The Political Compass of the Executive Director of the Alaska Permanent Fund Corporation


Nicholas T. Palso

Department of Human Resources



According to Haass (1999), to succeed in one’s professional life, one must identify the layout of the organizational landscape he or she works in so as to fully understand it.  The best way to achieve this, especially in large and complex organizations, is to create a compass that represents the relationships between different parts of the organization.  At the center of Haass’ compass is the individual in question.  To the north are those whom that individual works for, that supervise and have control over him or her.  To the south are those whom work for the individual.  To the east of the center are the people with whom the center works.  They do not have direct control over the center, but they can influence and be influenced by it.  Finally, to the west are the people and organizations outside of the center’s organization with whom he or she should work to improve operations.  By creating this compass, one can understand the workings of his or her organization and then use that understanding to succeed and avoid mistakes (pp. 1-7).  Understanding such a compass could be useful to the Executive Director of the Alaska Permanent Fund, CEO of the largest public trust fund in the democratic world.

The Alaska Permanent Fund

In the late 1960s, vast quantities of oil were found in extreme northern Alaska along the shore of Prudhoe Bay, and part of the Arctic Ocean.  Under the newly written constitution of the state these oil deposits, like all mineral wealth, were the property of the State of Alaska and its people.  In 1969, the state auctioned the leases to the land around Prudhoe Bay to oil companies eager to begin exploring for and extracting the oil.  This sale netted Alaska over $900 million dollars in a single day—over eight times the previous year’s budget.  This gave the people of Alaska and their government a picture of

just how much money they could make by selling their oil.  That first $900 million was used to develop badly needed infrastructure for the state, and it was depleted in a little over a year.  Although there was a consensus at the time to spend the money right away, citizens and lawmakers became upset when they realized just how quickly it had gone (APFC 2001, pp. 1-3).  They saw this instance as another chapter in the long history of boom-and-bust times in Alaska.  Starting with the Russians in the 1740’s, “Outsiders” had been coming to Alaska, exploiting the resources until they ran out, and taking the money they made with them back home.  This left Alaska with little money or development even after centuries of fur, fish, timber, gold, and oil extraction.  To ensure that future revenues would not be wasted in the same way, Alaska’s legislature, spurred by Governor Jay Hammond, worked to develop the Alaska Permanent Fund (Stauffer, 1999, pp. 25-28).

The Alaska Permanent Fund became functional on February 28, 1977 with an infusion of $734 million in state oil revenues.  The Fund was legally formed by an amendment to the Alaska state constitution voted on by the people of Alaska in a November 1976 ballot proposition.  The purpose of the Fund was to take at least 25% of the revenues Alaska earned from oil sales and dedicate those funds to a permanent state savings plan intended to earn interest income and ensure that the money from current resource booms will last indefinitely.  The legislature also has the ability to deposit budget surpluses into the Fund, which it has done on several occasions.  Currently, the Alaska Permanent Fund has assets of just over $23.1 billion, and had a peak in the late 1990’s of close to $27 billion (APFC, 2002). 

No other state in the U.S. has anything like Alaska’s Permanent Fund, and few other places in the world do.  Over the years, other governments with rich oil reserves, such as Venezuela and Alberta, have attempted to develop funds similar to Alaska’s, but these have failed largely due to the fact that they were not created to generate the maximum amount of profit from interest and because the principles of the funds were easily tapped by the governments.  Alaska’s Fund is protected by an amendment to the State constitution that requires the passing of another ballot proposition in order to change it.  This effectively puts the control of the Fund in the hands of Alaskans.  The only other government in the world that has a fund more successful than Alaska is Kuwait, and that is largely because that nation has far more oil than Alaska and because their fund is managed by an authoritarian monarchy with absolutely no control from the people (Rose, 1997, pps. 1-5).  

In 1980, the Alaska legislature took steps to refine the Fund into its current operational shape.  At that time, Alaskans debated whether the Fund should be managed as a savings account or as an economic development bank to fuel business in Alaska.  The legislature decided that the Fund should serve as a public trust account.  At this time, the legislature also created the Alaska Permanent Fund Corporation (APFC) to manage the Fund.  Finally, and what most Alaskans view as most important, the legislature created the Permanent Fund Dividend program (PFD).  Under the PFD, dividends from

the earnings of the Fund are paid out to every Alaskan man, woman, and child who meets rigid residency requirements (APFC, 2002).  This, of course, instantly became an incredibly popular aspect of the Permanent Fund, but as will be seen later, has led to some severe problems. 


The Alaska Permanent Fund Corporation

The APFC is a self-described “quasi-independent state entity”.  It is insulated from short-term political decisions and is at the mercy of the legislature only in that it must have its budget approved by lawmakers annually and that constitutional amendments required to change it must be enacted by the legislature.  Ultimately, the APFC is accountable to all Alaskans (APFC, 2001, p. 33).  It is expressly forbidden to take any part in politics, including lobbying for ballot propositions that may affect its functioning (APFC, 1994, p. 4).  The finances, holdings, and actions of the APFC are always transparent, as the money it manages belongs to all Alaskans.  The mission statement of the APFC is “To maximize the value of Alaska's Permanent Fund through prudent long-term investment and protection of principal to produce income to benefit all generations of Alaskans,” (APFC, 2001, p. 45)

Today, the APFC has vast holdings in domestic and international stocks, bonds, mortgages, and real estate.  The ability of the APFC to act independent of politics is further exemplified by the fact that the Fund has only three of its 58 real estate holdings in Alaska.  While Alaskan politicians would doubtlessly love to see the Fund construct malls and office buildings in their districts, bringing the double benefits of development

and revenue to their constituents, the APFC has seen that large-scale investing in Alaska, with its shaky resource-based economy, is not sound for long-term financial gain.  Incidentally, the Fund does own a development of luxury condominiums near West Chester, PA (APFC, 2002). 


The Political Compass of the Executive Director of the APFC

The Executive Director (ED) is at the center of the compass.  Currently, this position is held by Robert Storer.  The ED is the CEO of the APFC.  He is in charge of the day-to-day operations of the Fund.  The duties of the ED include:


Ultimately, the ED is in charge of running the Alaska Permanent Fund.




To the direct north of the ED is the APFC Board of Trustees.  This is a six-member board that hires the ED and basically tells him what they want him to do in order to get the results that they want.  Four of the board members are appointed by the governor to staggered four-year terms.  These members are often prominent business people or political-hopefuls who are looking to get into politics, and over the years have included the presidents of banks, owners of car dealerships, and the children of U.S. senators.  The other two board members are the Alaska Commissioner of Revenue and one other state cabinet member of the governor’s choosing (APFC, 2001, pp 33-34). 

The Board of Trustees, formal goals are to protect the money in the Fund, maximize the Fund’s long-term returns, maintain the real value of the Fund and support it against inflation, and work with the legislature and the public to support the Fund (APFC, 2001, p. 34).  In reality, most of this work is handed down to the ED.  Few, if any, of the Board members actually take an active role in working for or promoting the Fund (Rose 1997, p. 8).   

North of the Board of Trustees is the Alaskan governor Frank Murkowski.  He is in charge of appointing all the members to the Board (APFC 2002).  Although that is the extent of his legal power over the Fund, he doubtlessly has the power as the state’s most powerful figure to persuade the members to get results he wants.  In reality, however, it seems that most Alaskan governors have left the APFC alone to do its job, probably knowing that the ED and his staff have a better idea of how to run things than he does.



To the south of the ED are the 32 employees of the APFC, all of whom are hired by him.  These are the people to whom the ED delegates the tasks of running and investing the fund.  Immediately south of the ED are the Chief Operating Officer (COO) and the Chief Investment Officer (CIO).  The COO, Robert Bartholomew, works closely with the ED to handle the actual mechanics and business operations of the Corporation.  He supervises the Director of Communications, the Director of Information Technology, the Director of Finance, and the Administration Department.  The CIO, Allan Moore, is responsible for all investment functions of the Fund.  He is the man who actually works with the Fund to earn more money.  Under the CIO are the managers of the various types of investments, such as real estate and bonds (APFC, 2001, pp 35-36). 



To the east of the ED of the APFC are the 20 Senators and 40 representatives of the Alaska State Legislature.  The legislature would actually probably be best situated northeast of the ED, as it does have some formal power over the APFC but also works with it on other matters.  The legislature can control the workings of the Permanent Fund, but only through the propositions of amendments to the state constitution.  This can be a lengthy process, as all proposed amendments must be voted on by the people of Alaska (Rose 1997, pp. 4-5).  It also serves to free the elected officials from any blame if things go wrong with the fund, as it is the voters who ultimately decide what action will be taken.  The Fund can wield power over the legislatures, too, as bad returns and lower dividends would make constituents discontented with their politicians.  The legislature

can also indirectly affect the fund by manipulating dealings with the oil companies working in the state to affect how much revenue the state earns, and ultimately, how much goes to the Fund (Alaska State Legislature House Finance Committee Department of Natural Resources, 2002). 

Also to the east of the APFC are the various departments of the State of Alaska.  Some of these have more workings with the Fund than others.  For instance, the Alaska Department of Public Safety has little to do with the Fund, but the Department of Natural Resources Division of Oil and Gas, which is in charge of oil drilling, can affect it by determining how much oil corporations can take out of the ground (State of Alaska Division of Oil and Gas, 2002).  Basically, any state department that has dealings with the oil industry can affect the Fund, and while the APFC is not legally allowed to lobby on behalf of itself, it does take some under-the-radar actions.  For instance, while working for the Alaska Department of Fish and Game (ADF&G) in Fairbanks, I noticed that the APFC was always sending up pamphlets to our offices that promoted the Fund as the future of Alaska and explained how important oil revenue was to its creation.  This was of no small coincidence, of course, as the ADF&G was responsible for monitoring the Porcupine caribou herd in the Arctic National Wildlife Refuge and most of its employees were highly biased towards protecting the herd and stopping oil exploration in that area.  Clearly, the APFC was trying to help us keep our options open. 


To the west of the ED and the APFC is one group that the Fund desperately needs to work with in order to protect itself and the state—the people of the State of Alaska.  After spending five long years as a student in Alaska, I observed that the people of the Last Frontier are a unique group who love their Permanent Fund.  Although it has only been around for 25 years, the PFD has firmly rooted itself into the collective psyche of the state and its people.  All television and radio stations interrupt their programming to announce the amount of each year’s dividend once it is revealed by the first week of October.  Then, a week later when the money is direct-deposited into thousands of Alaskan bank accounts, the few stores found in the state line their aisles with appliances while scores of “Dividend Specials” fill the newspapers, offering vacation packages that cost the exact amount of the payouts.  Many Alaskans view their dividend not as their portion of the sale of their collective mineral wealth but as their right as Alaskans.  Political candidates refer to the Dividend as Alaskans’ “hard earned money” and accuse their opponents of wanting to tap the Fund to pay for budget gaps (AP, 2002).  Except perhaps for their support of the Second Amendment to the U.S. Constitution, Alaskans generally do not feel stronger about any other political matter than keeping the PFD large.  It would be political suicide for any politician to work to lower dividends.  In a state where most of the residents show extreme distrust and loathing towards any sort of governmental power, the APFC is sacrosanct. 

While the PFD program has made the Alaskan people extremely happy, it could in the end lead to great problems.  Currently, the Alaska state budget is in horrible shape.  It relies almost solely on oil revenue for its funding, as there are no state sales or income taxes.  Oil prices have dropped precipitously in the last 15 years and Alaskan politicians seem reluctant to attract any sort of business other than oil (Hunter and Spiess, 2002).  While other governments in extremely similar geographical and economic situations to Alaska, such as Finland, have moved past resource-based economies to become powerhouses of high-tech communications and computers (Laakso, 2002), Alaska still concentrates principally on trying to expand resource exploitation.  This has resulted in a $1 billion budget shortfall (Hunter & Spiess, 2002).  In a state with so little for the government to take care of in the first place, this is having drastic effects.  For its immense size (one fifth of the land area of the United States is in Alaska), Alaska actually has less than 3000 miles of non-residential roadways (Alaska Dept. of Transportation and Public Facilities, 2002).  The state government has been toying with the idea of closing some of the roads in winter to snow removal, effectively destroying the communities that depend on them.  The state government is also shutting down some of its state parks and is considering stopping restaurant inspections (Cockerham, 2002).  From much personal driving experience, all but about 100 miles of those roads would be considered country highways in the Lower 48, and a good quarter of them are not even paved.  The roads are not the only things that are archaic in the state, however.  From personal observation, many people have no running water in their homes and bathe infrequently, if at all.  Outhouses are abundant, and street signs are often unreadable due

to shot-gun attacks.  Illness, alcoholism, air pollution, wide-spread forest fires, drug abuse, and domestic violence are widespread problems that can be seen on the streets, and if the weather is bad in Tacoma, Washington, Alaskans do not get their groceries delivered on time.  Many of what are considered “civilized” parts Alaska are still like the Wild West, yet the state is sitting on $23 billion, with over $1 billion paid out to its people each year (APFC, 2002).  The general consensus amongst Alaskans is that as long as they get their money each October, they do not care what else happens.  Since the Alaskan people also have to vote on any constitutional amendments that affect the Fund and the PFD, it is almost laughable to think that they would garnish their dividends to cover the fiscal gap and pay for things like roads or health care when they instead could use that money to buy snowmobiles, TV’s, and trips to Hawaii.  As the Alaska Attorney General during the creation of the PFD, Avrum Gross, insightfully summed it up 20 years ago:

“I picture Alaska in the year 2020 with the streets swept with wind, holes in the road and mobs of uneducated people.  In the center of town there would be a marble temple with an alabaster statue.  The temple was the Permanent Fund Headquarters and the statue depicted, presumably, Gov. Hammond.  Each year the executive director of the Fund would announce the dividend and the throng of people would run to the airport...,” (Wohlforth, 1999). 


Gross probably hoped that his prediction would not be as accurate as it has proven out to be.  The ED of the APFC needs to improve the public relations aspect of the Corporation to better inform the public of its mission and purpose. 

The Fund already does a wonderful job of detailing its holdings and operations on its website ( and in pamphlets and books, yet it needs to somehow wrestle Alaskans away from the idea that it exists solely to give them checks each year.  The mission of the APFC, after all, never mentions direct-deposits.  Alaskans already have more than enough money to cover any budget gaps they have, they just do not want to touch it. 

Clearly, if the relatively young state of Alaska is to remain financially viable in the future, it needs to work more closely with the vast wealth it has in its Permanent Fund.  The Fund itself does not even have to be touched—the profits it earns each year are enough to solve all budget problems in the state.  The ED at the moment is lucky.  The Fund is probably one of the few state organizations that functions very smoothly, and it is certainly the most loved.  Even though the Fund has lost close to $4 billion in recent months due to the recent downturn in the stock market (APFC, 2002), few people hold the APFC and its managers responsible.  If the number of harvestable moose were to drop by 15% due to extremely cold weather, it is doubtful that the ADF&G would receive the same kind of support.  To ensure that Alaska does not revert back to a wild, untamed frontier while sitting on a public trust that is larger than the gross domestic products of Cuba or North Korea, or of Honduras and Latvia combined (CIA, 2002), the ED and the APFC will have to start working to educate Alaskans on how to better use their money.  Unless, of course, the ED is merely content to collect his $1,850.29 each October like everyone else. 







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