After spending millions, state abandons ‘excellence’ effort to consolidate office functions

Kelly Tshibaka tried to be the Great Consolidator of state services during her two-year tenure as administration commissioner under Gov. Mike Dunleavy.

The state has now abandoned much of what she did under the so-called “Alaska Administrative Productivity and Excellence” campaign, a venture that included expensive consulting contracts and never worked as advertised.

Alaskans deserve a full accounting from Dunleavy about what went wrong with the excellence effort, how many millions were wasted and what lessons can be drawn from the flawed exercise.

It’ not clear how much of this is related to the major payroll backlog problem that has shortchanged state workers. There were more than 3,000 unresolved notices of payroll problems in August. The unions filed a class action grievance on December 20, 2023, which went to arbitration this fall. A consistent lack of payroll staff has been a big part of the problem.

A payment to employees to settle the grievance was to be made as part this week’s payroll, but the Dunleavy administration failed to get the money sent out on time. I’ve been told that the payment is supposed to be $746 per employee for each eligible Notice of Pay Problem. This will cost the state millions to resolve the payroll mess.

The state has been less than candid for years about what seemed to be at times the reinvention of the wheel under Tshibaka, who quit her job without warning five years ago to run for the U.S. Senate, claiming she had saved the state hundreds of millions.

In the latest in a series of reversals, none of which were publicized by the Dunleavy administration, the state is ending the payroll consolidation push that dates from Tshibaka’s excellence campaign.

On December 11, Administration Commissioner Paula Varna wrote to state workers that seven state departments will resume responsibility for their own payroll services by next July—corrections, fish and game, law, military and veterans affairs, natural resources, public safety and the transportation department.

Eight departments will continue to have payroll handled by administration—commerce, education, environmental conservation, health, family and community services, labor and revenue.

About 40 payroll positions will move from the administration department to other state agencies.

“I want to emphasize that there will be no jobs lost or changes in salary. Employees whose positions are affected will be realigned within the organization, and leadership remains fully committed to providing the necessary guidance and support to ensure a smooth transition. Staff meetings are being scheduled to discuss these changes together,” Vrana wrote.

The Office of Procurement & Property Management and the mail services office “will realign” under the Division of Administration Services, she wrote.

In another pullback from the excellence campaign, most of the positions in the “Shared Services of Alaska” will be transferred from administration to individual departments to handle accounts payable processing, travel and expense reimbursements and more.

The Shared Services of Alaska office, created from what was the Division of General Services, had a “primary goal of standardizing and streamlining business processes, reducing costs, improving efficiency, and enhancing service quality across state agencies.”

“Successful consolidation is our goal, and each of you will be a part of that success through your participation and contribution. As we navigate this change together, we will end up with an organization that delivers much greater customer satisfaction and cost savings to Alaskans. They are counting on us,” Tshibaka wrote in a letter that is still on the state excellence page.

“We will communicate, communicate, communicate – transparency builds trust and demystifies the change process. We will tell you what we know, when we know it,” Tshibaka promised.

She also set up a page for “Empowering Peak Performance of the State of Alaska’s Administrative Services.”

The state hired Alvarez & Marsal to handle the consolidation of “accounts payable, travel and employee reimbursement, debt recovery collections, print services, lease management, and procurement.”

On February 13, 2019, with lots of fanfare, Dunleavy signed an executive order to consolidate the procurement functions of state government in a single office.

“The purpose of this order is to streamline and increase accountability of non-construction procurement activities within the executive branch of state government by realigning non-construction procurement staff to create solid line reporting to the DOA Commissioner or Commissioner Designee in DOA and clear managerial reporting within their respective agencies,” Dunleavy said in his order.

He said that about 100 non-construction procurement staff in various state agencies were to be transferred to the Department of Administration. He created the new Office of Procurement and Property Management and a task force led by Tshibaka to reinvent the process of purchasing goods and services for state agencies.

It would save money, lead to staff reductions, streamline ordering, make state government more efficient, end redundant purchases, and make it easier to enforce procurement policies, he said in Administrative Order No. 304.

On July 17, 2023, with no fanfare, Dunleavy signed an administrative order saying never mind.

The new order revoked Administrative Order No. 304, declaring an end to statewide procurement consolidation. Procurement staff were transferred back to individual state agencies, Dunleavy said in Administrative Order No. 348.

The goal of the latest changes is “to best align support services with department needs and to empower departments to adapt to the unique demands of their mission,” which is one way of saying the consolidation scheme was a failure.

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