Permanent Fund exec: Dividend bill too optimistic

FAIRBANKS (AP) — The bill to restructure the Alaska Permanent Fund to help pay for government could be too optimistic about the market, the head of the corporation that manages the fund told the Fairbanks Daily News-Miner editorial board Tuesday.

Angela Rodell, the CEO of the Alaska Permanent Fund Corp., said an annual draw of 5.25 percent of the market value of the fund could be tough to meet every year. That money would come from the fund’s earnings reserve account, not the fund’s principal.

The Alaska Permanent Fund Corp.’s Board of Trustees has not taken a position on any of the proposals put forward by Gov. Bill Walker or the Legislature. It did, however, endorse the transition of the management of the fund into a percent of market value model in the early 2000s.

Called POMV, the model allows for a certain percentage of the overall value of the fund to be available to spend each year. The method was contained in the most recent version of the restructuring proposed by the Legislature, allowing 5.25 percent of the value to be drawn. That would actually be less than what the Legislature can currently access from the earnings reserve through a majority vote.

The earnings reserve contains about $7 billion. The entire value of the permanent fund, including both the corpus and the earnings reserve, totals about $53 billion. A 5.25 percent POMV draw would be about $2.5 billion.

Still, Rodell told the News-Miner editorial board she has concerns about the ability of the permanent fund to keep up with the 5.25 percent draw.

Rodell said the trustees have a target of 5 percent real return with an additional 2.25 percent inflation but said the fund has missed those goals due to the state of the market lately.