Senate Finance reviews SJR 14 to enshrine 5% POMV draw and merge Permanent Fund accounts

March 12, 2025 — The Alaska Senate Finance Committee met in the Senate Finance Room of the state capitol in Juneau and heard testimony on Senate Joint Resolution 14, a proposed constitutional amendment that would consolidate the Alaska Permanent Fund’s two-account structure and set a percent-of-market-value draw cap of 5% to fund state government.

Liz Harpold, staff to Senator Olson, told the committee that SJR 14 would “constitutionalize this POMV draw to 5%” and would put the question before voters if it receives the two-thirds legislative threshold required for a constitutional amendment.

Why it matters: The Permanent Fund supplies the largest share of unrestricted general fund revenue for Alaska. Proponents say the amendment would simplify accounting, reduce the risk of a single legislature appropriating a large portion of unrealized earnings, and provide a predictable, recurring revenue stream for future budgets and possible dividends.

Devin Mitchell, executive director and chief executive officer of the Alaska Permanent Fund Corporation, told the committee the amendment would collapse the existing principal and earnings reserve account into a single, constitutionally protected endowment and make the POMV draw a constitutional limit rather than a statutory mechanism. Mitchell described the fund’s current composition: roughly $58.6 billion in constitutionally protected principal, about $12.8 billion in unrealized gains allocated to principal, and an earnings-reserve-account balance that includes roughly $2.9 billion in spendable realized earnings as of the January 31, 2025 snapshot the corporation presented. Mitchell said the fund is about $80 billion on a nominal basis and total lifetime earnings including unrealized gains exceed $100 billion.

Mitchell and committee members discussed mechanics and risks. The current two-account system allocates realized earnings into an earnings reserve account (ERA) that the legislature may appropriate; that structure requires manual inflation-proofing adjustments and leaves some amounts effectively unprotected from appropriation under the constitution. Mitchell said the POMV model smooths year-to-year volatility by using a multi-year market-value average to compute a draw, removing the need for separate inflation-proofing and reducing the temptation to overspend in any single legislative session.

Committee members pressed on specifics asked how much the statutory 25% deposit of certain mineral revenues typically equals (Mitchell said it varies with oil prices and current projections show about $400 million for the year in question) and whether unrealized gains become spendable when realized (Mitchell said realized gains flow into the ERA and are available for appropriation; unrealized gains become realized only when assets are sold and then are reinvested unless appropriated). Mitchell warned that, under current rules, realized and unrealized earnings can move between accounts and, in extreme scenarios of portfolio churn or large realizations, a future legislature could appropriate sums beyond what many Alaskans expect; he cited a hypothetical where more than $17 billion could become spendable if certain unrealized gains were realized and then appropriated.

Mitchell also summarized modeling and governance work: the Permanent Fund Board has recommended a 5% POMV limit, Trustee Paper 10 (a board-commissioned analysis) supports a move to a single endowment-like structure with a defined draw, and the board favors constitutional protection for the larger protected balance. Committee members discussed the averaging window used in POMV calculations (five-year trailing average of five of the last six years) and sequence-of-return risks that make withdrawals during market downturns more damaging.

Several senators voiced support while noting trade-offs. Senator Merrick called the amendment “the single most important issue that we can tackle this legislature” and urged public education on the change. Senator Cronk asked whether the amendment would still allow the legislature to reduce the constitutional draw (Mitchell said the amendment would set an upper limit that the legislature could set below by statute but could not exceed without further constitutional action). Senator Brown emphasized to listeners that this proposal, as presented, is intended to constrain the constitutionally available draw rather than create an easier backdoor to spend the fund’s principal.

On technical points, Mitchell said the corporation expects little or no additional administrative cost from consolidating accounts and that some accounting work could simplify without two separate ledgers. He also flagged model-driven risk estimates presented to the board: in one probabilistic modeling exercise cited during testimony, there was an estimate of a 46% chance of at least a partial failure in the current POMV transfer under certain scenarios, an observation used to argue for changing the structure.

No formal committee vote occurred during the March 12 meeting. Committee members asked for additional modeling and stressed the need to educate voters should the resolution reach the ballot; Mitchell confirmed that, if passed by the prescribed two-thirds majorities in both chambers, the constitutional amendment would appear on the next general election ballot and would not require the governor’s signature.

The committee’s next scheduled meeting was announced for March 13, at which the committee expected testimony on Medicaid levers and the federal insurance marketplace.

Ending note: SJR 14 would require a two-thirds vote in both the Alaska Senate and House to appear on the ballot; supporters say it would protect intergenerational equity and provide predictable revenue, while skeptics urged care in setting the draw rate and averaging rule to balance present needs and future purchasing power.