Municipality of Anchorage to pay up to $2M to outsource finance work due to employee vacancies

About half of the staff positions are vacant in Anchorage’s Controller Division, and as a result, the city has contracted with private firms for up to $2 million total in professional accounting services over the next three years in order to accomplish work usually done by the city’s own employees.

It’s a stopgap measure to help ensure that the Controller Division’s work gets done, elevating concerns held by Anchorage Assembly leaders about the Bronson administration’s ability to hire and retain city workers.

The Controller Division’s work includes the city’s annual financial report, and its fund accounting, grant accounting, financial reconciliation and more. Nine of 19 positions are vacant, including a few key high-level positions, according to the Finance Department, which the Controller Division is a part of. According to Chief Financial Officer Grant Yutrzenka, six of the vacancies have occurred since September. Two moved into other municipal positions, while four left city government for other jobs, including supervisory staff and the assistant controller, he said.

Earlier this month, the Assembly approved contracts with three firms — Altman, Rogers & Co., Floyd Advisory LLC and Wilks Consulting Services, Inc. Funding for the contracts largely comes from the budget for the currently unfilled labor in the Controller Division, according to Yutrzenka. The contracts can be used by any department in the city to assist if needed.

“Currently we have nearly half the work unassigned as we don’t have the resources to assign the other work to at this time,” Yutrzenka said in an email about the contracts sent to some Assembly members before they were approved.

Before the Assembly voted to approve the contracts on Feb. 2, Assembly Chair Suzanne LaFrance called it a “rather extraordinary measure” and said the level of vacancies is “not something we have ever seen.”

“If they don’t get under control, it could have a crippling effect on the municipality in terms of receiving funds and carrying out essential functions,” LaFrance said.

“I am very, very concerned about this state of the municipality,” she said. “And I understand that this is not isolated; other areas are having difficulty attracting and retaining staff. It seems like it is very acute right now in the municipality, and I’m very worried about the additional cost to taxpayers that stopgap measures might incur.”

Staff vacancies have become a growing issue within Mayor Dave Bronson’s administration in several city departments. Assembly members say they are worried about the destabilizing effects and possible long-term impacts, and that they don’t know the full scope of the problem.

The issue also extends to top leadership positions in the city, several of which do not have a permanent appointee and are filled by staff working in a temporary, or “acting,” capacity. Those include the municipal manager, the Human Resources director, the Health Department director and the city’s controller, Casie West.

Yutrzenka had been working as acting CFO since September, then Bronson appointed him to the position in a regular capacity in early January. The Assembly voted to confirm later that month.

The Finance Department is actively trying to recruit, but “that’s been difficult,” Yutrzenka said. He attributed the issue in part to a nationwide shortage for accounting expertise.

“Degree accountants are in very, very high demand right now,” he said to Assembly members at the Feb. 2 meeting.

[Anchorage Assembly approves ‘online checkbook’ to make public finances more transparent]

The department is also working to restructure itself to create entry-level positions, which don’t currently exist, to allow for upward advancement, he said.

“We’re restructuring to try and bring in lower-level employees and give that advancement opportunity,” he said.

Contracting out work will ease some of the division’s workload, but it’s not exactly a simple fix.

“A lot of the work can only be done internally and a lot of training has to take place with contractors — if we’re able to get them. But they’re running into some of the same issues where they just don’t have staff to offer up to us,” Yutrzenka said in a Wednesday interview.

The Bronson administration has been rocked with upheaval, seeing several top officials depart since the mayor’s December firing of former city manager Amy Demboski. Demboski later issued a scathing letter accusing Bronson and members of his administration of unethical behavior and misconduct. (Bronson has repeatedly declined to discuss Demboski’s allegations.)

Complaints from current and former city employees alleging a hostile work environment have also been pouring into the city’s Ombudsman office, according to Ombudsman Darrel Hess.

The administration hasn’t fulfilled a January records request for the number of vacant top executive positions and the number staffed only in a temporary capacity.

Yutrzenka on Wednesday said the Controller Division has long struggled to maintain consistent leadership, seeing 11 different controllers since 2000. The Treasury Division, which has seen the longtime leadership of Treasurer Dan Moore, doesn’t have the same issues, he said.

“This is my first year in the position, as well as our acting controller,” said Yutrzenka, who has previously been assistant general manager and chief fiscal officer for Anchorage Water and Wastewater Utility. “We’re trying to stabilize that team, build a team, and work through some of the legacy issues.”

Numerous other issues in recent years have also contributed to the drain in staff and high turnover, including the troubled launch of a city software system, changes in mayoral administrations, and more flexible, much higher-paying jobs in the private sector, he said.

In an email exchange with Yutrzenka and other Assembly members about the contracts early this month, LaFrance said, ”I think Assembly members will want to know what is the Mayor’s plan for addressing the rampant vacancies and the destabilizing impact that the vacancies are causing. I appreciate the interim solution but am also concerned with the high cost and long term negative impacts.”

“Understood and no disagreement,” Yutrzenka replied.