20-30024-03

Purpose of the Report

In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative
Budget and Audit Committee, we conducted an audit of the Departments of Corrections
(DOC) and Administration (DOA). The overall objective of the report was to determine if
DOC personnel practices are creating an under-funded burden on the retirement system and
displacing local hire. Our analysis included the hiring and personnel practices of DOC,
transfer of correctional and probation officers to rural areas, and the inclusion of the
geographic pay differential in retirement base pay.

Report Conclusions

Some correctional and probation officers are transferring to rural communities near the end
of their careers to increase their retirement pay. Particularly in Nome, these employees are
living only part-time in the community and have their primary residence elsewhere. This Type
of transfer has decreased the opportunities for hiring in the local communities and affects the
ethnic make up of correction and probation officers in these rural communities. The transfer
of these employees does add an under-funded financial burden to the State’s retirement
system. Through analysis, we identified that the retirement fund will pay an additional
$4 million to 22 employees due to the inclusion of geographic pay differential in the
employee’sthree high year earning’s calculation.

Findings and Recommendations

1. Future retirement plans should consider excluding geographic pay differentials (GPD)
from average monthly compensation used to calculate retirement benefits. As an
alternative, GPDs could be used as a post retirement cost-of-living allowance. Further,
the flexibility of the GPD as stated in statute for Tier II and III employees should be
clarified.

The GPD was intended to address a need to provide additional cost of living
compensation for living and working in the high cost areas of Alaska, typically rural Alaska.
However, the inclusion of the GPD factor in the compensation base used to
calculate retirement pay, regardless of whether the former employee retires in rural
Alaska, results in under-funded retirement pay.

2. DOC’s human resources manager should develop a framework for Correctional Officer
(CO) hiring decisions, within the confines of the Alaska Statutes and the COs union
agreement. The CO bargaining unit contract does and should continue to give the
department sufficient flexibility. The current administration has the opportunity to
develop staffing policies by facility with the intent of addressing what is in the best
interest of each facility. The facility-by-facility framework should be considered in lieu
of a restricted statewide transfer preference in accordance with the CO bargaining unit
agreement. Factors to consider in the staffing policy of each facility should include need
for continuity of CO staff, need for more experienced staff, and the impact of high
turnover.

3. The DOC directors of Institutions and Probation and Parole should take steps necessary
to ensure that correctional and probation officers are in compliance with federal gun
control laws.

4. DOC’s director of Administrative Services should increase correctional and probation
officer recruitment efforts for rural communities. DOC’S director of Administrative
Services should increase recruitment efforts by considering additional advertising,
working with Native organizations, and flexing positions to provide a career path in rural
communities.

5. DOC’s director of Administrative Services should strengthen internal controls over staff
travel and prisoner transportation. Weaknesses were identified with approvals on travel
authorizations and expenditure transactions. Additional weaknesses were identified with
accountability over inmate and staff travel on contract flights coordinated by the Prisoner
Transportation Unit.

6. The director of DOA’s Division of Administrative Services should not include a GPD to
rural facility COs working at urban facilities on their week off. DOC’s director of
Administrative Services should collect overpaid wages. Additionally, the COs bargaining
unit agreement should clarify that COs assigned to rural areas will be paid a geographic
differential only when performing the duties at a rural facility.

7. The director of DOA’s Division of Personnel Should consider conducting a cost-of-living
survey