as an operational challenge at 17.9 percent. He moved to
slide 25 titled "Position History: Filled Count," which
showed the historical trend of positions filled from 2018.
He reported that filled positions were climbing but were
well below average of being optimally and fully staffed. He
highlighted slide 26 titled " Position History: Top 5
Vacant Job Classes. He listed the classes as Accounting
and Tax Technicians, Child Support Specialist, Office
Assistant, and PFD Technician. He reminded the committee
that the Child Support Specialist was the only job class
where DOR made a positive impact, and it took 2.5 years
from inception to implementation. Mr. DeMoulin continued to
slide 27 titled "Position History: Hires and Resignations."
The graph depicted more hires since 2023 than resignations.
However, there was a significant amount of resignations in
the Tax Division and CSED.
2:46:54 PM
Representative Josephson asked what the vacancy rate in the
audit and tax areas were and whether the oil industry tax
returns were being reviewed in a timely manner. Mr.
DeMoulin deferred to the Tax Division for an answer.
BRANDON SPANOS, ACTING DIRECTOR, TAX DIVISION, DEPARTMENT
OF REVENUE, ANCHORAGE (via teleconference), replied that
the Tax Division had "many auditors" and administered over
20 tax programs. He acknowledged prior year's issues
meeting the 6 year statue of limitations for the oil and
gas tax program. He delineated that there was some turnover
due to hire pay in the industry. However, in general, there
was "a lot" of longevity among auditors in the defined
benefit program. He disclosed that the division never
missed an audit deadline, and the frustration was that
interest was accruing during the 6 year cycle on
assessments. The oil and gas tax program was currently on a
three year tax cycle along with all of the other tax
programs and was almost caught up with the cycle.
Representative Josephson asked whether classification
studies were performed for the tax division.
2:51:23 PM
Mr. Spanos responded that the tax division was not included
in the class studies. Representative Josephson asked if it
will be included in the future. Mr. Spanos deferred the
answer.
Mr. DeMoulin answered that the department was not in a
queue for another classification study but was waiting for
the completion of the salary study to help address the
hiring issues.
2:53:07 PM
Mr. DeMoulin continued on slide 28 titled "Position
History: Departing Employees. He summarized that the
graphs showed the majority of resignees were leaving the
state and finding employment elsewhere. He discussed slide
29 titled Position History: Filled and Vacant by
Division. He pointed to the correlations between the
vacancies and filled positions and the resulting
operational impacts.
Mr. DeMoulin moved to slide 30 titled "Position History:
What We Know:
Filled positions are rebounding but are below the 6-
year average
The distribution among programs is not equal. CSED is
down the most, followed by the PFD and Tax divisions.
The vacancy distribution by pay range is predominately
at the lower end, ranges 12 and 14.
Representative Galvin understood that ranges 12 to 14 were
competing with fast food places and grocery stores. She
deduced that it was the reason for the range increases in
the CSED. Mr. DeMoulin answered in the affirmative.
2:56:13 PM
Co-Chair Johnson thought that people in the 12 to 14 ranges
were more transient. Mr. DeMoulin replied in the
affirmative and noted that typically, the lower range
positions were entry level and employees moved on to more
professional jobs, which was expected. The issue was the
prolonged vacancies to fill the positions.
Mr. DeMoulin advanced to slide 31 titled "Recruitment and
Retention: What We've Accomplished
Implemented a Class Study for the Child Support
Specialist positions effective December 2023. Results
in a 2-range increase to 107 positions.
• Reclassified Child Support's Office Assistants to
Administrative Assistants. Results in a 2-range
increase to 28 positions.
• Using in-state telework as a recruitment and
retention tool in difficult to fill areas across all
divisions
• The department has dedicated 1 full-time HR position
to recruitment activities; exceeding standard
processing time since returning from DOPLR.
• Attending various job and career fairs to market our
programs and employment opportunities
• Putting data into hiring managers and division
leaders' hands to drive future improvements; automated
filled/vacant reports; employee engagement and
satisfaction survey reports.
2:58:58 PM
Representative Coulombe cited slide 24 and referenced a
data point regarding unspent personal services totaling $18
million. She asked for clarification. Mr. DeMoulin
responded that it was data from the OMB slide. He spoke to
DOR's personal services data. He explained that unspent
revenue lapsed back into the general fund (GF).
Representative Coulombe cited a reference in DOR's budget
(not contained on any slide) to the $150 thousand
appropriation relocating APFC's disaster recovery data
center from Fairbanks to Anchorage. She asked for more
information. Mr. DeMoulin responded that it was driven by
data connectivity issues. He deferred to Mr. Mitchell.
Mr. Mitchell replied that the move was predicated on poor
connectivity in the disaster redundancy center. The
Anchorage site will be implemented in the next 6 months.
3:02:47 PM
Co-Chair Johnson
HB 268 was HEARD and HELD in committee for further
consideration.
HB 270 was HEARD and HELD in committee for further
consideration.
Co-Chair Johnson reviewed the agenda for the following
day's meeting.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DOR FY2025 Gov Amend H.FIN 02.22.24.pdf |
HFIN 2/22/2024 1:30:00 PM |
HB 268 HB 270 |