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 set up an office in Anchorage is analyzed in a May 10 memo to Board Chair Ethan Schutt, from Mike Barnhill, the Permanent Fund’s chief operations officer. It lays out options and costs (including personnel moving expenses) for an office in Anchorage. It reviews the current practice of the Alaska Permanent Fund Corp.’s collaborative working relationship with the state 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 Legislature each year in Juneau, where all non-investment matters are worked out. The APFC office should be located in Juneau, close to this action. In addition, the Legislature would have to approve the funds for any 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 fund’s financial performance. The Anchorage-based trustees, all of whom favor moving the office to Anchorage, point to investment staff turnover as an issue impacting the fund’s performance. They contend that there would be less staff turnover if 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 offices as a whole. Moreover, the same study showed that only three of the current Permanent Fund employees were interested in moving to Anchorage.
The Alaska Beacon reports that supporters of an Anchorage office claim 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 argue 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 Executive Director Angela Rodell; the refusal to explain how the $200 million provided to managers for its in-state investment program is being spent; the failure to produce an annual report evaluating private-equity firm investments in the fund (including one managed by one of the trustee’s father); 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 to Anchorage.
The 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 H. Murkowski is a former governor (2002-2006) and former U.S. senator (1980-2002) from Alaska.
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