State PFD Division foul-up handled poorly

It was bad enough when the state issued full Permanent Fund dividends to roughly 5,500 people who should have had some or all of that amount withheld to pay one obligation or another.

The PFD Division compounded that mistake not long afterwards by reaching into the bank accounts of those Alaskans and taking all $1,174 out with little or no warning. In fact, the state discovered the error Oct. 10, waited two days to notify banks and three to tell the general public. This snafu, followed by reclaiming the money on short notice, has led to overdrafted accounts, creating headaches for not only the people affected by the mistake, but banks and credit unions that have to sort out the mess in the fairest way possible.

To their credit, most reports we’re receiving state the financial institutions are waiving overdraft fees and bending over backwards to help customers whose balances have gone from positive to negative overnight.

To be fair, some of the 5,500 affected folks knew or should have known the money that showed up in their accounts wasn’t all theirs. Things such as IRS levies, bankruptcy and child support aren’t imposed in secret, and a fair number of the people literally seeing red on their bank balances were well aware they’d been given money by mistake.

However, many others did their due diligence by checking and rechecking the PFD division’s website to see if their checks would be a little light, perhaps from a long-forgotten traffic ticket. Requests for garnishments were due by Aug. 31, and people double-checking their memories or records should have been reasonably able to expect to receive their full PFDs if no holds had been placed by the deadline. This doesn’t mean those debts aren’t owed, but it does give the debtor a role in managing the process so one bill isn’t satisfied at the expense of all others.

At a minimum, the PFD Division should have notified the people affected by its mistake first, and worked out a way to recover the improper payments. Yes, offering a payment plan might have been a burden on the division, but let’s not forget this became an issue because of its mistake. Instead, there are now people scrambling to figure out how to pay for a winter’s worth of heating oil on an expected income that suddenly shrank nearly $1,200.

The picture of an over-reaching government has been a popular one to paint as of late — sometimes with justification and sometimes not. Actions like those taken last week by the PDF Division only serve to showcase one of the biggest strokes of that portrait — a government entity acting within the law but outside the bounds of common sense.

Mistakes are bound to happen, regardless of whether an organization is one of the people or a private entity. Let’s hope the PFD Division learns from this one, so future errors aren’t compounded by a lack of thinking before acting.

11/23/2011 - 12:05pm