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 All assets remain invested together in one pool, and a fixed percentage is withdrawn each year.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.
