Vastly different perspectives on Alaska’s state employee salaries — suggesting either most are well paid or most are underpaid — were offered by state officials and legislators during initial hearings this week to review a long-delayed report comparing state pay to other employers.
The key factor is whether salaries are being compared to the state’s traditional 65th percentile competitiveness benchmark or a lower 50th percentile standard the Dunleavy administration added to the study after seeing the preliminary results. That creates a debate where one side can say most salaries are ”at or above average,” while the other side argues “average” isn’t the same as “competitive” — citing as proof the state government’s 16% employee vacancy rate.
[See also: State employee salaries fall short of levels intended to be competitive, long-delayed study finds]
The rosy spin offered by state administrators is 72% of employees are at or above the 50th percentile for their occupations compared to all employers. The harsh reaction of some legislators and union officials is 83% of state employees are below the 65th percentile benchmark that is the state’s declared salary target level and the original parameter of focus in the study.
Among the areas of agreement among administration officials and lawmakers is there are deficiencies in pay for some state employees that need further examination, along with the process used to determine salary levels, and that will take some time.
“We will review findings by job family to determine if a salary adjustment is indeed warranted,” Department of Administration Commissioner Paula Vrana told members of the House Finance Committee at the end of a two-hour presentation of the study Monday. “And we’ll begin that analysis with job families that include benchmark jobs that are 10% or more below market.”
It’s possible, but not certain, that analysis might be done in time for next year’s budget process, legislators were told. That means a study the Legislature approved in 2023 that was supposed to be completed by June of 2024 isn’t likely to be a factor in determining state salaries until 2026 or 2027.
Some critics of Republican Gov. Mike Dunleavy have accused his administration of deliberately stalling the study as well as changing its original parameters to avoid giving state employees leverage in salary negotiations.
During a similar presentation to the Senate Finance Committee on Wednesday, Vrana said a “very rough” estimate is it would cost the state about $93 million to bring all state salaries to the 50th percentile level and $180 million to the 65th percentile. She told committee members a decision has not been made which percentile will be made when presenting future recommendations to legislators.
The state has roughly a $12 billion annual budget, but is currently facing a shortfall of several hundred million dollars due to low oil prices and other economic factors that are expected to put a cash crunch on the state during at least the next few years. There were about 14,500 executive branch employees and 2,900 additional positions that were vacant at the end of 2024, according to Department of Administration records.
Overviews of the study’s processes and results were presented to both finance committees by three executives with The Segal Group, which was hired by the Dunleavy administration to conduct the assessment with funds approved by the Legislature. Patrick Bracken, the company’s senior vice president, told the Senate committee the study classifies employees into 12 occupational groups.
“There are four occupational groups that are consistently below market when looking at the midpoint,” he said. “Those are the executive and senior administrators, which is known as the PA group; the education information, libraries and museums. (PE group); the biological sciences and the physical sciences and engineering groups.”
“Kind of conversely, when we think about the legal, judicial and related groups; the police, firefighters, corrections; craftwork and labor — those groups are consistently at or above market when compared to the market identified points,” Bracken said.
However, identifying which individual jobs may be below or above a salary benchmark is a considerably more complex determination, according to both company and Department of Administration officials.
“Within that 12 occupational groups we have 72 job families,” Camille Brill, acting director of the state Division of Personnel, told the Senate committee. “And then within those 72 job families we have 183 job classes…Maybe it might appear that we’re under-market in a certain job family of one of those 72, but as you do a deeper dive some of those job classes within that job family might be over-market. So we really do need to get into the details in order to provide good data for good policy decisions.”
A general overview of those details is provided in the study by breaking the 12 occupation groups into minimum, midpoint and maximum income categories — reflecting varying levels of pay based on experience and other factors — thus resulting in a total of 36 comparative groups.
At the 50th percentile, 21 of those 36 have salaries ranging from 89% to 99% of the benchmark, three equal to it at 100% and 11 exceeding it with scores ranging from 101% to 108%. At the 65th percentile, 31 of the 36 groups are at 85% to 98% of the benchmark, one equal to it, and four exceed it with scores between 101% and 103%.
When asked by legislators what benchmark other state and private employers use in determining their salaries, Bracken said the 65th percentile “generally would be considered a market-leading” standard. Among the lawmakers questioning if that should indeed be Alaska’s official target for its public employees was Sen. James Kauffman (R-Anchorage).
“I don’t know that the public sector should seek to be the premier employer at risk of poaching everyone from the private sector,” he said.
Legislators at both committee hearings asked how significant factors beyond salary — notably health insurance and retirement benefits — are in whether jobs are perceived as competitive.
“Generally the thought is that public employees aren’t always paid as much as private sector employees because it’s considered a calling,” said Rep. DeLena Johnson (R-Anchorage) during Monday’s hearing. At the same time the perception is “public employees tended in the past to (receive) better benefits as far as health care and so on. Would you say that’s changing?”
Bracken said he’s been conducting similar studies nationwide for 20 years and “the reality is that when I first started that work that perception was very strong and borne out pretty frequently in our studies.”
“Recently — and I would define that maybe in the last 10 years — that perception is less and less the case when we do our benchmarking work,” he said.
State union leaders and legislators sympathetic to their cause have argued that, in addition to state pay being uncompetitive, the loss of a traditional pension system in 2006 has made jobs more unattractive for potential recruits. Legislation seeking to restore such pensions has stalled again this session due to cost questions, with lawmakers supporting the bills stating recently it appears those efforts will extend into next year.
• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.
