Fiscal Policy Study Group
Inflation-proofing, the POMV draw, and the Earnings Reserve:
Understanding the Interconnections
with Professor Ralph Townsend, Director of ISER
BP Energy Center
Building opens at 7:45am
In 2018, the Legislature passed SB 26 which established a “percent of market value” (POMV) which defines and limits how much will be transferred each year from the Permanent Fund’s Earnings Reserve to the state for the operating budget (including the amount for the Permanent Fund Dividend.) The amount in the Earnings Reserve will fluctuate, so it must be effectively managed in order to reduce the risk that the POMV could not be paid in some future year.
The Alaska Permanent Fund Corporation commissioned analyses to model the probability that the Earnings Reserve would not have sufficient funds to pay the POMV formula in the future. One analysis concluded that the Earnings Reserve should have $12 billion as a minimum to minimize the risk of not being able to pay the POMV.
Ralph’s presentation will explore how inflation proofing the Permanent Fund interacts with the goal of managing the Fund’s Earnings Reserve in order to maintain a sustainable annual draw.