Dunleavy's phony plan to 'save' $200 million gives gimmicks a bad name

Before he quit the Legislature to run for governor, Mike Dunleavy should have applied himself  to examining the state budget. Had he done so, maybe he wouldn't be spreading a whopper about one element of state spending that is obvious to anyone who has ever looked into the subject.

In an appearance on Talk of Alaska Tuesday, Dunleavy said he has plans to cut $450 million from the state budget in ways that will make government more efficient and not require any reduction in services.

If it sounds too good to be true, that's because it is. I will deal today with a $200 million slice of his proposal. I will get to the others in future installments as they are equally specious.

Here is what he said about a painless way of shaving $200 million from state personnel costs:

"There's roughly 24,000 state employee positions. Last year 22,000 of those positions were filled, but 24,000 were funded. So 2,000 positions were funded but not filled. This represents almost $200 million. We're not quite sure where that money went. They call it the vacancy factor. Some of that money was probably used for overtime in some of the departments and divisions. Some of it was probably used for travel, equipment, who knows? But the point is that money was supposed to be used for positions, but those 2,000 positions were not filled.

"So there's $200 million right there that can be discussed as to how we want to use that going forward. Do we want to use that money and hire more Troopers? Do we want to use that money and hire more prosecuting attorneys? Do we want to use that money and keep the courts open on Friday to improve our public safety situation?"

The problem is that he is wrong in claiming that 2,000 positions were funded but not filled and that there is $200 million of easy money waiting to be spent on Troopers, attorneys, courts, etc.

 Anyone who spent years warming a chair in the Senate Finance Committee room, as Dunleavy did, should know that the vacancy factor doesn't work that way.

The number of positions funded by the Legislature is less than the number of positions—that is what they call the vacancy factor.

In fact, on March 4, 2015, Dunleavy attended a meeting in which he was told about the vacancy factor and that it doesn't work the way he now claims it does. He was also at the table on other occasions when this was discussed.

This year, two weeks after he quit the Legislature, Dunleavy was not at the House Finance Committee when legislative experts gave a report on the vacancy factor. 

In that presentation, the legislative finance experts said it is a myth that "There is $300 million to $400 million of 'slush funds' associated with vacant positions."

The Division of Legislative Finance, which provides assistance to legislators, has a document on its website that explains the process.

The vacancy factor is the "percentage by which personal services are purposely underfunded."  This is to recognize that when employees quit, get fired or retire, the positions are vacant and don't need to be funded during the weeks, months or years when the position is vacant.

"In theory, a vacancy factor should account for savings attributable to employee turnover, and the budget should include sufficient funds to fill all positions listed in the budget (less the savings attributable to turnover.) In reality, high vacancy factors, in combination with other complications, often force agencies to leave positions unfilled in the long term," the legislative analysts say.

The larger the state agency, the larger the vacancy factor because there is likely to be more turnover.

The Office of Management and Budget says there are 22,600 positions now in state government, down from 25,000 four years ago. There are 17,125 positions in the executive branch, while the rest are at the University of Alaska, state corporations, the court system and the Legislature.

"To stay within legislative funding limits, every day at least 900 full-time positions must be held vacant," said Pat Pitney, the director of OMB. There is no money appropriated to fill those 900 positions.

She said right now there are about 700 additional state positions that are vacant. There is money to fill those jobs, but some are in areas with high turnover and recruiting problems, such as the Alaska State Troopers, the Division of Public Assistance and the Alaska Psychiatric Institute.

She said those 700 jobs, on an annual basis, would need about $70 million to keep filled, but only $30 million is from the general fund. The rest may be from federal funds and other sources that can't be transferred. Some of the money goes to overtime to cover staff shortages.

The $200 million of Dunleavy's easy money doesn't exist.