One person has far too much power over the Permanent Fund. Change won't be easy
Rep. Sarah Vance has introduced a bill calling for legislative confirmation of the four public trustees to the Alaska Permanent Fund Corporation.
This bill is not going to pass. It’s a good idea, but it will have to be part of a long overdue examination of the role of the trustees and the structure of the Permanent Fund.
It’s been 50 years since Alaska voters created the Permanent Fund through an amendment to the Alaska Constitution. While this is one of the great success stories in Alaska history, enough time has passed to recognize a danger sign: Far too much power over the giant fund is delegated to a single person in the executive branch of state government—the governor.
The governor chooses the six trustees who oversee the Alaska Permanent Fund Corporation. The trustees have the power to hire and fire the chief executive officer of the corporation. There is no legislative confirmation, no formal vetting process for applicants and no checks and balances on the governor.
There is no legislative confirmation for the trustees because attorneys general through the years have all said that having legislators confirm Permanent Fund trustees would be an unconstitutional infringement on the executive power of the governor. That’s because of language in the Alaska Constitution and a 1976 Alaska Supreme Court interpretation.
The Legislature acted in 1975 to require that dozens of more state employees—deputy commissioners and division directors—be subject to confirmation votes by the legislative branch, along with the heads of principal departments. Gov. Jay Hammond vetoed the bill. He was overridden by the Legislature, but he refused to submit the extra names for confirmation.
The Legislature filed a lawsuit and the court sided with Hammond.
In Bradner v. Hammond, the Supreme Court ruled that it was beyond the power of the Legislature to require that deputy commissioners and division directors be confirmed.
When the Legislature set up the Alaska Permanent Fund Corporation, there were versions of the bill that called for legislative confirmation of trustees, but that was removed from the final text.
Article III, Section 26 of the Alaska Constitution details the circumstances under which confirmation is allowed: “When a board or commission is at the head of a principal department or a regulatory or quasi-judicial agency, its members shall be appointed by the governor, subject to confirmation by a majority of the members of the legislature in joint session, and may be removed as provided by law.”
There is an argument to be made that the Legislature could simply redefine the Alaska Permanent Fund Corporation as a principal department of the state, headed by a board of trustees who would have to go through the confirmation process.
The board sets policy for the entity that produces the majority of state income. It has more power than any other six-member entity in state government. It is not a stretch to say that the Permanent Fund has a stronger claim to being a “principal department” of the state than several of the existing principal departments.
The state Board of Education is an example of a group at the head of a department whose members must be approved by the Legislature, while the governor has to sign off on the choice of commissioner.
I don’t know that anyone has ever made a serious effort to find out if an alternative approach to include the Legislature in the confirmation process would work. The authors of our Constitution did not envision a corporate arm of state government of this scale.
A complicating factor is that almost everyone wants the Permanent Fund to be insulated from politics, as well as independent and accountable, goals that don’t mesh easily.
In 1980 and again in 2000, Alaska voters turned down proposed constitutional amendments related to confirmation powers. A proposed amendment in 2000 would have required confirmation for board members on state corporations, except for the Permanent Fund. The proposed amendments drew little public attention 46 years ago and 26 years ago.
Now that the Permanent Fund and other state corporations, including the Alaska Industrial Development & Export Authority, are so much larger and powerful, I suspect that an amendment to expand confirmation proceedings would meet a different fate now.
By the way, there is a clear avenue for effective legislative oversight of the Permanent Fund. But it has been neglected throughout the entire history of the fund. The dividend has consumed so much attention that the Permanent Fund has often been an afterthought.
Most of our legislators today are unaware that their predecessors 45 years ago had clear expectations that future lawmakers would take an active role in overseeing the Permanent Fund, monitoring its operations and performance to ensure accountability.
Our lack of legislative oversight for decades is not one of the great success stories in Alaska history. More on that later.
Your contributions help support independent analysis and political commentary by Alaska reporter and author Dermot Cole. Thank you for reading and for your support. Either click here to use PayPal or send checks to: Dermot Cole, Box 10673, Fairbanks, AK 99710-0673.
Write me at dermotmcole@gmail.com
(I hope you will join me at an online presentation and panel discussion March 31 about key issues regarding the future of the Alaska Permanent Fund, organized by Alaska Common Ground, a nonpartisan group that focuses on Alaska public policy.
The evening is to begin with an overview by veteran Alaska attorney and former Rep. Cliff Groh on the structure and governance of the fund.
A panel discussion, with questions from the online audience, will follow. The other panelists are former Senate President Rick Halford, who served in the Legislature for more than 20 years, and former Attorney General Craig Richards, a former trustee of the Permanent Fund and a longtime Alaska lawyer.)