'What the hell is going on?'
Politics finally invades the Alaska Permanent Fund Corporation, sending the fund's well-liked leader who had argued against using the fund as a piggy bank packing.
Happy Friday, Alaska!
In this edition: Angela Rodell is out as the head of the Alaska Permanent Fund Corporation following a secretive board meeting, leaving us all wondering “What the hell is going on?” The reading list and weekend watching.
Twitter status: Still suspended.
Coming up next time: The lawsuits against the Alaska Redistricting Board’s plan.
‘What the hell is going on?’
I’m down in Juneau this weekend and on the way into town from the airport Thursday, I was talking with a friend about the latest developments at the Alaska Permanent Fund Corporation. Specifically, we talked about the string of stories by columnist Dermot Cole on the fund’s secrecy around its investments in Alaska, an area that Cole argues is ripe for corruption. But it was mostly a different issue that was on my mind.
“Do you think they’ll can Rodell?” I asked of APFC Executive Director Angela Rodell, who got crosswise with the trustees appointed by Gov. Mike Dunleavy at a previous hearing when she questioned a proposal to cut staff pay for its potential to undercut the fund’s independence.
About an hour later, we got word that the five Dunleavy-appointed members of the corporation’s board had, in fact, fired Rodell. Shielded by executive session and claims of it being a personnel issue, the board’s members offered zero explanation for why the well-liked and successful executive director, whose six years on the job have seen the fund grow from $51 billion to a whopping $83 billion, was fired.
The news spread like wildfire through Alaska’s political world, spawning a load of theories and guesses that would put even the most ardent of covid conspiracists to shame. But perhaps the clearest summation of the responses to the firing was what Rep. Bryce Edgmon, I-Dillingham, told the Anchorage Daily News:
“What the hell is going on?”
Indeed, what the hell is going on here? The Alaska Permanent Fund has been one of the few bright spots for Alaska at a time when things have been looking dim. Under Rodell’s leadership, the fund’s value grew by 29.73% over the last year on top of a strong investment market. It funds a vast majority of the state’s budget and is the foundation of the state’s financial future. With that duty in mind, Rodell has also advocated for careful and thoughtful management of the fund, arguing that despite the strong returns the fund can’t be all things to all people. It’s the state’s golden goose (or golden salmon, if you may) and shouldn’t be plucked.
And that’s the core of the problem right there.
As Gov. Mike Dunleavy and company scramble to achieve whatever win they can as they head into an election year (see also the ferry announcement, cabinet shakeups and various lawsuits) when he’s starting to feel the heat from the right, the Alaska Permanent Fund and its strong returns are the last and best hope to deliver on that mega PFD he promised while on the campaign trail. While the administration has feigned ignorance about Rodell’s canning, it’s hard to overlook the fact that his initial version of the budget is set to be released next week.
Observers also pointed out that the board’s first day of meetings included a presentation on how overdrawing the fund—a move that has historically been opposed by the board and Rodell—would actually be fine. Of course, the presentation was predicated on the assumption that the record gains we experienced over the last year would continue into the next and didn't really examine the benefit of just leaving up to $5 billion in the fund to continue to grow. Given Dunleavy and company’s knack of cherrypicking overly rosy numbers that happen to conveniently align with the governor’s agenda, it would be more interesting to have this presentation vetted in a more rigorous environment like the House and Senate finance committees.
And that’s looking likely judging by what Senate Finance Committee co-chair Sen. Click Bishop told the ADN:
“I’m stunned. I can’t wait to see the Board of Trustees’ reasoning for terminating her. To me, it’s the equivalent of trading Michael Jordan after you’ve won five NBA championships,” he said.
The big problem, of course, is the fate of the dividend has always rested with the Legislature and not Rodell. While Rodell has certainly been a voice in favor of limiting the strain on the fund, the executive director position has no say in the size of dividends. But removing the authority of that voice is probably the point here.
Rodell, who served as the revenue commissioner under Parnell and was picked as the executive director of the Alaska Permanent Fund Corporation while Walker was in office, is popular and well-respected. When she talks, legislators listen. For example, here’s what Rodell had to say about overdrawing the fund back in February:
“I’ve watched this debate now happen year in and year out for 10 years. Yes, I do worry that if we don’t follow a POMV spending rule, it will open floodgates. People are hurting, there’s no question. You walk around this town and you can see the effects of the pandemic on Juneau. It is not the same place you came to a year ago or two years ago by any stretch of the imagination, and yet I wonder what are we creating for ourselves in three, four, five years, in ten years. Do we have a place for your two-year-old or five-year-old to grow up in? We have to ask ourselves what we do we want Alaska to be not in 10 years but what do we want it to be in ’23, ’24, ’25? The CARES Act money is not going to last for a long time. We have to really be asking ourselves what do we have for ’23, ’24, ’25? And that’s a really hard place to be because it means saying ‘no’ sometimes. I don’t envy you guys at all. I have the easy job in all of this. I get look at markets, I get to invest, things are looking good, we’re at 15% for the fiscal year, and maybe I just made your job that much harder by having those kind of returns.”
The by-the-numbers approach has been a much needed foundation as political pressures have mounted on the fund. For Dunleavy and company, it would be that much easier if APFC was cowed into silence. And in that dustup with the board in September, Rodell hit closer to home on the issue than we probably understood.
“Should we continue to be building this agency, or is it time to put our hands up and go, ‘Maybe it’s time to shrink this. Maybe it’s time to move it over, back to Department of Revenue,” Rodell said. “And how do we think about that? So it’s bigger, it’s more philosophical. It’s just trying to understand where we want to go with this organization.”
We got our answer in her firing.
With Rodell gone, I’d expect politics to invade the Alaska Permanent Fund Corporation and it will suddenly be more amenable to being the state’s piggy bank, ready to be cracked open for the whims of Dunleavy. Whether that ultimately comes to pass is a decision that still rests with the Legislature… unless...
For a while now, there’s been chatter that the Dunleavy administration is exploring ways to pay out a dividend while skirting the Legislature. The mechanics of such a plan aren’t entirely clear and it’s likely that such a power doesn’t exist—though not having the clear legal ability to do something hasn’t stopped Dunleavy from doing something in the past—but it’s something to keep in mind.
Why it matters: As I said above, the Alaska Permanent Fund is a critical foundational piece of the Alaska budget and will only be more important into the future. The outlook of state services—everything from schools to public safety and, yes, the dividend itself—will hinge on the health of the fund. Rodell’s push for a conservative, rules-based approach had the long-term health of the fund in mind. What’s next isn’t clear. The Board’s refusal to explain its actions is, frankly, unacceptable. At least it looks like the Legislature isn’t keen on letting it slide:
With the end of the NFL’s regular season a month away, I’m reminded of this very excellent video covering the 1987 players strike and its impact on one of the league’s most fierce rivalries.
Have a nice weekend, y’all.