OPINION: Alaska Permanent Fund trustees are making the wrong move

The job of the Alaska Permanent Fund Corp. trustees is to focus on pursuing, maintaining and growing our fund. Instead, they are being sidetracked by their plan to open a satellite office in Anchorage by the end of the year. This is the first step in what will end up being a multi-year, disruptive, unnecessary and expensive move to Anchorage.

The plan to open the office in Anchorage is analyzed in a May 10 memo to Ethan Schutt, trustee chair, from Mike Barnhill, the Permanent Fund’s chief operations officer. The memo may be seen on the Permanent Fund website. It lays out options and costs, including personnel moving expenses, for an office in downtown or Midtown Anchorage. It reviews the current practice of the Alaska Permanent Fund Corp.’s, or APFC, collaborative working relationship with the Alaska Legislature, employee turnover issues, the evolving “working from home” environment, and the potential for satellite offices outside Alaska.

The Permanent Fund budget works its way through the Senate and House Finance Committees during each legislative session in Juneau, where all non-investment matters are worked out. If financial issues come up between sessions after the budget process is complete, they are discussed with the Legislative and Budget Audit Committee.

The APFC office should be located in Juneau, close to this action. In addition, the Legislature would have to approve the funds for a move. Before making a rash decision, the Permanent Fund Trustees should consult with the Legislative leadership as recommended by the APFC internal memo. In the long run, trust between the Permanent Fund and the Legislature must continue to exist for the good of all Alaskans.

The APFC employs 66 people. The investment staff is the critical component to the Permanent Fund’s financial performance. The Anchorage-based trustees, all of whom favor opening the new office in Anchorage, point to investment staff turnover as an issue affecting the fund’s performance continuity. They contend that there would be less staff turnover if Permanent Fund investment professionals had the stimulus of being closer to other investment professionals.

This makes no sense. An APFC internal study shows pretty clearly that there is no APFC staff turnover problem — at least, not in comparison with state executive offices as a whole. That internal memo references a study of staff turnover at APFC and compares it with turnover in state executive branch offices for the past two decades. APFC turnover for the past 20 years — 12.6% (2003-2012) and 14.3% (2013-2022) — is almost identical to state executive turnover of 13.94% (2013-22). Moreover, the same study showed that only three of the current staff employees were interested in moving to Anchorage.

The Alaska Beacon reported that the claim was made that potential new hires would “potentially accept employment with the Permanent Fund if we had an Anchorage office but were not willing to look at Juneau.” There’s no means to verify this claim and, in any event, it is an absurd basis for determining where government agencies should be located.

The trustees further argued that Anchorage would attract capable people who would stay longer with the APFC. That speaks for opening a satellite office in Seattle, San Francisco or New York City, not Anchorage. As a no-cost alternative, the APFC could expand its “work from home” program for those who prefer not to live in Juneau — whether it be the Lower 48 or to the north.

In recent years, the Alaska Permanent Fund Corp. has consistently been in the news for all the wrong reasons: the controversial firing of former Executive Director Angela Rodell; the refusal to explain how the $200 million provided to brokers for its Instate Investment Program is being spent; the failure to produce an annual report evaluating private equity firm investments in the fund, including one managed by the father of one of the trustees; a projected shortfall of realized earnings over the next three to four years; and now the expenditure of funds to open a satellite office in Anchorage — which, again, will be the first step in moving the Permanent Fund offices to Anchorage altogether.

Recently, the APFC staff has raised the concern that the Permanent Fund will be running out of realized earnings in the next three to four years — funds needed to help pay for the cost of government and for the dividend. The Permanent Fund trustees’ efforts should be concentrated on the highest return for the shareholders of the state with minimum risk, rather than catering to their own convenience with an expensive and unnecessary move.

Frank Murkowski is a former governor and United States senator from Alaska.

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