Private companies that do business or want to do business with the Alaska Permanent Fund Corporation often pick up the tab for corporation employees to travel to office sites, conferences and other meetings.

There are rules in the Alaska Administrative Manual about how to handle this in state agencies, but the Permanent Fund has not followed them. The fund is a state-owned corporation, not a state department, which has allowed for some wiggle room.

In any case, it makes sense for the fund to be more transparent about this and I’m glad to see that a change is coming. Until now, third-party travel has been subject to the approval of the chair of the trustees.

Here is a 2004 resolution outlining the fund’s approach to travel.

With more and more companies offering to pay for travel, the fund is proposing to change the way it accounts for these trips to come into alignment with the state regulations. Investment managers hired by the fund sign contracts in which they agree to pay for travel to certain meetings. This is a benefit offered to all investors not just the APFC. It is treated as a cost of doing business.

“Over the last two years, the approved list of third-party reimbursors has doubled,” fund managers told the APFC trustees in a budget presentation September 5.

Starting in the next fiscal year, the Permanent Fund says it will disclose these arrangements and has included a $250,000 estimate of travel costs to be provided by others.

Money spent by state agencies and corporations on travel becomes a political issue at times in the Legislature.

This topic came up a year ago at the fund’s annual meeting.

“Because third-party travel has become material to APFC’s travel budget and is part of the regular duties to carry out the purpose of some of our asset classes, we are requesting additional budget authority to be transparent in our accounting of these trips,” the fund presentation this month said.

The cost of each trip would be offset by reimbursements from the organizations providing the travel. General partners in APFC investments would be among those reimbursing the state.

“The reimbursements or receipts for direct pay will be recorded as revenue and the corresponding expenses will be charged against it,” the fund said. The $250,000 target would not be a state expense, but an estimate of the value of third-party travel that might take place over a year.

The fund said the new proposal “is in alignment with the Alaska Administrative Manual for third-party reimbursements.”

That manual says: “Payments by a third party for state agency travel expenses must be recorded appropriately in the state financial system. If the travel is material to the agency’s travel budget and is part of the agency’s regular duties or is connected with carrying out the purpose of the agency, the costs must be recorded as an expenditure with an offset recorded as a revenue. If the state incurs the expenditure and is reimbursed by the third party, the reimbursement is to be recorded as revenue.”

“The third party should be instructed to reimburse the state directly for the travel expenses to reduce potential tax consequences to the traveler. When this is not possible, any third party reimbursement made directly to the traveler for travel expenses, per diem, and/or meal allowances shall be turned over to the traveler's state agency for deposit into the state treasury.”

The state rules also say that reimbursement should be limited to travel expenses, per diem or other allowances permitted by state policies. Honorariums are not allowed.

“Any time a third party is paying for a traveler's travel expenses, the state agency must avoid the appearance of or the fact of any conflict of interest. The agency should also ensure the transaction does not violate the code of ethics and if there is any question, the Department of Law should be consulted on the matter,” the manual says.

Increased disclosure of APFC travel is a good thing and will be endorsed by the Legislature. Meanwhile, the Legislature will ask more pointed questions about increasing the budget for other travel.

“There is also a $166,000 request to increase staff travel, primarily investment staff for asset visits, due diligence, and attend industry-standard conferences and trainings. There is also a request for increase travel costs for the Board as well as a small increase related to non-employee travel and/or relocation.”

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