JUNEAU — The Alaska Permanent Fund hit an all-time high this week of $83.5 billion.
The state’s sovereign wealth fund was hit by recent stock market turmoil. It lost $2.2 billion over a few days in April, falling below $80 billion. But the fund has since rebounded.
Paulyn Swanson, a spokesperson for the Alaska Permanent Fund Corp., called that an “encouraging increase.” She said that the fund’s growth “reflects recent strength in the stock market and the long-term success of our diversified investment strategy.”
Permanent Fund investment earnings provide roughly 60% of state revenue each year. They fund state services and the annual Permanent Fund dividend.
Oil is expected to provide around $1.6 billion in state revenue during the fiscal year that starts July 1. The Permanent Fund will contribute $3.8 billion over the same period.
The Permanent Fund today plays a larger role in the state’s budget from the corporation’s founding in 1980.
In 2018, the Legislature established an annual 5% of market value draw from the Permanent Fund. The size of the draw is not calculated annually. Instead, it is based on the average value of the fund over the past five out of six years.
On July 1, the Permanent Fund’s managers are set to start transferring the $3.8 billion to the state treasury.
The timing of the fund’s recent growth is notable. On June 30, the fund’s value will be part of determining the size of next year’s draw.
Swanson said the record high for the Permanent Fund is “a positive development.” But as of Tuesday, there are still 20 days of “potential market volatility” that could see the fund’s value change.
“We look forward to providing a comprehensive update once we receive the final audited numbers, which will be released with the annual report in September,” she added by email.
The Permanent Fund is split into two accounts: the principal, which is invested to earn revenue, and the Earnings Reserve Account, where the investment earnings are deposited.
The Alaska Legislature has typically transferred funds into the principal each year in order to preserve its real value.
State lawmakers grappled this year with a severe budget crunch due to diminished oil revenue.
The Legislature repealed $1 billion earmarked for inflation-proofing the principal in the current fiscal year. Lawmakers also did not approve a similar transfer for next fiscal year, estimated at $1.5 billion.
Instead, lawmakers said that $4 billion deposited into the constitutionally protected principal in 2021 would cover inflation-proofing this year.
The Permanent Fund board met in late May and said that special appropriation cannot be “retroactively” labeled as inflation-proofing. Board members “encouraged” lawmakers to honor their commitment to preserve the fund, “emphasizing the importance of consistent rules-based discipline for intergenerational equity.”
Legislators this year approved a pared-down operating budget and a slim spending plan for state construction and maintenance projects. They also approved a $1,000 dividend for eligible Alaskans. When adjusted for inflation, this year’s PFD is set to be the smallest received by Alaskans since the program began in 1982.