Alaska Mental Health Trust Authority CEO Mike Abbott described being audited as a lot like an invasive medical screening.
“You won’t be surprised to hear me say that audit processes are not always enjoyable in the moment, but even if they aren’t enjoyable as you’re experiencing them, (they) can significantly improve the performance of an operating entity like the trust,” Abbott said from the hot seat at a Senate Finance Committee meeting on Thursday.
He took over leadership of the trust as auditors working for the state Legislature were finishing up a scathing report of the trust. It was released last year and flagged years of investment and meeting practices that were likely illegal and concluded the trust was exposed to lawsuits on multiple fronts it would likely lose. Thursday, Abbott was updating state lawmakers on how he’s fixing it.
The auditors found the trust had overreached its investment authority by buying and managing commercial real estate it wasn’t supposed to. Then it mishandled earnings from those properties. And the auditors found that some board members were deliberately obscuring trust business that should have been public.
Abbott said they’ve rewritten bylaws and have held trainings on transparency obligations. They hired a firm to examine their investment policies to comply with state law. The trust will have the firm’s recommendations in February.
“We expect to be completed, substantially complete, with the policy decisions to fully address these issues by June of this year,” Abbott said. “The trustees and myself have agreed that we’re going to use this to improve both our practice and the public’s confidence in our practice, and our work, ultimately, for beneficiaries.”
The trust is also working with the Alaska Permanent Fund Corporation, which is supposed to handle the trust’s investments, on what to do with the handful of commercial real estate properties it still owns. The trust expects that process to be complete by June as well.
Sen. Bert Stedman, R-Sitka, co-chairs the committee Abbott was speaking to. Stedman said he thinks the trust is on track to smooth things out and avoid lawsuits.
“But we just need to keep an eye on them, so we get this situation put to bed,” Stedman said. “I think we’ve got in front of it enough to take care of that, there doesn’t appear to be any loss to the trust beneficiaries.”
The Alaska Mental Health Trust Authority is mandated to manage about 1 million acres of state land and a portfolio worth about $560 million to benefit Alaskans’ mental health needs. Its earnings turn into tens of millions of dollars in annual grants for programs like alcohol and drug abuse prevention and treatment, supportive housing and health care workforce development.