AD Main Menu

In DC, budget knife threatens Alaska's Denali Commission

Dermot Cole

FAIRBANKS -- The smallest federal agency in Alaska is staffed with a Certified Public Accountant, a master of public administration, a certified fraud examiner and a lawyer.

The office directory is shorter still. It consists of Mike Marsh, the accountant, administrator, fraud examiner and lawyer who is the only employee of the Office of Inspector General for the Denali Commission.

His office is one of 73 created by the federal government over the years as a watchdog for a specific agency. The inspectors general work to prevent waste, fraud and abuse and promote efficiency. The other 72 offices have more than one employee. For instance, the Department of Interior IG office has about 260 employees, while the Social Security Administration IG office has more than twice that many.

The Washington Post reported Thursday that Marsh began lobbying this summer to have his job eliminated and to end federal funding for the Denali Commission. The letters he sent in June to members of Congress and the Office of Management and Budget calling for an end to Denali Commission funding come as a surprise, but not as a shock.

Over the last three years, Marsh has filed a series of critical reports with Congress, which have drawn little attention, arguing his one-man office should be closed and that the Denali Commission should be restructured. His June 23 letter to California Rep. Darrel Issa, the Republican chairman of the House Committee on Oversight, goes beyond those previous documents in calling for an end to Denali Commssion funding, saying the $7.4 million proposed in a House bill should be spent on something else.

"I have concluded that Denali is a congressional experiment that hasn't worked out in practice," he wrote Issa. "I recommend that Congress put its money elsewhere." He said cutting off money would be an incentive for the commission to "leave the federal nest and chart its own course as a non-federal entity."

The harsh assessment from Marsh will make it harder for the Denali Commission to keep drawing a regular federal allowance and harder for Alaska's congressional delegation to defend the one-state agency. There will be questions about the state's responsibility for funding power projects, health clinics and tank farms. 

Marsh wrote that one of the problems is that the commission has built many projects in villages of 300 people or less that do not have the resources to commit to future maintenance and repairs.

"Denali assumes that the community will receive other government subsidies in the decades ahead to operate what Denali builds today," he said.

Marsh says that Alaska has billions in the bank and that ending the federal appropriation would give Alaska more incentive to "find and fund its own solutions for the residents of Bush Alaska, as it should." The absence of statewide taxes and the presence of the Permanent Fund Dividend are evidence of the state's financial health, he said.

In questioning various aspects of Denali Commission operating procedures on everything from conflict of interest provisions to monitoring grants, Marsh has long made life uncomfortable for the agency and the Congressional delegation, asserting that the commission should no longer be a federal agency.

The commission began when Sen. Ted Stevens, at the height of his powers to direct money to Alaska, quietly slipped the commission into the federal budget in 1998.

The agency has distributed about $1 billion in the past 15 years, but the big dollar days ended when Stevens left the Senate. The friction between Marsh, who has held this job for eight years, and the agency he analyzes, is clear from his semi-annual reports to Congress.

In 2009, he said the “most serious management and performance challenge”  facing the commission was to justify its existence to Congress.

 “This locally-sensitive question is often misinterpreted as a debate over whether Congress should continue to send Alaskans their ‘fair share’ of the federal treasury,” he wrote in May 2010.

He said the real issue is what benefits there are from sending Alaska’s share through a regional commission that serves only one state.

For years, Marsh wrote that the reach of the Denali Commission should be expanded to include Hawaii, Guam, American Samoa and other islands in the Pacific.

“While the climates are obviously dissimilar, Denali’s lessons-learned in serving small isolated, road-challenged, ethnically-diverse settlements should be quite transferable to such a ‘Pacific Regional Authority,’’ he wrote in May 2011.

But in his May 2012 report to Congress, Marsh said that after considering all the options, he recommended that the commission be shut down as a federal agency and reestablished as a state nonprofit corporation that could be free of the "federal straitjacket." In his June letter to Issa, he said that one of the problems that has afflicted the commission is its "unrealistic promise to do too much for too many."

It was in 2010 that Marsh first told Congress that his one-person office should close.

“There are certain things in life that are not designed to be done alone. The inspector general function is one of them,” he said. “In the interest of more effective public oversight, we recommend that Congress consolidate Denali’s Inspector General function with another OIG.”

He said that recipients of federal grants through the Denali Commission periodically pressured the commission staff to get Marsh to stop inspecting.

“The role of Alaskan interest groups is obviously to marshal as much federal money as possible for their constituents –and to minimize the bureaucratic strings attached to it,” he said.

He said to some people, one of those strings would be a critical report saying a grant violated federal law. While he thought of his office as one designed to keep people out of trouble, “the disappointed see OIG as the ‘Grinch’ that keeps stealing Denali’s Chirstmas.”

He said some recipients of Alaska grants long wanted his office to go away, with duties assigned to   “a larger, more distant OIG that could dispatch personnel from the Beltway as needed (or requested).”

“It will surprise these challengers to now read that Denali’s inspector general agrees with them –though, of course, for different reasons,” he said three years ago.

 “The economies of scale from this consolidation should provide a greater public oversight of Denali’s funding than the agency’s current OIG can do as a force of one,” he said in May 2011. “And that consolidation remains our recommendation in this report.”

If the Denali Commission becomes a private nonprofit corporation under state law, as Marsh now proposes, the inspector general job would not be consolidated, but eliminated.

Contact Dermot Cole at dermot(at)alaskadispatch.com. Follow him on Twitter @DermotMCole