Alaskans own the Permanent Fund, and 50% of earnings lawfully belong to them



Tim Bradner, an otherwise reasonable person, made a couple outrageous statements is his column printed in the Anchorage Daily News.  

It caught my eye because in it he questioned how good conservatives (and I count myself as one) could support a socialist idea, giving money away.  

Are Permanent Fund dividends giving money away?  Historically, economically, by intent and in practice over the last 42 years of Alaska Permanent Fund Corporation performance, the answers are no, no, no and no.

The dividend program is a result of a conservative decision and statewide vote for a Constitutional Amendment by Alaskans in 1976.  The Amendment required the State to save 25% of the royalties from our mineral wealth.  This voluntary act continues to save a portion of our wealth for the individual benefit of Alaskans.  Individually Alaskans, acted to establish a Trust to manage the money.  Gov. Jay Hammond was the man who pushed the savings plan for the benefit of all Alaskans.  

The investment on our behalf was made the same way you would go to your credit union and open a savings account.  Or go to a stockbroker or real estate broker to establish an investment account.  The money you use to open an account, is still your money, not the bank’s.  The money set aside for deposit and the earnings to the APFC are yours, just managed jointly with other Alaskans.

The APFC is legally a trust and that demonstrates who owns the money.  You do and I do.  All Alaskans do.  Perpetuating the myth that our investment income is not ours but somehow mysteriously morphed into just another fund of the state of Alaska is subterfuge. “Giving money away” as Tim opines could only be true if the state owned the Fund.  It does not.  

The second Bradner broadside was the fallacy that economists have a difficult time assessing the economic impact of the dividend.  My UAF prof in Accounting would issue an F for that laziness.  Economic 101 clearly teaches the Multiplier Effect on cash coming into an economy.  

My economics text said, “As money is expended in the state’s channels of business, it changes hands several times. To measure the multiplier effect, we must focus on how much total business or income results from the original expenditure. The individuals and businesses receiving a payment return it to the income stream as payment of expenses. At this point, the all-important leakages emerge. When an individual or a business returns dollars to the income stream, they return part within the state and part outside. The portion spent outside no longer creates more business or income within the state.  The portions of the money retained within the state determine the true multiplier.”  

That means that each time a buck turns over, it is counted as new money for the portion spent in state.  

In my banking career, I read hundreds if not thousands of financial statements. I developed an easy kind of accounting that I call intake and exhaust. All the money in, all the money out.  What is left?  That is income for each Alaska enterprise and cumulatively is the gross state product for Alaska. All income, both public and private, determines the health of the Alaska economy.  

Look at Tom’s insurance agency as an example. Tom’s multiplier effect is dependent upon how many employees, how much they make and their spending habits, local or national.  

The historical multiplier effect of cash generated in a consumer economy like Alaska is 7.  

Money turns over and touches seven spenders before it reaches the end of its life cycle.  Does it matter where the employee gets the money?  Commissioned, salaried, hourly or investor, just count the cash and determine the multiplier effect.   

Now throw in the Permanent Fund dividend as income to that employee’s funds, another $5,000 to the annual income of the employee as the governor proposes. That is how you measure the value of the PFD to the economy of Alaska.  And it is huge.    

Cash is paid to all employed, retired, military and unemployed Alaskans.  Then it follows the normal economic pattern and multiplies just like bunnies. A dividend paid has the same multiplier effect as the wages to each employee, around seven times. From the financial statement of the APFC for FY 2019, the dividend appropriation for that year was $1,015 billion.  The net multiplier effect ($7 X 1.015 billion) was therefore $7.105 billion. Huge.      

Is the economic effect of tourism spending difficult to calculate? No. Is the economic effect of the oil and gas sector spending difficult to calculate? No.  The APFC dividend’s economic effect is no more difficult to calculate.  

Instead of calling it the Alaska Permanent Fund, the Trust could instead be named the Exxon Shareholders Fund. Would any Alaskan receiving a dividend complain if their dividend went up? Refuse to accept it? Criticize those fellow shareholders who get it? No, shareholders only revolt if their board of directors (just like our Legislature) cut their dividend when earnings are stable.  How long do you think the board of the fictional Exxon Shareholders Fund would last in their job by shortchanging their shareholders?  

The more cash in the economy, the healthier the Alaskans economy.  Our Alaska Permanent Fund earned $9.419 billion in the first six months of this fiscal year.  Huge. Without touching the principle, the fund’s available unspent earnings are $13.047 billion. Are we broke?  Not by a long shot. Let us count our blessings not our problems.    

So, Alaskans, buy local. Make certain our APFC income is tracked by Generally Accepted Accounting Principles. We agreed that 50% of our income should be paid out in dividends. And that other 50% may be paid out for government expenses. That agreement is still in statute.  Ask your legislator to honor it.      

Jim Crawford is a third-generation Alaskan entrepreneur who resides in Anchorage with his bride of 37 years, Terri.  The Alaska Institute for Growth is a local think tank which studies and reports on and may sponsor projects of sustained economic growth for the Alaskan economy.  Crawford known as the Permanent Fund Defender was a member of the Investment Advisory Committee, appointed by Governor Hammond to plan and execute the Alaska Permanent Fund Corporation.


  1. Bravo, THANK YOU JIM, for a straight up analysis and explanation of the FACTS concerning OUR PFD!! My father would be smiling from his grave in Homer ,knowing that his decision to relocate to Ak in the early forties and to invest his life in Ak and raise a family here was not without reward!!

  2. To a progressive all things come from the government: all life, all liberties and all property. To them, we as citizens are endowed with only that given by largess of the government and what government gives, government can withhold. They lust for total power and control over every aspect of government, and therefore the people, no tactics barred. As opposed to conservatives:
    “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.—That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,—That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it…”

    • You fail to realize that WE are the government. We get to decide who the deciders are. Nothing comes from the government but we give it the power to do so. If the government fails us, the ones we need to look to for blame are looking at us in the mirror. The government reflects who WE are. We reflect who the government is.
      An integral part of the “we” is that it is a collective. Each of us on our own cannot run a country. We would be eternally at odds. Governments exist to do the things that need to be done, such as build roads and infrastructure, educate our children, create a military to act in our behalf, and, yes, to look out for those who are unable to take care of themselves. Otherwise, we are at the mercy of the wolves, those who would exploit us for what they can take from us. You have it exactly backwards.
      The we in the PF is the collective of all the citizens of the state. I don’t get to pick my part out of the PF unless those who also have claim to the PF agree. Otherwise, it would merely be another untargeted government handout given to everyone equally, whether they needed it, earned it, deserved it, or wanted it.
      Right now, the PF is working for the benefit of all Alaska citizens. It is the largest contributor to the state treasury at the present time. If we siphon off a few billion dollars now to pay a bigger dividend, we will lose the earning power of that money. The PF will be smaller, the PFDs in the future will be smaller, and the PF could conceivably go away. Is that what you want? More money now and to hell with the future? Not a good plan for the future.

      • Very grandiose and I want to think that our representatives represent the will of the collective. Sadly in my first hand experience with both mainstream parties, many narcissistic egotistical megalomaniacs run, and many of the rest are just outright self serving criminals planning to pad their own pockets (how many go straight from government to board of directors or lobbyist?). Among both groups, few are above ‘a little edge here and a little edge there to win’ (Gabby Ledoux?). And yes, I have encountered many truly altruistic people in both parties wanting to serve the masses and I applaud and support them, but they seem far too few. Our government was founded on the idea that our liberty and our rights come from our creator, not from the largess of government. The decision how to use the PF comes down to the basic premise of: who can better decide how to spend this money, individual families or bureaucrats trying to court votes for reelection? Given the chance the bureaucrats will spend it all buying votes, prestige, and, yes, padding their own pockets. The PF belongs to the people and citizens can best decide how to spend it in lieu of paternalistic big brother taking care of them. I agree that we need to pay for what we get, but each of us needs to guard our acorns carefully. The wolves wear many skins and the worse appear in sheep’s clothing wanting to fleece us for our own good. I believe in charity, but it is as wrong to enable those who will not help themselves as to ignore those who cannot help themselves.

  3. Of course, the Permanent Fund is inherently communistic (I would not even say socialistic), in that individuals are denied the normal ownership of their land’s inherent mineral rights by the constitution of the state of Alaska. It should be shameful to any real believer in the free market that the situation is thus.

    • Yes, but so-called free markets are never free. They inevitably end up with the big players buying up the small players, creating monopolies, and, controlling the markets. Not free at all. Capitalism needs restraints just like any other form of human endeavor. They aren’t self regulating, just like communism, or fascism, or socialism, or democracy aren’t

  4. Amen Jim. You should do a follow up piece on the detrimental effects of stealing the PFD – as with any tax, it’s a big negative on the economy. Cut the government, not the PFD.

  5. Jim, I like how you think the amendment for the PF had something to do with the PFD. You certainly know it had nothing of the sort. And the courts have also ruled that there is nothing relating the two, other than that outdated pfd formula that no longer applies to anything.
    Go ahead and push your idea but it goes nowhere without another constitutional amendment determining what the PFD might mean. I don’t see it happening, or if it does get on a ballot my guess is it fails. Just my opinion.

  6. Great Analysis. . A suggestion for future fund management: the fund is now 70 billion. 50 % of the dividend goes to Alaskans and 50% goes to gov’t expenses. Why not divide the fund in 2, two 35 billion
    separate accounts. One the politicians spend, and one they cant touch that comes to us Alaskans.

  7. Anyone who has been around this state for while and reads business journals knows that Tim Bradner is a Lefty Democrat. He is not a well-reasoned follower of free market principles, but rather a rank and file stoolie for the Keynesian model. When he took over the Alaska Journal of Commerce a few decades ago, he changed the scope of that otherwise proudly independent reporter and changed it into a mouthpiece for what Keynes would classify as a quasi government-managed economic business magazine. Pure socialism, not even well-disguised for readers who really understand economics.
    As for the Dividend, rearticulated by a true conservative like Crawford, the Fund from which it is derived was created to act not like a dedicated fund, but rather an Account. And it should have been named the Permanent Account from the onset, so as not to confuse the Alaska Supreme Court. Crawford has it correct. The intent of the Legislature was always to distribute a dividend back to the shareholders. (Read McGee’s Alaska Law Review, 2020).
    Bradner can present his sophistry and try to call out conservatives for alleged socialist intent. The truth of the matter is that Bradner has run out of intellectual fuel, like so many Democrats have. Reverse hypocracy is easily detectable and identifiable when the purveyors and sophists resort to name-calling.

  8. I agree with everything said here, including the reader comments. But we have to stop holding state government harmless from our economic problems. Otherwise the Permanent Fund will merely be the last fund consumed by government. Look at this Governor! He tried one time to reduce state spending, and he now supports huge increases in the size and scope of government. He has given up, and by proposing to take over $9 billion from the Permanent Fund he has given Legislators from both sides a method and a reason to come together to not pay the full PFD. This pandemic is merely the latest excuse to avoid bringing the state government spend into alignment with our economy. We need to pay the PFD but we also need a similarly sized reduction in the state operating budget right now, and that is the fundamental way to protect both the Permanent Fund and the PFD. Stop sacrificing the private sector in order to protect state employees and Juneau! Does anyone here disagree with me?

  9. Jim, good article explaining how the fund is intended to operate.
    It appears that many people who disagree with your position claim the ” conservative” moniker as credentialed support for their argument. This is a ruse , and ultimately means that bureaucrats know best in how to spend your $.
    I once asked Oral Freeman, the Father of the fund, a Democrat, if any part of the fund so conceived was to fund Government. He was agitated by the question, his loud response was ” Hell No!”. It was intended to keep the Government from Spending all of the $ on special interest. It was devised to make certain that the ” little” people received their share of the Oil Wealth.

    • You are confusing the PF with the PFD Robert. When the PF was created there wasn’t the slightest thoughts of how to give some of that money to the “little” people. And Hammond’s initial thoughts were to give PFD money to Alaskans based on their years in country-which was ruled unconstitutional by Zobel case.

  10. All very interesting. Ultimately this discussion is about the state budget. Cutting the budget means reductions in medicaid and education. Transparency of medical billing, work for medicaid, and expansion of school choice are examples a (the?) solution. Privatization of other state services is another. This legislature is not likely to enact these or other savings. Are we to be the next Detroit or will Biden print us some fiat money? Crazy times.

  11. It be better giving the full dividends away to Alaska resident applicants than leaving it ALL into the hands of Legislators who cant even balance the state’s budget with what was/is given to them during the last 20 fiscal years. And they want more!!!? Hahaha

      • Right, republicans who sided with the democrats. They are RINOs. Even Geissel kept saying we couldn’t “afford” a PFD and we were selfish for asking for it. She was a Republican who consistently sided with the democrats. Now she is gone!

Comments are closed.