WHAT IS THE ALASKA PERMANENT FUND?

1. WHAT IS THE ALASKA PERMANENT FUND? • A dedicated fund owned by the State of Alaska 1976 – Alaska oil pipeline construction nears completion; Alaska voters amend constitution - establish dedicated fund: the Alaska Permanent Fund. • Created by a constitutional amendment ‘At least 25 percent of all mineral lease rentals, royalties, royalty sales proceeds, federal mineral revenue-sharing payments, and bonuses, received by the State will be placed in a permanent fund, the principal of which may only be used for income-producing investments.’ • Comprised of income-producing investments The Fund is invested in a diversified portfolio of public and private asset classes. • Used for both savings and spending The Legislature may spend realized Fund investment earnings. Most of the spending from the Fund has been for dividends to qualified Alaska residents. The Permanent Fund Dividend Division operates the PFD program; the PFDD was established in 1980. • Managed by a State-owned corporation • 1980 - Alaska established the Alaska Permanent Fund Corporation, to manage Fund investments.

2. $$ Come up with the Money $$ • How the PFD amount is calculated: • Add Fund Net Income from current and previous four fiscal years, multiply by 21%; divide by 2. • Subtract prior year obligations, expenses and PFD program operations. • Divide by the number of eligible applicants. Determine if enough income is available in the earnings reserve account to pay the dividend. It is possible that, in a given year, the calculation may produce a dividend although the funds may not be available to pay it. • From 1982 through 2009, the dividend program paid out about $17.5 billion to Alaskans through the annual distribution of dividend checks. This program has a significant effect on the state’s economy. Dividends represent an important source of income for some Alaskans, particularly those in rural Alaska.

3. Annual Dividend Payouts

4. How Did We Get Levy Authority? • Statutory authority required • When – started working on the effort in 1999 • In the beginning, it was all paper/manual transactions

5. 9 Steps to Garnishment • Select the universe of overpaid claimants • Import PFD applicant file from the Dept of Revenue • Sifting, sorting, compare –with MS ACCESS • Add delinquents to the default list • Send Levy Letters • Take appeals • Select finalists • FTP the list to the Dept of Revenue • Wait for the $$ to roll in

6. BPC Garnishment of the PFDPFD Levy Calendar • May 22: Select the universe of established overpayments through May 21; download data file to MS ACCESS program • June 23-25: File of claimants in default are merged to “Intent to Levy PFD” letter – ACCESS to MS WORD. ‘Deadline for appealing levy is 7/27/09 and deadline to Pay in Full (PIF) is 8/24/09’ • June 25: Mail “Intent to Levy PFD” letter (if mailed sooner – June 24 – adjust Appeal and Pay In Full deadlines back one day) • July 27: Appeal deadline expires • August 24: Pay In Full notice expires (a Monday) • August 24-28: BPC gives levy file to DPL; processed by DPL and returned to BPC for error correction; rinse and repeat until no errors; DPL FTP’s sanitized file to PFD Division for levy • August 28: PFDD’s published deadline for delivery of levy request file • October/November: Revenue begins posting levied funds to Labor’s account and sends BPC an AKSAS and MS Excel filefor verification and payment posting for each claimant account • Constructing automated posting garnished dividends directly to DB2

9. What Can Go Wrong • Garnish the wrong person’s PFD (ouch!) • Miss the deadline for prep and submission (well, that will never happen!) • Higher priority garnishments – Child Support, Court Restitution, etc. • Client is a felon • Client doesn’t apply for PFD (oh, c’mon!) • Once garnishment is committed, sometimes can’t get it released in time – must wait for transmittal (ouch, again!) • Some claimants PFD eligibility held up until decided by Revenue (sigh!) • Some claimants filed paper application – delays delivery of PFD (but, we’re getting better!) • There’s always the possibility the State will declare funds aren’t available for the PFD to be disbursed (ladies and gentlemen !! in this corner ……!!) • Considering limiting spending to 5% of Fund’s total market value – this could limit the size of dividends paid, while protecting the long term value of the fund • relying only on the PFD to collect overpayments – easy to get spoiled

10. What Can Go Right • Fund is expected to grow • with the price of crude oil continuing to rise • precious metal prices continuing to rise • the stock market coming back

11. Alaska BPC Melvin Torgerson, Manager 1111 West 8th Street, Rm 110 Juneau, AK 99801 Ph: (907) 465-3087 Toll-free 1-888-810-6789 fax (907) 523-9600 or (907) 465- 6010 melvin.torgerson@alaska.gov Steve Kinzie, Investigator III 3301 Eagle Street, Rm 205 Anchorage, AK 99503 Ph: (907) 465-4884 Toll-free 1-877-272-4635 fax (907) 375-9579 or (907) 269-4835 steven.kinzie@alaska.gov