Alaska Permanent Fund leaders warned trustees at a special July meeting that an “unprecedented” number of key staff have resigned from the corporation and that there are challenges hiring replacements.
Compensation was named as a factor behind many of the resignations as employees exit for higher-paying jobs offering salaries 50% or even 200% more, APFC leaders said.
“At a really high level, we are seeing unprecedented staff leaving the corporation, especially in the last few months. This is leaving the remaining staff who already are spread thin to cover significant areas of responsibility,” Valerie Mertz, acting executive director, told trustees at the July 12 meeting.
“It is an acute problem in 2022. We’ve had nine departures — most notably Steve Moseley, our deputy CIO, a big loss to the team,” Chad Brown, director of human resources, said at the three-hour meeting. Moseley left the Alaska Permanent Fund Corp. in June for a private-sector position in New York.
Alaska’s Permanent Fund is valued at roughly $79 billion, according to the APFC website. The investment fund pays for about two-thirds of state programs and delivers an annual dividend check to every eligible Alaskan. Other states with permanent funds include Texas, Wyoming and New Mexico.
“Most importantly, we would like to assure Alaskans that the assets of the Alaska Permanent Fund are being managed prudently and effectively,” Paulyn Swanson, director of communications, told the News-Miner Wednesday.
Other high-level departures identified at the board meeting were the director of administrative operations, the entire investment operations team, two members of the IT team, the procurement officer and a human resources staff member.
“This is a snapshot of the acuteness of what we are experiencing,” Brown told the board, which agreed to review its compensation structure in light of the resignations.
Trustees and the APFC leadership will reconvene Thursday morning at the Alaska Community Foundation in Anchorage.
Departures on the same day
On Aug. 1, every employee on the three-member investment operations team is resigning on the same day, Mertz and Brown told trustees.
The investment operations team is responsible for trade support and settlement for all internal trading — fixed income and public equities — within the portfolio, which is billions of dollars over the course of the year.
A member of the investments team will manage those support functions until the corporation outsources the job to ensure continuity of operations, Mertz said. “When you have gaps, it can have a financial impact on the fund,” she said.
Complicating the problem with staff departures are fewer job queries this year, along with more job applications from candidates who do not meet minimum qualifications, Mertz said.
“We have dramatically fewer applications than we have historically seen,” said Mertz, adding that candidates typically are seeking much higher pay than the board can offer.
The Alaska Permanent Fund Corp. often hires people fairly new to the industry, Mertz explained. After they develop experience and marketable skills they leave for jobs in the private and public sectors outside Alaska for higher pay.
Heading into the budget process
Mertz and Brown also provided details on the other departures in 2022 and the impact on the corporation. In some cases, lower-level staff are being trained to fill in until a replacement with the appropriate skills and experience is hired.
Brown told the board that the resignation of the administration chief this month comes at a difficult time as the corporation enters the budget season.
“Current members of the APFC team are stepping up to assist with the budget process that our Acting Executive Director Valerie Mertz is facilitating,” Swanson said Wednesday.
Another departure was the procurement officer, who left in February. Two lower-level administrative members underwent training to help fill in, and their skills will be developed.
Two IT team members who resigned provided front-end technical support and maintenance for data and infrastructure. The technicians left in January and May.
Asked by the News-Miner if the IT support staff has been replaced, Swanson said in an email: “Yes, our IT frontline time is currently staffed with outstanding Alaskans working to support all of us in the work we do to manage and invest [in] the fund.”
Staff turnover since 2017
Finding qualified professionals to manage investments and operations at a major wealth fund is an ongoing challenge because of the state’s remote location.
A total of 43 APFC employees have departed since 2017. But 55 were hired during that same period, for a net gain of 12 staff members.
“Fortunately, we have systems in place, business partners and each other to rely on to get us through the challenges of having staffing gaps,” Swanson said.
Revenue Department Commissioner Lucinda Mahoney, who sits on the board, said that the turnover rate is well within what she has seen in her department in state government.
Upon questions from APFC Board Chair Craig Richards, Brown said the overall turnover at the Alaska Permanent Fund Corp. is within the norm for the financial services industry.
But Brown said that the churn is more challenging now because it “has been such a short period of time and from one side of the house predominantly,” which is operations.
The corporation experienced higher turnover in 2018, but it was spread out across the company over the course of the entire year.
Brown said that APFC does not have the “bench strength” that larger corporations maintain.
The board of trustees also heard from a consultant about compensation levels and how to remain competitive in the industry.
When the board meets Thursday, it will continue to focus on staffing, turnover and compensation.
“In planning for the future and long-term recruitment success, we are grateful for the board’s attention to addressing retention and recruitment,” Swanson said.
“We are also assessing how to best utilize and optimize positions and resources in meeting the current and ongoing needs of the corporation and the fund,” she added.
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