The Alaska Permanent Fund Corporation’s top executive has asked whether corporation trustees are committed to the corporation’s independence.
Corporation Executive Director Angela Rodell raised questions after a corporation trustee proposed cutting the amount paid to corporation staff in the annual budget. She asked whether the board is committed to building the corporation’s capacity to manage its investments using its own employees. But she said the issues are larger than the budget.
“Should we continue to be building this agency, or is it time to put our hands up and go, ‘Maybe it’s time to shrink this. Maybe it’s time to move it over, back to Department of Revenue. Maybe it’s–’ And how do we think about that? So it’s bigger, it’s more philosophical. It’s just trying to understand where we want to go with this organization,” Rodell said.
Two members of Governor Mike Dunleavy’s cabinet who are trustees — Revenue Commissioner Lucinda Mahoney and Natural Resources Commissioner Corri Feige — voted against the corporation’s budget proposal.
Mahoney had wanted to cut $900,000 in employee pay from the $218 million budget proposal.
The budget had been prepared by corporation staff members and had been discussed by trustees in previous meetings.
Mahoney would have eliminated $600,000 of a proposed $1.6 million that could be paid to permanent fund employees as incentives for reaching certain goals. And her proposal would also eliminate two new positions proposed in the budget.
Mahoney questioned whether two new positions were needed, since they would work on the corporation’s operations and wouldn’t manage investments. And she said she was concerned about the “optics” of paying corporation employees more during a period in which the Legislature has paid for smaller permanent fund dividends than what would be paid under the formula in a 1982 state law.
“It’s difficult for me to support that in a time where we have had exceptional improvement, exceptional increase in the value of the permanent fund. And we have many citizens in our community who are receiving a dividend that is significantly less than the statutory amount,” she said.
The board did not adopt Mahoney’s proposal before passing the budget.
Even with Mahoney’s proposed cut, the incentive pay would have been higher than this year. She also raised a concern that the incentive pay increases the gap between what corporation employees are paid compared with other state government employees with similar responsibilities.
Trustee Ethan Schutt said the board should not put itself “in play” in state politics. And Trustee Steve Rieger said non-investment positions would be needed as the corporation adds investment staff.
Rodell said the trustees’ discussions raised questions about the corporation’s strategic plan. She said that a lot of work went into the incentive compensation proposal, as well as other aspects of employee pay proposed in the budget. And she suggested that uncertainty over paying for staff positions makes it harder to plan and to build the staff.
Mahoney said that when she has worked for organizations that didn’t receive all of the money they hoped for to achieve their goals, their leaders continued to work under the same strategic plan.
“Is there something I’m going to change about my strategic plan? And the answer usually was, ‘No.’ Because I’m still, as a leader, going to try to work really hard to achieve those goals,” she said. “And so, the execution of working on the strategic plan is maybe a little bit different, but I don’t know that the strategic plan itself actually changes.”
The board’s proposal for the budget is just the first step in the annual process. Dunleavy’s administration must decide what amount will be proposed to the Legislature. Then the Legislature determines what level it wants to fund the budget. And Dunleavy can either sign that amount into law or veto parts, like the rest of the state budget.
Rodell has held the corporation’s top staff position since 2015. She previously served as a trustee when she was the revenue commissioner in former Gov. Sean Parnell’s administration. She has tried to steer the corporation away from the political battles over dividends, while publicly defending the board’s long-held goal of limiting the amount the state draws from the fund each year.
Dunleavy has proposed drawing an additional $3 billion beyond the amount recommended by the board, which would allow the state to pay for both the budget and higher dividends over the next few years. A majority of lawmakers in both chambers have been concerned that spending more than planned would threaten the future of the permanent fund’s earnings reserve.
Board Chair William Moran’s year as board chair ended at the meeting, and the board elected former state Attorney General Craig Richards as its new chair, and Mahoney as its vice chair.
The fund has grown from $51 billion to nearly $81 billion during Rodell’s six-year tenure.
This story has been updated with additional information that was inadvertently cut in the original version.