The resources of the corporation or the fund may not be used to finance or influence political activities.
Repealed or Renumbered
The Legislative Budget and Audit Committee may provide for an annual post audit and annual operational and performance evaluations of the fund's investments and investment programs.
The corporation and the fund are exempt from all taxes and assessments in the state. All security instruments issued by the corporation or the fund, their transfer, and their income are exempt from all taxes and assessments in the state.
Four members of the board constitute a quorum for the transaction of business and the exercise of the powers and duties of the board. Action may be taken only upon affirmative vote of a majority of the full membership of the board.
The public members of the board shall be appointed for terms of four years, and they may be reappointed. The terms of the public members shall be staggered so that no more than one term of a public member expires each year.
The board may adopt regulations under AS 44.62 (Administrative Procedure Act) to interpret and implement this chapter.
Public members of the board receive an honorarium of $400 for each day spent at a meeting of the board or at a meeting of a subcommittee of the board or at a public meeting as a representative of the board. Members of the board are entitled to per diem and travel allowances as provided by law for members of state boards and commissions.
Repealed or Renumbered
Article 02. MANAGEMENT OF OTHER ASSETS
In this chapter,
(1) 'board' means the Board of Trustees of the Alaska Permanent Fund Corporation;
(2) 'corporation' means the Alaska Permanent Fund Corporation;
(3) 'fund' means the Alaska permanent fund established under art. IX, sec. 15, Constitution of the State of Alaska.
The board may employ and determine the salary of an executive director. The executive director may, with the approval of the board, select and employ additional staff as necessary. An employee of the corporation, including the executive director, may not be a member of the board. The executive director and the other employees of the board are in the exempt service under AS 39.25.
It is the purpose of AS 37.13.010 - 37.13.190 to provide a mechanism for the management and investment of those fund assets by the Alaska Permanent Fund Corporation in a manner consistent with the findings in AS 37.13.020 .
The revenue generated by the fund's investments must be identified as the source of the operating budget of the corporation in the state's operating budget under AS 37.07 (Executive Budget Act). The unexpended balance of the corporation's annual operating budget does not lapse at the end of the fiscal year but shall be treated as income under AS 37.13.140.
Information in the possession of the corporation is a public record, except that information that discloses the particulars of the business or affairs of a private enterprise or investor is confidential and is not a public record. Confidential information may be disclosed only for the purposes of an official law enforcement investigation or when its production is required in a court proceeding. These restrictions do not prohibit the publication of statistics presented in a manner that prevents the identification of particular reports, items, persons, or enterprises.
There is established the Alaska Permanent Fund Corporation. The corporation is a public corporation and government instrumentality in the Department of Revenue managed by the board of trustees. The purpose of the corporation is to manage and invest the assets of the permanent fund and other funds designated by law in accordance with AS 37.13.010 - 37.13.190.
(a) Members of the board, the executive director, and investment officers of the corporation are subject to the provisions of AS 39.50.
(b) If a member of the board or an employee of the corporation acquires, owns, or controls an interest, direct or indirect, in an entity or project in which fund assets are invested, the member shall immediately disclose the interest to the board. The disclosure is a matter of public record and shall be included in the minutes of the board meeting next following the disclosure.
The people of the state, by constitutional amendment, have required the placement of at least 25 percent of all mineral lease rentals, royalties, royalty sale proceeds, and federal mineral revenue sharing payments and bonuses received by the state into a permanent fund. The legislature finds with respect to the fund that
(1) the fund should provide a means of conserving a portion of the state's revenue from mineral resources to benefit all generations of Alaskans;
(2) the fund's goal should be to maintain safety of principal while maximizing total return;
(3) the fund should be used as a savings device managed to allow the maximum use of disposable income from the fund for purposes designated by law.
Net income of the fund includes income of the earnings reserve account established under AS 37.13.145 . Net income of the fund shall be computed annually as of the last day of the fiscal year in accordance with generally accepted accounting principles, excluding any unrealized gains or losses. Income available for distribution equals 21 percent of the net income of the fund for the last five fiscal years, including the fiscal year just ended, but may not exceed net income of the fund for the fiscal year just ended plus the balance in the earnings reserve account described in AS 37.13.145 .
(a) The governor may remove a public member of the board from office only for cause. A removal by the governor must be in writing and must state the reason for the removal. A member who is removed by the governor may not participate in board business and may not be counted for purposes of establishing a quorum after the member receives written notice of removal from the governor.
(b) A vacancy on the board shall be promptly filled by appointment by the governor. An appointee to a vacancy shall hold office for the balance of the term for which the appointee's predecessor on the board was appointed.
(c) A vacancy on the board does not impair the authority of a quorum of the board to exercise all the powers and perform all the duties of the board.
(a) The Board of Trustees of the Alaska Permanent Fund Corporation consists of six members appointed by the governor. Two of the members must be heads of principal departments of state government, one of whom shall be the commissioner of revenue. Four members shall be appointed by the governor from the public and may not hold any other state or federal office, position or employment, either elective or appointive, except as a member of the armed forces of either the United States or of this state.
(b) The four public members of the board must have recognized competence and wide experience in finance, investments, or other business management-related fields.
(c) The board shall annually elect a chairman from among its members.
(a) [See conditional amendment note]. Under art. IX, sec. 15, of the state constitution, there is established as a separate fund the Alaska permanent fund. The Alaska permanent fund consists of
(1) 25 percent of all mineral lease rentals, royalties, royalty sale proceeds, net profit shares under AS 38.05.180 (f) and (g), 25 percent of federal mineral revenue sharing payments received by the state from mineral leases, and 25 percent of all bonuses received by the state from mineral leases; and
(2) any other money appropriated to or otherwise allocated by law or former law to the Alaska permanent fund.
(b) Payments due the Alaska permanent fund under (a) of this section shall be made to the fund within three banking days after the day the amount due to the fund reaches at least $3,000,000 and at least once each month.
(c) The Alaska permanent fund shall be managed by the Alaska Permanent Fund Corporation established in this chapter.
By September 30 of each year, the board shall publish a report of the fund for distribution to the governor and the public. The board shall notify the legislature that the report is available. The report shall be written in easily understandable language. The report must include financial statements audited by independent outside auditors, a statement of the amount of money received by the fund from each investment during the period covered, a statement of investments of the fund including an appraisal at market value, a description of fund investment activity during the period covered by the report, a comparison of the fund performance with the intended goals contained in AS 37.13.020 , an examination of the effect of the investment criteria of this chapter on the fund portfolio with recommendations of any needed changes, and any other information the board believes would be of interest to the governor, the legislature, and the public. The annual income statement and balance sheet of the fund shall be published in at least one newspaper in each judicial district. The income statement and balance sheet for the two fiscal years preceding the publication of the election pamphlet under AS 15.58 shall be included in that pamphlet.
(a) The corporation shall manage the mental health trust fund.
(b) The corporation shall
(1) hold and invest the mental health trust fund subject to AS 37.13.120;
(2) at least quarterly, prepare, publish, and distribute to the Board of Trustees of the Alaska Mental Health Trust Authority a financial report showing investment revenue and expenditures, including the allocation of the cash assets of the mental health trust fund among investments;
(3) annually prepare, publish, and distribute to the Board of Trustees of the Alaska Mental Health Trust Authority financial statements prepared in accordance with generally accepted accounting principles consistently applied, and an audit report prepared by a certified public accountant;
(4) periodically advise the Board of Trustees of the Alaska Mental Health Trust Authority when revisions to long-range investment policy, including asset allocation changes, are contemplated, and provide an opportunity for consultation and comment on the changes before they are implemented; and
(5) transfer to the mental health trust settlement income account the net income available for distribution attributable to the mental health trust fund at the end of each fiscal year.
(c) Net income from the mental health trust fund may not be included in the computation of net income available for distribution under AS 37.13.140.
(a) The earnings reserve account is established as a separate account in the fund. Income from the fund shall be deposited by the corporation into the account as soon as it is received. Money in the account shall be invested in investments authorized under AS 37.13.120 .
(b) At the end of each fiscal year, the corporation shall transfer from the earnings reserve account to the dividend fund established under AS 43.23.045 , 50 percent of the income available for distribution under AS 37.13.140 .
(c) After the transfer under (b) of this section, the corporation shall transfer from the earnings reserve account to the principal of the fund an amount sufficient to offset the effect of inflation on principal of the fund during that fiscal year. The corporation shall calculate the amount to transfer to the principal under this subsection by
(1) computing the average of the monthly United States Consumer Price Index for all urban consumers for each of the two previous calendar years;
(2) computing the percentage change between the first and second calendar year average; and
(3) applying that rate to the value of the principal of the fund on the last day of the fiscal year just ended.
(d) Notwithstanding (b) of this section, income earned on money awarded in or received as a result of State v. Amerada Hess, et al., 1JU-77-847 Civ. (Superior Court, First Judicial District), including settlement, summary judgment, or adjustment to a royalty-in-kind contract that is tied to the outcome of this case, or interest earned on the money, or on the earnings of the money shall be treated in the same manner as other income of the Alaska permanent fund, except that it is not available for distribution to the dividend fund, and shall be annually deposited into the principal of the Alaska permanent fund.
(a) The prudent-investor rule shall be applied by the board in the management and investment of fund assets. The prudent-investor rule as applied to investments of the fund means that in making investments the board shall exercise the judgment and care under the circumstances then prevailing that an institutional investor of ordinary prudence, discretion, and intelligence exercises in the management of large investments entrusted to it not in regard to speculation but in regard to the permanent disposition of funds, considering probable safety of capital as well as probable income.
(b) The fund assets shall only be used for income-producing investments.
(c) The board shall maintain a reasonable diversification among investments unless under the circumstances it is clearly prudent not to do so.
(d) The board shall submit long-range and quarterly investment reports to the Legislative Budget and Audit Committee.
(e) The corporation may not borrow money or guarantee from principal of the fund the obligations of others except as provided in this subsection. With respect to investments of the fund, the corporation may, through an entity in which the investment is made, borrow money if the borrowing is without recourse to the corporation and the fund.
(f) The board may enter into and enforce all contracts necessary, convenient or desirable for purposes of the corporation.
(g) Subject to the limitations contained in this section, the board may invest fund assets at the competitive national market rates or prices that are applicable to each investment only in
(1) obligations of, or obligations insured by or guaranteed by, the United States or agencies or instrumentalities of the United States;
(2) obligations secured by reserves paid in by the United States or agencies or instrumentalities of the United States or obligations of corporations in which the United States is a shareholder or member;
(3) certificates of deposit and term deposits of United States domestic banks that are members of the Federal Deposit Insurance Corporation and that may be readily sold in a secondary market at prices reflecting fair value or that are fully secured at all times as to payment of principal and interest as described in (m) of this section;
(4) certificates of deposit and term deposits of federally chartered savings and loan associations in Alaska that are fully secured at all times as to payments of principal and interest as described in (m) of this section;
(5) certificates of deposit and term deposits of mutual savings banks in Alaska that are fully secured at all times as to payments of principal and interest as described in (m) of this section;
(6) fixed-term certificates of indebtedness of federally insured credit unions in Alaska that are fully secured at all times as to payments of principal and interest as described in (m) of this section;
(7) debt instruments that have been issued by domestic entities and that are rated investment grade, or debt instruments of comparable quality issued by nondomestic entities;
(A) promissory notes that have been issued by domestic entities and that are rated investment grade; or
(B) promissory notes of comparable quality issued by nondomestic entities, the interest on which may be payable in either United States dollars or nondomestic currencies;
(9) bankers' acceptances drawn on and accepted by United States banks each of which has a combined capital and surplus aggregating at least $200,000,000;
(10) repurchase agreements, the securities underlying the agreements being any of the items in (1) - (6) of this subsection;
(11) the portions of business and industrial loans made under the Rural Development Act of 1972 that are guaranteed by the Farmers Home Administration;
(12) the guaranteed portion of Farmers Home Administration loans;
(13) notes secured by mortgages granting a first lien on residential real estate improved by completed buildings if the mortgages are insured by a private mortgage insurance corporation that is authorized to do business in this state and has combined capital and surplus aggregating at least $20,000,000 and if loan-to-value ratios do not exceed 90 percent; however, mortgage insurance is not necessary for residential loans having a loan-to-value ratio of less than 70 percent and the minimum coverage of other residential loans shall be 10 percent for those having a loan-to-value ratio greater than 70 percent but less than 90 percent and 20 percent for those having a loan-to-value ratio of 90 percent;
(14) preferred and common stock and other equity interests in entities organized in the United States;
(15) certificates of deposit, term deposits, or bankers' acceptances, that are issued by a United States or nondomestic bank or trust company located outside of the United States and are denominated in United States or nondomestic currency if either (A) they may be readily sold in a secondary market at prices reflecting fair value, or (B) the issuing bank or trust company has capital, surplus, and retained earnings at the date of issue equaling at least $500,000,000; investments made under this paragraph are not subject to the collateral requirements for domestic certificates under (m) of this section;
(16) equity interests in, and debt obligations secured by mortgages granting a first lien on, real estate if the real estate is located in the United States, is professionally managed, and is
(A) improved by completed and substantially rented buildings; or
(B) located within the market area of real property in which the fund holds an existing interest and is acquired
(i) for the purpose of creating or adding to a portfolio of similar properties; or
(ii) to retain or service the needs of existing tenants;
(17) securities of nondomestic governments and nondomestic government agencies, the principal of, or interest on, which is payable in either United States dollars or nondomestic currencies;
(18) securities of other nondomestic entities whose dividends, if any, may be payable in either United States dollars or nondomestic currencies;
(19) taxable municipal or state debt instruments that are rated investment grade;
(20) shares in a money market or short-term investment fund that has either collateral securities of a type authorized elsewhere in this section as acceptable collateral or securities of similar quality to those authorized elsewhere in this section as acceptable collateral;
(21) interests in a titleholding entity, real estate investment trust, real estate operating company, or other entity whose assets consist predominantly of
(A) equity interests in real property or debt obligations secured by mortgages granting a lien on real property, so long as the property is of a type in which the corporation is otherwise permitted to invest fund assets under this subsection; or
(B) interests in other entities in which the corporation is permitted to invest fund assets under this paragraph.
(h) The board may enter into future contracts for the sale of investments purchased under (g) of this section, or for the sale of nondomestic currencies, only for the purpose of hedging an existing equivalent ownership position in these investments or as a means of implementing asset allocation strategies.
(i) The fund may at no time own more than five percent of the voting stock of a corporation unless the issuing corporation is an entity in which the Alaska Permanent Fund Corporation is permitted to invest fund assets under (g)(21) of this section. Domestic stocks, except for bank and insurance company stocks and stocks of corporations in which the Alaska Permanent Fund Corporation is permitted to invest fund assets under (g)(21) of this section, must be listed at the date of purchase on an exchange registered with the Securities and Exchange Commission. Except as otherwise permitted under (k) of this section, at the time of each investment, the aggregate investment of the fund in each stated category of investment may not exceed the following stated percentage of the total investments of the fund:
(1) mortgages under (g)(13) of this section - 15 percent;
(2) real estate investments under (g)(16) and (21) of this section - 15 percent;
(3) certificates of deposit, term deposit, or bankers' acceptances under (g)(15) of this section - 20 percent;
(4) interests in domestic and nondomestic entities under (g)(14) and (18) of this section - 55 percent.
(j) The assets of the fund may not be used for the purchase of debt instruments of a corporation or other entity upon which any regular interest payment has been defaulted within five years before purchase, except debt instruments never in default but which have been outstanding for less than five years.
(k) The board shall establish and from time to time as necessary modify guidelines for the investment of the assets of the fund. Before adoption of any guidelines, the guidelines shall be reported to the Legislative Budget and Audit Committee for review and comment. Notwithstanding (g), (h), and (j) of this section or the percentage investment limitations under (i) of this section and so long as doing so satisfies the prudent-investor rule under (a) of this section, the board may invest up to 10 percent of the total assets of the fund in either or a combination of the following:
(1) other types of investments not specifically listed in (g) of this section;
(2) categories of investment subject to the percentage investment limitations established in (i) of this section, even though investing additional assets in a category will cause the aggregate investment in the category to exceed the applicable percentage limitation.
(l) The board shall invest the assets of the fund in in-state investments to the extent in-state investments are available if the in-state investments
(1) have a risk level and expected yield comparable to alternate investment opportunities; and
(2) are included in the list of permissible investments in (g) of this section.
(m) Certificates of deposit or the equivalent instruments that are not of a quality that may be readily sold in a secondary market at prices reflecting fair value must be secured by a pledge as collateral of
(1) investments authorized for the fund under (g)(1), (2), (4), or (8) - (10) of this section;
(2) obligations of the state or instrumentalities of the state that are rated at least 'A' by a major bond rating service and have a demonstrated secondary market;
(3) the guaranteed portion of Federal Small Business Administration loans;
(4) the portion of first lien real estate mortgages guaranteed by the federal Department of Veterans Affairs; or
(5) notes secured by mortgages granting a first lien on commercial or residential real estate improved by completed buildings if the originating financial institution retains at least 25 percent of the mortgage until maturity.
(n) Investments or obligations pledged as collateral under (m) of this section must have value at least equal to the face value of the certificates of deposit being secured. The board may require substitution of collateral in order to ensure continued satisfaction of the requirements set out in (m) of this section.
(o) For purposes of (g) of this section, 'investment grade' means a Standard & Poor's Corporation rating BBB or better, or Moody's Investors Service, Inc., rating of Baa or better, including a rating with a '+' or '-' designation or other variations that occur within these ratings, or a comparable rating by another nationally recognized rating organization.
(p) For purposes of applying the percentage investment limitations established in (i) of this section, if the board determines that a particular form of investment authorized under (g) of this section may appropriately be classified in more than one category of investment, it may elect the category to which that form of investment is assigned.