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RE: Review of State Travel Costs in Relation to the Capital Location
In response to your request, we have reviewed the annual travel costs of state government to provide an estimate of the possible savings that may be realized if the capital was moved from Juneau to Wasilla. While we recognize that the capital move issue is a complicated and divisive issue among Alaskans, we have attempted to provide an analysis of state travel that is informative to all citizens regardless of their position on the issue. We encourage all readers to review the entire memorandum. It presents a detailed analysis of FY 94 travel costs incurred by the State. Our analysis and discussion of FY 94 costs provides a profile of travel expenditures, which in turn leads to a better and more comprehensive understanding of the travel costs involved in the varied state operations. At the end of the memorandum we also identify questions for which we are unable to provide an estimate of the associated costs to the State.
SCOPE AND METHODOLOGY
We began our review by analyzing the FY 94 travel costs of state government as recorded in the state accounting system. We reviewed FY 94 costs to determine what portion of the costs incurred by the State related to the capital being located in Juneau. In developing our estimate, we used a combination of experience and resources at both the agencies and within our division. We relied on our division personnel's knowledge of the organization and operations of state government. We also had extensive discussions with numerous state agency personnel who are knowledgeable about both the internal operations of their respective agencies and, more specifically, the nature of travel costs involved in course of those operations. We first reviewed the accounting structure to identify categories of expenditures that, by their nature, would not be affected by the location of the capital. An example of this type of travel cost would be expenditure account 72255, Aircraft Charter: based on our knowledge of this account, we categorically eliminated $830,000 from further consideration since the location of the capital has no bearing on how chartered aircraft are typically used in state operations.
Next, we reviewed each department to determine if there were identifiable components that should be eliminated. Many departments have aspects of their operation that are not impacted by the location of the capital. Where we could clearly identify those components we eliminated the associated travel costs from further consideration. An example of this type of travel cost is Mt. Edgecumbe in the Department of Education. We eliminated $313,000 in travel costs from further review. This travel is primarily transporting Mt. Edgecumbe students between their home and the school.
After eliminating accounts and components as discussed above, we reviewed the balance of the FY 94 travel costs remaining on a department-by-department basis, and often on an agency-by-agency basis. We discussed this travel with agency personnel and audit staff most knowledgeable about the various agencies and reviewed information prepared in response to capital move legislation. This analysis resulted in an assessment of a capital location factor to the various expenditure accounts within each agency. For example, in the Office of the Governor, we applied a savings factor of 80% to the Office of Management and Budget~(OMB). The rationale we used was that the relocation of the Governor's office to Anchorage or Wasilla would significantly reduce the travel costs of OMB.
The result of this process gave us an estimate of the amount of FY 94 travel costs that were attributable to the capital being located in Juneau. It does not recognize any new travel costs associated with relocating the capital to Wasilla.
Finally, at the end of this memorandum, we pose questions for which we were unable to develop an associated cost estimate either because time did not allow or for which there is no reasonable means of developing an amount in which we would have confidence. Nonetheless, they are real issues and would have associated costs.
The remainder of this memorandum walks the reader through the details of the process outlined above. We have attempted to summarize our analysis of FY 94 costs in a manner that will enable the reader to gain an understanding of the diversity and non-political nature of the majority of state travel. We did not attempt to analyze travel on the basis of necessity or efficiency.
THE UNIVERSE OF EXPENDITURES REVIEWED
We will begin our analysis with a departmental breakdown of the universe of travel we reviewed. We reviewed all travel costs recorded in the state accounting system. This covers all departments of state government, the Alaska Court System, and the Legislature, but does not include the University of Alaska. During FY 94, the University budgeted about $7.5~ million in travel. Time did not allow us to visit the University and analyze their travel for the purposes of this memorandum. Actual travel costs recorded on the state accounting system for FY 94 totaled $32,839,000. The table below summarizes these travel costs by department.
| Department | FY 94 Travel Costs |
| Office of the Governor | $720,000 |
| Administration (DOA) | 1,165,000 |
| Law | 1,047,000 |
| Revenue (DOR) | 583,000 |
| Education (DOE) | 1,649,000 |
| Health and Social Services (DHSS) | 3,185,000 |
| Labor (DOL) | 1,033,000 |
| Commerce and Economic Development (DCED) | 1,830,000 |
| Military and Veterans Affairs (DMVA) | 583,000 |
| Natural Resources (DNR) | 1,418,000 |
| Fish and Game (DFG) | 3,236,000 |
| Public Safety (DPS) | 3,556,000 |
| Environmental Conservation (DEC) | 1,885,000 |
| Corrections (DOC) | 1,029,000 |
| Community and Regional Affairs (DCRA) | 1,050,000 |
| Transportation and Public Facilities (DOTPF) | 6,004,000 |
| Alaska Court System | 929,000 |
| Alaska State Legislature | 1,937,000 |
| Total | $32,839,000 |
ANALYSIS AND ELIMINATION OF NON-AFFECTED ACCOUNTS
As shown above, almost $33 million was charged to various travel accounts on the state accounting system. As a first review, we analyzed the various detailed accounts that are grouped under the travel summary total. We attempted to identify those accounts with expenditures that would appear not to be affected by the location of the capital city. From this analysis, we identified over $10.8 million in travel account expenditures that we believe would be incurred regardless of the location of the state capital. The following table summarizes the primary accounts that we have eliminated from further consideration.
| Total FY 94 AKSAS travel expenditures | $32,839,000 |
Out-of-State Travel , Travel out of state was the largest category of costs excluded from further analysis. We felt these costs were not related to the location of capital, although it may be argued that there might be a slight reduction in air travel fares that may originate from Anchorage rather than Juneau. However, during much of FY 94, the Juneau commercial air travel market benefited from the presence of two, and sometimes three, major airlines. This contributed to competitive prices comparable to those of Anchorage for out-of-state travel. Of the almost $4 million involved, $2.2 million were classified as transportation costs and almost $1.8 million were in per diem costs paid to individuals while on travel status. | <3,985,000> |
Non-Employee Travel & Cost Reimbursement , We also excluded from further consideration travel and transportation expenditures paid to individuals who are not state employees. For FY 94, DCED had just over $500,000 of the total statewide expenditures in this category. These reflect the activities of DCED agencies such as the Division of Occupational Licensing for payments made to members of various occupational licensing boards, the Alaska Tourism Marketing Council, and the Alaska Seafood Marketing Institute board of directors (which has more than 20 members) for reimbursement of travel costs related to attending various board meetings. Expenditures include transportation reimbursement for travel agents to visit the State in order to promote tourism. Likewise, expenditures were made in FY 94 for individuals in the food industry from outside to visit the State in order to promote the marketing of Alaska seafood. For FY 94, DPS had expenditures in this category of more than $415,000 while DOC expenditures topped $260,000. The bulk of DPS expenditures is related to transport of individuals either arrested, or arrested and convicted, for criminal offenses. In contrast, the major amount of DOC expenditures reflect the costs involved with returning released inmates to the community of their original arrest. DFG also had a large number of FY 94 expenditures in this category with almost $270,000. Over $150,000 of these costs related to transportation and per diem costs for the Board of Fish and the Board of Game. We were advised that these expenditures would not be reduced or otherwise affected by a move of the capital from Juneau to Wasilla. DHSS incurred almost $264,000 in non-employee travel costs in FY 94. The largest element of these costs, $75,000, provided travel for patients voluntarily or judicially committed to the Alaska Psychiatric Institute from areas outside Anchorage. | <2,614,000> |
| Sub-total carried forward to next page | $26,240,000 |
| Sub-total carried forward from previous page | $26,240,000 |
| Moving and Relocation Costs , The second largest group of costs excluded in our review of travel accounts were those related to moving and relocation of state employees. Of the almost $1.4 million in FY 94 expenditures recorded on AKSAS, 44% or over $608,000 were incurred by DPS. Another $139,000 was spent by DOC, while DHSS had over $119,000 in these costs. All three departments have personnel in numerous locations throughout the State. DPS's expenditures in this category can be attributed to the department's policy of frequently transferring state trooper personnel between posts. DOC also transfers personnel frequently as both superintendents and correctional officers are reassigned to various correctional facilities. DHSS expenditures are primarily related to the transfer of public health nurses between stations and the reassignment of DFYS social workers. Again, as a general rule, it appears to us that most expenditures in this account are independent of the geographic location of the capital. | <1,379,000> |
| Aircraft Charter , We also excluded aircraft charter costs from further review. In FY~ 94, DOTPF spent over $322,000 to charter airplanes. DOTPF uses charter air service to place personnel and supplies in remote work locations. DOC had over $158,000; and, DPS more than $133,000 in aircraft charter expenditures. DOC costs are primarily related to the transport of released inmates back to their point of original arrest; while DPS costs are related to the agency carrying out law enforcement along with its search and rescue operations. Most, if not all these costs, appeared to us as being independent of the location of the state capital. | <830,000> |
| Inspection/Observation , For FY 94, four departments had substantial travel expenditures in accounts related to what is termed inspection and observation:
| <777,000> |
| Witness and Jury Travel , Also included in travel under the AKSAS structure are a variety of accounts with expenditures related to jury and witness expenses. As could be expected, most of the jury expenses (just over $219,000) were incurred by the Alaska Court System. Likewise the bulk of witness travel costs were incurred by DOA's Public Defender Agency (just over $52,000) and the Department of Law (almost $264,000). These travel and other expenses are independent from the location of the capital, and accordingly, we eliminated the costs from further consideration. | <597,000> |
| Sub-total carried forward to next page | $22,657,000
|
| Sub-total carried forward from previous page | $22,657,000 |
Employee Reimbursement for Mileage , Included in AKSAS travel costs are payments made to state employees to reimburse them for miles traveled in their personal vehicles while on state business. The Alaska Administrative Manual allows employees to be reimbursed 28 cents per mile for use of their personal vehicle. Under certain collective bargaining agreements, some employees are reimbursed as much as 30 cents per mile. Again, due to the nature of this account, we eliminated it from further analysis since it would not appear to be affected by the location of the state capital. To the contrary, it could be anticipated that employee mileage costs will increase if legislative deliberations and debate take place in Wasilla while the bulk of the bureaucracy is located in Anchorage. | <333,000> |
| Magistrate Travel Costs , These Alaska Court System costs were not considered further, since it was felt they were not affected by the location of the state capital. | <170,000> |
| Honorariums and Stipends , Honorariums and stipends are classified under travel in the AKSAS account structure. DPS pays out the most in honorariums with FY 94 expenditures topping $75,000. These honorariums are paid to individuals who make presentations or provide training instruction at the Public Safety Academy in Sitka. DOR paid out almost $21,000 in honorariums while DOL had another $17,900 in expenditures. DOR's expenditures reflect payments for Alaska State Pension Investment Board members and the Alaska Science and Technology Foundation board. DOL payments were for members of the Workers' Compensation Board. From our review of these and other honorarium payments it appears that these expenditures, classified in AKSAS under travel, would be unaffected by a capital move. | <127,000> |
FY 94 AKSAS travel expenditures, adjusted for non-affected accounts | $22,027,000 |
The $10,812,000 eliminated from further review in the table above can be viewed in relation to the various departments as reflected in the table on page 15. The eliminated amount represents 33% of the total travel costs.
ANALYSIS AND ELIMINATION OF NON-AFFECTED BUDGET COMPONENTS
After eliminating various account types from our analysis, we next reviewed the nature of travel costs incurred by various budgetary components. We considered programmatic activities of those components and how the various travel-related costs may be affected by the geographic location of the capital. For those components with travel costs that we determined clearly would not be affected by the location of the capital, we further adjusted FY 94 actual expenditures by eliminating the components from further consideration. The components identified, and the impact on our adjusted FY 94 travel expenditures, are presented and discussed in the table that follows.
(Note: Our discussion of various expenditure totals are only for those accounts that were not eliminated in the first stage of our review.)
| Sub-total for further review from previous table | $22,027,000 |
Capital Project Travel , In FY 94, four departments spent over $3.5 million on travel that was related to capital projects. As might be expected, DOTPF had the most expenditures, with $3.2 million. The other departments and their respective travel expenditure totals for FY 94 were: DFG $180,000; DCRA $104,000; and, DNR $87,000. By its nature, capital project expenditure activity is not involved with the legislative deliberation process. Expenditures for projects are made after the legislative review process; the project has already received legislative approval by way of a capital appropriation. Accordingly, we presume that little or no travel done in connection with projects is related to the geographic location of the capital. Additionally, the departments listed above all have a strong regional presence throughout the State. In our discussions with departmental personnel, they emphasized that capital project transportation costs were generally for travel from the agency's nearest regional location out to the project, and thus was unaffected by the location of the capital. | <3,585,000> |
| DPS Agency/Program Travel , Also excluded from further consideration were remaining travel costs (after elimination of selected accounts discussed previously) associated with five major agencies or programs within DPS. We felt all remaining travel associated with these agencies were for very specific missions and programs necessary for public safety , which would be carried out regardless of the location of the capital. The agencies and programs include: | <1,821,000> |
| Alaska Marine Highways System , For FY 94 the Alaska Marine Highway System (AMHS) had $964,000 in travel costs. The largest bulk of these costs were related to field travel necessary to maintain the AMHS fleet in working order. We found agency personnel assertions reasonable that virtually all transportation costs involved with AMHS operations are very much programmatic in nature, and would not be affected by the geographic location of the capital. | <964,000> |
| Sub-total carried forward to next page | $15,657,000 |
| Sub-total carried forward from previous page | $15,657,000 |
Public Health and Family & Youth Services Field Travel , In making inquiries with various department personnel regarding the nature of their travel expenditures, we identified just over $.5 million of transportation costs in DHSS that, due to their nature, would be incurred independent of the capital city's location. In FY 94, the Division of Public Health and the Division of Family & Youth Services spent $584,000 in field travel. These transportation costs were related to the travel of public health nurses, primarily in rural Alaska; and, social worker travel necessary for the protection and safety of children and older Alaskans. In contrast, we feel the administrative travel costs for these two divisions are related to the capital's location and they are further considered in the departmental analysis. | <584,000> |
| DOL Employment Services , Also excluded in our component review are FY 94 travel expenditures related to DOL's Employment Services program. This segment of DOL is fully funded from federal receipts. The program is administered in accordance with specified federal requirements. Given these circumstances, the regional presence of the program's various offices statewide, and discussions with departmental personnel, we have eliminated the component's $422,000 in travel costs from any further analysis. | <422,000> |
| Mt. Edgecumbe , The state-operated boarding high school at Mt. Edgecumbe spent just over $300,000 in FY 94 on in-state transportation and per diem costs. The overwhelming bulk of these expenditures involved transporting students to and from the school. Given the unique mission of Mt. Edgecumbe, and its relatively independent operating relationship with DOE, the location of the capital would have no impact on these programmatic costs. Accordingly, we have reduced the amount of travel costs that we will review further by the amount of the school's full $313,000 in FY 94 travel expenditures. | <313,000> |
| Alaska Seafood Marketing Institute (ASMI) , Our previous elimination of out-of-state travel and non-employee travel costs excluded more than two-thirds of ASMI's FY 94 travel expenditures from our final estimate of travel costs. After discussion with agency staff and our analysis of remaining expenditures, we feel that ASMI's travel costs are either: (1) independent of the geographic location of the capital, or (2) if ASMI moves to Wasilla/Anchorage along with any transfer of the state capital; any travel savings will be offset by the necessity of returning to Southeast Alaska, one of the State's largest seafood producing regions. Accordingly, we have eliminated the remaining $74,000 in ASMI travel costs from further consideration of our estimate. | <74,000> |
| DOLaw's Prosecution Budget Component , After our initial account exclusions, there were $169,000 in FY 94 travel expenditures remaining in the prosecution budget component of DOLaw. Based on discussions with the staff at DOLaw, these costs are not related to the geographic location of the capital, but rather to the prosecutorial activity undertaken in the district courts throughout the State. Accordingly, we have eliminated the $169,000 in travel-related expenditures from the development of our savings estimate. | <169,000> |
| Sub-total carried forward to next page | $14,095,000 |
| Sub-total carried forward from previous page | $14,095,000 |
Division of Elections travel related to Reapportionment , For FY 94, the Division of Elections within the Lieutenant Governor's office had almost $30,000 in travel-related expenditures associated with the electoral reapportionment process. Given that these expenditures are extraordinary in nature, since reapportionment takes place only after each ten-year census, we excluded them from further consideration when developing an estimate of travel cost savings. | <30,000> |
FY 94 travel expenditures, adjusted for non-affected accounts and components | $14,065,000 |
The affect of the elimination of the components on a departmental basis can be seen in the table on page 15. A total of $7,962,000 or 24% of total travel costs were eliminated from further consideration in this component analysis.
ANALYSIS OF REMAINING DEPARTMENT TRAVEL COSTS
The final stage of our analysis of FY 94 travel costs is relatively more subjective but is supported by our understanding of the department core operations and also by conversations with departmental staff knowledgeable about the affairs of the agencies of the department. The first two levels of our review eliminated certain expenditure accounts and also eliminated specific components of the departments' operations that, in our opinion, are not affected by the location of the capital. The remaining travel costs to be further evaluated total $14,065,000.
Our approach to this final evaluation included a departmental dissection and analysis to assign a savings factor to remaining significant travel accounts and/or components of the department. Within this analysis is a rather aggressive assumption that most headquarters and administrative functions of the various departments' operations would be relocated out of Juneau. Therefore, we assessed a larger savings factor to administrative travel recorded by agencies than we did to field travel. While there is no formal definition of the capital move, we chose this approach to identify the greatest amount of potential savings as possible in this stage of our analysis.
The following table begins with the amount carried forward from the previous table and includes a departmental summary of the basic assumptions we used to identify what portion of the remaining travel costs we estimate would continue to be incurred regardless of the location of the capital. Therefore, by this process-of-elimination design, the savings that we have identified is reflected in the final number at the end of the next table.
| Sub-total for further review from previous table | $14,065,000 |
Office of the Governor , After the exclusion of various accounts and components, the adjusted FY 94 travel expenditures for the Office of Governor were just less than $452,000. We analyzed the travel expenditures of various operating units of the Office of the Governor and, using the following assumptions, developed an estimate of travel costs of the capital being located in Juneau. We estimate that transportation costs of the Division of Elections and the Office of Management Budget could be reduced by 80%; or less than $142,000. We felt that the savings for the Executive Operations segment of the Office of the Governor was not as great. This budget unit includes travel associated with the Governor, and we believe that the individual in this office would continue extensive travel within the State, as has typically been the case. Accordingly, we estimate a savings of 50%; which translates into over $125,000. We assumed that travel costs associated with various special boards and commissions would largely be unaffected by the location of the capital and assigned only a 10% savings to less than $24,000 in remaining costs. Using these assumptions, our estimate of the remaining travel costs that would be unaffected by a capital move for the Office of the Governor would be $182,000. | <182,000> |
| Department of Administration , For those DOA agencies located in Anchorage, such as the Alaska Oil and Gas Conservation Commission, we assumed there would be no savings. For agencies such as the Pioneers' Homes, Older Alaskans Commission, Public Defender Agency, Alaska Public Offices Commission, and Alaska Public Broadcasting Commission, we assumed only a 10% savings for all transportation costs. The primary transportation costs for these agencies was field travel as compared to administrative travel. With much of the travel being done out of Anchorage already by the Public Defender Agency and the Director of Senior Services, we felt designation of 90% of the travel costs as unaffected by a prospective capital move to be realistic. On the other hand, we assumed that 80% of the travel costs in the Office of Commissioner could possibly be saved if the capital was not in Juneau. For the Division of Information Services, which has extensive staff in both Anchorage and Juneau, we assumed 100% savings in administrative travel. Conversely, we applied no savings factor for field travel, which is predominantly used to record transportation costs involved in repair of telecommunication facilities throughout the State. These assumptions and factors resulted in more than $500,000 being unaffected by any prospective capital move. | <521,000> |
| Sub-total carried forward to next page | $13,362,000 |
| Sub-total carried forward from previous page | $13,362,000 |
| Department of Law , After the elimination of selected accounts and the prosecution component, the remaining FY 94 travel expenditures for DOLaw totalled just over $246,000. After consulting with the department and evaluating information submitted to the legislature in 1993, we calculated that almost $105,000 in transportation costs could be saved, leaving an additional $141,000 in unaffected travel costs. For FY 94 the Alaska Marine Highway System (AMHS) had $967,000 in travel costs. The largest bulk of these costs were related to field travel necessary to maintain the AMHS fleet in working order. We found agency personnel assertions reasonable that virtually all transportation costs involved with AMHS operations are very much programmatic in nature, and would not be affected by the geographic location of the capital. | <141,000> |
| Department of Revenue , After the elimination of selected accounts the remaining FY~ 94 travel expenditures for DOR totalled almost $237,000. Many of DOR's agencies are located in Anchorage, and accordingly incur a relatively large percentage of their administrative costs traveling to Juneau to testify regarding their budget. Accordingly, we assumed that the Child Support Enforcement Division and the Alcohol Beverage Control Board staff would save half their administrative travel costs with the capital located in Wasilla. For the travel by the Executive Director of the Alaska Science and Technology Foundation, we assumed administrative savings of only one-third given that the Executive Director travels to communities other than Juneau for administrative purposes. For the rest of the of DOR, based on discussions with departmental staff we assumed no travel savings for various boards and commissions. We estimated a 10% savings in field travel costs and a 50% savings in other DOR administrative travel. These assumptions and factors translated into a savings of just over $56,000 based on FY 94 expenditures, or as presented at right, some $181,000 left unaffected by the location of the capital. | <181,000> |
| Department of Education , After the elimination of selected accounts and the expenditures related to the Mt. Edgecumbe budget component, the remaining FY 94 travel expenditures for DOE totalled almost $842,000. Although the DOE staff we spoke to felt there was no affect, we assumed that at least a 20% savings could be achieved in the more than $155,000 of remaining travel expenditures related to conventions and meetings. We also assumed at least a 10% savings impact on the remaining $116,000 in travel related to various boards and commissions administered by DOE. Since most of DOE is located in Juneau, we feel that the Juneau-Anchorage transport leg represents a significant cost element in almost every monitoring trip made by departmental personnel to various northern school districts. We applied an assumption that 50% of transportation costs and 15% of per diem costs related to field travel would be saved, leaving only $338,000 of field travel costs unaffected by the capital move. Likewise, although the department felt that no administrative travel savings were attributable to the location of the capital, we felt that 90% of the more than $36,000 in departmental administrative travel could possibly be saved if DOE headquarters were in the Anchorage/Wasilla area. Applying our assumptions and guesses, based on FY 94 expenditures, DOE would still have travel costs of $570,000 in addition to those related to Mt. Edgecumbe operations. | <570,000> |
| Sub-total carried forward to next page | $12,470,000 |
| Sub-total carried forward from previous page | $12,470,000 |
Department of Health and Social Services , Based on extensive discussions with agency personnel and analysis of FY 94 accounting information, we estimated that DHSS would save over $226,000 if the DHSS headquarters were relocated to either Anchorage or Wasilla in conjunction with moving the capital from Juneau. This is out of more than $2.3~ million in adjusted travel costs after elimination of selected accounts. The assumptions we used to develop our estimate were consistent with those of other agencies. We assumed no savings in travel related to boards and commissions. For field travel other than that associated with the Division of Public Health and DFYS we used a 10% savings factor. Departmental administrative travel savings were calculated based on discussions with DHSS staff and analysis of transportation costs involved with various operational components. As shown at right, we felt that more than $1.5 million of the departmental travel would be unaffected by the geographic location of the capital. | <1,522,000> |
| Department of Labor , Based on FY 94 expenditures, prospective travel savings in DOL are minimal. After elimination of selected accounts DOL costs are just less than $570,000. After deducting costs related to the Employment Services budget component, the remaining total is almost $148,000. As with other agencies we applied a 50% savings factor to administrative travel and a 10% savings assumption to field travel. After applying a 50% savings factor to less than $10,000 in costs recorded as convention and meeting travel, departmental savings come up to just under $30,000. As shown at right, our estimates and assumptions indicate that approximately $118,000 of departmental travel would be unaffected by the geographic location of the capital. | <118,000> |
| Department of Commerce and Economic Development , When analyzing FY 94 travel expenditures for DCED for possible savings we subdivided field travel along agency lines. For those DCED agencies that are based in Juneau, we assumed that 80% of the in-state field travel costs could be saved if they were located in Anchorage/Wasilla with a relocated capital. For those DCED agencies already based in Anchorage, we assumed that only 10% of field travel costs would be saved. Based on FY 94 expenditures application of the factors result in approximate savings of $267,000 for Juneau based agencies, $13,000 for Anchorage based agencies. As with other agencies we applied a 50% savings assumption to administrative travel costs, which, based on FY 94 expenditures, would result in an additional savings of just over $13,000. All told we calculated some $294,000 in savings and, as shown right, calculated some $253,000 in non-ASMI, non-excluded account, travel that would be unaffected by the location of the capital. | <253,000> |
| Department of Military and Veterans Affairs , Based on FY 94 expenditures, prospective travel savings for DMVA are substantial when compared to the department's almost $352,000 (adjusted for excluded accounts). Since DMVA is already headquartered in Anchorage, we assumed field travel costs would be minimal. Similar to the assumption used in DCED, we applied only a 10% savings factor to field travel. On the other hand, because of the Anchorage headquarter location, we felt that virtually all administration travel would be eliminated , which based on FY 94 costs represents over $113,000. All told, we estimate DMVA savings at $133,800; which, based on how the information is being presented at right, translates into some $218,000 in travel that would be unaffected by the location of the capital. | <218,000> |
| Sub-total carried forward to next page | $10,359,000 |
| Sub-total carried forward from previous page | $10,359,000 |
Department of Natural Resources , After the exclusion of certain accounts DNR had just over $873,000 in FY 94 travel expenditures. After deducting an additional $87,000 in capital project related travel, the department had some $786,000 in costs remaining. From this total we developed a estimate of savings by considering travel related to: (1)~conventions and meetings, (2) boards and commissions, (3) field travel, and (4)~administrative travel. Based on discussions with departmental personnel we decided to apply a 33% savings factor to convention and meeting travel, while using a 10% factor for boards and commissions. Application of these estimates resulted in total savings of almost $48,000. Because DNR already has a substantial presence in Anchorage, and in other regions of the State, we felt the capital location's impact on field travel would be minimal. Although agency staff felt there would be no savings, we did apply a 10% savings assumption. However, we did accept the department's estimate that about one-third of administrative travel would be saved, which, based on FY 94 expenditures, represents just over $122,000 in savings. Accordingly, as reflected at right, approximately $590,000 in travel costs would be unaffected by the geographic location of the capital. | <590,000> |
| Department of Fish and Game , After exclusion of selected accounts, and just over $180,000 in capital project expenditures, DFG still had almost $2.3 million in FY 94 travel expenditures. The expenditures essentially fell into three major categories: (1) conventions and meetings, (2) field travel, and (3) administration travel. Similar to DEC and DNR, we applied a 33% savings factor to conventions and meetings. Additionally, we also estimated a one-third savings in administrative travel. From FY 94 expenditures these estimated savings would be more than $312,000. For field travel we felt the savings, if any, would be minimal. DFG is very much a decentralized department with numerous regional and district offices. Most field travel is related to day-to-day operations and originates out of the nearest DFG office. We decided to apply a 10% savings factor to field travel which yielded at savings of approximately $126,000. We estimate departmental travel costs that are unaffected by the location of the capital to be just over $1.1 million. | <1,838,000> |
| Department of Public Safety , Of all departments, DPS was the most affected by the exclusion of various accounts and components. Based on FY 94 expenditures, when travel in the selected accounts and that associated with the Alaska State Troopers, Fish and Wildlife Protection activities, State Fire Marshall, the Village Public Safety Officer program, and contract jails are excluded, the department has only about $81,000 in travel expenditures left. Based on discussions with agency personnel and the commissioner, savings were estimated to be no more than a maximum of $60,000. Given the results of exclusion analysis, such an estimate appears reasonable. Accordingly we will use the departmental estimate, which excludes only an estimated $21,000 from the affect of the geographic location of the capital. | <21,000> |
| Sub-total carried forward to next page | $7,910,000 |
| Sub-total carried forward from previous page | $7,910,000 |
| Department of Environmental Conservation , After exclusion of selected accounts, DEC still had $1.034 million in travel-related expenditures. The expenditures essentially fell into three major categories: (1) conventions and meetings, (2) field travel, and (3) administration travel. Similar to DNR, we applied a 33% savings factor to conventions and meetings. Additionally, we also estimated a one-third savings in administrative travel. From FY 94 expenditures these estimated savings would be more than $227,000. For field travel we felt the savings, if any, would be minimal. DEC is very much a decentralized department with numerous regional and district offices. Most field travel is related to day-to-day operations and originates out of the nearest DEC office. Although the department felt there were no costs related to the location of the capital, we felt that Juneau's geographic location had some marginal, tangential affect on costs. We decided to apply a 10% savings factor to field travel which yielded at savings of approximately $34,000. We estimate departmental travel costs that are unaffected by the location of the capital to be $773,000. | <773,000> |
| Department of Corrections , Like DMVA, DOC's headquarters are already located in Anchorage. When analyzing the $437,000 in FY 94 departmental travel expenditures remaining after the exclusion of selected accounts, we identified just over $56,000 costs related to the location of the capital. We applied a 10% savings factor to $164,000 in field travel, because of the Anchorage location and the nature of the travel involved. After discussions with departmental personnel we accepted their estimate that about $38,500 out of almost $193,000 in administrative travel was attributable to the location of the capital. Accordingly, as shown at right, some $382,000 of travel expenditures are unaffected by the geographic location of the capital. | <382,000> |
| Department of Community and Regional Affairs , After exclusion of selected accounts, and expenditures related to capital projects, DCRA has $720,000 in travel-related expenditures. As with DEC, DCRA is a very decentralized department. Accordingly we felt a limited amount of field travel was related to the location of the capital. As with DEC and DNR we applied a 10% cost factor which yielded a savings of almost $49,000. Application of the same factor with boards and commission travel yielded a savings of almost $8,000. As we did with DNR, we accepted the department's estimate that more than $32,000 in administrative travel could be saved if the capital were located in Anchorage/Wasilla. As shown at right, we estimate, based on FY 94 expenditures, that $631,000 in DCRA travel costs are unaffected by the geographic location of the capital. | <631,000> |
| Department of Transportation and Public Facilities , After exclusion of selected accounts; and, expenditures related to capital projects and AMHS, DOTPF still has more than $1,177,000 in FY 94 travel-related expenditures. As with DNR, we applied a one-third savings factor to commissioner office and other administrative travel. Likewise, as with other decentrally organized departments such as DEC we applied only a 10% savings factor to field travel. We also used the 10% assumption for $65,000 in travel related to conventions, meetings, boards, and commissions. These assumptions yielded projected savings of just over $214,000 based on FY 94 expenditures, but, as shown at right left $963,000 of departmental travel unaffected by the location of the capital. | <963,000> |
| Sub-total carried forward to next page | $5,161,000 |
| Sub-total carried forward from previous page | $5,161,000 |
Alaska Court System , The court system provided us with a detailed estimate of their travel costs related to the location of the capital in Juneau. According to Alaska Court System estimates and calculations just over $23,000 in travel costs are related to the Juneau location of the capital. Based on FY 94 expenditures, this would leave $355,000 in court system travel costs unaffected by the location of the capital. | <355,000> |
| Alaska State Legislature , The Legislative Affairs Agency estimated that relocating the capital would produce savings in three areas of legislative travel: (1) relocation expenses would be reduced by $125,000, (2) in-session per diem would be reduced by $125,000, and (3) in-session travel for legislators returning to their home district would be reduced by about $25,000. For Legislative Audit, Legislative Finance, and the Ombudsman, we estimate a savings of about $80,000. This would leave $1,474,000 in travel unaffected by the capital location. | <1,474,000> |
| ESTIMATED SAVINGS IN FY 94 TRAVEL | $3,332,000 |
In summary, we estimate, on an annual basis, state travel costs related to the geographic location of the capital to be around $3.3 million. The estimate was developed by applying a three-tiered analysis to the expenditures recorded to the various travel-related accounts in the state accounting system for the most recently completed fiscal year, FY 94.
To recap, our first analysis involved reviewing the nature of all the accounts involved, and eliminating more than 40 different accounts (grouped in ten categories) that, in our view, would not be affected by the location of the capital. This process eliminated over $10.8~mi llion of the $32.8 million in FY 94 travel expenditures. Our second analysis consisted of reviewing various budgetary components in order to isolate and eliminate state operating units with travel expenditures that would be unaffected by the location of the capital. This second analytical review eliminated an additional $8.0 million from further consideration.
After application of these two procedures, we informally surveyed various operating departments, reviewed fiscal information submitted in response to previous capital move legislation, and considered the unique nature of various agency operations and organizations. From this information we developed some basic assumptions, tailored to the unique characteristics of each department's operations, and developed what we feel is an "educated guess" of the annual travel costs related to the capital's location in Juneau. After applying this third analytical review procedure, we excluded an additional $10.7 million, leaving the final estimate of $3.3 million in annual savings.
This process is summarized in the following table.
Department | FY 94 Travel Costs | Account Elimination | Component Elimination | Program Travel Elimination | Total Savings |
| Office of the Governor | $720,000 | -$238,000 | -$30,000 | $-182,000 | $270,000 |
| Administration (DOA) | 1,165,000 | -420,000 | -0- | -521,000 | 224,000 |
| Law | 1,047,000 | -632,000 | -169,000 | -141,000 | 105,000 |
| Revenue (DOR) | 583,000 | -346,000 | -0- | -181,000 | 56,000 |
| Education (DOE) | 1,649,000 | -496,000 | -313,000 | -570,000 | 270,000 |
| Health and Social Services (DHSS) | 3,185,000 | -851,000 | -584,000 | -1,522,000 | 228,000 |
| Labor (DOL) | 1,033,000 | -464,000 | -422,000 | -118,000 | 29,000 |
| Commerce and Economic Development (DCED) | 1,830,000 | -1,209,000 | -74,000 | -253,000 | 294,000 |
| Military and Veterans Affairs (DMVA) | 583,000 | -231,000 | -0- | -218,000 | 134,000 |
| Natural Resources (DNR) | 1,418,000 | -545,000 | -87,000 | -590,000 | 196,000 |
| Fish and Game (DFG) | 3,236,000 | -775,000 | -180,000 | -1,838,000 | 443,000 |
| Public Safety (DPS) | 3,556,000 | -1,654,000 | -1,821,000 | -21,000 | 60,000 |
| Environmental Conservation (DEC) | 1,885,000 | -851,000 | -0- | -773,000 | 261,000 |
| Corrections (DOC) | 1,029,000 | -591,000 | -0- | -382,000 | 56,000 |
| Community and Regional Affairs (DCRA) | 1,050,000 | -226,000 | -104,000 | -631,000 | 89,000 |
| Transportation and Public Facilities (DOTPF) | 6,004,000 | -649,000 | -4,178,000 | -963,000 | 214,000 |
| Alaska Court System | 929,000 | -551,000 | -0- | -355,000 | 23,000 |
| Alaska State Legislature | 1,937,000 | -83,000 | -0- | -1,474,000 | 380,000 |
| Total | $32,839,000 | -$10,812,000 | -$7,962,000 | -10,733,000 | $3,332,000 |
FINAL AUDITOR'S COMMENTS AND QUESTIONS
The central aspect to our approach on this analysis was what we came to term the "magic wand" assumption. That is, we assumed that all of the bureaucracy that is currently located in Juneau, with the exception of regional presence, would appear in either Wasilla or Anchorage if the capital was relocated. However, we did not consider what costs may be involved in relocating employees from Juneau to Anchorage and Wasilla. Although we excluded moving and relocation costs entirely from our analysis, it would seem to us that these costs would increase dramatically during the transition period if most of the state positions currently located in Juneau were transferred to either Anchorage or Wasilla. What would be the associated cost to the State?
It is our understanding that the supporters of the capital move envision only the legislative chambers and the Office of the Governor being located in Wasilla, while Anchorage would house the remaining state offices. The rationale appears to be that this is the most viable option, since it would not require the construction of extensive infrastructure in Wasilla to house state offices. Rather, their assumption is that existing facilities and resources currently available in Anchorage could be used to house state offices. This assumption ignores the need for significant information exchange during the legislative session. We would anticipate that numerous state agency directors, budget personnel, and commissioners would essentially be commuting daily from their offices in Anchorage to Wasilla during the legislative session. To accommodate that need, significant costs in mileage, per diem, lost productive time commuting, overtime pay for classified employees commuting before or after normal work hours, meal allowances for day trips, state vehicle usage or car rental and other items will be incurred. What would be the associated cost to the State?
During the near term, it is suggested that only the legislature will be required to be in Wasilla by 1997. It will logically take longer for the remainder of the bureaucracy to relocate. Meanwhile, significant travel costs will be incurred between Juneau and Wasilla during these transition years. What would be the associated cost to the State?