Thousands of Alaska’s public-sector employees have been waiting for their retirement contributions to be processed since a hacking attempt last November pushed state systems offline. The delay has affected teachers and government workers in Sitka and across the state.
In early November, Alaska’s Office of Information Technology identified suspicious activity on Division of Retirement and Benefits servers. The state shut down servers to avoid a data breach.
Forrest Wolfe is the legislative liaison for the Alaska Department of Administration. He said that the shutdown damaged servers. That damage prompted the division to move all programs and applications to more secure remote servers — a planned transition that was originally scheduled to be complete by June 2024.
“Instead of going through the whole process of trying to rebuild a whole bunch of new servers and stuff, they just decided, hey, we’ll go ahead and move it all over to the cloud, like they had planned to do already,” Wolfe said.
One program, used by 137 agencies around the state to process retirement contributions, stopped working after the transition.
“It was discovered that there were some issues with the format that [the program] was in prior that needed to be upgraded,” Wolfe said.
That means that employers around the state, including the Sitka School District and City and Borough of Sitka, have not been able to use the program to send employee retirement contributions to the state since early November.
Mike Vieira is a career and technical education instructor at Sitka High School. He also serves on the Saving Our Alaska Retirement (SOAR) committee, which is associated with the Alaska chapter of the National Education Association. He said $2,300 in contributions has been deducted from his paycheck since November, but that money has not been deposited into his accounts.
“And the big concern about this is that now going on three months, we’ve lost our time in the market on these contributions,” Vieira said.
By the end of January, when the state estimates that systems will be running again, he said that number will be close to $3,500. That’s money that would have been growing over the past three months. For Vieira, who is 12 years from retirement, losing three months of growth now would mean a long-term impact to his retirement savings.
Vieira said Alaska teachers and public-sector employees already face an uphill battle without defined benefits in retirement.
“You pile this on top of it, where you’re a whole quarter out of the market with your contributions, it just doesn’t give you much confidence in the state that they’re going to really allow you to retire with security and dignity and be able to live, you know, for the rest of your life,” he said.
It’s unclear whether employees have a remedy. Vieira pointed to a 2023 Alaska statute stating that employees are entitled to lost interest if contributions are not deposited within 15 days. Wolfe said the state is awaiting guidance from the Department of Law and tax consultants on whether that statute will apply to the state.
Wolfe said that the state has provided employers with a temporary workaround process, which requires both employers and the state to manually enter contributions. As of January 17, 73 of those 137 of those employers had engaged in that process according to state data, although only 30 of those were actively processing contributions.
Melissa Wileman is the Public and Government Relations Director for the City and Borough of Sitka. She said the city is not currently using the state’s temporary process and is holding employee contributions until the program is functioning again.
“Our representative advised against using the manual system, stating that the city is just too complex,” she said. “Based on our understanding, other communities are using the manual entry system, but it sounds like we are just too complicated for that.”
The Sitka School District is not using the workaround either. Vieira said the district has struggled to get help from the state to implement the manual system.
The state expects the tool to be fully operational by the end of January, Wolfe said. At that point, employers who have not been using the manual process will have to enter back-logged contributions.
