Permanent Fund Earnings, Energy Work, Childcare & lots more!

Senate Majority Coalition Website

State Senator District E

Senate Majority Leader

Senator Cathy Giessel Newsletter

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Issues affecting

your family, community and jobs.

September 28, 2023

Dear Friends and Neighbors,

The August unaudited financial statements for the Alaska Permanent Fund are now available. See the section below and the link to the APFC website itself.

The next Board of Trustees' Annual Meeting is scheduled for September 27-28, 2023, in Anchorage and online. The meeting will include a presentation by Callan, a report on the Annual Audit by KPMG, and discussions on APFC's Estate portfolio. The proposed APFC FY25 operating budget and strategic planning will also be discussed.

Items in this Newsletter:

· Alaska Permanent Fund Performance Report

· Childcare Task Force

· Soldotna Public Pension Townhall

· Alaska Common Ground Public Pension Informational Meeting

· Connected Transmission Grids

· In-River Electric Generation

· Alaska Energy Authority Press Release

· Demystifying Nuclear Energy

· Current Topics: Education, Economy, Minerals, Health Care, Politics

· Resource Values, Permanent Fund

· Alaska History

· A Restful Pause

Email me

Alaska Permanent Fund's FY23 Performance Updated 10-year Projections

In FY2023, the Permanent Fund's total investment revenues were $4.3 billion, or 5.18%. While this is lower than the Fund's target of a 5.00% real return (return above inflation), APFC reports that this exceeded the performance benchmark by 56 points (or 0.56%). Since inflation for the year was 8.00%, the real (inflation-adjusted) return was negative for the year. Overall, the balance of the Fund grew from $76.3 billion to $78.0 billion as investment revenue and royalty inflows exceeded the POMV draw to the General Fund.

Statutory Net Income, a measure of realized income which is used to transfer money into the spendable Earnings Reserve Account (ERA) and for the statutory Permanent Fund Dividend (PFD) calculation, was relatively low at $2.5 billion, or 3.36%. The high inflation rate in 2022 (8.00%) meant that the statutory inflation proofing transfer to the principal was nearly $4.2 billion. The combined inflation proofing transfer and POMV draw out of the ERA exceeded Statutory Net Income, so the realized balance of the ERA dropped from $13.8 billion at the end of FY22 to $8.8 billion at the end of FY23.

If realized earnings continue at a level less than the amounts necessary to cover statutory appropriation needs, there is a risk that the ERA will not have enough money to pay out the full POMV draw in future years. LFD highlighted this issue in a March 24 Senate Finance Committee meeting, and the Permanent Fund Corporation highlighted it in an April 14 Senate Finance Committee meeting as well as in board meetings in July and September. The Legislature's FY24 budget reduced this risk somewhat in the short term by capping the FY24 inflation proofing transfer at $1.4 billion, equivalent to 2.50% inflation. This mitigates the risk to the ERA balance caused by high inflation, but persistent lower realized income (as contemplated in the LFD and APFC modeling) could still cause a shortfall in the ERA in the next few years.

With final FY23 figures, the FY25 POMV draw is now fixed at $3,657.2 million. This is about $8 million lower than the estimate in previous revenue forecasts due to investment performance for FY23 being below the projection.

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Alaska Permanent Fund improves after money-losing year, but withdrawals still exceed earnings. Alaska Beacon

In slides scheduled to be presented this week, Callan concluded that the Permanent Fund performed in line or slightly better than average among large endowments nationally last year, but worse than most large public pension funds.

CalPERS, the largest public pension fund in the nation, reported 5.8% returns during its just-completed fiscal year. California’s retirement fund for teachers, the second-largest in the country, returned 6.3%.

Childcare Task Force and In Home/At Home

On Sept. 21, I was honored to co-sponsor a public discussion about child care needs in our state. My fellow co-sponsors were Rep. Jenny Armstrong and Rep. Julie Coulombe.

The event featured a video capturing the challenges faced in rural Alaska. The panel (see members listed below) addressed rural as well as urban Alaska challenges.

It was a great turnout both in the venue and on the Facebook live page.

Progress is being made by the Child Care Task Force. Their first report will come out by the end of this year; the second report will be available by June 2024.

In the photo (Left to Right):

· Commissioner Heidi Hedberg, Dept of Health;

· Stephanie O’Brien, RurAL CAP Early Childhood Programs Director;

· Cordelia Qiognaaq Kellie, Special Assistant of Rural Affairs for U.S. Senator Murkowski/Policy Advisor for U.S. Senate Committee on Indian Affairs;

· Tracy Schaeffer, Occupational Therapist, Director of Nunakins Childcare in Kotzebue;

· Christina Eubanks-Ohana, Director of Hillcrest Children’s Center, Anchorage;

· Jasmin Smith, business owner, parent advocate, formerly Nine Star processing childcare assistance;

· Rep. Julie Coulombe, State House, member Governor’s Child Care Task Force;

· Wesley Early, City Reporter, Alaska Public Media, former News Director KOTZ public radio in Kotzebue;

· Laura Norton-Cruz, who wrote and produced “At Home/In Home” video with Joshua Albeza Branstetter.

Bring the Future Back North:

The pros, cons and costs of returning to a defined benefit retirement system for Alaska's public employees

Thursday, September 28

7:00 to 8:00 PM

Alaska is losing its population aged 18-64 and a third of our youth leave the state and never return. Our skilled public sector workforce is being educated and trained here in Alaska, but too frequently now moving for jobs with better benefits in Washington, Oregon, California, Arizona, and elsewhere.

Meanwhile, public assistance, snow removal and other vital services are being negatively impacted and many government phones are going to voicemail rather than to a person. If we want a prosperous future, we have to turn this around.

Senator Cathy Giessel and Fate Putman, former staffer for the Department of Revenue, will outline a plan, more than 10 years in the making, that they believe will stop the bleed of Alaska’s youth and skilled public sector workforce out of state – a return to a defined benefit retirement system for Alaska's public employees. They will discuss the pros, cons and costs with time for questions and answers.

Connected Transmission Grids!

A new study explores interconnection of islanded power systems

Islanded power systems – local power grids that are not connected to a wider electric power system – generally cost more to maintain and are less stable compared to larger interconnected grids. The interconnection of islanded power systems can provide numerous advantages.

ACEP’s Power Systems Integration team and their partners studied techno-economic modeling of the interconnection of two remote communities in Alaska to explore the feasibility and the economic advantages of an electrical intertie as well as technical challenges.

This study, entitled “Evaluation of MVDC Electrical Interties Connecting Remote Communities: an Alaska Case Study” has been published here. This report is also available at no cost from ACEP at https://www.uaf.edu/acep/our-resources/index.php.

For more information about this work, contact Mariko Shirazi at mshirazi@alaska.edu.

In-River Electric Generation

SHARKS BladeRunner deployment at

Tanana River Test Site

The third summer of field testing the BladeRunner Energy hydrokinetic turbine took place in June and August at ACEP’s Tanana River Hydrokinetic Test Site (TRTS) near Nenana. BladeRunner Energy’s work is in partnership with ACEP’s Submarine Hydrokinetic and Riverine Kilo-megawatt Systems(SHARKS) project, which aims to develop a debris-resilient and material-efficient hydrokinetic turbine.

Read the full article.

PRESS RELEASE

Brandy M. Dixon

Communications Director

(907) 771-3078

FOR IMMEDIATE RELEASE

September 25, 2023

AEA and DOT&PF Announce First Round of Alaska NEVI Funding

(Anchorage) — Today at the Alaska Infrastructure Development Symposium, the Alaska Energy Authority (AEA) and the Alaska Department of Transportation and Public Facilities (DOT&PF) announced their first round of awards for National Electric Vehicle Infrastructure (NEVI) funding. AEA and DOT&PF selected projects in nine Alaskan communities for a total investment of $8 million in this round. The $6.4 million in NEVI funding will be matched with $1.6 million from private entities selected to install, own, and operate the new electric vehicle (EV) charging stations.

The first-of-its-kind NEVI funding is a result of the Infrastructure Investment and Jobs Act, which provides funding to states to deploy EV charging infrastructure along public roads to establish an interconnected network across the state and nation. For fiscal years 2022-2027, Alaska will receive over $52 million.

“We are thrilled to be among the first six states in the nation to issue these NEVI awards,” said AEA Executive Director Curtis W. Thayer. “AEA is committed to supporting EV adoption with better access to EV charging infrastructure. This investment enables us to provide convenient, reliable, and affordable access to EV charging infrastructure in ways that couldn’t be achieved previously.”

“Alaskans are leaders in innovation and resiliency,” said DOT&PF Commissioner Ryan Anderson, P.E. “DOT&PF and AEA are pleased to support our communities' relentless pursuit of affordable and sustainable energy in Alaska.”

“In Alaska and across the country, President Biden’s Investing in America agenda is building the backbone of our national network of EV charging stations that will ensure a seamless experience for drivers when they’re charging up — similar payment systems, clear pricing information, interoperable connector types, and reliable charging speeds as we make the historic transition to electric vehicles,” said Federal Highway Administrator Shailen Bhatt. “With federal investments made possible by the Bipartisan Infrastructure Law, Alaska is taking a critical step forward as States across our nation begin deploying EV chargers for the communities they serve, and we are proud to partner with them in this shared project.”

The initial focus of this funding, Phase One, is to build out Alaska’s Alternative Fuel Corridor (AFC). AEA will strategically deploy Direct Current Fast Charging (DCFC) along the designated AFC, between Anchorage and Fairbanks, to help build out the national charging network. Once Alaska’s AFC is “fully built out” and meets the Federal Highway Administration’s criteria, which could take up to two years, AEA and DOT&PF will use NEVI Formula Program funds to install charging infrastructure along Alaska’s Highway (non-AFC) and Marine Highway Systems. The second phase of the program will focus on connecting small urban areas, rural communities on the road system, Alaska’s road system to Canada, and coastal communities located on the marine highway system.

Clean Energy

Demystifying nuclear energy

By Gwen Holdmann and Richelle Johnson

This is an excerpt of a story from ACEP’s blog From the Grid: Dispatches from Alaska’s Energy Sector.

Public opinion about nuclear energy is often shaped by big events and popular culture, with many people not feeling they fully understand the topic.

Nuclear energy is coming to Alaska. We can either observe from the sidelines or take an active role in determining how, where, and when this technology can best serve the interests of Alaskans. That decision rests with all of us. Our goal is to empower ourselves and fellow Alaskans with knowledge, enabling us to make informed decisions about our future energy options grounded in facts and well-informed reasoning.

Read the full article.

Current Topics

Amazon's first Alaska sorting facility to open by 2024. Alaska Public Media

An Amazon spokeswoman described the facility as a “last stop before packages arrive at customers’ doorsteps.” There, employees will sort packages and load them onto delivery vehicles.

Kenai to sign bluff stabilization agreement Monday. Peninsula Clarion

National Weather Service revamps Alaska maps to improve forecasts, advisories. Alaska Public Media

The National Weather Service’s Fairbanks office has redrawn the boundaries of its so-called forecast zones around northern Alaska in an effort to provide more accurate weather outlooks and advisories.

Alaska relaxes rules for marijuana ads, allows free samples. Alaska Beacon

Alaska Lt. Gov. Nancy Dahlstrom has signed new regulations that allow the state’s legal marijuana businesses to advertise more widely and to distribute free samples of marijuana at retail stores.

(My Comment: I am not happy about this relaxation of regulations. Free samples are a problem in my opinion. We don’t allow free samples of alcohol in liquor stores.)

Alaska lawmakers push back on Kroger-Albertson merger in letter to FTC chair. Alaska's News Source

"There are simply too many unanswered questions and unforeseen consequences over the horizon should this merger be approved. When reviewing this proposed merger, we ask that you and the Federal Trade Commission (FTC) set a very high approval bar and consider the following issues that are essential to Alaskans’ well-being,”

Three Bears buys 6 more retail properties in the Interior and Unalaska. Alaska Public Media

The rapidly growing Wasilla-based grocery and retail chain is buying six new properties. The latest acquisitions include a supply store in Unalaska and a gas station-convenience store in Delta Junction. In Fairbanks, Three Bears is buying four Sourdough Fuel gas-station-convenience stores.

NIST Researchers Develop Standards to Help Eliminate 'Forever Chemicals' in Firefighting Foams. NIST

New reference materials containing PFAS will help the military and other organizations identify and phase out foams that contain these chemicals, which have raised environmental and health concerns.

Education

ASD hopes new behavior program pilot will reduce discipline issues. Alaska's News Source

At Northwood Elementary, where the program is in place this year, students and staff define their expectations as PAWS — Positive attitude, Act respectfully, Work responsibly, Safe behavior. Principal Elizabeth Hornbuckle said students who exhibit these behaviors earn points and are then recognized at school assemblies.

Economy

Alaska heading toward fiscal 'brick wall' that could force end to PFD formula debate. Alaska Public Media

That seems to be a coming brick wall that the state’s fiscal car is driving towards at the moment. If trends continue, and something isn’t done, there won’t be an annual transfer from the Permanent Fund to the state treasury in a few years.

Alaska's 2023 Permanent Fund dividend is set at $1,312, paid starting in early October. ADN

As child poverty doubles, states launch or expand their own tax credits. Stateline

Six states have created new child tax credits (New Jersey, New Mexico and Vermont in 2022, and Minnesota, Oregon and Utah this year), while five more have expanded their existing credits, according to the Institute on Taxation and Economic Policy, a nonpartisan tax policy nonprofit. Currently 14 states offer child tax credits, and several others saw bills introduced this year.

Bad Week. Axios

Last week's nearly 3% slide in the S&P 500 was the second-worst weekly performance this year.

(Why does this matter? More than half of Alaska State government revenue comes from earnings of the Permanent Fund, which is affected by the stock markets. In addition, public and private sector retirement accounts are largely invested in stocks, meaning that those earnings were lost.)

Opinion: Providing for generations of Alaskans. ADN

The Alaska Permanent Fund was created by Alaskans coming together and voting to amend the state constitution to dedicate, save and invest a portion of the state’s oil and mining revenue to benefit all generations. As a public endowment, the wealth of the Fund is the responsibility of every resident of the state.

(My Comment: CEO Mitchell regularly emphasized that the Fund is a generational asset created through the sacrifice of generations before us. I support that statement, as a member of the generation that voted to create the Fund.)

Opinion: Alaska's government 'employment woes' go far beyond salaries. ADN

For many employees, the state of Alaska is a toxic environment that systematically treats its workers like infants and criminals who are out to fleece their employer instead of like the adult professionals that they are.

Minerals

Coeur Mining Announces Positive Exploration Results at Kensington. Alaska Business

At Kensington, the company reports that 2023 drilling has demonstrated the continuation of all key mineralized structures to the south and down dip. In addition, new sub-parallel mineralized structures have been discovered.

A new rush arrives on the Seward Peninsula: for graphite, not gold. Northern Journal

Tesla needs graphite. Western Alaska has plenty. But mining it raises fears in nearby villages. ADN

Graphite is a critical ingredient in the batteries needed to power America’s electric vehicle revolution. But every ounce of it is imported. A proposed mine on the Seward Peninsula would change that. But some of the people who live nearby fear it will endanger their way of life.

Fisheries

'Too hot' for salmon: How climate change is contributing to the Yukon salmon collapse. Alaska Public Media

Scientists know one thing for sure about the collapse of Yukon River king and chum salmon: there’s more than one culprit.

Politics

Sullivan forms new Alaska council for selecting federal judges, prompting concern about delay from Murkowski. ADN

One of Alaska’s three U.S. District Court seats has been vacant since the retirement of Judge Timothy Burgess in 2021. Federal judges are appointed for life, meaning whoever is selected has the potential to wield influence for decades to come.

No special session this year on fiscal issues, Alaska legislators say. Alaska Beacon

“I think there’s disagreement — and I think it’s throughout the Legislature — about the idea of whether there should be a tax to pay out a PFD. And that’s the crux of it,” she said.

Taxes to pay for a Dividend?

Bipartisan group of Wisconsin lawmakers propose ranked-choice voting and top-five primaries. AP News

A bipartisan group of Wisconsin lawmakers on Wednesday revived a push to implement ranked-choice voting and nonpartisan blanket primaries in the battleground state.

Editorial: The Alaska Legislature's fiscal shortsightedness wears thin. ADN

And despite the mega-PFD hardliners’ attempts to don the mantle of fiscal conservatism, they’ve been perfectly happy to spend $18 billion in state savings over the past decade rather than accept the reality that our revenues can no longer support their have-your-cake-and-eat-it-too mindset.

Project to increase access to justice in Alaska receives $1M boost from National Science Foundation. Alaska Beacon

The group has been training nonlawyers, called “community justice workers,” to represent Alaskans in court for some lower level legal issues. Last year, Alaska’s Supreme Court approved a waiver that allows the practice, a decision that drew the support of the state’s bar association.

(My comment: this problem exists because the state can’t hire attorneys due to lack of pension retirement and low pay. )

Health Care

Murkowski and Durbin Introduce Nurse Faculty Shortage Reduction Act. KSRM

The Nurse Faculty Shortage Reduction Act is a bipartisan bill that would provide a federal wage differential for the salary gap between clinical nursing and nurse faculty roles—to help fill desperately needed nurse faculty positions across the country.

Opioid overdose reversal drugs are now available over-the-counter in Alaska. Alaska Public Media

The opioid overdose treatment Narcan became available over-the-counter in pharmacies throughout Alaska last week.

State task force begins drafting recommendations to address Alaska's childcare crisis. Alaska Public Media

Alaska’s Child Care Task Force has started drafting its recommendations to submit to the governor and Legislature.

Proposal would prevent physician assistants from providing appropriate care in rural Alaska. Alaska Beacon

“ Two years ago, the Alaska Academy of Physician Assistants entered into discussions with the Alaska State Medical Board with the goal of updating Alaska’s regulations of physician assistants. Now, the ASMB is proposing regulations which would render it virtually impossible for PAs to practice in rural areas, and which could deprive many Alaskans of needed health care.

(My comment: I’m a nurse practitioner. Nurse practitioners in Alaska have had independent practice since 1980. I am co-sponsor of a bill to give Physician Assistants that same independent practice. The strangle hold of physician-centered health care is hurting U.S. health care delivery.)

Women's higher health costs. Axios

Optimization Postpartum Coverage Extension. NASHP

The postpartum period, defined as the period after childbirth, is a critical time for maternal and neonatal health and well-being. More than half of pregnancy-related deaths occur in the first year after birth, with 33 percent of pregnancy-related deaths occurring between one week and one year postpartum. There are stark disparities in maternal mortality, with Black women 3.3 times and American Indian/Alaskan Native women 2.5 times more likely to die from a pregnancy-related cause than White women.

Alaska Oil Resource Values

Alaska North Slope crude oil price (9/27/23): $95.78

FY24 budget (beginning 7/1) is fully funded at forecast $73/barrel oil.

Price on 9/30/23: $87.99

Price on 9/30/22: $86.91

Price on 6/29/22: $116.84

Price on 3/8/22: $125.44

Price on 12/22/21: $75.55

ANS production (9/27/23): 457,217 bpd

The Frontiers Project Meeting: Anchorage, Alaska. Atlantic Council

The Frontiers Project Meeting looks at Alaska's potential to become a first-mover state in advanced nuclear and at how Alaska can meet increased global demand for low-emissions manufacturing.

(My comment: This conference is in Anchorage on Oct. 3. Registration information is in the link.)

Reporter, Tim Bradner, shared some helpful financial information about a small microreactor energy project in the Interior.

The Eielson AFB microreactor power generation cost estimate is $60 million. The contractor chosen is Oklo, Inc.

The power delivered will cost 39.41 cents/kwh, beginning in 2027.

Operations and maintenance are estimated to cost $3 million/year.

Tim put the microreactor costs into perspective by citing Chugach Electric rates, which is almost 10 cents/kwh from Cook Inlet Region’s Fire Island wind project; this is about twice what Chugach pays to obtain other electricity.

Tim also points out that power generation in rural energy comes from fuel oil, which is equal or more than the 39.41 cents/kwh from Oklo.

Sept. 27, 2023 Precious Metal Prices

Gold - $1889.39

Silver - $22.77

Platinum - $903.33

Palladium - $1271.90

Alaska Permanent Fund

website

PFD payout from ERA, Fiscal years 1980-2024: $29.7B

Cost of PFD in Oct. 2022: $2.2 B

Cost of PFD in Oct. 2023: $881.5 M