Alaska panel hears bill to require state funds prioritize financial returns

ANCHORAGE, Alaska — The House Judiciary Committee heard testimony March 19 on House Bill 6, legislation that would require fiduciaries of state funds to prioritize beneficiaries’ financial interests and bar social, political or ideological considerations from investment decisions.

Representative Kevin McCabe, sponsor of HB 6, told the committee the bill would keep the Alaska Permanent Fund and the state retirement fund “doing what they’re built for.” McCabe said the intent is to “lock fiduciaries into pecuniary interest” and to prevent investment decisions based on what he described as transient social trends. “Pecuniary duty is our North Star,” McCabe said.

The bill’s sectional analysis, read into the record by Julie Morris, staff to Representative McCabe, says Section 1 amends Alaska statute 37 10 0 7 1 and Sections 2 and 3 amend Alaska statute 37 10 2 20 to require the Alaska Retirement Management Board and the Alaska Permanent Fund Corporation Board to prioritize beneficiaries’ financial interests and to prohibit consideration of social, political or ideological factors in investment decisions.

Devin Mitchell, executive director and CEO of the Alaska Permanent Fund Corporation, told the committee the statutory “prudent investor” framework already directs managers to seek risk‑adjusted returns for beneficiaries. “The prudent investor rule simply means…that you are going to invest the trust money…in a fashion that’s going to maximize the risk adjusted rate of return for the beneficiaries,” Mitchell said. He described past episodes, including divestiture pressures after Russia’s invasion of Ukraine, to illustrate how mandated divestitures can force sales at depressed prices; the corporation instead held securities and avoided a “fire sale.”

Committee members asked whether the bill could have unintended effects, for example limiting the ability to decline investments when a financial risk is tied to factors such as climate impacts or site instability. Representative Mina and others pressed whether the legislature already governs the scope of allowed investments and how statutory language interacts with federal procurement or sanctions lists. McCabe and Mitchell both said the bill is aimed at preventing investment decisions made for policy or ideological reasons rather than to block investments that remain financially prudent or that violate federal law.

Committee members also asked about proxy voting and whether the corporation’s proxy votes are audited; Mitchell said the corporation has used a proxy‑voting service and is exploring auditing those votes, with consultant work expected and reporting likely after the board’s next meetings.

The committee took no final action on HB 6; Chair Copp said the committee would set the bill aside and take it up later for public testimony and further consideration.

The hearing record shows multiple references to statutory sections and to the constitutional framework for the Permanent Fund. The bill’s supporters and the corporation’s director said the legislation is intended to clarify existing duties rather than to change current investment posture.