Federal government examines Alaska’s use of 2020 pandemic aid money

The inspector general of the U.S. Treasury Department is examining how Alaska spent more than $1.25 billion in coronavirus aid approved last year.

The examination, formally known as a “desk review,” will be performed in all 50 states, legislative auditor Kris Curtis told members of a legislative committee late last month, but Curtis said last week that Alaska was put near the top of the list after complaints about the Municipality of Anchorage’s plans to use some aid money.

South Dakota, the U.S. Virgin Islands and one unnamed tribal organization are also participating in the first round of reviews, and Alaska should know the result by August.

Jason Bockenstedt, chief of staff to Acting Anchorage Mayor Austin Quinn-Davidson, said that the complaints may involve the municipality’s plan to use some aid money to help homeless Alaskans.

“I think that the vast majority of those complaints we were already very well aware of. We had a number of conversations with the Inspector General of the Department of Treasury over the summer, when we were discussing the acquisition of a couple of buildings to deal with the issues surrounding homelessness that were exacerbated by COVID-19,” Bockenstedt said.

The municipality received $156.7 million in aid from the state, part of $568 million allocated to Alaska cities and boroughs. Of Anchorage’s total, the Assembly earmarked $12.5 million for the purchase of three buildings as shelters. The inspector general’s office objected to that idea, and ultimately suggested that Anchorage spend the aid money on first-responder payroll, and then use general funds to offset priorities like buying the buildings for homeless and treatment services. The city went with that plan.

None of the three buildings have been bought. (A fourth building was purchased with a different funding source.)

This time around, the inspector general’s office hasn’t contacted the municipality, Bockenstedt said.

Under federal guidelines, the spending review will take place at the state level because the state accepted the money from the federal government before distributing it to cities, boroughs, businesses and individuals, making it the “prime recipient.”

The state Office of Management and Budget and the Division of Finance within the Department of Administration are dealing with the federal inquiry and held a first interview last week, said Jeff Turner, a spokesman for Gov. Mike Dunleavy.

“The objective of this desk review is to evaluate the state’s documents supporting the uses of (Coronavirus Relief Funds) proceeds as reported, and assess risk of unallowable use of funds,” he said by email. “A desk review may result in a site visit for a more in-depth review or a recommendation for audit.”

Turner said the state hasn’t been able to confirm that Alaska was chosen for early review because of complaints about Anchorage’s spending.

Sen. Natasha von Imhof, R-Anchorage and chair of the Legislative Budget and Audit Committee, said the Legislature is taking a separate look at how the state distributed $290 million in grants to small businesses last year.

The Legislature isn’t involved in the federal examination, and she doesn’t expect it to become involved.

“I don’t expect the Legislative Budget and Audit Committee or even the Legislature to have any role in this process. It is between the U.S. Department of the Treasury and the state accountant in the Division of Finance,” von Imhof said.

She said it’s worth noting that the federal examination applies only to money approved last year.

This year, Congress is already on track to approve $1.9 trillion in coronavirus aid, and Alaska is expected to receive another substantial sum. In the coming weeks, von Imhof expects to hold hearings on how best Alaska can spend that money.