The Alaska Permanent Fund Earnings Reserve Account, where the Alaska Permanent Fund dividend is drawn from, has dropped in value over the past quarter.
While in May, there was $17.6 billion in the ERA, a note from the Fund reports says it is down to $8.4 billion. But it’s actually down even more. A lot more.
The actual realized earnings of the account are now just over $3.09 billion, with unrealized gains at $1.3 billion.
That’s because on July 1, the state operating budget took a draw of $3 billion.
The ERA will have an estimated $5.3 billion available for future appropriation, according to the fund.
That is a seriously low number for state budgeters to work with over the coming years.
The rate of return for FY 2020, which ended in June, just over 2 percent. Markets in general have crashed across the globe due to the current pandemic, so the Alaska Permanent Fund is not alone in that regard.
At the end of the fiscal year, the entire fund, which is a result of oil royalties that go to the state, stood at $65 billion. But most of that is untouchable. Only the Earnings Reserve Account can be used to pay dividends to Alaskans and to shore up state services, via a method called the Percent of Market Value, or POMV.
The low balance in the Earnings Reserve Account means next year’s budget will have little to draw upon. Permanent Fund dividends will be competing with state spending. And in future years, with the fund’s low rate of return, Alaskans can expect smaller dividends. This year’s dividend was $992.