A Permanent Fund endowment for all Alaskans

In November of 1976, after graduating from high school I went to the polls, and along with more than 75,000 Alaskans, voted YES on Proposition 2; this vote created Alaska’s Permanent Fund (PF). It continues to amaze me that more than 30,000 Alaskans voted against this measure.

We were blessed to have wise leaders who had the foresight back in 1976 to ask Alaskans if we should save a portion of our non-renewable resource; making it a renewable resource in the corpus of the PF.

The vote on Proposition 2 has created enormous wealth for Alaska and is the envy of other states. Today, Alaska’s PF and Earnings Reserve Account (ERA) has over $80 billion and is being managed and invested by experienced financial professionals. 

In addition to the deposits discussed above, the Legislature with the support of the Governor has deposited billions more into the fund’s corpus and appropriated hundreds of millions more in inflation proofing deposits to maintain the value of the PF.

The PF consists of two separate, but related accounts; the corpus or principle of the PF and the ERA, which receives earnings and realized gains from the PF investments. The corpus of the fund is constitutionally protected. The ERA is not; it can be appropriated — spent — with a simple majority vote of the legislature.

Senate Joint Resolution 14 currently resides in the Senate Finance Committee and proposes to ask Alaskans to combine Alaska’s PF and the ERA into one account. Simply put, this resolution proposes two changes: 1) the balance of the ERA shall be deposited in the corpus and become part of the PF principle and 2) the Legislature MAY appropriate from the PF an amount that is NOT more than 5%. 

Part 2 is particularly important. Currently the Legislature is withdrawing 5% to meet the public’s needs and balance the state budget. There is growing concern with falling oil prices, dwindling savings accounts, and few, if any, revenue options, that the Legislature will move to withdraw more than 5% to meet current needs. Placing the 5% withdrawal limit in the constitution will protect the remaining realized earnings in the corpus/principal of the PF and provide a known revenue stream for sound fiscal policy planning.

I believe that if the Legislature passes SJR14 as soon as possible, it would allow Alaskans to debate this important issue.

The Board of Trustees of the Alaska Permanent Fund Corp. has recommended combining the ERA with the corpus of the PF. As a former legislator and a former Senate Finance committee co-chair, I have come to trust the knowledge of the staff at the APFC and value the experience and recommendations of the members of the Board of Trustees.

The Senate Finance Committee sponsor statement for SJR 14 says it best: “Consolidating the two accounts follows globally recognized best practices for endowments and trusts. A single-fund model ensures all earnings are retained and reinvested within the fund, eliminating the need for inflation-proofing, and the endowment model structure guarantees an annual, sustainable POMV transfer. Additionally, constitutionalizing the draw protects the Permanent Fund, preventing the legislature from making ad hoc draws on the Fund.”

As a more “mature” woman, retired, with decades of work experience and community service I support combining the corpus of the PF and the ERA. 

Given the opportunity, I will vote YES on a constitutional amendment, to secure the PF for future generations of Alaskans and provide a sustainable and predictable revenue stream for our state.