JUNEAU -- The Alaska Permanent Fund Corp. has figured out a way to get raises for its staff that other state employees are aren't getting, said Mike Burns, the state-owned corporation's executive director.
The $51 billion Alaska Permanent Fund provides earnings with which to manage the fund, as well as annual dividends to most Alaskans, but its budget still needs legislative approval.
"There was nothing in our appropriation to manage our compensation system," Burns said at a meeting of the corporation's board of trustees in Ketchikan. "It basically flatlined the employees, and I don't think that's the appropriate message we want to send."
Burns has complained in the past that low state salaries make recruiting and retention a challenge, and he has said that legislative attempts to make the state budget appear smaller have cost the Permanent Fund and the state more than they've saved.
The corporation needs a merit pay system for its employees, he said. While Burns’ employees are some of the most highly compensated in state government, those salaries are low compared to some others in the financial industry, he said. On Wednesday, Burns told the trustees that he's figured a way around the limited budget appropriation.
The corporation, he said, will adopt the state system of providing a geographic pay differential, something that it had previously avoided. Under the state's pay system, Anchorage is considered the lowest-cost place to live and is used as the base. Juneau's pay differential is 5 percent above that base, and all or nearly all Permanent Fund employees live in Juneau.
Most state employees will get 1 percent cost of living raises next year, pay hikes approved by the Legislature last year as multiyear contracts. That will add to the 5 percent geographic differential, Burns said.
"There will be a 6 percent across-the-board adjustment in everyone's salary," Burns said.
Burns said he'd have preferred that the corporation keep control over its salary system, but it had to adopt the state system to get the geographic differential increases.
"That's the only way it can be administered," he said. "We can't take the money and use it as a merit proxy -- it has to be administered the way the Legislature put it in."
The corporation had earlier rejected adopting the state geographic differential system, preferring the flexibility to pay more valuable employees more money.
"I'd rather have our independence, but I don’t think its fair to the employees to maintain our independence on their backs," he said.
Burns' proposal requires approval of the Board of Trustees, and in a brief discussion Wednesday morning no objections were raised.
Burns said he was glad the geographic differential strategy was available.
"Several years back, there was a year when there was no money appropriated for salary adjustments and there was nothing like this available," he said. "It was a long year, and it was hard on people."
The strategy he's proposing can only be used once, Burns said.
Contact Pat Forgey at firstname.lastname@example.org.