Permanent Fund's latest analytical study, a public document, should be released now

The trustees of the Alaska Permanent Fund Corporation voted 5-1 last week to release what they are calling “Trustee Paper No. 10.”

Trustee Paper No. 10 became a public document when the trustees voted February 16, but the staff of the corporation has yet to release the paper to the public.

I’ve asked corporate officials to send me a copy of the report without delay. The comment made at the board meeting that the document would be available to the public by the “end of the month” does not comply with state law.

The trustees voted to approve the paper and include, as an addendum, a report given to them by their financial consultant, Callan Associates, about potential problems with the two-account structure of the Permanent Fund.

One account contains income that can be spent, while the other contains money that can’t be spent, principal and unrealized earnings.

The two-account structure made sense in 1976, when Alaskans created the Permanent Fund through a constitutional amendment, envisioning an investment world in which it was easy to measure principal and earnings. That is no longer the case, given the complexity and diversity of the fund’s investments.

Trustee Paper No. 10 could be a step in improving the situation. A constitutional amendment is needed and it will take a lot of groundwork to make it happen. There have been nine previous trustee papers over the years.

The trustee paper recommends changing the fund structure so that it contains one account and limiting the amount that can be withdrawn from it.

I’m fine with the corporation waiting to post the paper on its website until the Callan report is added. The Callan report, which says there is at least a 10 percent chance of a zero distribution of earnings in 2033 because of the restrictions created by the two-account structure. That doesn’t mean the Permanent Fund would be out of money. It would mean that its earnings account would be out of money if things go south.

With or without the addendum, Trustee Paper No. 10 is already a public document, however. Anyone who wants to read the version the trustees had in front of them when they voted, has a right to do so.

The trustee paper ws paid for with public funds, through a contract the corporation signed with Malan Rietveld, who wrote the last trustee paper. The trustees approved the fifth draft of the document.

I’ll let you know what the corporation says.

ADDENDUM: I received the following from Deven Mitchell, the CEO of the Permanent Fund.

“We are highly motivated to ensure we release the most professional appearing and highest quality product possible. Due to our Board’s process we weren’t able to finalize the formatting and do our final scrub to ensure there aren’t any remaining typos until the approval to proceed was provided last week. Staff and our consultants have been working diligently to achieve this goal and you should expect to receive it this week.”

I replied: “Withholding a public document for any reason is wrong, especially since the document the trustees voted on was not subject to the "final scrub" and may have contained typos. The vote was not an approval to proceed. It was approval.

“I am not trying to be difficult, but this is an important point. I would like to see the version of the document the trustees voted on.”

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One of the slides from the Callan presentation that will be added to Trustee Paper No. 10, showing the risks created by the two-account structure of the Permanent Fund, which was set up by constitutional amendment in 1976 and can’t be changed without a constitutional amendment.