Lawmakers grill Dunleavy administration over delayed salary study

Alaska lawmakers raised concerns during a Thursday hearing over delays in the release of a study that could affect the compensation of some of the state’s more than 14,000 employees.

The administration of Gov. Mike Dunleavy last year delayed the release of the study, which was originally due in June 2024, citing missing data. The administration classified an early version of the study released in June, rendering it inaccessible to lawmakers and the public.

Lawmakers approved $1 million in funding for the study in 2023, under the understanding that its findings would be incorporated into this year’s budget process by determining whether compensation for state employees was adequate. The study was seen as an effort to combat ongoing recruitment and retention challenges.

The state’s current vacancy rate stands at around 16.6%, the state’s director of the Division of Personnel and Labor Relations Kate Sheehan said Thursday. Understaffing in state agencies has had in recent years drastic impacts on state services, including an ongoing backlog in processing food and monetary assistance to low-income Alaskans.

Rep. Ashley Carrick, a Fairbanks Democrat who chairs the House State Affairs Committee, said she called a hearing on the study Thursday because she was concerned about the Dunleavy administration’s decision to delay the release of a study that has “the potential to significantly affect worker populations” across Alaska.

Department of Administration Commissioner Paula Vrana told lawmakers during the hearing that the study is now set to be released at the end of March, nine months after it was originally expected.

The delay in the study makes it virtually impossible for lawmakers to incorporate the findings into the coming year’s budget.

The Alaska State Employees Association, a union representing more than 8,000 of the state’s direct employees, is currently under contract negotiations with the state.

Heidi Drygas, director of the union, said the new delivery date for the study is several days after a mid-March deadline for lawmakers to receive new bargaining contracts for ratification and inclusion in the state budget. That means that in effect, even if the study recommends significant changes to the compensation of various state employees, those changes cannot be included in the contract that is currently under negotiation.

“If the point of the salary study is to inform wages for state employees and our collective bargaining agreements are three years old, then getting that information after our wage information is due to the Legislature is not very helpful,” said Drygas. “The whole point of the information is to inform whether or not we need to increase wages.”

Vrana told lawmakers on Thursday that the study was delayed because it did not reflect raises approved by legislators last year for roughly 1,200 state employees, and raises for other state employees negotiated through union contracts. Those raises were approved by lawmakers months after the salary study had been commissioned.

“After receiving some early drafts of the report, it was noted that significant and relevant factors had changed since the study began,” Vrana told lawmakers.

Sheehan, with the Division of Personnel and Labor Relations, acknowledged that since the state is constantly bargaining with at least some of the numerous unions representing the state’s employees, any study is inherently “a snapshot in time.”

“But this was significant enough that we did think it was important enough to make sure that the Legislature and the administration had the best data available,” said Sheehan.

However, Sheehan said the report would not include information on the millions of dollars the Dunleavy administration has requested in temporary recruitment and retention bonuses. The one-time bonuses — used attract troopers, corrections officers, and numerous other hard-to-fill positions — are not included in employees’ contract-negotiated salaries, but in some cases they significantly boost compensation.

“To include that would have skewed the information,” said Sheehan, because the bonuses are not available equally to similar job classes.

Carrick said it was important for the study to take into account all “wage-related factors.”

“If we really want to understand recruitment and retention factors related to wages, bonuses are a part of that conversation,” said Carrick.

Lawmakers questioned Sheehan and Vrana during the hearing about the preliminary report produced by the private contractor that conducted the study, called Segal, and whether the administration could release it to lawmakers even as Segal was working to update it.

Shaheen said the preliminary reports submitted to the Department of Administration were deemed privileged by the Department of Law, and would not be released to lawmakers or the public.

“It is critical that the study incorporates adequate, accurate, up-to-date information, because recommendations from the study could substantially impact the state budget,” said Vrana.

Some lawmakers on the committee questioned the need to hide the initial results from lawmakers.

“I don’t understand why we didn’t have a preliminary report that could have been updated with a supplemental,” said Rep. Ky Holland, an Anchorage independent.

“What’s so unique about Alaska right is we have had a big workforce shortage,” said Rep. Andi Story, a Juneau Democrat. “We know there’s an urgency to getting this report back.”

“I would think that there would have been an urgency conveyed to the company, and I’m wondering why the study couldn’t have been expedited, knowing that we were going to be hitting the ground running,” Story added.

Vrana said the contractor is “working as expeditiously as possible.” When asked if there was any way to receive a draft of the study before the end of March, Vrana and Sheehan said they didn’t have an immediate response for lawmakers.

A salary study of this scope — looking at compensation for a vast array of jobs across state government — has not been conducted in more than a decade. A 2009 study found the state was overpaying in many job classifications, Sheehan said. In 2013, a study found that the state needed to update its job descriptions, Sheehan added.

This year’s study is set to compare the state’s pay to compensation by other states, Alaska municipalities and private employers.

Republican minority members of the committee were more receptive to the administration’s delay of releasing the report.

“I don’t see this as a huge deal,” said Rep. Kevin McCabe, a Big Lake Republican. “I just see this as the normal way that business is done.”