Almost 1 in 5 Alaska state jobs is vacant as agencies struggle to hire, retain employees

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The offices of the Alaska Permanent Fund Corp. are seen Monday, June 6, 2022 in Juneau, Alaska. (Photo by James Brooks/Alaska Beacon)

The top employees of the Alaska Permanent Fund Corp. are some of the highest-paid public workers in Alaska, but with wages rising across the country and employers competing for skilled labor, even the Permanent Fund is struggling to keep employees from leaving.

Nine of the corporation’s 66 employees have quit this year, including the manager of the corporation’s highest-earning investments, and the entire three-person team in charge of finalizing trades. Seven other positions are new, and filling them is expected to be difficult.

The APFC’s struggles are being shared across state government, according to a May 31 vacancy report published in response to a public records request.

Among the listings:

  • 30% of the 196 positions in charge of child support are unfilled;
  • 16% of the 142 jobs at the Department of Motor Vehicles are vacant;
  • The state’s commercial fisheries division is missing 21% of its 666-person workforce; and
  • Almost 60% of the state ferry system’s 1,275 jobs are vacant.

Some vacancies are inevitable as employees come and go, but the Office of Management and Budget expects vacancy rates to stay between 0-7%, based on the size of a division or office.

Across all branches right now, 19.3% of the state’s 17,006 jobs, almost one in five, are vacant.

Those vacancies have canceled ferries, slowed state services and have created worries at the Permanent Fund Corp.

Since 2018, an annual transfer from the Permanent Fund to the state treasury has accounted for at least half of the state’s annual revenue.

Employees from the Permanent Fund Corp. are in charge of investing the fund in such a way that the transfers will continue without hurting the fund’s long-term value.

“When you have gaps and staffing issues in this team, it can have a financial impact on the fund,” Acting Executive Director Valerie Mertz said earlier this month, speaking about the departure of all three members of the corporation’s investment operations team.

She said the corporation will have to temporarily outsource the work.

“That will be more costly, but we’re really left with no choice at this point,” Mertz said.

At another state-owned corporation, the Alaska Industrial Development and Export Authority, talk of outsourcing led a board member to briefly offer his resignation.

AIDEA is the state’s investment bank, putting public money to work on development projects across Alaska, but in early June, 20 of its 83 positions were vacant.

“I don’t think we stand out as an anomaly,” said AIDEA’s executive director, Alan Weitzner.

AIDEA is developing the Ambler Road, a 211-mile gravel highway intended to reach mining projects in northwest Alaska. Because of problems hiring staff, AIDEA has outsourced some work it would normally handle in-house.

During a late-May discussion about staffing issues, AIDEA board chairman Dana Pruhs asked whether more positions might need to be outsourced. Later in the meeting, Pruhs apologized for inadvertently insulting current staff and offered to quit the board. He remains a member.

AIDEA and other state agencies have tried aggressively recruiting through social media, job fairs, headhunting firms and more.

A white pickup truck with a sign mounted in the bed that reads "Alaska Department of Corrections $10,000 hiring bonus"
The Alaska Department of Corrections advertises its $10,000 hiring bonus during a July Fourth parade in Juneau on July 4, 2022. (Photo by Lisa Phu/Alaska Beacon)

During the Fourth of July parade in Juneau, a truck carried a banner promising a $10,000 signing bonus for new employees of the Alaska Department of Corrections.

The Alaska Marine Highway System is offering a $5,000 bonus for new employees from the Inlandboatman’s union and has hired a professional recruitment agency to help.

But even when the state finds an employee, it’s not always enough. At AIDEA, human resources director Megan Schmidt said it can take two to four weeks to get approval from the Office of Management and Budget to hire a candidate, even when the position is budgeted and the interviews are over.

Sometimes, she said, that candidate has taken a job with someone else in the meantime.

“I think we’re getting hit as hard as everybody else,” said Craig Richards, chairman of the Permanent Fund Corp.’s Board of Trustees.

Richards said the corporation’s hiring problems predate the state’s recent trouble. Over the past five years, the corporation has had 43 employees quit for other jobs.

“It is an acute problem,” Chad Brown, the corporation’s HR director, told trustees this month.

Brown said it’s “pretty easy to identify the primary reason why a person is leaving. … Compensation is always No. 1 or No. 2.”

“Compensation was a consideration for me, and it is for everyone who leaves,” said Steve Moseley, formerly head of the Permanent Fund’s alternative investments division.

Before leaving the Permanent Fund, Moseley oversaw private-equity investments, which have been by far the most successful segment of the fund and were the main source of its record-breaking growth last year. He now works with a private firm in New York City.

Moseley contrasted the Permanent Fund with a private business like a brewery. That brewery can raise its salaries without consulting the governor or Legislature or could get creative with incentives.

“We could respond, we could pre-empt (people leaving). Presumably, we could offer to pay people more or we could create a growth opportunity for them, open another office or introduce a new brand and put them in charge,” he said.

“Compensation is a real issue,” Moseley said. “I didn’t leave just over money, but it’s the easiest thing to measure, and probably because it’s one of the hardest things to fix, it remains one of the biggest problems, and I think it explains the turnover (at the Permanent Fund).”

The Permanent Fund’s trustees are answering that issue by advancing the idea of a “salary reset” that will benchmark employee pay according to what similar organizations pay elsewhere.

There’s no American institution exactly like the Permanent Fund Corp., so the corporation is planning to hire a consultant as part of a long-term project.

In the meantime, Richards said, the corporation will likely take some kind of interim step for employees this year. One possibility — yet to be decided — involves diverting money intended for performance bonuses.

Other state agencies could see pay hikes as well. This year, the Alaska Legislature passed House Bill 226, which calls for a 5% across-the-board pay hike for nonunion state employees.

State attorneys would get a 20% hike, and employees of the judicial branch — excluding judges — would get a 10% hike.

That bill is now on the desk of Gov. Mike Dunleavy, who has until Aug. 1 to sign it, veto it, or allow it to become law without his signature.

“The state and the private sector are both experiencing challenges recruiting new workers. This is a problem that is occurring not only in Alaska, but across the country,” said Jeff Turner, the governor’s deputy communications director.

“Each state department has ongoing recruitment campaigns and all open positions are advertised on Workplace Alaska. Alaskans looking for work are strongly encouraged to apply for any position they are qualified for,” he said.

Earlier this year, Dunleavy vetoed several million dollars intended to pay hiring and retention bonuses.

The governor’s office did not say whether he would do the same for the bill to raise non-union state workers’ pay, but Rep. Andy Josephson, D-Anchorage and the sponsor of the bill, said he believes the governor will allow it to become law without his signature.

“The first paycheck that is supposed to be reflected with the higher pay should come on Halloween Day, I’m told,” he said.

 

Alaska Beacon

Alaska Beacon is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Alaska Beacon maintains editorial independence. Contact Editor Andrew Kitchenman for questions: info@alaskabeacon.com. Follow Alaska Beacon on Facebook and Twitter.

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