The Alaska Mental Health Trust Authority board met on Thursday to discuss the legality of its investment policy. The board’s decisions to independently invest $39 million of the Trust’s principal funds in real estate have recently been called into question, and the Trust will undergo a special legislative audit.
State statue reads the Trust’s principal is to be invested by the Permanent Fund Corporation, but the board and its legal counsel previously interpreted other statues and regulations to provide more leeway for investments. They say statues that apply to private trusts also apply to the public trust.
Income from the endowment funds mental health programs throughout the state.
Those legal opinions have not been made public, but the Trust’s legal counsel, Nelson Page, addressed the issue during a work session on Thursday.
“And general trust law in the state of Alaska allows and in fact, I think, clearly suggests that the Trust has the right and the obligation to make the endowment of the Trust be as productive as possible,” he told the board.
Page met with the director of the civil division of the Attorney General’s office to discuss the issue last month. Page said the AG’s office had some serious questions about the Board’s investment strategy.
“’How big are you gonna get with this program? Where do you cross the line from enhancing revenue and enhancing the endowment of the trust to violating the statutes?'” he cited representatives from the AG’s office as asking.
The Attorney General’s office declined to comment on the meeting because it has not issued an official opinion on the matter.
The board is working in a legal grey area, Page said.
He said the board is putting its aggressive real estate strategy on hold, and will work with the AG’s office, advisory boards, and others to develop a way forward.
Board chair Russ Webb said the Trustees need to meet in executive session to discuss the next steps as soon as possible.
“The ambiguity is clear. It’s out there,” he said. “The fact that it exists is clear, and we obviously need to resolve the issue as quickly as we can.”
The board will also begin recruiting for a new CEO as soon as a job description is ready.
Greg Jones was put in place as an interim leader when former long-time CEO Jeff Jessee was demoted last fall.
The organization will seek a new Chief Financial Officer as well. Kevin Buckland resigned in December.