Permanent Fund trustees should shelve plans to open a new unbudgeted office in Anchorage
All six trustees of the Alaska Permanent Fund Corporation live in the Anchorage area, but that’s no reason for the Alaska Permanent Fund Corporation to expand its bureaucratic footprint beyond Juneau and waste hundreds of thousands on new office space in the state’s largest city.
Given the range of big challenges facing the permanent fund, the trustees should focus on improving electronic communications statewide instead of resurrecting an old idea of planting an Anchorage office.
One of the issues that led to the firing of former executive director Angela Rodell in 2021 was the desire of Craig Richards and some other trustees to have an Anchorage office, a move that Rodell opposed as a waste of money.
On multiple occasions, Richards claimed that having an Anchorage office would make it easier for the corporation to hire employees.
Richards claimed that Rodell manipulated the numbers and exaggerated the costs of the Anchorage move, but there was no evidence that happened, the attorneys who investigated Rodell’s firing wrote in a legislative report.
They said that no other trustee believed Richards’s allegation, which was that Rodell went “out of her way to make it look a little more expensive and throw a little cold water on it.” Rodell said she asked fund employees to prepare a cost analysis and passed the numbers onto the trustees without changing them. Here is that full report.
Rodell said in a deposition that she thought it would be a waste of money to have two offices in Alaska and that if a second office would be started it should be in a financial center where the fund actually makes investments, such as New York, Chicago or Toronto.
Rodell, not Richards, presented the more logical argument about an additional office, given the specialized nature of the fund’s operations.
Now, with Deven Mitchell as executive director instead of Rodell, the trustees have resurrected the Anchorage office idea and have called for opening an unbudgeted branch office in the fiscal year that starts July 1.
Meeting last month, the trustees “directed staff to expediently work to open an Anchorage office and develop a timeline, identify space, and prepare a budget for presentation at an upcoming board meeting.”
Before spending any money or staff time on this effort, the trustees should have asked lawmakers for approval and justified the expense.
I suspect that going ahead without legislative approval is likely to lead to legislative rejection. And with good reason.
There is no evidence that dividing the fund’s 70 or so staff members between Juneau and Anchorage and creating a new space for the trustees to meet in Anchorage would improve operations. On the contrary, there is reason to believe that this would make the fund less efficient and less cohesive.
The two state commissioners who serve on the fund’s board—DEC Commissioner Jason Brune and Revenue Commissioner Adam Crum—have their state offices in Anchorage. The other four board members, all appointed by Gov. Mike Dunleavy, live in or near Anchorage—Ethan Schutt, Craig Richards, Steve Reiger and Ellie Rubenstein.
Under current law the governor appoints trustees with no public hearings, no public applications and no confirmation process. The law has long been in need of revision.
Future governors may recognize that one area of the state should not control the entire board, and that geographic diversity is important, while future legislators may recognize the need for legislative oversight.
In 2019, the permanent fund trustees said that having an Anchorage office would make it easier to recruit and retain employees. They said they wanted it open by September 2020.
That didn’t happen because of the pandemic and the workplace changes that swept the world, including the widespread adoption of remote work. The corporation has three alternatives in effect now that include one that allows a small number of employees to work anywhere with supervisor approval. These are relevant in the recruitment debate.
Mike Barnhill, a longtime state employee who is now the chief operations officer for the fund, wrote this memo in May about the office space issues and how the fund staff “will seek to implement the board’s direction in FY 2024.”
Leasing and equipping a 3,000-square-foot space would cost up to $850,000 to begin with and cost $150,000 to $170,000 a year after that, Barnhill wrote.
About employee turnover, that “appears to be correlated with changes in the executive director position.”
A recent survey found that only 5 employees “may choose to relocate at this time,” Barnhill said. It would cost about $11,000 per employee to move. It would be up to the trustees to decide whether that expense should be covered.
In terms of any additional offices beyond Anchorage, “APFC senior management recommends that we focus on stabilizing the organization, the culture and the alternative work policies before we open additional offices, including offices outside of Alaska.”
The trustees should take that advice to heart and cancel the plan to expand its bureaucracy to Anchorage as there is no clear strategy on the number of employees to move, the cost of relocation, the potential for remote work, the conditions under which trips to Juneau would be required and how all this is supposed to better serve Alaskans.
Making it more convenient to attend meetings for trustees who live in Anchorage does not qualify as better serving Alaskans.
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