Other People's Money
Let me tell you, the Alaska Permanent Fund Corporation Board meetings have not been boring lately. They’re always important, but they're usually also dry as dust. The past few months conversations got a lot more heated as the board members push in some pretty unexpected directions.
On the plus side, the board decided not to take an extra-high risk approach to investing. Right now the official goal is for the investments to grow in value enough each year (on average) to beat inflation plus add 5%. They call it “CPI+5.” That investment strategy, if it works, will let us draw 5% of the fund’s average value each year without ever decreasing its real value.
The board spent time and money flirting with a change to CPI+7. Higher returns sound great in theory, but the only way to get there is by taking more and bigger risks. Risks often bring rewards, but sometimes they just lose money. The Permanent Fund’s staff and consultants recommended against it. One even pushed for a lower risk strategy than we use now.
This board has taken to berating and micromanaging the staff in ways I haven't seen before. Listening to their meetings, they don't seem to think very highly of the people who actually do the work. Thankfully, this time they listened and kept our fund on course.
The board also decided not to pursue an exemption to the Open Meetings Act. They're right to criticize the legislature for exempting itself many years ago. (I’ve run amendments to try to change that, but the bill went nowhere.) But some members took the wrong lesson and tried to let the Permanent Fund Corporation operate further from the public eye, too. Less transparency in government is a bad direction. I’m glad they dropped it.
Unfortunately it’s not all good news. The board is still pushing for exemptions from our procurement code. Governments have procurement rules to prevent corruption. It's rarely a good idea to remove those guard rails—even less so when you're managing $77 billion dollars.
They also want to exempt some information from public records requests. That includes their review of the Executive Director and some senior managers. Performance reviews should generally be private, but a total exemption opens the door to board members giving the head of the fund direction on investing outside of public meetings. If they bring this one forward it will need a very careful look.
And sadly, they're still pushing the cockamamie idea that spending a bunch of public money to open a new Anchorage office will magically solve recruitment and retention problems for the fund.
That's despite the fact the fund has the best recruitment and retention numbers in state government—the sort of numbers private sector businesses would kill for these days. And organizations seldom become more cohesive when they’re split up.
The board is proceeding on that without bothering to wait for the legislature to appropriate the money they plan to spend for no benefit. That’s not a good look.
Alaskans count on the Permanent Fund's board to act prudently and transparently with the people's money. I think it's fair to say the legislature will have a lot of questions for them this upcoming session.
