Unfunded and Underfunded Priorities

• This chart from Legislative Finance (an independent, non-partisan arm of the Legislature focused on fiscal research and analysis) is probably the most useful way to look at how State spending has declined over time, if you adjust for population growth and inflation.
• It’s easy here to see the booms – the yellow and bright blue clearly show that funding becomes available to address infrastructure needs and statewide operating.
• Statewide operating includes things like funding for local governments, school construction, and debt obligations. It can be thought of in terms of costs that would normally be there but that can be shifted to another party if the State needs to. The reality is that the other parties have little capacity to pick up those costs.

• A lot could be said about the Alaska Marine Highway System, and its gradual erosion within the State’s budget.
• To think that this investment was one of the first by the new State after it became one, with a vote of the people on a bond that funded its establishment, conveys in part just how important this is to many Alaskans.
• The return on the investment is clear – about $2 to the economy for every $1 in State support. But since the State’s budget isn’t tied to the economy through a broad-based tax, it doesn’t feel that return. So it just looks like a cost it can’t afford during down times.

• Water, sewer, and wastewater systems are foundational elements of a community. Businesses and residents depend on these as much as they do power and transportation.
• The way the State approaches water and sewer investments is to leverage federal funds. The federal Indian Health Service maintains a list of needed projects, with about $1.9 billion in needs listed for eligible communities. Some funds flow directly to ANTHC, and the State’s match of about $80 million each year flows through DEC.
• For communities that aren’t eligible, they either utilize the State’s revolving loan fund, or take on debt or increased costs on their own.
• The majority of water and sewer systems are owned and maintained by incorporated cities, many of whom struggle to afford necessary upgrades. Many water and sewer systems are in dire need of improvements.

• Broadband in Alaska is not traditionally delivered by the public sector, though most of the investment has been through federal grant, infrastructure, and formula programs.
• Broadband is critical for efficient government, economic development, and Alaskans improved quality of life. Unfortunately, the majority of Alaska’s communities rely on less than 10Mb speeds. Internet speeds are easily described as deficient in much of rural Alaska, especially.
• The State has convened a number of task forces to work through this issue, has identified goals related to improvements needed, but doesn’t have a role in regulating the industry. One of the more important roles of the State is mobilizing and coordinating federal funding to meet the needs it has identified, and closing the gaps.
• Local governments have had less a role even than the State, in many ways. One local government – the City of Ketchikan – is the only municipal-owned telecom provider, with some of the fastest speeds and redundancy in the state. There do exist many community-owned cooperatives, however.

• Efforts to address affordable and/or sufficient housing, and homelessness, are increasingly relevant to improve the cost of living in Alaska, as well as public welfare.
• Multiple nonprofit agencies work with and through federal, state, and local agencies to improve conditions.
• While homelessness may be more prevalent in urban communities, what is less visible is overcrowding, which is often the case in rural or remote communities. Housing, though, is a statewide challenge, both in terms of its affordability and accessibility.
• HUD estimates the total costs to solve overcrowding to be $7 billion in Alaska.

• Public school data reported to the U.S. Department of Education during the 2017-2018 school year shows that an estimated 3,769 public school students experienced homelessness over the course of the year. Of that total, 351 students were unsheltered, 678 were in shelters, 222 were in hotels/motels, and 2,518 were doubled up (Source).  Almost half of the homelessness population is in Anchorage. Alaska Natives make up a disproportionately high percentage of Anchorage’s homeless community — about 45%, although they make up about 15% of the state’s overall population. PsyDPrograms.org released a study on the State of Homelessness in America using data through 2019 from the Department of Housing and Urban Development. The study includes state rankings on the overall homeless population, as well as numbers on women and children. Here are key findings in Alaska:
  • No. 8 highest homelessness rate, 260.7 per 100,000 people.
  • No. 22 highest percentage of women in homeless population, 39.9%.
  • No. 30 highest percentage of children in homeless population, 17.6%

• Alaska has one of the highest rates of homelessness among women according to the National Alliance to End Homelessness. Some 37% of Alaska’s homeless population are women while the national average is 29%, statistics from the coalition found.
• Homeless is a medical condition under the International Classification of Diseases, the diagnostic manual that doctors use, it’s a billable code. The average age of a homeless person to die in the United States is 50, about 28 years younger than the normal life expectancy. While homeless individuals die from the same causes as the general population, they experience these illnesses at rates three to six times higher, according to the National Health Care for the Homeless Council.

• Maintaining a system of public schools means the State is responsible not just for providing adequate and equitable funding for student education, but also ensuring that schools do not fall into disrepair.
• Adequate State funding means that school districts have enough funding to meet instructional needs and to ensure educational attainment – enough teachers working to make sure students succeed.
• Equitable funding means that those districts with less access to a local contribution, or who have higher costs, have just as much available for that instruction and student outcomes as those districts with greater access.
• The State has a clear role in helping to pay for the construction of new schools, where the population has grown or to replace old schools, and to ensure that maintenance occurs. Where maintenance does not occur – where a district cannot afford to fix things along the way – it is more likely that costs will be higher in the future as the problems worsen.
• A recent Task Force on Teacher Recruitment and Retention found that education professionals identified “adequate compensation for assigned duties (salary)” as of most personal importance, with retirement and healthcare benefits # 3 and 4 on the survey. The survey looked to at what solutions would most influence retention and recruitment, and found that a “competitive salary commensurate with cost of living” was the #1 need; retirement benefits was #3. The Task Force took up no recommendations related to pay or benefits.
• Interestingly, from NCSL data listed below, Alaska has some of the highest K-12 per pupil expenditures in the nation, coming in at #4. However, if you look just at salaries, Alaska places just ahead of South Dakota (ranked 25th overall and just ahead of national average) as a % of total spending.
• Actually, Alaska is tied for 5th for spending as it relates to all other functions as a % of total spending. It’s just expensive to provide education here, even as salaries are well below that national average and benefits on par.

• The State is the primary provider of public health, followed by or at the same level as tribal health. Very few local governments have public health “powers,” which simply means that they haven’t adopted laws or had voters approve laws that would fund the delivery of local public health.
• About eight local governments do own municipal hospitals, almost exclusively in coastal, islander communities who experience high inflows of tourists or the fishing industry.
• Public health and well-being is crucial for the sustainability of Alaska’s communities. Local governments work within this space daily.
• From the Kids Count data: Alaska ranks 47th nationwide for economic well-being. 23,000 Alaska children (13%) live in poverty,  75% of Alaskan 4th graders are not proficient in reading and 71% of 8th graders are no proficient in math (this might be good in the education section), 44% ranking nationwide for health.

• In 2018, the estimated costs of drug misuse borne by state and local governments, employers, and residents of Alaska was $1.1 billion. Most of the costs shown in the table below—those associated with criminal justice and protective services and public assistance and social services—are borne by the public sector. A significant portion of the health care costs are also a public expense, largely because they are covered by Medicaid. The remaining large category, productivity loss, affects individuals, families, and public and private employers across the full range of the Alaska economy. In SFY2019, the Division of Behavioral Health provided approximately $4.3 million in state- funded grants for prevention of drug misuse.
• In SFY2019, the state spent $227 million on social welfare programs, of which approximately $3.1 million (1.4%) was to address drug misuse.
• An estimated 5.9% of total justice system spending (state, federal, and local) in Alaska, $123 million, is attributed to drug misuse arrests and offenses in Alaska. If the same rate is applied to total state Undesignated General Fund spending on the justice system ($620 million), about $37 million of that spending is attributable to drug misuse. This figure is likely conservative, as Alaska likely covers a greater percentage of its justice system costs with state funds than the average of other states.

Source

• This term is perhaps the most ambiguous and far-reaching of the State’s Constitutional obligations. Technically, it is described as programs that provide cash assistance or services to individuals and families who are deemed eligible on the basis of their income and assets. It might be more helpful to think of it in terms of efforts to protect our most vulnerable, address inequities, and ensure the public safety.
• Vulnerability can be thought of as those Alaskans in need – this is measured by income levels, unaffordable costs, and conditions or circumstances that place an individual, family, senior, or child in an untenable position.
• Inequity is simply making sure that access to and relief from State investments of resources are felt across geographical or societal systems. It’s not that everyone gets the same thing, but that one group of Alaskans, or part of the state, isn’t disproportionately impacted over time.
• Finally, it is probably important to place public safety under welfare, as the two go hand in hand, and includes emergency response.

Public Welfare – PCE

• Power Cost Equalization (PCE) – The PCE program provides economic assistance to communities and residents of rural electric utilities where the cost of electricity can be three to five times higher than for customers in more urban areas of the state.
• The program is founded on the fact that the State made large investments into urban and railbelt infrastructure projects, which couldn’t be replicated in all Alaska communities. The funding available each year is formula-driven and provides an equitable baseline from which energy costs can be managed.

• While the data here is a few years old, the premise stands – sovereign wealth funds are common across the world. Many are tied to oil and gas development, basically transferring a non-renewable asset into a renewable asset, anticipating that the resource runs out at some point and the nation will need a sustainable source of revenue into the future.
• Alaska’s Permanent Fund is the only one in the world that pays a dividend to residents. This has the effect of diminishing the potential size that the Permanent Fund could be, even as it provides economic support for Alaskans.
• $26 billion in PFDs have been paid out since inception, which means that much less in Alaska’s long-term savings account. Coupled with the lost investment return from that amount, it’s a significant difference

PFD Reductions

• Alaska’s Permanent Fund Dividend (PFD) is unique among the states, offering every full-time Alaska resident a chance to share in the state’s natural resource wealth. Annual payouts under the PFD typically range from $1,000 to $2,000 per person. But while every individual in Alaska receives the same size PFD, this payout is a much more significant source of income for families of modest means. While a $2,000 annual payment amounts to 2 percent, or less, of the income of an Alaskan earning a six-figure salary, its value is closer to 10 percent of income for a minimum wage worker bringing home roughly $20,000 in earnings per year.
• As a result, reductions in the PFD are steeply regressive, having a far larger impact on families with lower incomes. Figure 5 demonstrates that while a $784 cut to the PFD payout could free up approximately $500 million for Alaska’s budget, that gain would come at a high cost for Alaska’s most vulnerable residents. Low-income families could expect to see their incomes cut by 7.2 percent under this change while the impact on middle-income families would amount to 2.5 percent and high-income Alaskans would see impacts well below 1 percent of their incomes.
• The results show that the impact on the bottom 20 percent of earners (at 7.2 percent of income) is nearly ten times as large as the impact faced by the top 20 percent (at 0.8 percent of income).

• There are 59 cities that have police departments or employ a municipal police officer – in rural communities these are referred to as Village Police Officers. This does not include VPSOs, which have a different role.
• A standard by which to evaluate public safety is the number of law enforcement per 1,000 residents. One metric that is common is 3.5 officers per 1,000 residents.  Source
• By that measure, of those 59 cities, 30 of them need more officers per capita. That ranges from at least a half-time officer, to needing as many as 15. Anchorage, Juneau, and Fairbanks could be considered to need dozens more than that.
• If we’re looking at total number of officers in Alaska, including State Troopers, Alaska is more than 1,000 law enforcement officials deficient

Public Safety – Troopers

Average State Trooper Position Counts:

• Over the last 10 years, the number of budgeted trooper positions peaked in fiscal years 2014 & 2015, with 425 budgeted positions. Moving into FY21, the department has 403 budgeted Trooper positions, which is an increase of 15 positions over the prior fiscal year. The department averages a 9.55% vacancy rate for the trooper job positions at the beginning of the fiscal year. The attrition rate for the trooper job class is determined based on the workforce size at the beginning of the calendar year. 2019 marked a 5-year low in the trooper attrition rates. 2015 was 7%, 2016 was 9%, 2017 was 7.7%, 2018 was 9.3%, 2019 was 6.9% (Data from Alaska Payroll system). Notably, approximately 44% of the department’s state trooper workforce will reach retirement eligibility in the next five years.