First, here's s quick history of Alaska's PFD:
The Alaska Permanent Fund (PF) was created in 1976 by an amendment to the Alaska Constitution. It was established to ensure that Alaskans would get long-term benefits from the temporary bonanza that oil development would bring to the state. The first deposit was in February 1977 in the amount of $734,000.
In 1980 the legislature created the Alaska Permanent Fund Corp. (APFC). The same year the legislature, by state statutes, increased the fund's share of certain mineral revenues from 25 to 50 percent which placed more into the PF. (All of the original leases are still paying 25%, as per the constitution.) In 1982 the legislature approved the PFD program and paid out a check for $1,000 to every qualified resident of Alaska. The legislature also instituted inflation-proofing of the PF. All of this was done by state law (statute).
As of January 1,1999 the PF had a total value of $25.3 billion and that total is broken down in the following manner. The principal, or corpus, of the PF was $18.6 billion. Of this amount, $6.4 billion was placed into the PF corpus by constitutionally dedicated oil royalties. The reason that the PF is as large as it is, is that during this same time the legislature placed all extra interest earnings back into the PF corpus along with extra one time sums of money the state was receiving. This amounted to $6.6 billion, which is more than was placed into the PF constitutionally. $5.5 of the $18.6 billion is the money placed into the PF for inflation-proofing. The remainder of the PF is made up of $2.8 billion in realized income or interest earnings and $3.9 billion in unrealized income. Unrealized income is the difference between the market value and the cost value of the assets currently held by the PF which become realized income only when the asset is sold. An interesting side note is that as of April 19, 1999 the PF total value was $26.343 billion, but I do not have a current breakdown of the fund. In other words the PF grew by over $1 billion during the first four and half months of this year.
Simply put, the principal or corpus of the PF is protected constitutionally and cannot be spent without a vote of the people. The income from the PF which pays for the PFD, inflation proofing, and the excess interest earnings is subject to statutory changes by the legislature. Remember, the constitution says the income was to go into the general fund unless otherwise provided by law. Under current state statutes the PFD is paid out first and then inflation-proofing is done second. Only the principal of the PF is inflation-proofed.
How is the amount of the dividend determined each year? Basically the total number of eligible applicants is divided into the average income for the last five years, giving us the individual amount for each dividend. There is some real concern among legislators and APFC Board members about the practice of paying PFD's out on a five-year average. If there is a major drop in the stock market, the PF would not earn enough interest to pay out a five year average and still inflation-proof the PF.
No, it's definitely not as high as it normally is, but I will definitely take it!!