By James Brooks
Alaska Beacon 

State payroll office overwhelmed by work with 46% of its staff jobs vacant


September 6, 2023

Staffing problems at the payroll division are causing many of Alaska’s 14,000 state employees to be paid late or for the wrong amounts and have caused the state to temporarily stop using one of its main tools for hiring and retaining workers.

In an August letter to the commissioners in charge of state departments, Gov. Mike Dunleavy’s chief of staff told them that the problems “are primarily due to excessively high vacancy rates at payroll (over 40%).”

Thirty-one of 67 budgeted positions are vacant, said officials at the Department of Administration, which controls most payroll work. That’s about 46%, and the department said it has been “around 45% for some time.”

The Department of Administration has contracted with a private company for six months to help clear the backlog, at an hourly rate almost double the state salary for the comparable job. The contractor’s workers will be based in Alabama, working remotely.

To help make time to clear up the payroll processing problems, Chief of Staff Tyson Gallagher said in his email that he is “putting a temporary but immediate pause” on letters of agreement which the state can use to give extra benefits or higher pay to attract or retain individual employees or groups of employees.

Those letters “are one of the few tools you have to compete for labor in a very tough market,” Gallagher told commissioners, but the time needed to process them is contributing to problems in the payroll division, he said.

Jeff Kasper, business manager of the Alaska Public Employees Association, the union that represents payroll workers, said the problem has worsened over the past several months.

His statement is backed up by figures published by the executive branch, which reported a payroll staff vacancy rate of 35% to the Alaska Legislature earlier this year. “They’re one crisis away from lots of people not getting paid,” he said.

Kasper said employees in the department are working as hard as they can, but they can’t make up for a lack of staff.

“It’s not the payroll staff that is to blame for this. It’s the management that’s to blame for this,” he said, adding that he believes the understaffing is being done deliberately in order to justify outsourcing payroll work.

“I wholeheartedly feel it’s deliberate. This is not an accident. This is deliberate action,” he said.

“No. That is not true. The division has been recruiting aggressively for vacant payroll positions,” the Department of Administration said by email, adding that it has been continuously advertising, paying sign-on bonuses and paying retention bonuses.

Commissioner Paula Vrana, in charge of the department, declined an interview request, and the agency responded to questions by email, six days later.

The agency said it intends to secure “temporary contract assistance” to help with the problem and it has already conducted a feasibility study required under its agreements with labor unions.

On Aug. 15, the state signed a contract with CGI Inc., a Canadian IT firm. That company will provide 4½ full-time employees, working remotely in Alabama, through Feb. 16, 2024. The first work would be done by the end of this month, and the state will pay up to $315,000 if the contract is fully completed.

Under the terms of the agreement, the state will be charged $45.50 per hour for the work of each payroll analyst. The state pays $22.69 per hour to a comparable worker in-state, plus benefits.

In a presentation to a legislative budget subcommittee in March, the Department of Administration said it was struggling in part because some payroll functions are still done on paper and others must be entered manually by payroll staff.

About 2,000 manual actions are processed every two weeks, the agency told lawmakers.

New electronic tools are expected to help the problem, it said at the time, and it plans to increase the amount of automation it uses. Those plans are still under way, the agency said on Aug. 21, and it expects that they will simplify processing, making it more efficient.

In the short term, the department said, it is temporarily reassigning staff with prior payroll experience. Those workers are being taken from their existing jobs and assigned payroll work.

The department is also stepping up its recruitment efforts, it said.

Despite those efforts, problems have persisted into the summer, affecting a variety of state agencies. The state ferry system, already critically understaffed, said it was losing workers because of payroll issues.

Heidi Drygas is director of the Alaska State Employees Association, which represents about 8,000 workers. She said some state employees are waiting on several hundred dollars, or more, because of problems with the payroll system.

Jordan Adams, who represents almost 1,400 trade workers, said people are turning away from state jobs.

“The payroll department has been stretched so thinly that in some instances, we have hired new transportation workers who didn’t even get paid for six weeks,” he said. “That’s unacceptable. When we can fill these positions with qualified workers, we can’t hold on to them if the state doesn’t pay them.”

Union officials, workers and others have said the state is contributing to the hiring woes by failing to

This year’s state operating budget included $1 million for the Department of Administration to study whether state salaries should be increased. The department said it intends to hire an outside firm to conduct that study; no firm has yet been hired.

The Alaska Beacon is an independent, donor-funded news organization.


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