New Office of Management and Budget Director Donna Arduin is known for slashing state budgets and hailed by some as a budget wizard. One reason Gov. Mike Dunleavy brought her on to his team is to help him with the task of cutting an estimated $1.6 billion from the operating budget.
Last week, Dunleavy introduced Senate Bill 39, a supplemental budget bill that proposed cutting $20 million from the education budget, and now some legislators say they’re are on high alert. SB 39 irked legislators and school officials around the state because the proposed $20 million cut specifically targets a bipartisan budget deal made in May 2018. The $20 million was distributed to the state’s 53 school districts and the Mt. Edgecumbe school in Sitka.
Sen. Donny Olson, D-Golovin, said Dunleavy made education a campaign issue and because of that, Olson believes Arduin’s work does not completely reflect Dunleavy’s intentions. Olson said he believes Dunleavy has a full plate and doesn’t have time to micromanage Arduin.
“I don’t necessarily blame the governor for doing that,” Olson said about SB 39 during a Thursday news conference. “I think the OMB director’s the one with the hatchet out there. And it’s a hatchet, not a scalpel.”
One of the duties of the OMB director, according to statute, is to “assist the governor in the preparation and explanation of the proposed comprehensive program and financial plan, including the coordination and analysis of state agency goals and objectives, plans and budget requests.”
Sen. Tom Begich, D-Anchorage, said Arduin’s position in the Dunleavy administration is concerning.
“It does concern me that a budget director — who has a reputation for going into states and cutting and slashing and burning so the governor doesn’t take responsibility for it and then leaving — has come here,” Begich said, during the same news conference.
In 2015, Arduin worked for the state of Illinois as a budget consultant.
A Chicago Tribune article from August 2015 tells how Arduin left then-Gov. Bruce Rauner’s administration with Illinois legislators in the midst of special sessions and no budget. According to the Tribune, Arduin was paid $120,000 over the course of four months to help the new governor deliver a state budget while the state of Illinois was facing a deficit. She helped Rauner formulate a budget proposal with $2 billion in budget savings that relied on cuts to state employee pensions. The Tribune reported those cuts never materialized during the regular session, which ended in June 2015, and Illinois legislators believed those proposed pension cuts were unconstitutional.
When Illinois legislators were not able to pass a budget, Rauner retained Arduin through special sessions at a reduced rate of $15,000 per month, according to the Tribune. This new contract was to last until a budget deal was reached or Aug. 28, 2015 — whichever came first. The aforementioned date arrived first and Arduin was let go.
Arduin made a name for herself by successfully cutting the budget in Michigan, though.
“Back in 1991, after Arduin and Patti Woodworth carved $5 billion in programs out of the Michigan state budget, Gov. John Engler’s approval rating fell to 13 percent. Arduin didn’t blink,” reads a 2006 profile article in Duke, the Duke University alumni magazine. “They cut taxes, businesses crept back into Michigan, and, come election time, Engler breezed right into his second term.”
She has worked in California, too, for former Gov. Arnold Schwarzenegger’s administration in 2003 and 2004.
According to the Los Angeles Times, Arduin helped the Schwarzenegger administration make budget cuts when it was facing a multi-billion dollar budget shortfall. After 11 months with the Schwarzenegger administration, she left her position. Arduin took a position on the board of trustees of Correctional Properties, a spinoff of GEO Group, according to a 2005 Times report.
Arduin’s career move came under scrutiny because the Schwarzenegger administration reopened a McFarland, California, prison, which was owned by Correctional Properties. The operations contract at the McFarland jail was given to GEO Group (a private prison corporation), according to the Times article. The Times reported Arduin denying having knowledge, while working with the Schwarzenegger administration, that GEO Group and its subsidiaries would would be getting these prison contracts. Then California state Sen. Gloria Romero (D-Los Angeles) was skeptical of Arduin’s claim and told the Times, “The Department of Finance had to be in the midst” of the prison contract negotiations. Another California legislator said it was “deceptive.”
Private prison interests unknown
Arduin’s current ties to the private prison industry are unclear. But her history spurred a group of Democratic legislators to send a memo to Dunleavy on Friday, asking him to clarify her ties, if any, to private businesses.
“News reports indicate that Ms. Arduin developed budget proposals for other states, including to privatize prisons, that directly benefited companies (including the GEO Group and related firms) for which she worked as a lobbyist and as a corporate board member,” the memo reads. “Ms. Arduin’s POFD does not provide sufficient detail to ascertain whether her consulting firm Arduin Laffer Moore currently holds or recently held contracts with private prisons or private mental health hospital firms.”
Lawmakers who have signed the memo include: Sens. Tom Begich, Elvi Gray-Jackson, Scott Kawasaki, Jesse Kiehl, Olson, Bill Wielechowski, as well as Reps. Ivy Spohnholz and Zack Fields.
A Jan. 21 Alaska Public Media article stated a department spokesperson said in December that the department was considering making changes including privatizing prisons.
In addition, a GEO Group lobbyist named Raymond Matiashowski has registered to lobby in Juneau this session, according to a lobbyist registration form with the Alaska Public Offices Commission (APOC). His lobby interests, according to the registration form, are described as, “All matters of interest to Department of Corrections related issues including electronic monitoring, CRC’s, inmate health care and incarceration issues.”
How much power should the OMB director have?
Kawasaki, a Fairbanks Democrat, said he believes Arduin’s power to cut translates to power over policy, and is wondering whether a new model should be in place for hiring an OMB director.
“Clearly she is doing policy work,” Kawasaki said in his office on Thursday. “Every cut or every addition to a budget in an agency impacts that agency.”
The $20 million education cut proposed in SB 39 is an example.
“Education was a priority of the Legislature. We passed a law,” Kawasaki said. “By cutting that, she’s effectively made public policy regarding education.”
Other high-profile jobs in the governor’s administration require a confirmation process. That process has already weeded out John Quick, who Dunleavy had tagged to be the commissioner of the Department of Administration. Last week, discrepancies in his resume were found, and Quick rescinded his acceptance of the job.
Kawasaki said he is considering legislation to provide the legislators with a better tool for vetting OMB directors in the future.
“We all know where she came from and her history,” Kawasaki said in his office on Thursday. “What I’ve seen during the last three weeks is she seems to be taking over a lot of policy decisions. What’d I’d like to see is if she should be confirmed by the legislators. Shouldn’t the legislators have some sort of say? Some states have a treasurer that is either elected or appointed (and subsequently confirmed) and maybe that’s the model we want to go to with.”
A memo from Rep. Dan Ortiz, an Independent from Ketchikan, says Arduin will be hosting an informational meeting for legislators and staff regarding SB 39 at 9 a.m. Thursday Feb. 7, in the Al Adams House Finance Committee Room.
• Contact reporter Kevin Baird at 523-2258 or kbaird@juneauempire.com. Follow on Twitter at @alaska_kev.
