Letting politics influence management decisions of the Alaska Permanent Fund is like inviting an acquaintance with COVID-19 to dinner. You may get lucky and nothing bad happens, but the possibilities for misery are real.
One of the tenets of an endowment fund is to minimize risk, or at least measure the risks against the potential gains. It’s unclear whether the Permanent Fund’s board of trustees were thinking about that when they voted 5-1 last week to fire Angela Rodell, who has served as executive director the past six years. During her tenure, the state’s main savings account grew from $51 billion to more than $81 billion under solid management practices that avoided political investment decisions.
That may be ending with Rodell’s firing. The trustees provided no explanation for their decision and abruptly ended the meeting after the vote. Her dismissal comes after an audit praised the fund’s management, and after record investment gains in the fiscal year that ended June 30.
As long as the fund succeeds with its investment strategy and elected officials do not overdraw the checkbook to pay bigger Permanent Fund dividends, the account is projected to reach almost $100 billion 10 years from now. That would be enough to cover most of the state budget for public services, just as intended when voters approved the constitutional amendment establishing the fund in 1976, and also pay out a reasonable PFD to hundreds of thousands of Alaskans each year.
So why fire the director? The trustees aren’t talking, which violates the first rule of honest and open government, in addition to damaging the fund’s relationship with its investment partners, who probably wonder what just happened.
Whatever the secret reasons of the five trustees last appointed by Gov. Mike Dunleavy, it appears the governor’s quest for a larger, pre-reelection campaign dividend was a possible factor, along with his attitude that some of last year’s investment earnings should be spent on bigger PFDs rather than saved to protect the fund when bad investment years hit the balance sheet.
Rodell, to her fiduciary credit, has spoken consistently and strongly — but always respectfully and politically cautiously — that overdrawing the fund by several billion dollars, as the governor wants, is not a good idea for the account’s long-term health.
She also spoke up when the governor’s Revenue Department commissioner, who serves on the board of trustees, tried to block performance bonuses for fund employees. The commissioner, in politicizing a budget decision, said it would send a bad signal to pay bonuses when the PFD is smaller than Alaskans deserve. The bad signal was talking about the dividend — the Legislature appropriates money for the dividend, not the fund’s trustees.
Legislators are understandably upset that the governor has turned the fund’s earnings into a potential campaign speech. They are calling for hearings into Rodell’s firing and want to understand what happened and why. As they should.
An impartial board of trustees, not beholden to the governor, is the only vaccine against politicizing the Permanent Fund.
Wrangell Sentinel
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