Lawmakers press Treasury on $130 million Higher Education Fund transfer and lost earnings estimate
Loading...
Summary
Committee members questioned whether the $130 million transfer from the Alaska Higher Education Investment Fund to the general fund could have been avoided and how much the state forewent in earnings; Treasury said the transfer was a legislative budget decision and offered a rough estimate of foregone returns.
Members of the House Finance Committee on Jan. 30 pressed Treasury officials about a $130,000,000 transfer taken from the Alaska Higher Education Investment Fund at the start of FY26 and asked whether the department had any discretion to prevent or modify the move.
Representative Tomczewski asked directly whether Treasury could have left the funds invested to avoid losing growth. Chief Investment Officer Zach Hanna said the transfer was made through the budget process and implemented by appropriations authority (Office of Management and Budget and the Division of Finance). "Because this is part of the budget bill...that's what was moved," Hanna said, adding Treasury did not have unilateral discretion to override the legislature's budget decision.
Members also asked about the financial cost of that choice. Hanna gave a preliminary, verbal estimate: he pointed to recent six-month returns (~8.29% for a relevant higher-risk portfolio less roughly 2.2% for CBRF cash returns) and described "about 6% on that $130,000,000" as a very rough estimate of foregone return over a comparative period. He told the committee he would provide an exact, date-specific calculation by email.
Pam Leary, Treasury director, provided background on the fund: it was capitalized with $400,000,000 from the Alaska Housing Capital Corporation and is statutorily allowed to appropriate up to 7% for scholarships and grants; Leary said the fund's balance was $435,000,000 on June 30, 2025 before the $130,000,000 transfer.
Committee members discussed options for recapitalization. Some members said restoring principal (and in some past cases also foregone earnings) has been done; Hanna said both approaches have precedent and restoring earnings is ultimately a policy and budget choice. Treasury committed to follow up with precise calculations of what the transfer cost in foregone returns and how much the fund has earned since the withdrawal.
The committee did not take a vote. Lawmakers signaled continued interest in whether the supplemental budget will include replenishment of the Higher Education Investment Fund and whether restoration should include foregone earnings.
