Module IX - Alaska Governance and Contemporary Issues

Musings:  Going through significant financial shortfall and budget cuts in our district in the last 5 months has caused me to ask, "With so much money in reserve, why is the State of Alaska so hesitant to support the education of the Alaska School Districts?"  I cannot reconcile this question to the games being played-out in the legislative session.  It doesn't seen that the Permanent Fund really belongs to the residents of the state, but controlled tightly in the hands of the legislature.  It seems like too much power is in the hands of too few.

Alaska Permanent Fund $42 Billion Strong

Essential Question:  Alaska Permanent Fund - $41+ Billion.  It is our "rainy day account."  So, is it "raining" yet?  How hard is it raining?  Is it time to spend some of the earnings of of the Alaska Permanent Fund to provide for state services?  What arguments would you present to the legislators reluctant to confront this issue?



History of Permanent Fund


Fund Balance - for the past 20 years, the fund has been maintaining or increasing.
FY 1997 - $21 Billion
1998 - $23 Bil
1999 - $25 Bil
2000 - $26 Bil
2001 - $24 Bil

Growth of Alaska Permanent Fund since beginning.
"Alaska Permanent Fund Dividend: An Experiment
in Wealth Distribution," by
Scott Goldsmith, 2002

2002 - $23 Bil
2003 - $24 Bil
2004 - $25 Bil
2005 - $27 Bil
2006 - $29 Bil
2007 - $31 Bil
2008 - $33 Bil
2009 - $34 Bil
2010 - $36 Bil
2011 - $38 Bil
2012 - $40 Bil
2013 - $42 Bil



Major Historical Data Points
*1968 - first major oil strike.  State issued leases to oil companies and took in $900 million.  The money was spent quickly on needed state infrastructure and speculative ventures.  Alaskan citizens complained about the way the legislature spent the money.
*1976 - Alaska Permanent Fund was created (Article 9, Section 15 of State Constitution)
*1980 First Alaska Permanent Fund Distribution was authorized.  However this was not distributed until 1982.
*Per person payouts have varied from smallest of $331 in 1984 to $3,269 in 2008.

PFD from $331 to $3,269 over history
(google image)

Payout History

2011 - $1,174.00 per person

2010 - $1,281

2009 - $1,305

2008 - $2,069 + $1,200 Resource Rebate

2007 - $1,654

2006 - $1,106

2005 - $845

2004 - $919

2003 - $1,107

2002 - $1,540

2001 - $1,850

2000 - $1,963

1999 - $1,768

1998 - $1,540

1997 - $1,296

1996 - $1,130

1995 - $990

1994 - $983

1993 - $949

1992 - $915

1991 - $931

1990 - $952

1989 - $873

1988 - $826

1987 - $708

1986 - $556

1985 - $404

1984 - $331

1983 - $386

1982 - $1,000

* The resources of the state on state land belongs to all Alaskan Citizens.

Permanent Fund Basics
1.  25% of Alaskan mineral revenues are added annually
2.  Inflation proofing money from fund earnings maintain the fund value
3.  Special appropriates can by done by the legislature

How Money is Invested
1.  Principal can only be used for investment purposes.  The earnings of the fund may be spent by the Legislature.
     * Excess money is reinvested, but available for spending
2.  Domestic and global stocks
3.  Fixed income investment (bonds)
4.  Real estate
5.  PF management done by executive director/staff and guidance from the 6-member Board of Trustees

AK Legislature can expend excess money annually.
(google image)

Arguments to Legislature
"The fund was established as an investment account and public trust, the legislation following the  the example of the constitutional amendment, left open the disposition of the Permanent Fund earnings, saying only that the Legislature could appropriate those funds as it saw fit."

1.  The Alaskan government distributes only about $1 Billion per year in the dividend.  This leave much more funding available for needs on Alaska.
Education - Education is being under funded by the Alaskan Legislature.  Anchorage school district alone faces of $20 million shortfall for education.  In Juneau the shortfall is about $5 million.  This is the same for other larger school districts.  The Legislature could fully fund all educational needs from surplus interest gained on the PF.  (Anchorage Daily News - adn.com)

The Permanent Fund was patterned after the Texas Public School fund which is an endowment for education in Texas.  The AK Legislature should follow the pattern set in Texas.  Texas supports public K-12 education in the amount of nearly $1Billion annually.

9% of Alaskan Families live below poverty level.
(google image)

Social Services - Approximately 9% of Alaskan families live below the poverty level.  The additional interest from PF could support the needs of these families.  (http://www.census.gov/compendia/statab/2012/tables/12s0709.pdf)



Combating Drug and Alcohol Problems in Alaska. - 5.6% of
Alaskans are classified as heavy drinkers.  These citizens need medical and psychological help, which could be provided from the Permanent Fund.
(http://www.hss.state.ak.us/dph/healthplanning/movingforward/areas/health.htm)

5-8% of Alaskans may struggle with
Alcohol and Drug Problems.
(google image)

Nearly 8% of Alaskans are
over 65 years old.

Needs of Seniors/Aged - 7.7% of Alaskan population is over the age of 65.  Many of these seniors live in situations needing assistance.













Economic Development - Additional tax credits should be given for the purpose of encouraging business reinvestment in Alaska.  Additional oil sources could be discovered and tapped.  These investments will yield continued growth of the Permanent fund

Economic Stimulus - each year's PFD stimulates the Alaskan economy with Alaskans spending within the state.  This infusion of cash supports the economy Alaska-wide.

Examine Question: Describe the management structure of the Alaska Permanent Fund.


The Alaska Permanent Fund corporation is a Semi-independent Corporation that manages the assets of the PF and other state investments.


Board of Trustees
4 public members
Commissioner of Revenue
One Additional member of the governor's choosing


Additionally there is the APFC Support Staff (accountants, IT specialists, controllers, general counsel)
1 Consultant
3 Advisors (Investment Advisory Board)
(http://www.apfc.org/home/Content/aboutAPFC/board.cfm)





Evaluate:
A wonderful learning experience, knowing more about the Alaska Permanent Fund and how it is handles... or should I say "mishandled?"  From a micro-perspective, there is so much money stored for a "rainy day" and so many current needs in Alaska.  It seems like the Alaska Permanent Fund Corporation and the Alaska Legislature are very hesitant to make spending decisions -- and mostly out of "fear of not having enough."  Perhaps the Alaska Legislature and the Board of Trustees should live WITHOUT for a time to experience much of what the Alaskan Citizenry experiences.


I am starting to enjoy the requirements of this class.  Thanks for creating such a challenging class.

Extend:
How might you use the content from this module in your professional practice?

With all the talk of state finances in this module, I was thinking about a unit for high school students with special needs, in which they could relate.  I think in our area school bus transportation would be a great connection.

Most of our students ride the bus each day to and from school.  I think the students will grasp the fiscal concepts of our state as they look at bus transportation as a service.

I would divide the class into "owners," drivers, maintenance crew and students.  Each group will research the need for transportation and relative costs.  From each group's perspective, they will create posters showing the importance of transportation.

After the students grasp the concepts of bus transportation as a service and as an industry, connections will be made to the Alaska Permanent Fund.  We have the "drivers," the "owners," the "maintainers," and the "users."

Should prove to be an interesting unit of study.

Module Final: Connections

"Alaska Does not Belong to Outsiders... It Belongs to No One... We are only Caretakers of Haa Shageinyaa's creation."  Tlingit Elder, Juneau 2012.

Youtube: Tlingit Student Dancers: The Culture Belongs to Our Youth

Timeline of Southeast Alaska

TIMELINE	Loca-tion...	Nat Hist...	Cult Hist..	Russ Amer..	AK Econ..	Trans- port and  Comm	Pop Set-tle Educ...	WW II: 1939-1945....
Prehistoric Alaska – Human beings have inhabited SE Alaska for 11,000 or more years	Φ	Φ	Φ
16th Century
1579 – Sir Francis Drake’s Secret Voyage to Northwest America brought him to Alaska’s southeast.	Φ	Φ	Φ
18th Century
1742 – First scientific report on the North Pacific fur seal		Φ	Φ	Φ	Φ
1743 – Concentrated hunting of sea otter by Russia begins		Φ	Φ	Φ
1792 – Catherine II grants a monopoly of furs in Alaska to Grigorii Shelikov		Φ	Φ	Φ
1799 – Alexander Baranov establishes Russian post known today as Old Sitka	Φ	Φ	Φ	Φ
19th Century
1802 – Russian fort at Old Sitka destroyed by Tlingits			Φ	Φ
1804 – Russians return to Sitka and attack Kiksadi form on Indian River.  Russians lose the battle but Natives are forced to flee.  Baranov re-establishes trading post.			Φ	Φ
1821 – No foreigners allowed in Russian-American waters, except at regular ports of call.			Φ	Φ
1834 – Father Veniaminov moves to Sitka, consecrated Bishop Innokenty in 1840			Φ	Φ
1848 – Cathedral of St. Michael dedicated at New Archangel (Sitka)	Φ		Φ	Φ
1865 – Western Union Telegraph Company prepares to put a telegraph line across Alaska and Siberia	Φ		Φ	Φ
1867 – US purchases Alaska from Russia	Φ		Φ	Φ	Φ
1868 – Alaska designated as the “Department of Alaska” under Major General Jeff C. Davis, US Army	Φ		Φ		Φ
1869 – The Sitka Times, Alaskans first newspaper is published			Φ		Φ
1872 – Gold discovered near Sitka and in British Columbia	Φ		Φ		Φ		Φ
1876 – Gold discovered south of Juneau at Windham Bay	Φ		Φ		Φ		Φ
1878 – School opens at Sitka; it becomes Sheldon Jackson Junior College.			Φ		Φ		Φ
1878 – First canneries established at Klawock and Sitka			Φ		Φ		Φ
1880 - Gold discovered on Gastineau.			Φ		Φ		Φ
1880 – Juneau is founded			Φ		Φ	Φ	Φ
1881 – Treadwell Mine is the most prominent mine in AK			Φ		Φ	Φ	Φ
1882 – First two AK salmon canneries built	Φ		Φ		Φ	Φ	Φ
1882 – US Navy bombs and burns Tlingit village of Angoon	Φ		Φ		Φ	Φ	Φ
1887 – Father William Duncan and Tsimshian followers establish Metlakatla on Annette Island	Φ		Φ		Φ	Φ	Φ
1890 – Large corporate salmon canneries begin to appear	Φ		Φ		Φ		Φ
1897 – First shipment of fresh halibut sent south from Juneau	Φ		Φ		Φ		Φ
1898 – Skagway is largest city in Alaska	Φ		Φ		Φ		Φ
1898 – Congress appropriates money for telegraph from Seattle to Sitka			Φ			Φ
20th Century
1900 – Capital moved to Juneau	Φ		Φ		Φ	Φ	Φ
1904 – Last great Tlingit potlatch held in Sitka.			Φ
1904 – Submarine cables laid from Seattle to Sitka and from Sitka to Valdez	Φ		Φ		Φ	Φ
1906 – Alaska authorized to send voteless delegate to Congress.			Φ		Φ
1906 – Governor’s office moved from Sitka to Juneau	Φ		Φ				Φ
1912 – Territorial status for Alaska provides for a Legislature			Φ		Φ
1912 – Alaska Native Brotherhood organizes in Southeast			Φ
1913 – First Alaska Territorial Legislature convenes			Φ		Φ	Φ	Φ
1913 – First law passed grants women voting rights			Φ				Φ
1915 – Alaska Native Sisterhood holds first convention in Sitka			Φ
1916 – First bill for Alaska statehood introduced in Congress			Φ		Φ		Φ
1923 – President Harding comes to Alaska to drive the last spike in AK Railroad			Φ			Φ	Φ
1924 – Congress extends citizenship to all Natives in the US			Φ				Φ
1924 – Tlingit William Paul, Sr is first Native elected to Alaska Legislature			Φ				Φ
1924 – Start of airmail delivery to Alaska			Φ			Φ
1929 – US Navy begins 5-year survey to map parts of Alaska	Φ		Φ		Φ	Φ
1929 – Alaska Native Brotherhood Convention at Haines resolves to pursue land claims settlement in SE Alaska			Φ
1932 – Radio telephone communications established in Juneau and Ketchikan			Φ			Φ
1936 – The Indian Reorganization Act of 1935 amended to include Alaska			Φ
1946 – Boarding school for Native high school students opens at Mt Edgecombe			Φ		Φ		Φ
1947 – First Alaska Native land claims suit filed by Tlingit and Haida people in US Court			Φ
1955 – Alaska’s flag adopted			Φ
1956 – Territorial voters adopt the Alaska Constitution.			Φ				Φ
1956 – Alaska sends two senators and one representative to Washington, D.C.			Φ				Φ
1958 – US Congress votes to admit Alaska into the Union	Φ		Φ				Φ
1959 – President Eisenhower signs Alaska statehood bill			Φ		Φ		Φ
1969 – First live satellite telecast in Alaska			Φ			Φ
1976 – Voters establish Alaska Permanent Fund to receive 2.5% of all oil revenues			Φ		Φ
1994 – Voters defeat the latest proposal to move the Alaska capital away from Juneau	Φ		Φ		Φ		Φ
1995 – U.S.-Canada Pacific Salmon Treaty talks hinder Southeast Alaska’s troll king salmon fisheries			Φ		Φ
1998 – The moose was adopted as Alaska’s official state land mammal			Φ
1998 – The new Seward Sea Life Center is the western hemisphere’s first cold water marine research facility	Φ		Φ		Φ		Φ
21st Century
2006 – Sarah Palin becomes Alaska’s first woman Governor.  Moves residence to Juneau			Φ		Φ		Φ