By JOSHUA CHURCH | Investment Adviser Representative, Arbor Capital Management
I like Senator Robb Myers. He cares about Alaska and he’s thoughtful about policy. But on the Permanent Fund, he’s wrong.
Robb argues we should keep two accounts—the constitutionally protected Principal and the separate Earnings Reserve Account (ERA)—because that structure supposedly creates a “hard floor” of protection. He says merging them into one account would weaken safeguards and tempt the Legislature to overspend.
Here’s the truth: merging the accounts, with a constitutional Percent of Market Value (POMV) rule, would actually make the Fund stronger, more efficient, and better protected.
Right now, Alaska manages the Permanent Fund in a way that almost no serious endowment or trust in the world does. We keep “earnings” in a side account, separate from the principal, and let the Legislature draw directly from that pot. This creates uncertainty. Because lawmakers don’t know how much they’ll need until the last minute, fund managers are forced to keep billions in short-term, low-yield holdings to cover potential withdrawals. That drag reduces long-term returns and prevents the Fund from growing as much as it could.
In money management, this is the opposite of best practice. Many major endowment—from Ivy League universities to the largest sovereign wealth funds—use a single-fund model. All assets remain invested together in one pool, and a fixed percentage is withdrawn each year. That structure allows the portfolio to stay fully invested, which maximizes compounding returns over decades. It also stabilizes withdrawals so policymakers can budget with confidence.
This isn’t theory—it’s how the most successful funds in the world operate. Commonwealth North, Alaska’s most respected nonpartisan civic group, studied the issue in detail and unanimously recommended merging the accounts into one endowment with a fixed, constitutionally protected draw of 4–5% per year.
Still, some Alaskans are understandably cautious about change. Let’s take their concerns seriously.
Concern 1: “The Fund hasn’t been managed well enough to deserve more trust.”
That’s a separate issue and if the fund isn’t managed well enough than the legislature needs to hire new managers and do a better job on their reviews. This reform doesn’t give up accountability. In fact, it adds more structure. A single-account model removes the guesswork, locks withdrawals to a predictable rule, and allows managers to focus on long-term growth instead of short-term liquidity. And nothing prevents us from demanding stronger oversight or performance reviews. Those are separate conversations.
Concern 2: “A 5% draw is too high.”
I agree. While 5% may be nice, it’s aggressive if we want to protect long-term value. A safer number is 4% to 4.5%. That’s still high enough to support services and the dividend, but conservative enough to ensure the Fund’s purchasing power is preserved for future generations.
Concern 3: “We should only spend earnings, not principal.”
This one sound sensible, but it reflects an outdated view of investing. Many of the best investments today—think Apple or Amazon—don’t pay large dividends. Their value comes from growth, not “earnings.” By contrast, companies like Ford or Sears returned plenty of dividends but delivered far less wealth over time. Limiting ourselves to only what shows up as “earnings” is like tying one hand behind our back.
A better way to think about it is like a farmer with chickens and a cornfield. Should he only live on the eggs the chickens lay each month? Or should he also plan for the annual harvest, budgeting carefully so it lasts until the next season? The Permanent Fund works the same way. With smart management, we can responsibly draw a small, fixed percent of the Fund’s total value each year, regardless of whether those returns are labeled “earnings” or not.
This reform doesn’t cut the dividend. It doesn’t grow government. What it does is modernize the Fund, align it with global best practices, and lock in protections that keep politicians from raiding “extra” cash.
A unified endowment model brings three benefits:
- More reliable growth – less idle cash, more strategic investing.
- Stable, predictable budgeting – lawmakers can plan with greater confidence.
- Stronger long-term protections – the Fund stays intact and continues to grow.
The Permanent Fund is Alaska’s crown jewel. We owe it to future generations to manage it wisely. Fear of change should not keep us from making improvements that every other successful endowment in the world already uses.
I respect Robb, but on this one, he’s wrong. Merging the accounts under a constitutional draw rule won’t weaken the Fund—it’s the best way to protect it for decades to come.
A strong case for predictability. Now if we could only ensure responsibility from the legislature when they have a predictable amount to invest or squander. I for one am not holding out much hope.
Great point.
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Predictability without accountability, what persuades us one can happen without the other?
Great point. I hope voters will hold the reps accountable better than they are now!
Sounds like someone that likes to spend everyone else’s money. The problem is we do not trust legislators and if they support this it is because it will pour money into their agendas not those of Alaskans. This also has the backing of people that don’t want the dividend. Most are of “means!”
Not sure it benefits the single mom with 3 kids that works at Walmart.
In spite of what this writer says, it’s not broken so don’t fix it.
Why did Ford go from the 1908 Model T automobile to the 1927 Model A? The Model T was a classic that made motorized transportation available to everyday people. It was tried and true. The 1927 Model A had a 40 horsepower engine instead of the Model T’s 20 H.P. But was the extra speed really necessary? The Model A added extras that probably added complexity and cost, such as 4-wheel brakes instead of just rear brakes on the Model T, and 3-speed transmission instead of 2-speed. Electric starter instead of hand-crank. Just when we get used to something, someone comes along and wants to change everything.
Yep, just another money grab for bigger government
No, Senator Myers had it right! And, his thoughts were well read and thought out. If you represent this type of investment, its you that are worried. I’m not worried about Myers thoughts. The next good thing to happen is that Dunleavy will be gone and all of his crews he hired, including those on the PFD board. More than likely, just like Dunleavy did to the previous board members. and, with changes by law on terms of board members, we can be back in a normal sense of work, responsibility and business. the PFD is not your chain pulling venture. With a decent and responsible governor elected after Dunleavy, we’ll have a better handle on those issues of the PFD and responsible persons to manage it.
All thoughts and questions are more than welcome to debate over.
Five percent is entirely possible if the Permanent Fund was not managed as a plaything where various managers were not given authority to manage (play) the money in unproven techniques. I think we should hire Wall Street managers with proven track records and get rid of the second stringers in Juneau. The current return is the thing of amateurs and not even lucky amateurs.
Rob Myers is correct. You are wrong. Merging the funds makes it problematic for a full, statutory PFD payout. And Mr. Church doesn’t believe in a payout to the stakeholders of this state. He believes in Big Government getting the money.
Your comment is the bottom line to this story.
You’re just assuming that and you’re wrong. I’ve been a strong support of a full Pfd because ultimately that is the dividend that the Alaskans are owed since they’re private sub surface rights were taken. However, the current system hasn’t stopped them from stealing most of your Pfd and we should manage what we have as best as possible.
Mr. Church is exactly right. His proposal simplifies the accounting while at the same time providing a better platform for the management of the fund consistent with modern, more prudent investment practices. In particular, managing for optimal total return for a given level of risk is hampered somewhat by the current structure.
The fund has other problems that need to be addressed. In the past some trustees have had a very heavy had in levering campaign contributions from outside fund managers. The trustees should adopt a policy prohibiting trustees and staff from soliciting such contributions from managers while similarly prohibiting contributions from managers. All benefits of investment activity should flow to the fund and not to the politicians.
Further, some manager selections and directed investments have also likely stretched the prudent investor approach but those concerns need to be addressed in a different manor.
No, no, no. The only people advocating for combining are those who want the $$$$ for more and more and more and bigger government.
Josh, your arguments fail, period. First and foremost, those other sovereign wealth funds you refer to DO NOT HAVE A CORRUPT GREEDY LEGISLATURE TRYING TO STEAL IT ALL. Entirely different animals. We must make it as hard as possible for the legislature to continue stealing the PFD. Any POMV scheme that bears the possibility of being trusted must be in the form of a Constitutional Amendment… – not going to happen. Your analogies for Concern #3 make for good story telling like any good fairy tale – but they don’t fit the subject, just like your entire premise that somehow the Alaska Permanent Fund is just like any sovereign wealth fund. It is the people’s money, and ONLY that portion already written into statutory law belongs to the Legislature for State expenditures – Justice Bolger is in error extremis. Current POMV schemes are illegal theft.
Leave the corpus constitutionally protected. We already have inflation-proofing. The fund is growing slowly, but it is protected from the wolves. Leave it alone.
The chicken and corn analogy did not take into account the weasels and snakes we have in this equation.
They are already in your hen house
The Permanent Fund is being dismantled piece by piece, by so-called “smart folks.”
The average Alaskan on the street and in the villages can see this.
The Alaska Legislature has broken Alaska Statute 9 years in a row. The Alaska Supreme Court said they have the constitutional power of the purse, but they’re literally choosing to break Alaska Statute for 9 years in a row without good cause. What legal consequences do they face for stealing from the people?
And now you want to make it easier for them?
What happens to any of the rest of us if we decide we’re too hungry and can’t afford food and steal it instead?
And why haven’t they changed the statute in all these years so that they are NOT literally breaking the law?
The legislative body is seriously complicit but the two last governors are responsible for the damage done to the allowable amount of monies to residents. Dunleavy is the worst and is continuing to destroy everything he touches with people he hires in his spoils rewards as favors for their crooked management in their jobs. Lying mealy mouthed Adam Crumb is the one individual that should be investigated by the FBI for many illegal activities in the Dept Health and in Revenue and the PFD board. Thune is another in DEC Com. and rewarded by Dunleavy to the PFD board. Crum has totally screwed the PFD up with bait and switch practices and reporting to the public in what he planned to do without consent of the public or legislative body. Dunleavy chooses employees that lie for him and rewards them with high paying jobs after the crucial lie and hiding from prosecution.
“Because lawmakers don’t know how much they’ll need until the last minute”
This right here tells me why we should not take your advice. 🤦♂️
This writer is WRONG. Leave our Perm Fund alone. Senator Meyers is right.
The author of this piece is spewing absolute nonsense. Here is one example, of many from the piece:
“We should only spend earnings, not principal.
This one sound sensible, but it reflects an outdated view of investing.”
What Church is really saying is we should let the legislature spend principal. What an unmitigated disaster that would be.
The legislature has already stolen over $70,000.00 from a family of four in lower dividends because the legislature voted to give away our oil with SB-21. Because of this, Alaskans statutory dividends have been lost- and the dividends now paid are entirely up to the legislature. These, lower dividends do not follow the statutory formula. Alaskans have paid a very, very costly price.
What is now going on is the special interests, from those who want Juneau to spend ever more money, to the oil industry that wants to keep the SB-21 grift going as long as possible, want to use the principal of the Permanent Fund as a cash cow.
These are all lying hucksters. All of ’em need to be rejected by Alaskans.
Fatal flaw in the article “lawmakers don’t know how much they’ll need until the last minute” lmao! Can’t spend more than we bring in… it’s really not a difficult concept.