This story has been corrected to note the Alaska Marine Highway System headquarters was relocated to Ketchikan, not Anchorage.

Leaders of the Alaska Permanent Fund Corp. are considering moving some its operations and staff to Anchorage from Juneau during the next year — an action that is estimated to cost nearly $1 million.

The action is being challenged by a lawmaker and others in Juneau who say no approved funding exists for the move, among other factors.

A directive for APFC officials to obtain office space in Anchorage for an undetermined number of employees during the fiscal year starting July 1 was issued by the board of trustees at its most recent meeting on May 18. The board’s order is for staff to “expediently work to open an Anchorage office and develop a timeline, identify space, and prepare a budget for presentation at an upcoming board meeting.”

Ethan Schutt, chair of the APFC’s board of trustees, said in an interview Friday he is not taking a public stance on the move, although he noted “a couple of trustees feel strongly about this.”

“The directive to staff is so it can be considered in the budget as we work on our annual process,” he said, adding “without a budget, of course, we’re not going to execute it.”

The board’s next scheduled meeting is July 12 in Anchorage.

The idea to move has been considered at least since 2019, when a five-year strategic plan adopted by the trustees called for establishing an Anchorage office by September of 2020. Similar “capital creep” movements of state functions out of Juneau to Anchorage and other locations, such as the relocation of the Alaska Marine Highway System headquarters to Ketchikan, have occurred for decades.

A memo summarizing the factors involved in opening an Anchorage office was submitted to the trustees May 11 by Mike Barnhill, APFC’s chief operations officer. It states “staff estimates the initial costs of an Anchorage office for a 3,000 sq. ft. office to be $680k-$850k, with ongoing costs of $150k-$170k (annually).”

Barnhill, in an interview Thursday, said a more specific cost remains undetermined because both the location of office space and how large it needs to be are unknown.

“At this point in time I don’t know how many people are going to move,” he said.

APFC, which has about 70 employees, has had a high turnover rate since its inception and the COVID-19 pandemic caused additional workforce complications that are having a widespread effect beyond the corporation, Barnhill’s memo notes. That means some of the parameters the board approved in its original proposal in 2019 need to be reevaluated.

Objecting to the proposed move is state Sen. Jesse Kiehl, a Juneau Democrat, who said Thursday he and many other people in Juneau are working to prevent the move. He said the foremost issue is no funding for such a relocation was considered by the Legislature or exists in next year’s state budget.

“If they have so much slop in their budget that they can just spring a million bucks here and a million bucks there without coming to talk to the appropriators we will need to take a very hard look at trimming that, tightening the ratchet straps way, way down,” he said.

Barnhill, in his interview, said APFC would seek a supplemental budget appropriation when the Legislature reconvenes in January if such funds were used in the meantime. Kiehl said he questions if the votes to approve such funding would exist and suggested it would be a risky move on behalf of property owners with available office space.

“I would be very reluctant if I were in the real estate business to sign a lease that’s subject to appropriation with an agency that doesn’t have an appropriation,” he said.

All six members of the board of trustees live in Anchorage, according to Dermot Cole, who first reported the current proposed move at his news website Reporting From Alaska. But Kiehl said a relocation won’t be an improvement for the investors and other employees who actually manage the fund.

“I think it’s fair to say the focus is on convincing the corporation and the board that spending a lot of money for no improvement in returns, and no improvement in recruitment and retention, is a bad idea and they should stop,” he said.

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