The director of the $52 billion Alaska Permanent Fund wants the Alaska Legislature to approve a funding request for employee raises, and argues that denials to do so in recent years have helped drive two key executives, including one whose blockbuster investment grew more than 10-fold, to leave for higher-paying jobs.

Special opportunities director David Fallace, who left in December and was paid $215,000 annually, led the fund's entry into biotech startups with a highly profitable deal involving Seattle-based Juno Therapeutics. Former chief investment officer Jay Willoughby, who made $400,000 and oversaw Fallace and others as the Permanent Fund grew $12 billion in four years, left in October.

Both are now working for The Investment Fund for Foundations in Boston, which manages $10 billion for endowed nonprofit organizations. Willoughby is chief investment officer and he hired Fallace, said Paul Horvitz, spokesman for the foundation.

The two are being paid three times more than they were in Alaska, said Angela Rodell, the Permanent Fund's CEO. She said Willoughby sought "greener pastures" on the East Coast, but said pay was also a factor. Their departures came after the Legislature denied funds for raises for two straight years, she said.

"To be fair, it's not like I could offer $1 million to $1.5 million in salary for people to stay," said Rodell. "But the point is, when the fund in 10 years has doubled in size and the reaction is to hold salaries constant and not take steps to retain talented staff, that's not a message we want to send to people."

Fallace and Willoughby declined to comment.

Rodell said Fallace, Willoughby and other Permanent Fund staff received a 5 percent increase through a cost-of-living adjustment in 2015 that had been provided to other eligible state employees in Juneau.

But the last time the Legislature approved raises for the fund was in 2013. Permanent Fund employees are not on the same salary schedule as most other state employees, so they lack built-in raises and must seek Legislature-approved funding for salary adjustments, officials said.

On Tuesday, the fund announced the hiring of a new chief investment officer, Russell Read, who will start May 9 with a starting salary of $400,000 a year, the same as his predecessor made after four years.

Read's experience includes serving as chief investment officer for California's public employees retirement system, CalPERS, heading his own private equity firm and overseeing risk and product engineering programs for Oppenheimer Funds, according to a prepared statement from the Permanent Fund.

Employees for the Alaska Permanent Fund are some of the best paid in Alaska government. But Rodell, like her predecessor, the late Mike Burns, has argued the fund's portfolio managers and other employees are poorly compensated compared to the rest of the financial industry, making it difficult to hire and retain skilled investors.

Rodell's request for pay increases comes amid large budget cuts to help close a multibillion-dollar deficit blown open by historically low oil prices, sharply cutting back the state taxes, which help fill the state's general fund. But the state's financial woes mean careful management of the Permanent Fund, created in 1976 and seeded with money from oil production, could become increasingly important if it's used to pay for state operations.

For the last two years, the Legislature has denied requests for salary and benefit increases for the Permanent Fund, striking a total request of $526,000, said Laura Achee, the fund's communications and administration director.

The Permanent Fund is trying again this year, with a $216,000 request for salary and benefits. The House struck the request from its budget, but the Senate retained it. The issue will be decided in a joint conference committee.

Rep. Steve Thompson, R-Fairbanks, and chair of the finance subcommittee that handled the request, said he'll take responsibility for the item's removal from the House budget.

He acknowledged the fund's investors are paid about 25 percent of what their counterparts in the Lower 48 receive. But he said the raise would have also gone to other Permanent Fund staff beyond investment officers. The decision was a tough one, but he said he couldn't support a raise with the Legislature planning widespread cuts across state agencies.

"We thought at this time, we better not allow it," Thompson said.

Sen. Anna MacKinnon, R-Eagle River, recommended the increase to the Senate Finance Committee, said her chief of staff, Laura Cramer.

Cramer said the Permanent Fund in recent years has saved millions of dollars by bringing management decisions in-house, reducing fees paid to outside companies. Also, private industry would have rewarded employees for the gains seen at the fund, so it's time for an increase, she said.

"We want to keep investment officers on staff and keep their expertise, and we felt this is a way to continue to grow our funds at time we need to do that more than ever," said Cramer.

The Permanent Fund, best known for issuing annual dividend checks to Alaskans, has reached record-high levels in recent years alongside a strong performance in the overall stock market.

Permanent Fund employees also have made shrewd decisions during that time, said Rodell, a former Permanent Fund trustee when she served as former Gov. Sean Parnell's Revenue commissioner starting in 2013.

Former chief investment officer Willoughby was a big part of that reason, and encouraged staff such as Fallace not to be so afraid of losing that they missed opportunities, she said. Willoughby managed the entire fund carefully, redeploying money made in the stock market to diversify the fund, including into real estate, said Rodell.

In 2012, Willoughby, along with Burns, led the fund into its first direct investment into private equity companies, taking a stake in American Homes for Rent, which buys, upgrades and sells homes.

The company went public in 2013. As of last summer, the Permanent Fund owned a 21 percent position in the firm, the fund's 2015 annual report said.

The state's initial investment was $600 million, and was worth $632 million in February.

Fallace led the fund into its first investments in biotech startups. The state has invested in three so far. The companies have adopted Alaska-themed names to honor the state's large financial support. Two of them prominently feature Alaska-themed art on their websites.

Fallace's most recognized success was Juno Therapeutics — named after the Alaska capital under a slightly different spelling, and also, appropriately, the goddess who protected Romans. The company is working to genetically program a patient's T cells to kill cancer cells.

In 2013, the fund invested $129 million in the venture before Juno's highly successful initial public offering in late 2014. The value of the state's investment grew to around $1.5 billion as the stock price rose, but more recently had fallen back to about $1 billion, said Rodell.

Earlier this month, the fund sold one-third of its initial stake. The fund received $335 million in cash, more than doubling the initial investment, while retaining more than $600 million in stock, she said.

Fresh off that success, Fallace encouraged investment in Denali Therapeutics, a San Francisco-based company that launched in May to develop therapies for Alzheimer's and other neurodegenerative diseases.

The Permanent Fund has agreed to provide up to $153 million for that startup, but has invested $9 million so far. The fund owned 27 percent of the company last summer, according to the annual report.

Fallace also led the investment in Massachusetts-based Codiak Biosciences, which plans to fight cancer using tiny exosomes, natural vesicles that influence cellular behavior. That startup launched in November. The fund has invested $10 million in that company.

Rodell is hoping the new investments pay off like Juno Therapeutics, with a large IPO and gains in stock prices boosting the value of the state's investment.

During nearly three years at the fund, Fallace received one raise.