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Computer Error Rocks Alaska's $38 Billion Oil Fund

Perhaps you know that sinking feeling when a single keystroke accidentally destroys hours of work. Now imagine wiping out a disc drive containing an account worth $38 billion.

That's what happened to a computer technician reformatting a disk drive at the Alaska Department of Revenue. While doing routine maintenance work, the technician accidentally deleted applicant information for an oil-funded account -- one of Alaska residents' biggest perks -- and mistakenly reformatted the backup drive, as well.

There was still hope, until the department discovered its third line of defense, backup tapes, were unreadable.

"Nobody panicked, but we instantly went into planning for the worst-case scenario," said Permanent Fund Dividend Division Director Amy Skow. The computer foul-up last July would end up costing the department more than $200,000.

Over the next few days, as the department, the division and consultants from Microsoft Corp. and Dell Inc. labored to retrieve the data, it became obvious the worst-case scenario was at hand.

Nine months worth of information concerning the yearly payout from the Alaska Permanent Fund was gone: some 800,000 electronic images that had been painstakingly scanned into the system months earlier, the 2006 paper applications that people had either mailed in or filed over the counter, and supporting documentation such as birth certificates and proof of residence.

And the only backup was the paperwork itself -- stored in more than 300 cardboard boxes.

"We had to bring that paper back to the scanning room, and send it through again, and quality control it, and then you have to have a way to link that paper to that person's file," Skow said.

Half a dozen seasonal workers came back to assist the regular division staff, and about 70 people working overtime and weekends re-entered all the lost data by the end of August.

"They were just ready, willing and able to chip in and, in fact, we needed all of them to chip in to get all the paperwork rescanned in a timely manner so that we could meet our obligations to the public," Skow said.

Last October and November, the department met its obligation to the public. A majority of the estimated 600,000 payments for last year's $1,106.96 individual dividends went out on schedule, including those for 28,000 applicants who were still under review when the computer disaster struck.

Former Revenue Commissioner Bill Corbus said no one was ever blamed for the incident.

"Everybody felt very bad about it and we all learned a lesson. There was no witch hunt," Corbus said.

According to department staff, they now have a proven and regularly tested backup and restore procedure.

The department is asking lawmakers to approve a supplemental budget request for $220,700 to cover the excess costs incurred during the six-week recovery effort, including about $128,400 in overtime and $71,800 for computer consultants.

The money would come from the permanent fund earnings, the money earmarked for the dividends. That means recipients could find their next check docked by about 37 cents.

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