I read Senator Rob Yundt’s post on the Permanent Fund Dividend (PFD) with both appreciation and concern. I commend his support for a full, statutory dividend: Alaskans are better stewards of those funds than 60 legislators. This aligns with our constitutional framework, where Alaskans are the ultimate owners and beneficiaries of the Permanent Fund, and the Legislature serves as the trustee managing the purse strings. Voters established the Permanent Fund, and Article VIII’s equal-access and uniform-application rules ensure fair resource development. The Legislature’s role is to translate these principles into statutes, leases, budgets, and audits that deliver maximum benefit to Alaskans, with accountability enforced at the polls.
My concern is that Senator Yundt calls for a fiscal plan without providing one. Supporting the PFD is straightforward; governing demands a detailed, balanced roadmap that protects the Fund’s inflation-adjusted value, funds core services, and avoids diverting dividends. I welcome his leadership and look forward to seeing specific line items, timelines, and trade-offs that turn his vision into a practical plan.
A Proposed Fiscal Framework
I have written extensively on Alaska’s fiscal challenges, which are straightforward to address functionally but politically daunting, akin to pulling teeth from a chicken. Alaska can balance its budget, preserve the Permanent Fund, and boost household prosperity by prioritizing outcomes over bureaucracy. The Legislature’s tendency to expand bureaucracy undermines Alaskans’ needs and fails to prepare our children for a prosperous future.
The fiscal solution is simple: live within recurring revenues annually, preserve the Fund’s real value, and allocate dollars to measurable, effective services. Four key reforms achieve this: stabilize Medicaid, replace K-12 bureaucracy with parent-directed Education Savings Accounts (ESAs), develop low-cost energy (hydro, nuclear, modern coal), and restore the statutory PFD while repaying arrears in predictable installments. These changes allow the state to reduce its administrative footprint and support public employees’ gradual, voluntary transition to private-sector roles in resource development and infrastructure.
Stabilizing Medicaid
Medicaid poses the primary budget risk. In year one, Alaska should implement a contracted payment-integrity and eligibility program to remove ineligible recipients, pre-audit high-risk claims, and negotiate outlier costs into case rates, without expanding permanent staff. A statutory contingency account would cap General Fund exposure, preventing mid-year overruns from diverting other priorities. Next, Alaska should pursue one of two paths: federalize core Medicaid administration, shifting financing and compliance to the federal level while retaining local provider networks, or, if federalization is unavailable, adopt an 1115 waiver with shared-savings contracts to pay for outcomes. Either approach creates a predictable, audited program that protects patients and the state treasury.
Reforming Education with ESAs
Education reform should redirect funds to students and teachers, bypassing centralized bureaucracy. A universal ESA law would provide each student a per-pupil amount (adjusted for special needs and remoteness) in a parent-controlled account for tuition, tutoring, curriculum, micro-schools, or vocational training. Over two years, the state should phase out non-federally required functions in the Alaska Department of Education and Early Development and dissolve school district bureaucracies, retaining only temporary facilities and records offices. Existing schools can compete for families as providers, with special-education services guaranteed through contracts and ESA add-ons. Accountability shifts to results, with public report cards tracking reading and math growth, graduation rates, per-pupil spending, and parent satisfaction. ESAs will preserve funding for sports, physical education, vocational training, and apprenticeships, ensuring well-rounded, job-ready students.
Building Affordable Energy
Reliable, low-cost energy drives long-term growth. The state should accelerate hydropower by upgrading dams, permitting run-of-river projects, and using take-or-pay agreements to attract private investment. Simultaneously, a Small Modular Reactor (SMR) siting and licensing act should pre-zone industrial sites, set decommissioning reserves, and invite vendor proposals for remote hubs and large loads. Where feasible, aging coal plants should be modernized with high-efficiency, low-emission technology. A one-stop permitting office will streamline timelines, and time-limited, auctioned production credits will launch projects without ongoing subsidies. These efforts will lower retail rates, support industries, and reduce reliance on volatile imports.
Restoring the PFD
Restoring trust requires reinstating the pre-2016 statutory PFD process, with dividends paid from realized earnings outside annual budget negotiations. Arrears owed to Alaskans should be repaid over time through a dedicated account funded by excess earnings above an inflation guardrail and unexpected surpluses, never touching the principal. The Legislature should also propose a constitutional amendment to protect the PFD formula and the Fund’s real value, ensuring future legislatures cannot raid either. This approach returns mineral wealth to Alaskans while preserving the Fund’s endowment.
Supporting Workforce Transition
As the administrative state shrinks, Alaska should support affected employees with voluntary transition pathways, including priority placement, training vouchers, and hiring pipelines into private firms building energy projects, maintaining infrastructure, or delivering education services. These programs can leverage public-sector skills (e.g., procurement, safety) for roles like construction managers, plant technicians, or instructional providers, with contracts prioritizing local hires and apprenticeships.
Ensuring Fiscal Discipline
Appropriations must follow three guardrails: cap Permanent Fund draws to preserve its real value, set a General Fund spending limit with automatic rollbacks if revenues fall short, and pass clean, single-subject finance bills. Quarterly scorecards should track Medicaid costs, ESA adoption, energy costs (cents per kilowatt-hour), and PFD arrears. If targets are missed, prewritten corrective actions (such as rate adjustments or contract rebids) will trigger automatically.
Implementation Timeline
Within the first 90 days, pass the ESA law, sunset school districts and DEED, enact Medicaid payment integrity and contingency accounts, restore the statutory PFD, create the arrears fund, and establish SMR siting and a one-stop energy office. In year one, build the ESA platform, sign initial hydro and modernization agreements, publish transparent baselines, and pay the statutory dividend. Years two and three complete the Medicaid strategy, launch ESAs, award SMR and coal projects, and begin arrears payments. By years four to seven, new energy projects reduce rates, arrears decline, and Alaska’s workforce drives a private-led resource economy.
Conclusion
Alaska’s fiscal solvency and prosperity hinge on returning power and wealth to families through a restored statutory PFD, universal ESAs, and affordable, reliable energy. A leaner, outcome-focused state can deliver these priorities, fostering a future where Alaskans thrive, unburdened by bureaucracy.