Radical restructuring? A blast from the past

Art Chance
Art Chance


Dermot Cole, a Fairbanks writer and political gadfly, is parroting the the congenital ‘crats and former employees of the previous administration in their opposition to Gov. Mike Dunleavy’s consolidation of departmental administrative services functions into the Office of Management and Budget.

It is the standard attack on the newbies and especially on the new director of OMB, who Cole avers “knows nothing about Alaska.” Cole asserts that the Administrative Services Divisions are where the expertise about State operations reside and all this expertise is being supplanted by newbies who don’t know anything and are about to radically upset the congenital ‘crats’ applecart.

In the fall of 2002 a group of us who had survived the Knowles Administration’s concerted effort to destroy the State’s institutional memory and culture to make it safe for them to do as they pleased without nagging rules ran up the black flag and let our name show on APOC reports as contributors to Frank Murkowski.

That will get you fired if you’re not careful; merit system rules don’t apply to Democrats.   A few months later three of us were in charge of the wages, hours, and conditions of all classified and partially exempt employees of the Executive Branch.

There is nothing radical about actually having the Governor’s Office in charge of the government!   There is nothing radical about a new Governor putting his/her own people in charge of things.

Let me show you “radical.”   Here’s an excerpt from what three of the more knowledgeable and experienced merit system direct reports to political management were thinking about organizing State government 16 years ago:

The Eight Stars Program

A Quality Initiative Plan

The following assumptions underlie this plan:

  • A Republican Governor cannot staff the State government with loyal, qualified appointees.
  • The Governor’s Office of Management does not manage and its budget functions largely duplicate those that are or could be performed at a lower level.
  • The current structure is ossified and intensely hierarchal.
  • Each department is stovepiped.
  • Most State employees have no sense of a corporate culture or values beyond bureaucratic self-preservation.
  • The integrity of the State’s human resources and financial management systems has been severely compromised.
  • There is no incentive to excel.
  • Employees generally know more about their work than their politically appointed managers.
  • The State’s statutory and contract pay schemes are inadequate to attract quality managers.
  • Only the first of these assumptions is a good thing.

Run the Whole Government from the Governor’s Office

We propose to assemble a top-quality management team reporting directly to the Governor or Chief of Staff, placed in the exempt service, and paid whatever it takes to attract them.  These managers will be tasked to put the management back in the Office of Management and Budget.

Since these managers will be in the exempt service, they will not be subject to, and thus slaves to, the Public Employees Retirement System (PERS), and can be offered attractive 401Ks or other retirement schemes that they can take with them when they leave.

This will have the additional benefit of forcing current employees who might be suitable for one of these positions to make the hard choice of leaving the PERS entitlement.  Eight Star Managers will be the chief executive officers of eight functional entities comprised of logical groupings of functions now performed by one or more departments.

There will be no commissioners; the duties conferred to them in statute or through executive organization will be delegated by the Governor to the appropriate Star Managers.

The Star Managers will have the authority to employ subordinate managers for sub groupings in much the same manner as a division director might now be employed, but this plan envisions much larger and many fewer entities than the current division system.  The current departments and divisions would continue to exist, but essentially only as accounting entities.  The primary consideration in organizing the groupings is that the organization requires no statutory changes.

State Services Should be Grouped and Managed by Function

We propose the following functional groups:

Assets Management Group to comprise the core functions[2]of the current Department of Revenue, the Division of Finance, the Division of General Services, the information technology functions of ALL departments,[3]and the facilities functions of the current Department of Transportation and Public Facilities.[4]  Some of the oil and gas functions of the Department of Natural Resources might logically accrete to this group.

Human Resources Management Group to comprise the current Division of Personnel, Division of Retirement and Benefits, and the human resources functions of all the current departments.

Public Protection Group to comprise the current Departments of Corrections, Public Safety, Military and Veterans Affairs, and the juvenile justice functions of the Department of Health and Social Services.  Strong consideration should be given to moving the Criminal Division of the Department of Law to this group.

Transportation Group to comprise the transportation and airport functions of the current Department of Transportation and Public Facilities, the Marine Highway System[5], the Division of Motor Vehicles, and the various transportation regulatory and enforcement entities.

Natural Resource Enhancement Group to comprise the Departments of Fish and Game, Natural Resources, and Environmental Conservation.

Human Services Group to comprise the current Departments of Health and Social Services, Education, and the Senior Services functions of the Department of Administration.

Economic and Workforce Development Group to comprise the current Departments of Community and Economic Development and Labor and Workforce Development.

Legal Service Group to comprise the Department of Law.

Longtime veterans of State service will recognize this as somewhat similar to the Budget Request Unit scheme of the Program Budget Accounting system.

One Swift Stroke

The new management scheme should be enacted by Executive Order immediately upon the Governor’s swearing-in.  Concurrently, the Governor should demand and accept the resignations of all Commissioners, Deputies and Assistants, and Directors.  The only explanation offered should be that the new administration will be implementing a transition management, and that we will be happy to entertain their application for a position in the new government.  They will figure it out when nobody calls them. The new functional group managers should be appointed immediately and their delegations should be pre-prepared and signed.  Department human resources staff should be ordered to audit all return rights agreements, and the new administration should void all for which it can develop a colorable argument (This may cost some money eventually, but getting rid of congenital appointees with rights to return to the classified service will be a bargain even at twice the price.).

Epilogue: We actually got some of it done over the vehement opposition of the congenital ‘crats.  As long as we remained in government we could keep some of it in place.   Once we left the counterattack began in earnest and today only some vestiges remain.  Maybe this time some reforms can be made to stick.

Art Chance is a retired Director of Labor Relations for the State of Alaska, formerly of Juneau and now living in Anchorage. He is the author of the book, “Red on Blue, Establishing a Republican Governance,” available at Amazon. 


  1. Art, Dermot Cole has been hanging around Fairbanks for over 40 years, but amazingly, he still acts and talks like a newly arrived Cheechako from NYC. He hasn’t learned the pioneering “can do” attitude. In Dermot’s world, government spending is what makes Alaska go round. Dermot has plenty of nicknames in FBX, but most not for repeating in Suzanne’s on-line paper. The printable words are: grouch, grinch, sourpuss, scrooge, etc. Its actually hard to imagine Dermot ever being happy. Maybe a few quarts of his favorite bourbon……..

    • For a time, folks were fond of calling him “Dimwit Cole”. He had a daily column in the FDNM for 15 or 20 years, which was notable for routinely featuring community rumors six to nine months after said rumors first appeared on the street. I went to a panel discussion at UAF in 2013 where Cole was joined by Michael Carey and Mike Doogan. I left thinking “Three Irishmen together and not a drop of booze to be found anywhere? How could that be?”. Ahem, anyway… my Google news feed recently kept pushing a story on KTOO’s website, an interview with Cole’s former coworker James Brooks. His “laymen’s explanation” of ASDs is uproarious: “OK. So, imagine that I’m the commissioner of cheeseburgers for Alaska…And the governor comes in and says, ‘Hey you need to cut your budget by 10 percent.’ If I’m the administrative services director, I’m the person that decides, ‘Well are we getting rid of ketchup and mustard? Or are we eliminating the top bun on everything?'”. That is just so wrong on so many levels, but I can see how it would appeal to the mindset there in Juneau.

      • Sean, maybe all we really need is the meat and onions to stay healthy. Cheese, buns, ketchup, mayo, mustard, etc is the trimmings we get used to. Great analogy. As for Dermot, he doesn’t need drinking buddies from the Irish persuasion. I’m sure he can handle it all on his own. Btw, who do you drink with, SEAN?

      • I wrote a piece for MRAK a year or two ago called “The Unkindest Cut” in which I discuss the naïve politician’s favorite budget-cutting tool; the general decrement, the simple instruction to the bureaucrats to cut the budget by some percentage. Especially if the Legislature and the Governor are different parties, if the Legislature says to the Gov “cut the budget by 10%” you can rest assured that the Gov will cut the budget where it will hurt the offending legislators most. This is what gets you Girdwood Post closure when all you really had to do was move a few PCNs around or ferry runs cancelled and the like. The natural reaction is “cuts you want, I’ll show you cuts.”

        Another version is like your cheeseburger example. The upper level State bureaucracy are congenital Democrats. Insiders call them “shape changers” because they can feign loyalty to a Republican but no Republican should ever trust anyone who has held an appointed position in a Democrat administration. If a Governor gave one of the shape changers the directive to cut his cheeseburger budget by 10% the shape changer would eliminate the bun altogether bragging that he exceeded expectations and make the cheeseburger as inconvenient and messy as possible to eat.

  2. Thank you for re-printing this program Art. I am so disappointed in how far left Dermot has swung. It is sad that a formerly respected journalist would give up objectivity and ignore the data.

    Our state workforce must be reduced by at least 10,000 employees to right this ship. That’s not just my a guess or opinion, it is backed by solid research by J. Scott Moody using categories eerily similar to those referenced in your 2002 program. Alaska’s state workforce was compared to other state agencies (per capita and per wage-earner) performing the same functions. Some agencies like State Parks are staffed similar to other states. Other agencies like our Public Defender and Admin sections have 3X more staff than agencies in other states.

    I will be speaking on this at the Fairbanks Republican Lunch January 4. Join us in helping our new Governor understand how to “right-size” Alaska’s state workforce.


  3. Well put, Fred. There is nothing sacred about a state job. Government workers must learn to weather the tides just as workers do in the private sector. Dermot’s brothers both retired from government work. Good pensions and medical bennies, although one passed and the other
    is not healthy. Dermot’s problem is that he sees life in very “us against them” terms. Very hateful. And he seems to be getting worse now that we have Trump and Dunleavy. I hope he can try to stay physically healthy and overcome some of his mental anguishes.

    • Doubtful. Dermot is not much of a people person. Wasn’t he Terrence’s evil twin? Of course, Terrence was identical in politics and had a similar sneer personality. But he had a little sense of humor too…….said he was “never gonna die” on a History Channel episode about cemeteries. How is that working out?

  4. #1 Seems so simple. Why hasn’t anyone implemented before?
    #2 I think if you compare State spending and number of workers per capita with just other state agencies, you might be missing the fact that in other States, cities and counties also perform many functions with a separate supervisory and administrative structure. If we could just get the Mat-su to police itself, prosecute those who offend in the area, house them in a prison, and build its own roads, we could reduce state spending significantly!

    • The accounting sources used for these studies are very complete with lots of granularity. It is quite easy to compensate for total government (state plus local) vs just state, then back out the appropriate local government portions. My analysis takes that into account. Your comment brings to light another point however. There is no reason for the state to pay for certain expenses in wealthy boroughs or municipalities. Education, building code, and most Law Enforcement is usually a local or county/borough function. State funding should be reserved for only those needy areas that don’t have a local property tax base.

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