Grading the States introduction THE GOVERNMENT PERFORMANCE PROJECT Report Card: Alaska GOVERNOR Tony Knowles (Democrat, elected 1994) LEGISLATURE House — 27 Republicans, 13 Democrats Senate — 14 Republicans, 6 Democrats FINANCIAL MANAGEMENT: C For four years in a row, Alaska’s expenditures came in higher than revenue, requiring the state to dip into its Constitutional Budget Reserve to pay its bills. Fiscal 2000 looked like it was going to be a disaster, with budgeters anticipating a $952 million shortfall. Fortunately, oil prices began to rise, and the state had to use only $316 million from the Reserve. With a continued elevation in the cost of crude, the state has been able to refill the fund. This is a cycle repeated regularly in Alaska. And despite the fact that things turned out OK this time, that won’t always be the case. Still, among political leaders, “there’s no sense of urgency,” says one state official. The irony is that Alaska has $26 billion in its Permanent Fund, the interest from which pays annual dividends to every citizen — $1,963 per person in fiscal 2000. The very idea of touching that gigantic bank account is unthinkable, though. The consequence is that Alaska is likely to face a structural deficit for the foreseeable future. There are positives in state finance: a new emphasis on training for procurement, well-stocked pension funds and reasonably good investment practices. The officials who run the Permanent Fund have the best investment technology available (see below). CAPITAL MANAGEMENT: C Little has changed in Alaska’s capital management over the past couple of years. Routine maintenance continues to be inadequate and a backlog of repair needs exists. “Pressure to reduce state spending over the last decade has placed considerable pressure on state maintenance budgets,” Alaska reported to us. “There is now widespread recognition by both the administration and the legislature that additional resources must be devoted to asset maintenance.” That’s also what they said two years ago. The state’s capital program is unusual in that the Department of Transportation and Public Facilities handles both highway building and construction of state facilities. The department used to put together six-year plans, but they were scrapped — a victim of legislative indifference. Agencies, however, develop one- or two-year plans, with ample opportunity for citizen involvement. There are dozens of public hearings and citizens can file their own capital requests. Alaska does a good job of tracking the major projects it undertakes. They are monitored for compliance with scope, schedule and budgeting; compliance with environmental requirements; and delivering on commitments made to the community. HUMAN RESOURCES: C Alaska has made significant advances in its hiring process through the implementation of Workplace Alaska, an online hiring system. In the past, the state depended on established lists of qualified applicants, which were often out of date. With the new technology, applicants self-screen as to whether they fit minimum and desirable qualifications before they apply. Managers can easily obtain a list of candidates who best match the job description. Unfortunately, recruitment has not kept pace with the hiring technology. The state has a very high turnover rate and a sagging salary structure, and there is increased urgency about the worker shortage. As in other states, this shortage has hurt HR itself. With many high-level personnel management positions open for months on end, some impressive recruitment initiatives planned a couple of years ago were stalled last year. The legislature hasn’t been particularly receptive to dealing with the state’s pay and recruitment problems, but the director of personnel has begun a work-force planning effort, and hopes the information she’s gathering will help educate legislators. MANAGING FOR RESULTS: C- Over the years, Alaska has shortchanged its strategic planning efforts, decentralizing many activities to managers who simply don’t have the time to focus on strategic thinking. As one official says, “It’s a lot like eating out your cerebrum.” There is no formal, written statewide strategic plan. Agencies are free to develop their own, but are not required to. Instead, most develop management plans to focus on specific program areas and issues. The state has been moving toward the use of performance measurement. In the executive branch, the development of meaningful measures has become a top priority. Although they’re at an early stage, all agencies are attempting to come up with outcome-related measures, which are documented in the budget. Things have moved in somewhat schizophrenic fashion, however, as the legislature has also developed a set of performance measures. “So,” explains one official, “we’ve had two sets of performance measures, without any blending taking place and some confusion as to whether they’ll be mixed.” INFORMATION TECHNOLOGY: B Although some statewide IT systems — notably human resources — could be better integrated, the state’s first truly automated budgeting information system is a symbol of progress toward enterprise-wide solutions in Alaska. In fact, when the state was struggling to balance the budget, the governor put the system online, so citizens would have a sense of what the state’s budgeters were going through. Alaska has been a national leader in moving public information and transactions to an online environment, of particular importance in the most geographically far-flung state in the union. A future concern is bandwidth capacity — a sizable investment is needed in this area, and the legislature hasn’t been inclined in the past to make these kinds of commitments. This could limit the state’s future growth in IT. The technology for investing Alaska’s Permanent Fund money is equal to that at the best Wall Street brokerages (and since citizens’ annual dividends from the state are contingent on these investments, this is of great concern to them). AVERAGE GRADE: C Copyright © 2001, Congressional Quarterly, Inc. Reproduction in any form without the written permission of the publisher is prohibited. Governing, City & State and Governing.com are trademarks of Congressional Quarterly, Inc.