Reporting for Alaska: Legislators must do more than write letters to Permanent Fund trustees

By Dermot Cole
For The Cordova Times

I must confess I didn not know about an old state law that requires the Legislative Budget & Audit Committee to conduct an “annual operational and performance evaluation of the Alaska Permanent Fund Corporation investments and investment programs.”

It also requires a similar annual report about the Alaska Industrial Development and Export Authority and the Alaska Housing Finance Corporation.

And I must confess I had no idea that the Legislative Budget & Audit Committee, one of the three permanent interim committees of the Legislature, is not paying attention to the law.

With more than $80 billion at stake in the Permanent Fund alone, the Legislature has abrogated its duties by failing to appropriate the money necessary to conduct oversight of these giant state-owned corporations.

Angela Rodell has opposed making unsustainable withdrawals from the Permanent Fund. Lucinda Mahoney, one of the trustees who voted to fire her, supports an unsustainable $3 billion withdrawal to hide a state deficit and allow Gov. Mike Dunleavy to pay a supersize Permanent Fund Dividend.

While we have various lawmakers saying they plan to ask the trustees of the Permanent Fund to answer questions about the firing of Rodell, they need to realize that this is not enough: The Legislature needs to begin monitoring the APFC and other state corporations as part of the checks and balances required by state law.

This has escaped the notice of the Legislature, as well as Alaska news organizations and people like me.

The Division of Legislative Audit has 14 audits in progress now, ranging from the oil and gas tax production audit system to the workings of the Alcoholic Beverage Control Board.

The division has about 24 auditors of various levels on the job. They are required to be certified public accountants or in training to be CPAs. These jobs have long been hard to fill and there are several more vacant positions for auditors and a shortage of qualified applicants.

The division has a difficult assignment.

“The Division currently audits the basic financial statements of the State of Alaska annually. This audit includes testing the compliance by state agencies with state and federal laws and regulations. Federal compliance auditing is required by the Federal Single Audit Act of 1985,” the audit division says on its website.

Since 2016, the Legislature has failed to provide the money the division needs to conduct performance reviews, required by this law, which calls for once-a-decade studies of most aspects of state government.

The division has a total budget of $6.6 million this year, with about $5.8 million for personnel.

The budget includes $570,000 for “services.” The staff size and the limited amount available for consultants is not enough to perform the oversight work required of the main state agencies, let alone the Permanent Fund, AIDEA and AHFC.

The Division of Legislative Audit has not done an audit of APFC since 1995.

The Permanent Fund has hired Callan Associates to conduct its own performance evaluations, for nearly 30 years, but that is not the same as an external evaluation performed for the Legislature as part of a healthy system of checks and balances.

The Callan reports are not even sent to the Legislative Budget & Audit Committee.

Reporting for Alaska is independent analysis and political commentary by Alaska reporter and author Dermot Cole. Cole wrote a daily column for the Fairbanks Daily News-Miner for 21 years and worked for the Alaska Dispatch News from 2013-2017. Support Cole’s independent column via PayPal or send checks to Dermot Cole, Box 10673, Fairbanks, AK 99710-0673.