This article has been updated to correct which House Finance subcommittee added the intent language.

Intent language preventing the Alaska Permanent Fund Corp. from establishing or maintaining a new office in Anchorage without legislative approval was added last week to the proposed state budget for next year now being finalized by the Republican-led House, following aggressive action by APFC leaders last year establishing an office that currently has five employees.

Those actions resulted in the resignation of APFC Chief Operating Officer Mike Barnhill last August after he refused an order from Executive Director Deven Mitchell to announce the opening of the Anchorage office, although Barnhill has not publicly stated the reason for his resignation. No funding for such a move was provided in the budget for the current year passed by the Legislature and signed by Gov. Mike Dunleavy.

APFC officials are seeking funding for operational and travel expenses related to the Anchorage office for the coming year, but language to thwart that was inserted by the House Finance Committee’s Revenue Subcommittee last Tuesday.

“It is the intent of the legislature that the Alaska Permanent Fund Corporation will not establish or maintain new office locations without corresponding budget increments for that purpose,” the committee’s statement declares. “It is the further intent of the legislature that the Alaska Permanent Fund Corporation shall provide a report to the Finance Committee Co-chairs and the Legislative Finance Division by December 20, 2024, that details any actual expenditures to date related to the Anchorage office.”

The language was inserted due to concerns about the APFC’s decision to open the office without authorization through the budget process, but does not have enforcement authority, said Rep. DeLena Johnson, an Anchorage Republican who chairs the subcommittee and co-chairs the House Finance Committee, in an interview Monday.

“If they want to move that money around they have the power to do so,” she said.

The House is expected to release the first draft of its full proposed budget for the fiscal year starting July 1 this week.

Questions about the Anchorage office were also raised by the Senate’s budget subcommittee for the Department of Revenue on Feb. 20, with Sen. Forrest Dunbar, an Anchorage Democrat, asking Mitchell what APFC would do if funding for the Anchorage office is omitted in next year’s budget.

“I think that we would likely give those employees the opportunity to work remotely from Anchorage,” Mitchell told the subcommittee. “We would give them the opportunity to move back to or move to Juneau, as well, if they wanted to work out of an office.”

However, Mitchell said “it would not be outside the realm of potential” for the board to shift funding in APFC’s overall budget to keep the Anchorage office open if specific funding for it is omitted, in response to a question about that possibility from Sen. Kelly Merrick, an Eagle River Republican on the subcommittee

Closing the Anchorage office will save a relatively small amount of money — about $160,000 to $170,000 — and primarily affect only a handful of APFC’s estimated 70 employees as well as the six APFC Board of Trustees members who all live in Anchorage, according to Dermot Cole, who first reported last week’s action about the House subcommittee’s intent language at his news website Reporting From Alaska. About 90% of APFC’s employees currently work from its headquarters in Juneau.

Some local officials have previously said the Anchorage office appears to be part of the long-ongoing “capital creep” of moving state jobs northward. Mitchell, in an interview Monday, acknowledged there is room for the Anchorage office to expand, potentially to the point where it is the main office and Juneau is a satellite office.

“Certainly that’s something that can happen,” Mitchell said. “There’s a bigger population base, a community that’s more familiar to a lot of people that are considering moving from the contiguous states to Alaska. It’s bigger, it has a more similar feel.”

Three of the employees at the Anchorage office are existing employees who transferred, two others are new hires and there is a sixth Anchorage employee who does not work at the office, Mitchell said. However, he said most of the new hires are still working in Juneau since it remains the primary office.

“They’ve been positions that didn’t lend themselves well to being at a satellite office because they had core a function within the organization,” he said. “Our (human resources) director is an example that didn’t make sense to have that person located in a satellite office rather than in Juneau.”

APFC had an employee turnover of about 20% during the past fiscal year, “and so we’ve been trying to identify why that turnover occurred and mitigate those reasons in the future so that we’ll have hopefully longer-tenured employees,” Mitchell said.

Workforce shortages are a statewide issue — with some agencies reporting crisis-level vacancies — but APFC Board of Trustees Chair Ethan Schutt said in an interview Monday the corporation is able to fill its vacancies. However, he added, the desire for an Anchorage office is about attracting better-quality candidates.

“The question isn’t whether you filled the position, it’s sometimes if you filled the position with the right person,” he said. “Recruitment and retention is tough in Alaska for professional positions. So it’s a tool. It’s not the only tool and it’s not intended to be the only tool, but it is a tool.”

Schutt said that while the board has wanted to open an Anchorage office for several years, it is not their intention to have it replace Juneau as the main office.

“That’s a ridiculous proposition,” he said. “That proposition was never to move the office from the home office and out to Anchorage. That was never a part of anyone’s plan.”

However, the strength of the board’s desire for the Anchorage office was revealed in a series of emails first published last fall by The Alaska Landmine that included Barnhill’s resignation. The messages refer to office space offered by Jason Brune, who resigned as commissioner of the Department of Environmental Conservation shortly before the exchange and was appointed by Dunleavy to the APFC board a short time afterward.

The exchange reported by the Landmine begins with an Aug. 5 email from Mitchell ordering Barnhill to announce the opening of the Anchorage office.

”I just received a call from chair Schutt and he made it clear that the board expects the opening of an Anchorage office to be announced this week. Commissioner Brune has offered the space in the Cordova Street building and we haven’t been willing to accept it and that is unacceptable. I know there were some reservations about this space, but those need to be set aside.”

“Mike, I need you to enter into an agreement with DEC for use of the space on Monday and to work with others included in this e-mail to get the appropriate documentation in place and a press release out about it no later than Wednesday.”

Mitchell, on Monday, said he was on his way to a 10-day trip in the mountains when he sent the email, which is why he asked Barnhill to make the announcement.

Barnhill, in a response the the next day to Mitchell’s email, stated “I probably need to resign. I’ll think about it overnight and let you know.”

Deven, in a message shortly afterward that is partially redacted, asked “Why?! This isn’t you –” with the subsequent words blacked out.

Barnhill sent back another reply stating “hard pass,” followed by “I’m not seeing a way for me to reasonably continue…I am heading down to clear out my office.” He submitted his official resignation on Aug. 7, although an email sent to Mitchell a day later did not specify a reason.

On Monday, Barnhill declined to comment to the Empire about the email exchange and his resignation.

A press release announcing the opening of the Anchorage office in the Cordova Street building was issued by APFC on Aug. 10.

• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.