Permanent Fund trustees pick another pointless fight with Legislature

Four of the six Alaska Permanent Fund Corporation trustees refused to follow a legislative directive to close their new five-employee Anchorage office, claiming the Legislature doesn’t have the power to stop them.

This is not a smart move by Jason Brune, Adam Crum, Ryan Anderson and Gabrielle Rubenstein, who may think they are free to ignore the Legislature because they operate with the political blessing and protection of Gov. Mike Dunleavy.

Picking a fight with legislators over a branch office with a handful of employees is not going to turn out well. Key legislators who will still be on the finance committees next year see the Anchorage office as a decision they should have been involved in. They will see the decision to keep it open without an appropriation as a power grab, an insult or worse.

This is not about the money. It’s about the power of the Legislature to write the budget.

Here is the Alaska Beacon story on the situation. Craig Richards and Ethan Schutt took the sensible approach and voted to close the Anchorage office because of legislative opposition.

This is a turnabout for Richards, who helped lead the charge for the Anchorage expansion last summer. It became an exercise in micromanagement that led to the loss of the chief operating officer of the fund.

On August 5, the trustees, without a public meeting, ordered the corporation to immediately announce the opening of an Anchorage office in temporary quarters formerly occupied by DEC. This directive led to Mike Barnhill’s immediate resignation.

The Alaska Beacon quotes Revenue Commissioner Adam Crum as saying that the corporation can move money around in its budget to keep the Anchorage office, regardless of what the Legislature says.

The Legislature approved a budget that provides no real money for the Anchorage office and intent language that said the corporation should not open new offices without specific budget authorization.

Lawmakers created a separate Anchorage office line item and put $100 in it, an attempt to shut down the office.

Look for Dunleavy to veto that budget line and say that the Anchorage office, which seems to be a top priority for Rubenstein and Brune, can stay open if that’s what the trustees desire. Rubenstein’s focus on the Anchorage office and getting more employees in the Anchorage office was highlighted in a leaked email by Marcus Frampton, chief investment officer of the fund.

At a legislative hearing this year, Sen. Forrest Dunbar asked Permanent Fund CEO Deven Mitchell what would happen if the Legislature cut out the money for the Anchorage office.

“That’s an interesting question. I think that we would likely give those employees the opportunity to work remotely from Anchorage. We would give them the opportunity to move back to or move to Juneau, as well, if they wanted to work out of an office.”

Mitchell said he is not sure if the six employees would stay with the corporation, quit or work remotely.

Sen. Kelly Merrick asked if the trustees would move money around in the corporation budget again to pay for the Anchorage office if the Legislature refuses to include this item in the budget.

Mitchell said, “it would not be outside the realm of potential that the board would direct that action again in the future, if there wasn’t otherwise specific funding provided.”

As I wrote at the time, that would be a mistake by the trustees. If this office remains open, the corporation will have to assign someone to inform every member of the public who walks in the door or calls that the employees have nothing to do with the Permanent Fund Dividend.

There has been little discussion, if any, in this slipshod process, about the workplace inefficiencies and supervisory problems created by opening an Anchorage office with five employees when 90 percent of the corporation’s employees remain in Juneau.

Meanwhile, in more important matters, the fund voted to hire a law firm “to provide a third-party review of communications between trustees and staff for the past six years, as well as the recent unauthorized release of internal records,” according to a fund press release.

I’ll have more on this in days to come. I was unable to listen to the two-day meeting in Utqiagvik and will do so. I suspect the trustees are still far too concerned with the source of the leak and not concerned enough with the substance of the leak.

In a matter of real substance, the trustees voted to increase the target allocation of the fund’s investments in private equity to 18 percent from 15 percent.

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