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PFDs given, then taken away

Permanent Fund Dividend Division tries to recover thousands of erroneous payments

Posted: October 13, 2011 - 11:04pm

Last week, the Permanent Fund Dividend Division passed out payments to Alaskans totaling hundreds of millions of dollars.

This week, they’re reaching into some of their bank accounts and taking parts of it back.

Division Director Debbie Bitney said they overpaid about 5,500 dividend recipients who should have had some or all of their dividends taken for unpaid bills.

“We are working with the banks to make sure the process is as seamless as possible,” she said.

The payments made in error were less than 1 percent of the total dividends paid, and only a small portion of the total garnisheed payments as well, Bitney said.

At AlaskaUSA Federal Credit Union, which had some of the 3,600 improper direct deposits, they’re trying to recover the money, said spokesman Dan McCue.

“The state has come back on 1,300 accounts for us and have reversed that deposit,” he said.

They’re treating it as an error in a deposit, a not entirely unheard of occurrence, he said.

The issue becomes more complicated when recipients quickly withdraw the money, or check their balance online and may overdraw their account when they wind up having less in it than they thought.

“Those are the ones that we have to deal with on a case-by-case basis, there’s no set answer,” he said.

McCue said AlaskaUSA is trying to help the state recover the improperly paid money, but also doesn’t want an account holder to pay for something they couldn’t have expected. It is willing to waive overdraft fees, he said.

Bitney said the division discovered the errors Monday and announced it to the public Thursday; McCue said AlaskaUSA was notified of the problem Wednesday afternoon by the division.

The solution may be more complicated for 1,900 paper checks that were mailed out. The Dividend Division has placed stop-payment orders on the checks, and had provided banks with lists of all the numbers of the improperly paid checks to help them stop payment.

“It’s all or nothing,” she said, as it is not possible to place a partial stop-payment order on a check.

A list of check numbers will be placed on the division’s website so applicants can check as well, she said.

“We will be figuring out what amount, if any, will be owed to the applicants,” she said, and then cutting new checks.

In some cases entire dividends are seized, in other cases only portions were, she said.

Total amount of the overpayments is not known. The maximum amount of the overpayment, if all 5,500 applicants had their full $1,174 dividend taken, would be about $7 million, Bitney said.

There is no estimate yet of what, if anything the division’s error will cost the state.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.

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