Permanent Fund trustees owe Alaskans an explanation

The past week saw more information emerge about Alaska Permanent Fund Corp. executive director Angela Rodell’s firing by the corporation’s board of trustees — and although what’s come to light has answered some questions, others remain as enigmatic as ever. What’s more, the information provided is often contradictory, muddying the waters around the reasons for Rodell’s termination. It’s no wonder the Legislature is seeking better answers from the trustees — Alaskans deserve better answers, too.

The Permanent Fund ascendant

When Rodell took over direction of the fund in October 2015, its balance stood at roughly $51 billion, and oil cost less than $40 per barrel. Petroleum revenues’ historic dominance as the primary source of funds for state services was receding swiftly. And that revenue decline sent lawmakers looking for replacement funds, in the form of spending out of savings and, eventually, tapping Permanent Fund earnings under a percent-of-market-value formula. That source of funds has been crucial — last year, fund earnings made up more than 70% of Alaska’s general fund revenue. If we don’t overdraw from the fund, its earnings can help provide a path forward to funding government without overburdening Alaskans or depriving them of needed services.

There should be two goals for the Alaska Permanent Fund Corp. First, it should grow the fund as aggressively and sustainably as possible, a goal Rodell managed exceptionally well and the reason many were shocked when she was fired. Second, they should argue clearly and vociferously against any attempt to overdraw the fund in a way that could endanger its ability to provide stable returns that undergird Alaska’s budget.

More answers, more questions

The release of Rodell’s personnel file offers more insight into the dynamics that led to her firing by the board. In the past few years, some members of the board have clearly chafed at what they saw as communication issues and a tendency to not give board input adequate weight. On the other hand, APFC employees were often effusive in their praise for Rodell, and some members of the board also appeared impressed by her performance, as did outsiders — independent financial advisers praised Rodell and her acumen during the same meeting in which the board terminated her.

The members of the board are professionals with decades of managerial experience; they know well the importance of establishing a paper trail before any disciplinary action, even for at-will employees. This is Human Resources 101, and both Sen. Natasha von Imhof and Rodell herself pointed to its absence. “What was it I was exactly supposed to do?” Rodell asked. “When I manage people, I talk to you about it. I talk about the challenges I’m having with your performance, and we set out goals, we set out specific metrics at 90 days, 120 days, or whatever the time period is, and I can go back and say, ‘OK, this is what I asked you to do. Here’s what you did, here’s what you didn’t do, here’s how I didn’t see you correct it.’”

When asked about why no such plan exists, Craig Richards, chairman of the Alaska Permanent Fund’s board of trustees, said there was no obligation or direction to create one. He even went so far as to insist any performance goals or improvement plans were intentionally left out of the written record, discussed only in executive session. However, as the Board of Trustees’ Charters and Governance Policies states and Rep. Andy Josephson pointed out, part of the executive director’s evaluation hinges on “completion of the specific projects and initiatives set out in the strategic plan for that fiscal year,” which certainly seems like it was intended for measuring performance and any improvements the board considers necessary.

Although the personnel file establishes that issues between some board members and Rodell had existed for at least a few years, it doesn’t make her termination look like the last-resort option it should have been, nor that board members tried particularly hard to correct problems with the woman who oversaw 25% growth in the fund in the year of her termination.

Insufficient justification

Ultimately, Richards’ response to legislators about why he and the other trustees fired Rodell was that he didn’t need an explanation. “Ms. Rodell was a highly compensated executive-level employee, and at the end of the day it is the board’s prerogative,” he said. On Monday, he took the position that neither legislators nor the public they represent are entitled to further explanation of the “why” of the matter. He concluded his testimony by proclaiming he was “shocked” that he would be called before Alaskans to explain the trustees’ dubious action.

Such an attitude toward the firing of a chief executive, particularly of the corporation that oversees $83 billion in public money, is extremely troubling. In any corporation, removing the chief executive is a major, provocative and often destabilizing step that should not be taken lightly — and when that executive’s decisions are responsible for the funding of 70% of state services, the public deserves and should have an explanation that holds water. In the absence of that explanation, it’s no surprise that many Alaskans’ default assumption has been that the reasons for Rodell’s firing were political and potentially at the behest of the governor’s office. Richards repeatedly asserted that this firing was done the right way and consistent with his experience in other corporations. If that’s true, these trustees don’t have the experience necessary to properly administer Alaska’s nest egg.

Richards is right that the board has the power to fire the Permanent Fund’s executive director for any reason — or for no reason at all. But Rep. Chris Tuck hit the nail on the head when he said, “Just because you can doesn’t mean you should.” If the trustees’ attitude is truly that they can fire the person in that position without meaningful guidance on how to work with the board better, without an improvement plan or metrics to achieve, it augurs very poorly for Alaska being able to hire someone of Rodell’s capability to replace her. What financial professional earning far more in the private sector would be willing to take a job paying less with that sword of Damocles hanging over their head?

Through her actions running the Alaska Permanent Fund Corp., Angela Rodell showed she was squarely focused on the corporation’s twin goals of maximizing returns and maintaining a stable income stream for the state. The trustees, in insisting they don’t owe the public an explanation for abruptly removing Rodell, have yet to prove they are similarly focused on those goals.

Anchorage Daily News editorial board

Editorial opinions are by the Anchorage Daily News editorial board, which welcomes responses from readers. Board members are ADN President Ryan Binkley, Publisher Andy Pennington and Opinion Editor Tom Hewitt. The board operates independently from the ADN newsroom. To submit a letter or longer commentary for consideration, email commentary@adn.com.