Alaska Permanent Fund Corporation seeks larger operating budget as lawmakers press on fees and recession risk

Juneau — The Alaska Permanent Fund Corporation asked lawmakers on March 13 to approve a FY2026 operating budget that would raise appropriations for day‑to‑day operations and investment management as trustees and staff defended higher private‑market costs and described steps to limit risk ahead of a possible economic downturn.

The request, presented to the Department of Revenue Finance Subcommittee, breaks the corporation’s funding into two allocations: an operations allocation that the corporation said covers salaries and administrative costs, and an investment‑management allocation that covers fees tied to trading and outside managers. Devin Mitchell, executive director and CEO of the Alaska Permanent Fund Corporation, told the committee that the FY2026 Governor’s budget shows the operations allocation at about $30.6 million and the investment‑management allocation at about $199.5 million (approximately 24 basis points of assets under management if the full request is spent).

The budget matters because the Permanent Fund serves as Alaska’s long‑term savings vehicle and funds transfers that supply a large share of state unrestricted revenues. Lawmakers pressed the corporation for more detail about the fees it pays, how those fees are accounted for, and what the corporation is doing to limit losses if markets slide.

What the corporation asked for and why

Mitchell said the FY2026 request includes multiple smaller increments: roughly $810,000 to fully fund incentive compensation; $391,600 to create a portfolio manager position on the private‑income team; about $89,000 for middle‑office support (trade reconciliation and audit); roughly $307,000 for cybersecurity diligence and software; about $568,000 for enhanced data applications; and a roughly $45,500 off‑cycle workstation replacement. The budget also recognizes $250,000 of third‑party reimbursed travel tied to private‑market limited‑partner meetings, an accounting change Mitchell described as “recognizing a practice” rather than adding new travel.

Mitchell explained how the corporation measures some costs in basis points, saying, “each basis point is one hundredth of a percent,” and that investment‑management allocations vary with market activity because trading and manager fees rise and fall with market volatility.

Private‑market carry and total fees

Committee members pressed the corporation on costs that do not appear as line‑item appropriations. Mitchell said the roughly 24 basis points shown in the appropriated budget do not include fees that are netted from private‑market investments before returns are reported to the fund — particularly general partner fees (commonly 2% of invested capital) and profit‑sharing (“carry,” often 20% of gains) in private equity. “When you say, ‘oh, you had a high set of fees,’ again, you have to compare that to the return that resulted from those fees,” Mitchell said, explaining that co‑investments and other techniques are used to limit those fees when possible.

Adam Crum, Commissioner of Revenue and vice chair of the APFC board, told the committee that fee totals are posted on the APFC website and that the corporation provides an “extra above and beyond” level of transparency by reporting fees that are netted before distributions. “If you actually act CalPERS or CalSTRS, they actually can't answer the question of how much fees are being netted out,” Crum said.

Lawmakers asked whether the 24‑basis‑point number is the full story; Mitchell and others agreed it is not. Committee members referenced higher, all‑in fee estimates that include carried interest and manager‑retained fees — figures Mitchell acknowledged can be substantially larger in private‑market‑heavy portfolios, even as he argued those assets are the corporation’s highest‑performing class.

Risk positioning, recession planning and fee effects

Several senators asked how the corporation is preparing for a potential recession and how a downturn would affect both fund value and the corporation’s operating budget. Mitchell and Crum described the fund’s asset allocation and hedging posture: the fund currently carries an intentional “value tilt,” has been underweight public equities relative to target, and holds asset classes such as fixed income and absolute‑return strategies to moderate equity volatility. “The portfolio is constructed for maximizing risk adjusted rate of return,” Mitchell said. He added that private assets tend to mark more slowly and can moderate short‑term public‑market swings.

Mitchell warned that market volatility can increase trading and manager fees in the short run while simultaneously shrinking assets under management, producing complex budget effects: “there is some truth … that you're going to have more trading activity as a result of the volatility and at the same time you have a diminished value in the portfolio,” he said.

IT, data and cybersecurity spending

Committee members asked about IT and data projects, including a “Data Vault” effort to unify previously siloed information and a plan to move to a more robust firewall and an internally hosted AI tool. Mitchell said the corporation is pursuing both cybersecurity upgrades and an overarching data management system to speed reporting and analysis. He described those projects as reasons for the cybersecurity and data‑application increments in the FY2026 request.

Staffing, vacancies and recruitment

Mitchell said APFC budgets for 67 full‑time positions and two summer internships and estimated overall turnover around 10 percent. He said the corporation is filling several recent departures — including a private‑income team member, a procurement staffer and a junior compliance position — and that hiring is being paced to match asset‑allocation and organizational needs.

What the hearing did not change

No formal committee votes were taken at the March 13 hearing. Committee members requested follow‑up detail — including a vacancy breakdown and projected costs for future IT initiatives — that Mitchell said the corporation would provide. Lawmakers also requested distribution of a governance review report that had been referenced in news coverage.

Why this matters

The Permanent Fund’s management choices and fees affect long‑term returns that fund state services. Lawmakers said they want clearer, more readily comparable reporting of total fees — not just the appropriated basis‑point measures — so the public and the legislature can judge performance net of all costs. Mitchell and Crum emphasized the corporation’s quarterly reporting and defended private‑market allocations as delivering net value over time.

Ending

The subcommittee scheduled further follow‑up and asked the corporation to return with requested detail at a later meeting.