Nelson Page was interviewed by Bill Schneider and Karen Brewster with videography by Deborah Lawton and Aaron Elterman of KUAC radio/tv, Fairbanks on June 10, 2009 at the Marriot Hotel in Anchorage, Alaska. He is a lawyer with Burr, Pease and Kurtz in Anchorage, Alaska. He was an original member of the Alaska Mental Health Trust Authority Board of Trustees serving until 2008, and was the board's first chairman. In this interview, Nelson talks about the legal aspects of the mental health trust lawsuit, land selection and settlement, his work with the Disability Law Center, the establishment and functioning of the Mental Health Trust Authority Board of Trustees, and his personal connection with disability services through raising foster children.
Digital Asset Information
Project: Alaska Mental Health Trust History
Date of Interview: Jun 10, 2009
Narrator(s): Nelson Page
Interviewer(s): Bill Schneider, Karen Brewster
Videographer: Deborah Lawton , Aaron Elterman
Transcriber: Carol McCue
After clicking play, click on a section to navigate the audio or video clip.
Section 1: Personal background and his involvement in the development of a medical foster care program.
Section 2: Fighting for special education services in the schools, and joining the Alaska Mental Health Board.
Section 3: Learning about the poor quality of mental health and developmental disability services in Alaska, and effect of the mental health trust litigation.
Section 4: Settlement of the mental health trust litigation, and development of the Mental Health Trust Authority.
Section 5: Settlement of the mental health trust litigation that led to creation of the Alaska Mental Health Trust Authority and its management structure.
Section 6: Establishment of the Mental Health Authority and the Trust Land Office.
Section 7: Creating the Alaska Mental Health Trust Authority Board of Trustees and figuring out how the organization would operate.
Section 8: Imaginative thinking that went into creating and funding new programs.
Section 9: Managing the Mental Health Trust funds.
Section 10: Composition of the Mental Health Trust Authority Board of Trustees, public perception of the Trust, and generating revenue from Trust lands.
Section 11: Using experiences with his foster son to help build rural programs within the Mental Health Trust Authority.
Section 12: Role of the Disability Law Center in the mental health trust litigation, and personal experience with Ella Craig, who was a social worker for the Bureau of Indian Affairs in Anchorage.
Click play, then use Sections or Transcript to navigate the interview.
After clicking play, click a section of the transcript to navigate the audio or video clip.
Section 1: BILL SCHNEIDER: Today is June 10th, 2009. I'm Bill Schneider and Karen Brewster's here, too, to help with the interview. And we have the pleasure today of doing an interview with Nelson Page. So I appreciate you taking the time to do this. And Deb Lawton and the crew from KUAC are helping out and giving us some really good quality video. So we appreciate that, too.
Let's start, Nelson, with your talking a little bit about your background, where you were brought up, and something about your parents.
NELSON PAGE: Sure. I was born and raised in Portland, Oregon. My parents both came from New England, and I had ‑‑ my father is a physician, my mother has worked within the home, raising the family. I have two siblings, my brother is an electrician in Portland still, my sister is a nurse practitioner here in Anchorage. And I came here, I'm an attorney, I came here after law school.
My story is kind of like many Alaskans, I had an opportunity to ‑‑ to come up here for a one‑year clerkship after graduating from law school. I had a job lined up with a very nice firm in Portland, and within three months of coming here, I picked up the phone and told the law firm in Portland that I was not planning on coming back. And that was 30 plus years ago now.
I'm currently in private practice. I do civil trial work as a lawyer, and have been in private practice all that time with the same law firm.
BILL SCHNEIDER: And what was attractive about staying here?
NELSON PAGE: I loved two things. Of course, I loved Alaska as a place to live, and I loved the professional challenge.
I think early on in my clerkship with the Alaska Supreme Court, I recall hearing a First Amendment case, and the First Amendment case had to do with someone who had defaced Alaska license plates. He had been drawing pants on the grizzly bear that was on the Alaska license plate. And the issue was whether or not his drawing pants on the grizzly bear was an expression of speech.
What struck me, as I sat listening to the argument was that the lawyer who was arguing the case was about a year older than I was. And had I gone back to practice in Portland and had I gone back to the firm that I was going to be working for, it probably would have been 10 or 15 years before I would have found myself in front of the Supreme Court arguing a case.
And I thought, you know, that's something I ought to take advantage of while I'm here. I can do more here faster and have more responsibility. And I just thought that was a wonderful thing.
BILL SCHNEIDER: And has that proven to be the case?
NELSON PAGE: Oh, yeah. I ‑‑ I've had a wonderful career here and been able to do things. It's been different ‑‑ of course, I'm sure my life would have been different had I gone back down to Portland, but it's been different in a good way. I've had the opportunity to lead a life that's had a full and very rich range of experiences both professionally and personally.
BILL SCHNEIDER: Well, how did you get involved with the Trust?
NELSON PAGE: Well, my initial involvement with Trust beneficiaries came back in 1982. My wife was working as a nurse in the Providence Neonatal Intensive Care Unit, and she was telling me things that were just amazing about how kids with ‑‑ who had been born prematurely or who had severe developmental disabilities were being treated and cared for.
And specifically there was one child that she was caring for who was a Native Eskimo, had been born early, had gone to the Neonatal Intensive Care Unit at Providence and had been there for months.
And he was too sick, he was on oxygen, he had a number of medications, he was very fragile, he was too sick to go back to his family in the village. But after awhile, he wasn't too sick to be out of the Neonatal Intensive Care Unit.
And I think they charged somewhere between 3 and $5,000 a day now for a child to be in the intensive care unit there. The state was picking up that cost.
And what was preventing the child from getting out of that hospital setting, out of the setting that was just full of alarms and bells and nurses and sick people and into a setting where he could begin to be a child was that there was no developmental or medical foster care program for the State of Alaska.
And so my wife and I, with the help of Ella Craig from the Bureau of Indian Affairs, and other people, put together just out of thin air a program of a medical foster care placement for this child.
It required, of course, enhanced payment for ‑‑ for the foster parents, it required a setup so that the kid's medical needs could be met and he could receive the kind of monitoring that he needed while he was fragile, but it had never happened before, and when that child got out of the intensive care unit and went into our home as a foster child, that saved the state hundreds of thousands of dollars, just on that one kid.
That was a real eye opener for me about the idea that you don't have to do very much, sometimes big changes can be made with just incremental adjustments to what's already being done.
Section 2: I was very involved in raising our foster child. And I think that involvement became ‑‑ part of that involvement was to go work with the Disability Law Center on some of the issues that arose as our foster child started getting into the school system, started getting into needing other social services.
I think what happened was that I became ‑‑ I got ‑‑ came to the attention of David Maltman and Jeff Jessee, and they, oh, boy, in the mid, late '80s, asked me if I would be willing to serve as a member of the Alaska Mental Health Board.
At the time, the Mental Health Board was the only state fund ‑‑ state sponsored group that was dealing with mental illness and so forth.
Well, David was the executive director of the Disability Law Center at the time, and had been for a while. Jeff was one of the staff attorneys. And I met Jeff because he represented our foster son in a challenge to the school district.
What we were finding as we were trying to care for and get services for our foster son was that the system really wasn't set up to deal with anything that was outside of the norm. And of course, when you're dealing with children with intense developmental disability needs, or mental health needs, autism, everything about them is outside of the norm.
And you needed ‑‑ in order for this child to ‑‑ to ‑‑ to have a good and prosperous young childhood out of the hospital, he needed intensive Special Education services, he needed to have a very thoughtful medication schedule, he needed to have engaged and committed friends and parents who would be able to ‑‑ to introduce him back into his Yup'ik Eskimo culture.
All of those things were things that we were dealing with as brand new first‑time issues.
And the development ‑‑ the Disability Law Center, and Jeff Jessee in particular with Dave Maltman's support, had provided us with assistance in working our way through with some of these brand new things that we were finding out about.
And so when they asked me to be on the Mental Health Board, I was, of course, happy to ‑‑ to, in my ‑‑ the way I thought about it, return the favor. And on the Mental Health Board I was introduced to a lot of the players who were then or in the future after that became very involved in creating the Mental Health Trust.
I ‑‑ when I got on the board, Jim Gottstein and David Walker, the attorneys who were representing parties in the Mental Health Trust litigation, would give briefings to the board. At the time, the board included John Malone, that's where I met John, and I believe several other people who were eventually involved in ‑‑ in creating the Mental Health Trust.
Section 3: What I was learning from the Mental Health Board was just a broader picture of the same thing I had learned as a foster parent, which was that mental health services, services for people with developmental disabilities, services for people with Alzheimer's were really not very well coordinated and not very well thought out in the State of Alaska. And this, again, is in the mid to late 1980s.
Funding was inconsistent, there was no real imagination being applied to what people needed and how to provide the services that they needed. The ‑‑ basically, it depended on whether there was an administration and a Commissioner of Health and Social Services who had an interest in the issue or not, and you know, every couple of years that would change.
And again, applying what I had learned from my own experience, it seemed to me that it really didn't require a whole lot of imagination, just a little bit of imagination to really make big differences.
I'll never forget a briefing that the Mental Health Board got from Dave Sperbeck, who is a clinical psychologist and was involved with ‑‑ was working with the state, and he gave a briefing regarding mental health services for the mentally ill within the Department of Corrections.
I was appalled. It was shocking to me, it was Medieval what he was describing. There was no mental health service for people within the Department of Corrections.
And of course, that is probably the single largest population of people with mental illness in state custody in the entire state of Alaska.
And they were simply being warehoused in solitary confinement with occasional visits by a psychologist. No intensive treatment, no intensive understanding of what their needs were or why their situation was what it was.
I couldn't believe it at the time, and I'm happy to say that the Mental Health Trust came into existence and began to ‑‑ to start actually influencing policy, we were able to have a significant impact on ‑‑ on that, as an example.
The litigation that created the Mental Health Trust had been ongoing when I got on the Mental Health Board for several years. And the lawyers, Gottstein and Walker in particular, and then Phillip Volland, who represented those ‑‑ I believe it was people with ‑‑ I think it was seniors with Phillip, and Jeff Jessee represented ‑‑ got involved in the lawsuit for people with developmental disabilities.
They were doing a masterful job of holding the state's feet to the fire.
The ‑‑ Gottstein had filed a lawsuit and had obtained from this Alaska Supreme Court an injunction in which the Supreme Court basically said, yes, these people have rights. And the state has an obligation to provide treatment for them.
And more importantly, the Trust, which had originally been set up in the 1950s, has obligations to these people. The state as trustee has not met those obligations, and therefore, as with every other trustee who doesn't meet their fiduciary obligations to the beneficiaries, the state has to make good. And that was the ruling that Jim had ‑‑ had gotten from the Alaska Supreme Court.
Well, the implications for the state were huge. Jim, I think, properly took the position that the state had an obligation to pump millions of dollars into providing services that had never been provided before to the beneficiaries of this Trust. He was taking the position that all of the assets of the Trust, which the state had treated as though they were simply there to be spent without any consideration of their obligations, all of those assets were subject to a claim by the trustees.
Now, these assets included oil fields in Cook Inlet, coal fields in Beluga, land within the Municipality of Anchorage. The original trustees, the ones who set up the Trust and selected the land back in the 1950s, had done a marvelous job, a very astute job of picking land to be included in the Trust.
They created donuts around communities like Ketchikan, thinking, of course, accurately, that the communities would grow and they would bump up against Mental Health Trust land and that land would become much more valuable.
Section 4: Well, in the 20 or 30 years since that time, the state, as trustee, had simply ignored that. And now the Alaska Supreme Court was saying you can't ignore it, that land all has to be given back.
And Gottstein did a marvelous job of saying, no, we're not going ‑‑ we're not going to compromise, we are not going to change that ruling, we are going to require you to do what you were supposed to have done 20 years ago.
The state was in a terrible bind. And over about three or four years after I got involved in the Mental Health Board, the state tried a number of ways to get out from underneath this bind.
There were settlement proposals that involved the state guaranteeing a percentage of state revenues would be spent on mental health programs. That turned out to be, you know, the state just couldn't swallow that. They couldn't probably legally and they couldn't as a matter of policy bind themselves for future generations to spend X percent of state revenue on mental health programs.
There were proposals to determine what the value of these Trust lands had been, which turned out to be billions of dollars. And ‑‑ and then they were going to pay a percentage of that. And that, again, ran into problems. There were any number of proposals that the lawyers for the beneficiaries simply said, no, that's not good enough.
And as the state got more and more desperate, things got more and more complicated. And the lawyers who were involved in it for the beneficiaries got more and more imaginative about how to meet their needs.
What they were unwilling to do was leave it up to the state, which had already proven that it was not a very good trustee, they were not willing to leave it up to the state to make discretionary decisions about how much money was going to be spent on the ‑‑ on the beneficiaries, or whether any money would be spent at all.
And what they were unwilling to do was give up this lever that they had in the form of this hold over state property and this hold over state natural resources until they got something that was worthwhile.
I believe that Governor Hickel attempted a settlement. I remember attending a signing ceremony back in the early 1990s where Governor Hickel said we've finally reached a settlement of this problem, but basically, the settlement fell apart, once again, because the state insisted on having control over programs and how the money was to be spent.
And the beneficiaries at this point, after 20 years of having promises that were never kept, weren't willing to do that.
What ultimately happened was that the lawyers for the beneficiaries, and I give Phillip Volland and Jeff Jessee a lot of credit for their willingness to work this tension between what the beneficiaries wanted and what the state wanted and what the state felt it could provide, they ‑‑ they came up with an idea that after a number of ‑‑ of different evolutionary stages turned into the Mental Health Trust.
And the brilliant thing that they did was gather together the various interest groups beyond just the beneficiaries, they dealt with mining interests, they dealt with some of the natural resource ‑‑ other natural resource development interests. They worked with the state. And they came up with eventually what became the Trust.
The concept was the beneficiaries need independent control over their assets. So we'll have a Mental Health Trust Authority. The beneficiaries need to know that the money that is in trust is going to be spent on their behalf.
So initially, the idea was that the Mental Health Trust Authority would simply spend that money and would be in charge of spending it.
That evolved because of constitutional issues about who gets to decide how state money gets spent into a system in which the Mental Health Trust Authority has the ability to spend some of its money, and also has the ability to talk to the state, and by statute, it has the ability to ‑‑ to talk to the state and it has to be listened to by the state about how the state's money should be spent on mental health and developmental disabilities and Alzheimer's and substance abuse issues
Section 5: The state was concerned that the Trust would get out of control and not be in ‑‑ you know, would not be ‑‑ would do things that would be just sort of not very prudent.
So the system that was set up was that the trustees would be appointed by the Governor.
But then to accommodate the concern of the beneficiaries, the trustees not be just simply another board that has to answer to the Governor and follows the Governor's recommendations or orders, those trustees serve for a five‑year term, and a staggered term. So the trustee membership in the board changes over time. And those trustees cannot be removed except for good cause.
The legislature wanted to make sure that the Trust would not spend money wildly without any coordination with what the state's programs were. So ultimately, this ‑‑ the legislature is required to approve most of the Trust's expenditures, and to the extent that the Trust has money that it spends on its own, the Trust makes reports to both the legislature and the Governor.
This was a very carefully crafted series of compromises or changes or imaginative solutions that was intended to address as many of the concerns as possible of all the different sides to the issue.
There was a lot of controversy about this settlement.
The many members of the beneficiary community were very suspicious of any system in which the state had a hand in controlling assets of the Trust, or had a hand in determining how the Trust's assets would be used, because, of course, they had this history of the trustee ‑‑ of the state being a bad trustee.
The state, of course, had a very sort of mirror image concern. As I said, they were concerned about whether or not this Mental Health Trust would just go off in wild directions without trying to coordinate, without having any carefully grounded policy understanding of what needed to be done.
The ‑‑ probably one of the biggest controversy was what to do with the Trust's assets.
BILL SCHNEIDER: ‑‑ commenting on the interest between the Trust and the state is ‑‑ that's an interesting concept we haven't fully developed. Maybe you could say more on that.
NELSON PAGE: Well, sure. Probably the place where that was the hardest to reach an agreement on was what to do with the assets themselves.
Remember that the original Mental Health Trust was set up by an Act of Congress before Statehood, said that this Trust would have the right to select a million acres of land, and that that land would generate revenue which would then be used to fund the state's mental health program.
And this was the original concept, and this was the, as I said, the original people who selected the land for the Trust had done a brilliant job of selecting those lands. And this is the land, this original million acres was the land that was being held hostage through this lawsuit.
The state, again, was very concerned to turn over control of a million acres of land and whatever revenue could or had been generated by that land to a body, this Trust Authority, at least in theory at the time, that they couldn't control. There were constitutional issues as well as policy issues for them.
So again, a compromise was reached, which I think is a brilliant compromise. The ultimate settlement of the lawsuit was that the Trust would give up its claim to many of the original million acres, which erased the problem of title being clouded or not being able to use the land or having claims that the land had been used, and therefore, there was rent owed or whatever.
In exchange, the Trust was allowed to select another set of lands, up to another ‑‑ a new million acres. So there was a little bit of land that had been in the original Trust that had not been encumbered, had not been used, and that was to go back to the Trust.
Then the Trust was able to select another million acres from available state land, or another set of acres to come up to a million acres from available state land. And would be able to use that as it had originally been intended, to generate revenue on behalf of beneficiaries.
Now, everybody understood that being able to select a million acres 30, 40, 50 years after Statehood, 20 years, 30 years after the Native corporations had made their selections, after closure of this Territory and making sure there ‑‑ you know, that closing the ability to choose any land that was Federal land, everybody understood that whatever was going to be selected for this new Trust to make up the difference, it wasn't going to be as valuable as the original million acres.
So the compromise was that the state would pay cash as an additional part of the settlement. And that cash would be paid into a trust fund. The compromise that was reached over how that Trust was going to be managed was that the beneficiaries agreed that the Trust fund would be managed by and would be held by the Alaska Permanent Fund.
And so the state didn't have to worry about ‑‑ and the trustees and the Trust didn't have to worry about recreating a whole apparatus for ‑‑ for investment guidelines and figuring out how to invest that money, and so forth. It was already there in the form of the Alaska Permanent Fund.
Again, the trustees ‑‑ the beneficiaries were concerned to make sure that the state wouldn't use that lever to control how the money would get spent. And so again, the statute was crafted very carefully to say that the Trust could direct how the money would be spent, but then they would have to report to the legislature about how they were spending it. And they would have to report to the Governor about how they were spending it.
Section 6: So that took care of the cash part of the problem. Again, that left how were we going to manage the million acres. And again, a compromise. Beneficiaries had already had a track record of the state selling lands not using the land as needed and so forth. State was not willing to have no control whatsoever about how these million acres were going to be used, so we created the ‑‑ the land Trust ‑‑ the Trust Land Office.
And it was by statute that the Trust Land Office would be within the State Government, the Department of Natural Resources.
The head of the Trust Land Office would be a state employee, but the head of the land office would report not to the Commissioner of Natural Resources directly, but directly to the Board of Trustees of this new Mental Health Trust.
I think that was an example of creative ambiguity. There has never been so far a situation that I'm aware of in which the trustees have said the land should be used this way and the commissioner of natural resources has said, huh‑uh.
Because we understand the potential for conflict, at least during my time on the Trust, there was a lot of communication between the Department of Natural Resources and the Trust Land Office. And procedures and policies and personalities were worked out so that the Trust Land Office now has the ability to do things at the direction of the trustees in ways that the state couldn't do with its own land, but which it is enabled to at least know about and agree with.
I think what happens now is that if we're going to do something that the state doesn't like, the state tells us and we work it out. But essentially, that compromise allows the Trust and the beneficiaries of the Trust to feel comfortable that the state will not do what it had done in the past and simply ignore the interests of the beneficiaries when trying to create this ‑‑ trying to generate revenue.
This was very contro ‑‑ this whole process that I'm talking about was very controversial. But after 8, 9, 10 years of Gottstein and Walker and Volland and Jessee holding up all kinds of development, and after 10 years of folks who had purchased land from the state or homesteaded land from the state and then learned that their title wasn't good, complaining to their legislators,
and after the pressures had gotten to the point where people were saying for heaven's sake, just get this thing solved, that compromise, as I have been describing it at some length, that compromise started to look pretty darn good.
And it was under the auspices of Governor Knowles, and with the leadership from the legislature that that compromise eventually came into existence and the Board of Trustees and the Alaska Mental Health Trust came into existence.
Now, the ‑‑ I've often likened the first few months and years of the Alaska Mental Health Trust to the first few months and years of our country under its new constitution. There was a settlement, a statute, guidelines, as to ‑‑ as to, you know, things ‑‑ things that the statute said as to how things were going to work, just as there is a Constitution that tells how our Government, our Federal Government is going to work.
But putting flesh on those words and actually creating a living, breathing organization required a lot of imagination, a lot of hard work, and if I can say so, a lot of goodwill on the part of all the different parties and interests involved.
And I think that we were extraordinarily fortunate that the Trust came into existence under the Knowles administration because my sense was that Governor Knowles and Commissioner Perdue were committed to making this concept work, and they were prepared to act in good faith on the intentions and understandings of the beneficiaries about what the Trust settlement meant, to try and get it to go forward successfully. That was tremendously valuable.
Section 7: The Governor selected a first Board of Trustees that consisted of people who had a broad range of experience. You'll be talking to Tom Hawkins who, of course, had been working very, very diligently on the lawsuit and was very familiar with the natural resources end of things. You interviewed John Malone who had worked for years to advance mental health issues all over the State of Alaska, but particularly outside of the road part of Alaska.
There were ‑‑ there was, you know, people representing different groups within the beneficiary categories, there were people representing different populations within the State of Alaska.
I ‑‑ it is probably the ‑‑ the finest thing that I can think of that I was privileged to be selected to be first chair of the Board of Trustees. And I know that John Pugh was a member of that first board.
The sense I got, John is a marvelous, marvelous guy, and was a ‑‑ an extraordinary strong trustee. I kind of got the sense that John was there to make sure things didn't go off the rails for ‑‑ for the administration. John was very close to the Knowles administration, I think. This is all speculation on my part. We've never talked about this. But John was there to make sure that ‑‑ that things didn't just get too wild. But they didn't because these trustees had been very carefully selected.
The initial months of the Mental Health Trust were very interesting. There was no staff, it was just seven trustees and this statute, plus a lot of money that would ‑‑ had been parked in the Permanent Fund racking up interest. We had no idea what we were going to do with it.
There was a Trust Land Office person who had been hired, Steve Planchon, but nobody really knew anything about how the flesh was going to be put on the skeleton of this settlement.
We had, again, the continuing assistance of the Disability Law Center.
By this time, the executive director was Rick Tessandore. Rick had basically made Jeff Jessee available full time to work on this lawsuit and to work on trying to get a settlement through. And Jeff had been doing a marvelous job for years. When the settlement finally came through, Rick allowed Jeff to continue on basically as our advisor to the Board of Trustees for the first few months.
And we had to figure out what we needed to do, who did we need to hire, did we need an executive director, did we need an investment person, it was a blank slate.
And we ‑‑ we needed to determine how we were going to decide how money got spent because the Trust had the ability to ‑‑ to determine how its Trust assets would be spent? How were we going to do that.
How were we going to make sure that there is public input? How are we going to make sure that the needs of the beneficiaries are listened to? And so our process of trial and error began almost immediately. It would never have worked without the support of the administration, the Disability Law Center, and frankly, Jeff.
And as we started to sort of get a little bit of traction as to what we were going to do, we concluded that we did need an executive director, now a CEO, we concluded that we did need to have, you know, certain staff positions that needed to be filled out. We started talking about policies and procedures. We started talking about public input and we started having meetings.
Section 8: BILL SCHNEIDER: So we're talking about tweaking the system.
NELSON PAGE: We're talking about tweaking the system. Let me give you an early example.
Harborview in Valdez had been a residential facility for developmentally disabled people within the State of Alaska for years. In fact, my foster son was someone who was a candidate to go to Harborview and be institutionalized.
For years, the developmental disability community and the State of Alaska had been trying to find a way to close down Harborview and put all of the people now adults, many of them starting as children who lived at Harborview, into their communities, in ‑‑ in placements within homes or houses or families in their communities.
The issue was that there's always a period of time when you're creating system change when you have to fund the old system to meet the needs that are presently existing, and at the same time you have to create the new system. There's a call on funding, and legislators are very ‑‑ you know, it's difficult to say we're going to spend twice as much for a couple of years and then change the system.
The initial argument was that the Trust should start funding these foster placements and start funding the system for getting folks out of the Harborview.
But our thinking was that action is a trap because as soon as we start funding these programs that are going to be expected to be the new way of dealing with severely developmentally disabled people, the legislature is going to close down Harborview, they are going to take that money and spend it on roads, and they are going to ‑‑ we're going to be in an uphill fight with the legislature forever for them to take over that responsibility again.
So what we came up with was sort of reverse English. We went to the legislature and we said, okay, it's going to cost, pulling a number out of the air, a million dollars a year for the next three years to close down Harborview, and it's going to cost about that much to create these new programs. The Trust will pay for the operations of Harborview, a million dollars in the first year.
The deal is that you, the legislature and the Governor, will take the million dollars that you don't have to spend and put it into these new programs. The next year, the Trust will commit to paying three‑quarters of that. And the year after that we'll pay half, and in the fourth year, the money goes away and Harborview closes and the state will have created and funded a new program. And in fact, that's exactly what happened.
The State of Alaska, at least as when I was a trustee, and I'm sure it's still true, has no institutionalized developmentally disabled individuals, they are all in their communities. And that worked very well for the state. It got them out of the dilemma of how do we pay for two things at once, it worked perfectly for the Trust, because after four years of meeting our commitment, that obligation went away and that money was again available for us to move on and do something else.
And we had done that, variations on that theme in a number of different places. Examples are the housing issues. The Trust has worked in conjunction with Alaska Housing Finance to try and create a housing trust which would allow beneficiaries to have access to housing. And the deal is that over a period of ‑‑ finite period of time, the Trust will provide the funding necessary or part of the funding necessary to create a housing trust.
When the trust is set up and funded ‑‑ when that housing trust is set up and funded, the Mental Health Trust will move on to the next priority.
And so that was a way in which we could be implementing change without being locked into having to pay for it forever and then being, basically, calcified into not being able to do anything further.
The other thing that we started implementing early on was the understanding that there were needs that didn't really fit into state programs, and individuals who are beneficiaries would come to us and say, you know, I just need a bicycle so I can ride to work.
Or they would come to us and they'd say my teeth ‑‑ I take these medications, they rot my teeth, I'm in constant pain, but I can't afford dental care. I need $2,000 to get my teeth fixed. And there wasn't a mechanism or certainly no consistent mechanism within the state to do that kind of thing.
There was a group that came to us and said, look, we are all mentally ill, we have this vision of a place, basically a clubhouse or a place where we can meet, and where we can provide support for one another, maybe do a little bit of, you know, training, a little bit of a rummage sale kind of a place where people can donate goods and we can raise a little bit of money, but we need a place.
We need somebody who will help us find a place and help pay for it. And the Trust was able to assist with that.
The Alano Club, Alcoholics Anonymous, needed a place, and there was an individual who was very heavily involved with Alcoholics Anonymous, and he came to us for assistance in both providing funding to purchase their club and also providing a mechanism by which other funding sources could be brought together under an umbrella to ‑‑ to create a package, which would fund the Alano Club.
None of these are necessarily things that the state or a legislature is likely to say, okay, we're happy to do. But all of them were things that made a material difference in the lives of our beneficiaries.
Eventually, we worked out a similar compromise with the state that we did for things like dental care and emergency medical care that we did with Harborview.
We put in every year a certain amount of money for these small grants, and we asked the state to match it. And the legislature saw that they were getting twice the bang for their buck by appropriating a certain amount of money, we were able to assist our beneficiaries in a way that they couldn't have assistance without us, and the beneficiaries got things that they needed. And so those are examples of the kind of imagination ‑‑ imaginative things that we were trying to do.
Section 9: The other place where we were able to be creative was with respect to how to handle our assets. We were fortunate to have had the example of the Alaska Permanent Fund before us, and as, you know, you recall the way the Alaska Permanent Fund works is that a percentage of revenue or income that's generated by the Permanent Fund every year is available either to be sent out in the form of dividends or used by the legislature.
That is driven by how much money the Permanent Fund makes from year to year.
That is a way of handling large sums of institutional money that virtually nobody else uses. Instead, what people do is they operate these large funds as an endowment.
What that means is that instead of looking at how much you made each year, which can vary wildly from year to year, you look at what the total market value or value of the fund is, and you take a percentage of that, which, using, you know, as many years of historical information as you want, a percentage, which will be sustainable forever.
And nobody knew how we were going to decide how much money we could spend. There was talk about whether we would take the entire $200 million in cash, which was the initial investment from the legislature. We were going ‑‑ whether we were going to spend some of that down, whether we would just, you know, build a new hospital and spend $100 million of it that way.
What we decided was, no, we have an obligation as trustees not just to the current generation of beneficiaries but to all future generations of beneficiaries.
And so we started looking for ways to make sure that this cash endowment plus whatever got added to it from the Trust Land Office and the revenue that it generated, we wanted to make sure that that would be spent fairly both for current generations and for future generations.
So we came up with an endowment model, and basically we started out with, I think it was 3 percent of the value of the cash assets of the Permanent Fund is what we would spend as trustees every year. So we were disciplined. We ‑‑ we made sure we weren't just going to spend according to need, but also according to what was available now and in the future.
We wanted to be conservative to start with because we wanted to make sure that we knew what was going on. That generated, again, to pull a number out of the air, about 8 to $10 million, which the Trust then in its first, say, three or four years in, which is when this went into effect, generated about $10 million, which is what we said we would spend in that particular year. And that's the money that we used to, for example, help fund Harborview, or to pay for some of these special small grants, and so forth.
The ‑‑ as time has gone by and we have gotten more certain of our model, we have been able to increase the percentage. I don't know what it is now. I believe it was over 4 percent, around 4 percent when I left the Board of Trustees two years ago.
The other thing that we wanted to do was avoid what happens, what you see happening with the Permanent Fund with these wild swings from year to year. You know, you have a $2,000 Permanent Fund check one year and a $500 Permanent Fund check the next year.
So we, using ‑‑ with ‑‑ with the assistance of some pretty sharp folks, we created a mechanism to set aside a ‑‑ a contingency fund, basically. We built it up over a series of ‑‑ a series of years. And using formulas that the Permanent Fund's own advisors suggested to us, we now have basically three different pots of money.
There is the money that's invested in the Permanent Fund which is the principal, and that is the amount that was the original 200 million, plus however much it's grown basically because of interest or success in the stock market and so forth.
Then there is a fund which is kept with the ‑‑ with the Department of Revenue. That fund is designed to be large enough so that in the worst years of the stock market, we will still have enough to be able to tap into it and keep our expenditures on behalf of the beneficiaries from year to year reasonably level.
And what we've ‑‑ so what we can do is in bad years, we drop that fund down, that part of the money down, that pot of money down so that we can spend more money than we would otherwise be able to, and then in good years we build it back up so that we have that reserve still available to us.
BILL SCHNEIDER: Well, let's finish the discussion, then --
NELSON PAGE: Okay.
BILL SCHNEIDER: of the economics.
NELSON PAGE: To close the circle on what I was trying to describe is what we had done is ‑‑ is create a financial way of doing things that guarantees a fairly good level of spending every year, but almost as importantly, a fairly predictable and fairly reliable level of spending every year. And that's important.
Again, we have ‑‑ there's a constant tension getting to how that money gets spent, there's a constant tension between the desire of the state for this Mental Health Trust to step in and take over what we as trustees feel is the state's responsibility, which we aren't going to shoulder, and the Trust's desire to remain that catalyst, that ‑‑ that tweaker, that experimenter that comes up with new ideas that nobody else would be able to figure out or fund.
And so it's been fairly successful, it's been tested pretty heavily in the last year, and I think it's withstood that test fairly well.
Section 10: BILL SCHNEIDER: It sounds like it depended, too, on strong leadership.
NELSON PAGE: It did. It did. Again, I go back to the original Board of Trustees.
One of ‑‑ there was an individual, Phil Younker. Phil Younker, Junior, his father then became Phil Younk ‑‑ Phil Younker, Senior, then became a trustee after that, but Phil Younker, Junior, is an investment manager in Fairbanks who was one of the first members of the Board of Trustees. And Phil provided tremendous leadership and a really good understanding for most of the other trustees who, frankly, aren't as well versed in these things, and his vision helped create what we hope and think is a sustainable way to run the finances of the corporation, of the Trust.
Similarly, when you get to other elements of leadership, Tom Hawkins is a masterful ‑‑ has a masterful understanding of natural resources, and not only natural resources, but natural resource development in the State of Alaska. And he worked in conjunction with Steve Planchon at the Trust Land Office, the first director of the Trust Land Office, to essentially turn around the reputation of the Mental Health Trust 180 degrees.
Jeff tells the story of talking to some business people about coal development, this is at the time the Trust settlement was being created. There was a Japanese company that wanted to come in and take coal out of the ‑‑ out of the coal fields up north of Wasilla. And they were shut down.
They couldn't do it because there was this injunction, and Gottstein and Walker and Volland and Jessee were holding the state to the fire, and ‑‑ and the state simply couldn't get out from underneath it to release this land so that this Japanese company could do what it wanted to do.
And he was talking to this fellow and talking about coal development and the fellow said, well, there's no Trust land involved in this, is there? You've got to stay away from that Trust fund.
Well, five years later, five years into the existence of the Trust, the perception was exactly the opposite, which was that the Trust Land Office was a place to go, maybe the first place to go if you wanted to develop natural resources because the Trust Land Office was in the business of generating revenue for its beneficiaries.
And subject to the need to make sure that there was going to be something to generate revenue for next generations as well as this generation, subject to that fiduciary limitation, the Trust Land Office was happy to do business.
We sold lots of timber, we sold more timber ‑‑ there were several years to begin with in the early years of the Trust when we sold more timber than any other entity in the state.
We were ‑‑ you know, we owned some commercially developable land, and developers came to us and said we would love to buy this parcel because we want to ‑‑ we want to develop it. And Planchon was very good and Hawkins was very good at understanding these things, and putting deals together.
And the Trust lands, just prior to settlement, had generated revenue. Again, they were holding ‑‑ not firm numbers, but, you know, perhaps under $100,000 in revenue, as remnants of this million acres.
There was a period of time when we were generating ‑‑ we had doubled that every year for a period of years, and we were generating 1, 2, $3 million worth of revenue from this endowment of land. And it just required some leadership.
BILL SCHNEIDER: How would you evaluate your role in the Trust?
NELSON PAGE: Oh, I'm ‑‑ I'm very proud of having been the first chair of the Mental Health Trust.
I ‑‑ my job, I think, was to hold all of these very emotional, high‑strung parties who had just come out of a bruising, long, grueling, emotional lawsuit, to hold them all together to assure them and give them a credible assurance that this settlement was a good thing for them and that it was going to really generate tangible benefits.
And then my job was to let the very, very fine people who were other trustees who became staff of the Trust, who were beneficiaries and advocates on behalf of the beneficiaries, to let those very fine people create something that is going to last.
I have to say, you know, this is probably the thing that I have done that will last beyond my lifetime. Hopefully there will be others, but this one I know is going to be a really important thing, and I'm so proud to have been a part of it.
BILL SCHNEIDER: That's neat.
Section 11: Let me ask you some questions to pick up on some of the things you talked about.
Where is your son now, your foster son? How has that worked out?
NELSON PAGE: Well, he returned to his village in Western Alaska, grew up with his family, and then returned to Anchorage and lives in Anchorage now. So ‑‑ and he's been very successful.
BILL SCHNEIDER: On his return to the village, was that a program that the Trust helped facilitate?
NELSON PAGE: No, it was a program that we set up and created, my wife and I. Again, there was no way to ‑‑ there was no systemic way to help children from rural areas, from Native villages get back into their culture.
And my wife deserves a huge amount of credit. She figured out that this was a kid that was not going to thrive very ‑‑ be very successful in his village if he didn't like seal oil. So his father, who was a very successful hunter in the village, would bring ‑‑ would ship seal oil by mail to us, and we would make sure that that was part of his diet.
Incidentally, seal oil happens to be an extraordinarily highly nutritious, calorie‑packed, vitamin‑packed nutrient for a little kid who needs to grow.
And his parents would send him tapes with Yup'ik stories on them, and he would go to bed listening to those tapes so that when he got back to his village, he wasn't just some child that looked like an Eskimo that was really ‑‑ had only the talents and abilities of somebody who was ‑‑ lived in a city. And so a lot of time and effort went into that.
Again, that experience translated into some of the things that we were able to do with the Mental Health Trust.
One of the programs that the Trust implemented was basically what's called Rural Outreach, and it was a direct result of my having learned so much and my realizing how much I didn't know about what life is like in rural ‑‑ rural areas, in Native villages, in places that aren't served by the kinds of things that we're used to in Anchorage.
And what the Trust did for years, I don't know if it still does it, but it did for years was pay to bring leaders of our state to different regions of the state off of the road system, and we would bring legislators, or their staff, we would bring administrators, we would bring leaders in the community, set up a region where we would all go at Trust expense and meet with people in that area of the state.
And we ‑‑ we went to ‑‑ we've gone to the North Slope, we've gone to Western Alaska, to the Aleutians, Southeast, you know, we tried to hit all the different areas of the state.
And it was an opportunity for people who may have some responsibility and control over how things work, how programs are implemented in these areas to actually go out and meet the people who are going to be affected by what they are doing.
Not to say that many people don't have that understanding, but the fact of the matter is, many people don't. And it was an opportunity for them to get a real on‑the‑ground feel for what it meant.
Just as an example, the Trust has helped build ‑‑ has provided funding so that when the Denali Commission builds health systems, it builds clinics in the villages, that there is also space for mental health in the village.
And one of the things we learned, we learned it through going out into these communities, is that there really needs to be a separate entrance for the mental health clinic as opposed to the rest of the clinic because there's still a stigma associated in these villages, as there is in all communities, including this one, there's still a stigma attached to needing mental health services.
That's the kind of thing that you learn from being on the ground and talking to people about what works and what doesn't. And it's an example, again, of the Trust being able to sort of nudge things in a direction they wouldn't otherwise go.
Section 12: BILL SCHNEIDER: Good. A little bit more on the Disability Law Center. How is that funded?
NELSON PAGE: Every state in the Union has ‑‑ is required by Federal law to have a disability advocate center. And I can't tell you for sure exactly what the mix of funding is here in Alaska, but a chunk of it is Federal funding. Some of it may be state funds.
We as trustees were able to provide grants to the Disability Law Center so that they could give counseling to our beneficiaries on legal issues. That was a program that we started, and I don't know what's happened to it now, but ‑‑ but they have a staff of lawyers and advocates who will help people with disabilities wind their way through the legal system.
Example is my own example, Jeff Jessee represented us in our appeal asking for more Special Education services for our foster son when the Anchorage School District determined that he didn't need them. They will assist people who need Social Security disability to apply for and appeal if they are denied their need for benefits.
It has been around for a very long time, and again, as I say, it was not ‑‑ there are so many people who deserve credit for the success story of the Trust.
It wasn't strictly within the boundaries or outlines of the Disability Law Center's responsibility to provide the kind of support that it did with its limited resources in the Mental Health Trust litigation, but Rick Tessandore, the executive director at the time, saw just what the potential was, realized that this was helping people that his job was to help, and made resources available in the form of Jeff as a staff attorney and in the form of other ‑‑ in the form of other assistance that just was invaluable in creating this.
BILL SCHNEIDER: That's really helpful.
That's ‑‑ oh, I guess I should ask you a little bit more about Ella Craig, and then I'll ‑‑
NELSON PAGE: Uh‑hum. Sure.
BILL SCHNEIDER: ‑‑ let Karen ask you some questions. You talked about her involvement with your family.
NELSON PAGE: Well, you know, Alaska is one of those places where one of the true joys is that you can meet people who are ‑‑ I don't want to use the word "institutions," but forces of nature might well be a good example. And Ella is one of those people. You'll learn about her background and the many, many years, and the many, many wonderful things that she has done in Alaska over the years.
When we met her, she was working for the Bureau of Indian Affairs. And she understood. She got it right away when we talked about the fact that it was ridiculous for the state to spend a thousand dollars a day at the time to keep this child in an intensive care unit, which is a terrible environment for someone who doesn't need that level of medical care. She understood it right away. And basically, she said this is not ‑‑ I'm just not going to allow this to happen.
And we had hit our head against brick wall after brick wall trying to find a way to provide enhanced funding for the kind of care that this child was going to need, which was maybe 20 percent or 10 percent of what the ‑‑ was costing to keep him in the hospital, but which was nevertheless many dollars more than the foster care system was prepared to pay.
And basically, she put her foot down, she said, I don't care. If this is what you need, this is where we're going to get it, and we will make sure that you have the funds necessary so that my wife doesn't have to work, she can spend the time that she needs to with the child, and she can get the services that she needs to keep the kid in our home.
I always had the suspicion that there was a storm of bureaucratic nonsense that she just was an umbrella protecting us from during that whole period of time. And she was just one of those people who saw that it was the right thing to do, and she said that's what's going to get done, and she did. And she did it no matter how hard the work ‑‑ how hard it was to make it work and no matter what it meant in terms of her own efforts. And that is typical of Ella.
Now, I've ‑‑ I've worked with Ella in other capacities since then. She left the Bureau of Indian Affairs, she was on the Older Alaskans Commission, and may still be there, I don't ‑‑ I'm not sure. But she was very active when I was on the Mental Health Trust with issues relating to older Alaskans and has been a very effective advocate on their behalf.
She is a woman pioneer in Alaska, and I believe she's been very effective both as an example as an advocate on behalf of women in the state. You're in for a treat; she's a wonderful lady.