Former Revenue Commissioner Adam Crum defended his decision to invest $50 million from the state’s main savings account in an outside private equity fund in an interview Thursday. The investment with the infrastructure firm DigitalBridge has raised concerns among lawmakers, who have asked their auditor to investigate it.
The investment also raised eyebrows within the Department of Revenue.
Crum’s successor, acting Revenue Commissioner Janelle Earls, expressed concern over the process that led to the investment, a spokesperson said. In response, Gov. Mike Dunleavy ordered an independent third-party review of the investment to determine “whether there were in fact any violations of policy and make process recommendations as appropriate,” Department of Revenue spokesperson Aimee Bushnell said by email Wednesday. Bushnell said DigitalBridge was cooperating with the review but that the contract Crum executed could not be canceled.
The scrutiny was a surprise, Crum said.
Crum, who is a Republican candidate in the 2026 race for governor, said in an interview that the investment was an effort to boost the state’s investment returns. It represents about 1.7% of the roughly $3 billion in the state’s Constitutional Budget Reserve.
“The idea behind this was to put it into things that we know that there's going to be more of,” Crum said by phone. “These are companies that own cell phone towers, digital assets, AI data centers, and as the world's growing that direction, (it) seemed like an opportunity to actually get the state to invest in that.”
Crum had been working on the investment for more than a year and delayed his planned resignation to complete it, he said. The state committed the $50 million on July 28, three days after Crum announced that he would resign.
Crum said he’d followed state policy and procedure throughout the process.
“There was Department of Law sign-off, governor's office sign-off, all of that was there throughout,” he said. “This was not something that was done by fiat.”
Bushnell, with the Department of Revenue, said Crum had approached the governor’s office with the idea, but she said Dunleavy’s staff “cautioned that any investments made needed to be in accordance with established investment policies and procedures.” The Department of Law did not respond to a request for comment.
The vast majority of the reserve is invested in low-risk products like short-term U.S. Treasury bills, which can be easily and quickly sold when the state needs to access the money. That’s been the case since July 2020, when an analysis showed that the fund could be depleted within 12 to 18 months.
“For a budget reserve account that needs to fund the day-to-day operations of government in the event that the price of oil declines, you really need to be holding your investments in cash or Treasury bills or some similar asset that you can turn into cash quickly when you need it,” former Deputy Revenue Commissioner Brian Fechter said in a phone interview.
State law does, however, allow a portion of the Constitutional Budget Reserve known as the “subaccount” to be invested to yield higher returns. Lawmakers created the subaccount in 2000 in pursuit of higher returns but emptied it in 2015 to reduce risk.
Alaska is no stranger to private equity investments, which allow the state to invest in companies not listed on public stock exchanges. The state’s retirement funds hold more than $5 billion in private equity, and the Alaska Permanent Fund nearly $15 billion, according to public documents. Permanent Fund managers have said private equity and other alternative investments are a major driver of growth.
Private equity investments typically come with lock-up periods that make the assets difficult to access on short notice. The industry standard is five to 15 years, Crum said.
Senate President Gary Stevens, a Kodiak Republican and House Speaker Bryce Edgmon, a Dillingham independent, said in a joint statement earlier this month that their risk and inaccessibility makes them an inappropriate choice for the state’s rainy-day fund.
“The (Constitutional Budget Reserve) was created to provide stability during times of deficit and emergency, ensuring that schools, public safety, and essential services remain funded when state revenues fall short,” they wrote. “Placing tens of millions of dollars into an illiquid, high-risk investment undermines that purpose and raises serious concerns about accountability, transparency, and fiscal responsibility.”
The state has drawn on the account repeatedly in recent years to fill gaps in its budget, and lawmakers have said they’re concerned uncertainty around oil revenue and federal spending could require more spending from the Constitutional Budget Reserve in the coming years.
It’s unclear how much of the $50 million committed to the private equity investment would be available in an emergency. Crum said he believed the contract with DigitalBridge included “fire sale” provisions that would allow the state to withdraw its money at a steep discount. To make its money back and see some additional return would take “probably five years,” Crum said.
Crum, though, said it was unlikely the state would need to access the money before then. He said the Legislature’s scrutiny was “amusing” and chalked up the governor’s review to an effort to build a better relationship with state lawmakers.
“If we are actually at the point to where we're arguing over our last $50 million as a state, then we are already completely done,” he said.
