Key Performance Indicators

Department of Revenue

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Mission

The mission of the Department of Revenue is to collect, distribute and invest funds for public purposes. Alaska Constitution Article 9; AS 25.27, AS 37, AS 43

Key Performance Indicators

• Target: Increase disbursements of child support payments by 0.5%.

• Target: Maintain or reduce administrative costs from year to year.

• Target: Increase Senior Housing units

• Target: Increase Multi-Family units

• Target: For the funds under the fiduciary responsibility of the Commissioner of Revenue, exceed the applicable 1-year target returns.

• Target: A long-term 5% real rate of return

• Target: Formal visit, bond issue update, or updated document template sent or presented to ratings agencies at least four times per year.

• Target: 100% of new financings will result in savings or diminished administrative effort.

• Target: 90% of all complaints received by the LTCO program are resolved to the satisfaction of the resident or their representative.

Performance Detail

Target #1: Conduct five new compliance projects to identify non-filers. Compliance Projects Conducted Fiscal Year # of Compliance Projects # New Taxpayers FY 2021 207 18 FY 2020 250 22 FY 2019 72 11 FY 2018 73 45 FY 2017 67 27 FY 2016 27 15 FY 2015 12 18 FY 2014 15 11 FY 2013 8 62 FY 2012 24 109 Analysis of results and challenges: The Tax Division encourages voluntary compliance as the most effective tool for collecting tax revenues. An important aspect of voluntary compliance is for taxpayers to believe that they are paying about the same amount in taxes as other similarly situated taxpayers. Seeking out and finding new taxpayers and bringing them into compliance assists the Tax Division both in long-term voluntary compliance as well as bringing in the revenues from the new taxpayers. The Tax Division does not believe there are any major oil and gas taxpayers not filing. Therefore, the Tax Division focuses its compliance efforts on other tax types. This target and measure do not include federal or multi-state compliance programs in which the Tax Division currently participates. Compliance projects include analyzing databases of other states, the federal government, and local agencies to ensure that a person engaged in a taxable activity is filing required tax returns. In the past, the Tax Division has also conducted taxpayer outreach and education through attendance at industry meetings and conferences.

Target #2: 90% of existing taxpayers file their tax returns and make tax payments timely. Taxpayers Filing and Paying Taxes Timely Fiscal Year % of Timely Filers FY 2021 83.2% FY 2020 88.8% FY 2019 88.2% FY 2018 88.8% FY 2017 87.4% FY 2016 89.7% FY 2015 89.0% FY 2014 98.5% FY 2013 98.5% FY 2012 96.1% Analysis of results and challenges: The Tax Division completed its final rollout of its Tax Revenue Management System (TRMS) in FY2017. The new system replaced many outdated legacy systems and allowed us to get more accurate information from tax returns. While the above graph and table report a decrease in timely filing and paying of tax returns beginning in FY2015 (the year of our first rollout), we believe the higher numbers in earlier years were not correct, but a flaw in our previous system reports. We have checked with other states and they have told us that their timely filing rates are below 90 percent (some are far below). We feel the new system is giving us more accurate information. It should be noted that certain assumptions had to be made to produce the number provided. For example, only returns and payments that have been received are considered in the calculation. There may be returns and payments that will be late but have not yet been received. One of the primary functions of the Tax Division is to encourage voluntary compliance by all taxpayers across all tax programs. This is achieved in a variety of ways, i.e. taxpayer education and outreach programs, compliance activities where the Tax Division actively looks for non-filers, and collection activities. Taxpayers are more apt to voluntarily comply if they believe that everyone else is paying their fair share and the Tax Division makes it relatively easy to file returns and pay taxes. As such, the most effective way to measure performance is to look at the percentage of known taxpayers who timely file their returns and pay their taxes. TRMS has a public facing component which allows taxpayers to file and make payments online. The Tax Division has had great success with this system and believes it is a factor in the performance reported. There were challenges this past fiscal year due to the economic impacts of COVID-19. Some of the tax programs had delayed due dates for filing and payment due to legislative changes.

Target #3: Increase child support collections by 1.0%, to include Permanent Fund Dividend collections. Percent Change in Total Child Support Collections for a Fiscal Year Fiscal Year % Change FY 2021 -8.02% FY 2020 15.6% FY 2019 0.60% FY 2018 0.40% FY 2017 -10.1% Analysis of results and challenges: FY2021 collections including Permanent Fund Dividends (PFDs) decreased by 8.02% over FY2020. The division did not exceed the target of a 1% increase over FY2021. This is due to the ending of the CARES stimulus payments as well as the increased Unemployment Insurance Benefit payments. This is still an increase from where the division was prior to the CARES stimulus funds and the collections will normalize over the next reporting period. The goal for the next fiscal year remains a 1% increase.

Target #4: 1,000 hour increase in audit hours over prior year. Change in Audit Hours over Prior Year Fiscal Year # of Hours FY 2021 -2,083 FY 2020 963 FY 2019 455 FY 2018 -92 FY 2017 -2,670 FY 2016 4,168 FY 2015 -1,102 FY 2014 -11,582 FY 2013 -4,957 FY 2012 1,006 Analysis of results and challenges: Although voluntary compliance remains our best tool for effective tax collection, that voluntary effort is enhanced by an audit presence, therefore, the Tax Division needs to increase its audit numbers. The Tax Division strives to increase its year-over-year audit hours in an effort to be more efficient with its time and spend auditor time on things that will generate the greatest benefit to the State. The Tax Division began design and development of its TRMS in April of 2013. In order to ensure that implementation was successful, the Tax Division deliberately cut back on the number of audits conducted and diverted those resources to the implementation of TRMS. Full implementation of TRMS was completed in February of 2016. The project took a lot of our audit staff time in design and testing at various stages. The decrease in audit hours in FY2013 - FY2015 is a result of diverting resources to TRMS. The decrease in hours in FY2017 - FY2018 can partially be explained by the fact that there have been significant changes in the oil and gas production tax regime which has required programming changes to TRMS. The oil and gas production tax and corporate income tax Audit Groups remain current on all oil and gas audits. We made significant strides this past year in increasing our audit hours which you can see in the table above. This past year resulted in a decrease in overall audit hours. This decrease is primarily due to vacant positions and long-term leave by some audit staff. The expectation is that these numbers will reverse and increase for the next annual period.

Target #1: Increase disbursements of child support payments by 0.5%. Methodology: % change from the prior year Disbursements of Child Support Payments Fiscal Year % Change FY 2021 -4.54% FY 2020 11.79% FY 2019 1.21% FY 2018 -1.61% FY 2017 -8.45% Analysis of results and challenges: This measure has a direct correlation to the amount of collections received in the fiscal year: when collections increase, disbursements also increase. Due to the CARES Act and enhanced unemployment payments ending, overall collections decreased by 8.02% while disbursements decreased 4.54%. This is still a substantial increase from where we were before the CARES Act funding was put in place. The collections are normalizing and will continue to do so. The division continues to focus on improving processes and implementing technology to meet our target increase of 0.5% in child support disbursements.

Target #2: Maintain or reduce administrative costs from year to year. Methodology: Calendar/dividend year is used for Permanent Fund dividend (PFD) application and payment statistics. Appropriations are based on state fiscal year and become effective on July 1 of the dividend year shown. *Total PFD appropriation includes funding for fiscal notes, prior year supplementals, and new capital appropriations. **Number of applications received by the Permanent Fund Dividend Division at time of dividend calculation. at time of dividend calculation. Estimated Cost per Dividend Paid Fiscal Year Dividend Year Total PFD Appropriation* #Applications Received** Estimated # PFD's Paid Estimated Cost Per PFD FY 2021 2020 $8,249,400 672,277 634,831 $12.99 FY 2020 2019 $8,329,400 678,287 638,414 $13.04 FY 2019 2018 $8,323,000 670,759 639,247 $13.02 FY 2018 2017 $8,218,800 672,243 640,245 $12.84 FY 2017 2016 $8,340,100 675,531 643,678 $12.96 FY 2016 2015 $8,521,400 676,379 644,511 $13.22 FY 2015 2014 $8,245,500 677,114 641,489 $12.85 Analysis of results and challenges: There is a small increase in the application cost due to increased service costs which include central mail and printing services, and services provided by the Office of Information Technology. We also utilized an advertising firm to notify Alaskans of changes in not only the application, but payment of PFDs.

Target #3: Increase Senior Housing units Analysis of results and challenges: The Alaska Department of Labor and Workforce Development (2020) estimated that the senior population (65+) in Alaska could grow from 12,000 to 22,000 by 2045 (low/high forecast scenario). In terms of total population, this represents a total senior population increase of 5-6% over the next 25 years. Senior housing remains a high priority for the Corporation. While funding for senior housing has remained stable in recent years, the Alaska senior population continues to grow. This places a demand on communities throughout the State to fund the growing gap between housing need and availability, in a market where there is also a gap between the rents achievable and the cost of building new senior housing units. Note: Although AHFC provides mortgage financing for assisted living facilities, those developments report beds rather than units; consequently, the data above excludes AHFC mortgages to assisted living properties.

Target #4: Increase Multi-Family units Analysis of results and challenges: Affordable rental housing remains in demand and can benefit markets by facilitating community growth and freeing households to spend more of their disposable income within the community. The production of multi-family housing activity is subject to interest rates, local economic conditions, and other volatile market factors. New construction in several communities across the state continues to face marginal feasibility due to the persistent gap between achievable rents and those required to support the high development costs. These factors, when coupled with the reductions in matching funding sources utilized by AHFC funded projects, continue to limit new housing production.

Target #1: For the funds under the fiduciary responsibility of the Commissioner of Revenue, exceed the applicable 1-year target returns. Methodology: FY2021 one-year return data is for the period 7/1/2020 through 6/30/2021. One-year Return Data for Funds Managed by the Treasury Division Fiscal Year Fund Actual Return Target Return FY 2021 Gen Fund/Other Non-segregated Fu 0.09% 0.00% FY 2021 Public School Trust Fund 27.21% 27.28% FY 2021 Intl Airports Revenue Fund 0.10% 0.00% FY 2021 Const Budg Resv Fund-Main Acc 0.19% 0.09% FY 2021 Retirement Hlth Ins Fund-LongTer 16.78% 16.81% FY 2021 Retirement Hlth Ins Fund- Maj Me 0.19% 0.09% FY 2021 Power Cost Equalization Fund 14.43% 14.44% FY 2021 Illinois Creek Reclamation Fund 27.21% 27.28% FY 2021 Alaska Higher Education Fund 27.21% 27.28% FY 2021 Gen Fund/Other Non-segregated II 2.52% 2.52% Analysis of results and challenges: A combination of investments that is expected to produce the highest investment return for a given amount of risk is known as a "point on the efficient frontier." Each fiduciary for a fund reviews points on the efficient frontier and selects the combination of investments consistent with their appetite for risk and return of the fund. This selection is known as the target asset allocation. Target returns assume the total rate of return of passively managed indexes invested in the same proportions as the target asset allocation. A fund's investment return will differ from its target return if its asset allocation differs from the target asset allocation or if the returns of the underlying investments differ from those of the passively managed indexes. In FY2021, 22 of the 29 funds hit or exceeded their target returns.

Target #2: A long-term 5% real rate of return Rolling 10-year real rate of return; annualized returns for periods ended June 30 Fiscal Year Fund Total Return APFC Inflation Rate Fund Real Return Long-Term Real Return FY 2021 9.0% 1.7% 7.3% 5.0% FY 2020 8.3% 1.8% 6.5% 5.0% FY 2019 9.2% 1.5% 7.7% 5.0% FY 2018 6.5% 1.7% 4.8% 5.0% FY 2017 5.0% 1.8% 3.2% 5.0% FY 2016 5.4% 2.0% 3.5% 5.0% FY 2015 6.4% 2.3% 4.1% 5.0% FY 2014 7.0% 2.4% 4.6% 5.0% FY 2013 6.8% 2.5% 4.4% 5.0% FY 2012 6.2% 2.4% 3.8% 5.0% Analysis of results and challenges: Alaska Statute 37.13.120 defines APFC's responsibilities for the investment of the Fund. The statute requires that APFC's Board of Trustees apply the Prudent Investor Rule standards – emphasizing diversification and long-term goals in asset allocation strategy when making investment decisions. The Board authorizes APFC staff to make investment decisions to maximize the risk-adjusted return of the portfolio. The Board of Trustees' long-term investment objective for the Fund is to generate total returns in excess of Inflation/CPI plus 5%, with acceptable levels of risk. The Board has defined an approved risk guideline to delineate the absolute and relative risk staff may take to achieve these investment objectives. The Fund is invested across seven asset classes in both public and private markets to achieve this goal. The portfolio is designed to deliver compelling long-term returns under a variety of potential market conditions. The Alaska Permanent Fund's (APFC) long-term rolling 10-year Real Rate of Return for the fiscal year period (FY) 2012-2021 was 7.3% with an inflation rate of 1.7%, and the Total Rate of Return for the same period was 9.0%. The Fund's annualized total return for 37.5 years, ended June 30, 2021, was 9.12%. For FY2021, the Fund ended the year with a value of $81.9 billion in assets under management (AUM). This is comprised of $60.7 billion in the Principal of the Fund and $21.2 billion in the Earnings Reserve Account (ERA). The portion of dedicated State of Alaska revenues deposited into the Fund's Principal (or "corpus") is based on mineral prices and production. In FY2021, this amount came in at $320 million, just above FY2020's deposits of $319 million.

Target #3: Formal visit, bond issue update, or updated document template sent or presented to ratings agencies at least four times per year. Updates Provided to Ratings Agencies Fiscal Year # of Updates FY 2021 9 FY 2020 7 FY 2019 7 FY 2018 6 FY 2017 7 FY 2016 16 FY 2015 11 FY 2014 5 FY 2013 4 FY 2012 4 FY 2011 4 FY 2010 5 FY 2009 4 FY 2008 4

Target #4: 100% of new financings will result in savings or diminished administrative effort. New Financings That Resulted in Savings Fiscal Year Percent Aggregated Savings FY 2021 100% $51.7 million FY 2020 100% $1.0 million FY 2019 100% $4.3 million FY 2018 100% $3.4 million FY 2017 100% $41.2 million FY 2016 100% $75.3 million FY 2015 100% $25 million FY 2014 100% $12.7 million FY 2013 100% $19.6 million FY 2012 100% $17.2 million Analysis of results and challenges: In each fiscal year shown, all authorized Alaskan borrowers that borrowed funds through the Alaska Municipal Bond Bank Authority are projected to be paying less debt service (realized savings) than they otherwise might have using other means of financing their project or diminished the administrative burden of their staff.

Target #1: 90% of all complaints received by the LTCO program are resolved to the satisfaction of the resident or their representative. Complaints Resolved to Satisfaction or Partial Satisfaction of Complainant Fiscal Year Complaints Received % Resolved FFY 2020 374 80% FFY 2019 583 97% FFY 2018 631 98% Analysis of results and challenges: During FFY 2020, this target was not met. The data revealed a 64% decrease in the number of complaints received from FFY 2019 to FFY 2020. Additionally, only 80% of the 374 complaints were resolved to the satisfaction of the resident. The LTCO completed in-person visitations for six out of the twelve months due to federally mandated visitation restrictions. The LTCO program receives many of our complaints from in-person visitations with residents. While the LTCO completed virtual visitations after in-person visitations ceased, residents were challenged with sharing concerns over the phone. Virtual visitations do not offer the same opportunity to scan the environment of the home or to see residents in person. Furthermore, it was difficult to find resolutions to complaints relating to visitations or community outings due to the restrictions placed on Long-Term Care facilities during COVID 19. Being mindful of the LTCO work challenges during COVID, the program continued to work to ensure residents in LTC facilities were involved in the resolution of their complaints. The LTCO complaint process begins with the resident and ends the resident. The resident determines if they are satisfied with outcome of the complaint.

Current as of December 16, 2021