The Permanent Fund earned $8.2 billion and none of it went into protected principal

The Alaska Permanent Fund earned $8.19 billion in spendable income last fiscal year. None of it moved into the part of the fund Alaskans cannot spend.

Trustees approved the audited statements Wednesday in Juneau. The fund closed June 30 at $91.9 billion, up from $85.1 billion, on a 12.42 percent return after fees. The state drew $3.8 billion out of the earnings reserve for the general fund and the dividend.

Inflation proofing is the transfer that keeps the constitutionally protected principal from shrinking in real terms. It spends nothing. It moves money from the side of the ledger lawmakers can appropriate to the side they cannot, and it happens only if the Legislature appropriates it. The corporation put this year's required transfer at $1.6 billion. Lawmakers appropriated nothing, for the second year in a row.

So the protected principal grew by $535 million, which is precisely the year's oil royalty deposits. Every dollar the fund earned stayed on the spendable side.

This is not new. Over twelve years the formula called for $17.5 billion in transfers and lawmakers appropriated $12.8 billion, leaving a $4.6 billion gap. Seven of those twelve years got nothing at all: 2016, 2017, 2018, 2021, 2022, 2025 and 2026. Two years were funded in full, one partly. In 2020 lawmakers appropriated $4.8 billion against a $758 million requirement, $4 billion more than the formula asked for, which the corporation attributes to intent language in that year's budget.

Chief Financial Officer Valerie Mertz laid that history out for trustees in Valdez in May. Trustee Ralph Samuels compared it to draining the Constitutional Budget Reserve. Chief Executive Deven Mitchell drew a distinction: inflation proofing transfers never leave the fund, they only reclassify assets from unprotected to protected.

Nothing in the record before the board explains why the Legislature skipped the appropriations.

Next year's transfer is budgeted in full at $1.49 billion. The FY27 draw of $4 billion is already committed. The board's annual report to the governor and lawmakers is due Sept. 30.