Supplement to May 23, 2025, Alaska Landmine column

At the suggestion of some, we have developed additional charts that show the impact of implementing the approach we discuss in the column, effective as of Fiscal Year 2026

In Friday’s (May 23, 2025) Alaska Landmine column, we analyzed the impact of using non-cash “income from the permanent fund” to help meet the non-cash calls on the Permanent Fund’s (Fund) earnings reserve account.

As we explained in the column, the non-cash “income from the permanent fund” is the unrealized gains/losses from investments made by the Fund, as reflected on the Fund’s History & Projections report. The non-cash calls on the Permanent Fund earnings reserve account are the amounts required for inflation proofing, as also reflected on the Fund’s History & Projections report.

In the charts included in the column we follow the development of what the account balances would have been if the non-cash income from the Fund had been used to help meet the non-cash calls on the earnings reserve account from the start of the use of the percent-of-market-value (POMV) approach in Fiscal Year (FY) 2019. As the charts demonstrate, the balance of the earnings reserve account would have grown significantly over the period.

In response, some have asked what the results would be if we started using the approach in FY26. They raise the point because there were two, separate $4 billion ad-hoc transfers made from the earnings reserve account to the corpus of the Fund in FY20 and FY22. In previous columns, we discussed the transfers and their impact on fund balances. In addition, although cash transfers from the earnings reserve account to the corpus would not have been required to cover inflation proofing if the non-cash income from the Fund had been used instead, cash transfers in fact have been made during the period.

Applying the approach starting in FY26 incorporates those prior events into the analysis.

Additionally, to highlight the annual impact of using the non-cash income from the Fund, they have suggested not applying any of the accumulated balance of unrealized gains/losses to the inflation-proofing requirement. Instead, they have suggested applying only the non-cash income from the Fund realized each year to the requirement. While not as significant as in the charts included in the column, even such a stripped-down version shows the continued growth of the earnings reserve account over the period.

Using the projected ending FY25 balance for the earnings reserve account made in the latest History & Projections Report (current as of April 30, 2025) as the starting point, here are the results from FY26 forward.

We also capture those results graphically on this chart.

As both charts demonstrate, the balances in the earnings reserve account continue to grow over the period rather than decline, as occurs from failing to account for the annual non-cash income being generated by the Fund. In doing so, the calculations reinforce the continuing viability of the two-account approach established by the Constitution for the Permanent Fund and help disprove any need to amend those provisions to move the Fund to a single-account approach.

As new information becomes available, we will include updates to this chart as part of our set of monthly charts that look at the status of the Permanent Fund.