Episode 141: Future of the Fund
How much does Alaska’s Permanent Fund Dividend program figure into the hopes and dreams of Alaskans? That’s a question we explore this week on Frontiers. It’s important because Alaskan confidence in the fund’s future, or lack of confidence, might become a self- fulfilling prophecy.
Experts say one bad sign is the legislature’s departure from using a standard formula to calculate the dividend. Since the PFD program began, the size of the dividend was tied to the fund’s profits. But in 2016, the governor capped the dividend to set aside money to cover the state’s chronic multi-billion dollar deficits. The legislature did the same thing last year and again this year.
In this week’s show, we look into the economic crystal ball, to see how these developments affect the long-term future of the fund.
Here’s are the highlights from this week’s show:
• What the PFD program means to young Alaskans and why a surprising number feel they’ll be the last generation to receive PFD checks.
• Steve Rieger, a former lawmaker and a former trustee for the Alaska Permanent Fund Corporation, talks about an important principle that’s at stake – the dividend program’s role in protecting the fund.
• Larry Persily and Tim Bradner, longtime political observers, weigh in on a proposed change to the way dividends are doled out – the Percent of Market Value plan, in which the dividend would be managed more like a trust.
The protracted political debate over the dividend and how it’s doled out has drawn a collective yawn from Alaskans, who for the most part just want to get their checks -- so there wasn’t much of an outcry when legislature cut the dividend down to $1,600. Under the historical formula, it would have been $2,700.
The legislature is now at a historical crossroads that could determine the size of future checks. It has run out of savings to cover a massive state debt, which means it will have to draw from the fund’s earnings account to pay for the cost of state government – something that’s never happened before. Up until now, the fund has mostly been used to pay dividends to Alaskans, about $22 billion since the first checks were issued to Alaskans in 1982.
Right now, the Permanent Fund sits like a golden goose. It has grown to about $65 Billion and has rolled-out sizeable nest eggs for Alaskans for 36 years.
The practice of tapping the earnings of the fund to pay for state government will affect the fund’s growth and the size of future checks -- so a lot depends on the decisions lawmakers make today. It’s an important time to peer into the future and look beyond the political fog.
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