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PFD Savings 2013 2013 PDF.indd 1

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0 . 0 0 0 9 A supplement to the September 29, 2013 edition

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Historical timeline of the PFD

1976

Voters pass a constitutional amendment to establish the Permanent Fund (Alaska Constitution, Article IX, Section 15).

office closed in September 1991 (2 positions). One position each transferred to Anchorage and Juneau office. First receipt cards mailed.

application implemented March 2000 (applicants required to sign signature page only). Fairbanks office moved to Cushman Street location September 1.

1980

1992

2001

First Permanent Fund dividend legislation enacted. The legislation established a program giving every adult Alaska resident $50 for every year of residency since statehood in 1959 and also established a Dividend Fund. Payment of dividends were stayed under litigation (Zobel v Williams) challenging the constitutionality of the program.

1982

U.S Supreme Court ruled the 1980 legislation unconstitutional. In response to the litigation, the legislature passed legislation authorizing equal dividend payments to all six-month residents. The first dividend amount was $1,000. The first dividend checks were distributed June 14, 1982.

1983 30.

Residency period defined as 6 months ending March 31. Filing due date established as June

1985

Hold-harmless program funding for public assistance recipients changed from General Fund to Permanent Fund Dividend Fund.

1988

January 1988 - Permanent Fund Dividend Division established. Positions with PFD responsibilities in Administrative Services (20), Enforcement (23), and Public Services (14) transferred to the new division. Enforcement and Public Services divisions eliminated.

1989

Legislature changed residency period from 6 months to 24 months. Individuals banned from assigning dividends (except to government agencies) by regulation. Felons not eligible for dividends. Physical presence requirement established.

1990

Superior Court ruled 24-month residency requirement unconstitutional and changed the residency requirement to 12 months (Lindly v Malone). Disclosure requirements established to print program costs on dividend checks.

1991

Check-off program for Advance College Tuition started. Percent of dividend subject to levy for private judgments increased from 50% to 55%. Fairbanks

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Individuals banned from assigning dividends (except to government agencies) by statute. Review Unit moved from Anchorage to Juneau.

1993

Direct-deposit program for full dividends established. Residency period changed to calendar year. Voter registration forms included with dividend application.

1994

Filing due date changed to March 31. Longevity Bonus Annuity check-off program began. Legislature authorizes the division to charge fee for processing claims and assignnments on dividends

1995 1996 1997 1998

Longevity Bonus Annuity check-off program repealed. Misdemeanants with two prior crimes not eligible for dividends.

Fairbanks office re-opened February 1997 (2 positions).

Internet program implemented to allow applicants to check their status online. All allowable absences defined in statutes (statutory provision for commissioner to define absences by regulation repealed). Spouses accompanying eligible residents authorized as allowable absence. Authority to file for estates (persons who die during filing period) established. Physical presence changed to 72 hours every two years (effective for 2000 dividend). Percent of dividend subject to levy for private judgment increased from 55% to 80%.

1999

On-line application implemented, but applicants required to print and sign full application. Direct-deposit program expanded to include partial dividends. Document Processing Unit night shift (17 positions) eliminated. Emergency regulations detailing alien eligibility adopted.

2000

Imaging system and new data entry system implemented January 2000. First year that applications imaged. Improved on-line Internet

2013 PFD SPECIAL

Review and Appeals units consolidated into the Dividend Enforcement, Review and Appeals Unit. Alaska Supreme Court rules that immigrant aliens who form intent to remain in Alaska qualify for dividends.

2002

Receipt letter replaces application receipt card. Department of Health and Social Services files applications electronically. Final year securities companies participated in the direct deposit program. Misdemeanants with one prior felony or two prior misdemeanors not eligible for dividend.

2003

Online applications exceed 100,000 (155,226). Electronic signature for online applications implemented March 20, 2003. All review cases worked by year-end. Fraud Investigations moved from Anchorage to Juneau.

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2004

Receipt letters eliminated. Online application expanded to cover full application and supplemental schedule. Tri-fold direct deposit advice implemented. Selective Service registration part of the application.

2005

Online applications exceed 200,000 (211,464) and electronically signed applications exceed 100,000 (129,822). Time period for applicants to respond to requests for information changed to 30 days.

2007

Over 2/3 of Alaskans apply online (420,596) and electronically signed applications exceed 275,000 (276,203).

2008

One time resource rebate added to dividend. Payment timing moved up to September in response to high energy costs. New eligibility software program implemented.

2009

The Charitable Contribution program, Pick.Click.Give is implemented allowing applicants to donate all or part of the dividend to nonprofit agenices.

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During construction of the Trans-Alaska Pipeline in the 1970’s, oil companies flooded state coffers with money paid for leases to explore and secure drilling rights. The Legislature spent all $900 million of that initial lease money within a few years. Alaskans realized that they were about to receive a great deal more money from oil when the pipeline was complete. They wished to better safeguard the robust income forthcoming from the pipeline, but the state constitution did not allow for dedicated funds. So Alaskans voted in 1976 to amend the constitution to put at least 25% of the oil money into a dedicated fund: the Permanent Fund. This would save money for future generations, which would no longer have oil as a source of income. In 1976 Governor Hammond proposed a constitutional amendment to create the Fund. The 9th Alaska Legislature modified the governor’s legislation and placed it as a ballot proposition in the 1976 General Election. It passed by a margin of two to one.

What is the purpose of the Permanent Fund? The 1976 state law establishing the Perma-

nent Fund (AS 37.13), states that the Fund was created: • to provide a means of conserving a portion of the state’s revenue from mineral resources to benefit all generations of Alaskans • to maintain safety of principal while maximizing total return • to be a savings device managed to allow maximum use of disposable income for purposes designated by law

How is the Fund invested? The Board’s goal is to achieve an average annual real rate of return of five percent (5%) at risk levels broadly consistent with large public and private funds. In order to meet this goal, the Board sets an asset allocation that includes holdings across a broad range of investments. Information regarding the Fund’s current investments can be found in the Investments section of this site.

trends upward over time. In the U.S., the Fund is larger than any endowment fund, private foundation, or union pension trust.

Are some Fund investment classes too risky?

What happens to Fund income?

Stocks are the most volatile asset class and are high risk in the short run. But for long-run investors like the Permanent Fund, there’s actually a greater risk to be out of the stock market than to be in it. The long-term trend of stock prices is more steeply upward than that of other asset classes. Stocks advance in 6 out of every 10 years, in 72% of all 5-year periods and in 77% of all 10-year periods. One study

The Legislature decides how Fund income is used. To date, the Legislature has: • inflation-proofed Fund principal • paid dividends to qualified applicants • made special appropriations to the principal • paid for some Fund-related state expenses

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How big is the Permanent Fund? The current value of the Permanent Fund can be found on this site’s home page where it is updated daily. The value can fluctuate up or down with market movements, but

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Why did Alaskans create the Fund?

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2013 PFD SPECIAL

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looked at the 62-year period from 1926 through 1987. It showed that if an investor had been out of the stock market only during the 50 best market months (which would be only 7% of the total months in the 744-month time span), total return for the 62 years would have been zero, rather than more than 10% compounded annually had she stayed the duration. The Fund is now also invested in alternative investments, including private equities, hedge funds and public infrastructure. Gradual exposure to these classes will be in keeping with how the Fund has started out in stocks...dedicating just a small percentage of the Fund’s total value as Trustees gain knowledge and experience investing in a new asset class.

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Yes. The Alaska Constitution states that the Fund’s principal cannot be spent. The dividend can only be paid from Fund earnings. If the earnings reserve is zero or negative on June 30, no money can be paid out. APFC Trustees are proposing a better method for determining Fund annual payout that would require a change to the constitution through a vote of the people. The Percent of Market Value (POMV) payout method would remove the distinction

between principal and earnings, treating the Permanent Fund as one pot of money. Five percent of the Fund’s total market value could be paid out each year.

How is the Fund doing? The Fund is doing well, and over the years has paid out more in dividends than it has taken in from mineral deposits while maintaining a healthy balance. Current, detailed information on the Fund’s performance by asset class and overall can be found in the Monthly Performance Reports and Annual Reports that are posted in the Publications section of this site.

Why is the Fund successful? It was created by a Constitutional amendment. The APFC, which manages the Fund, receives legislative oversight. The dividend program keeps the Fund in the public eye. The Fund has sound management practices, including performance oversight of managers. The Fund is not used as an economic development bank.

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The success of Pick.Click.Give. grows every year. When you go online to apply for your dividend, you will see the Pick.Click. Give. option. Click and follow the instructions to make your donation. Organizations across Alaska are part of the program this year. You’re likely to find one you already support, and you can use Pick.Click.Give. to make an additional gift. Or you may find a new nonprofit whose cause is important to you, and you can donate to that organization. You may give all or part of your dividend, whatever is appropriate for you and your family. We simply encourage you to give.

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If you give...and your neighbor does...and another...it will add up quickly. With one donation at a time, we can make good things happen all over Alaska.

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When you make a donation from your PFD through Pick.Click.Give., you can make an impact by sharing just a little with a cause you care about. XNLV111238

Strengthen the arts, invest in education, shelter a homeless pet, lend a hand, or even make a wish come true when you give to one of Alaska’s nonprofits

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2011 – $1,174.00 2010 – $1281.00 2009 – $1305.00 2008 – $2069.00 2007 – $1654.00 2006 – $1106.96 2005 – $845.76 2004 – $919.84 2003 – $1107.56 2002 – $1540.76 2001 – $1850.28 2000 – $1963.86

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2013 PFD SPECIAL

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PFDs of the 1980s & 1990s 1982 – $1000.00 1983 – $386.15 1984 – $331.29 1985 – $404.00 1986 – $556.26 1987 – $708.19 1988 – $826.93 1989 – $873.16 1990 – $952.63

1991 – $931.34 1992 – $915.84 1993 – $949.46 1994 – $983.90 1995 – $990.30 1996 – $1130.68 1997 – $1296.54 1998 – $1540.88 1999 – $1769.84

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2013 PFD SPECIAL

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Pfd  

Permanent Fund Dividend, PFD Savings