Effects of PFDs on Poverty Among Rural Alaska Natives

A recent article in the journal World Development, by Matthew Berman, professor of economics at ISER, examines how the Permanent Fund dividend (PFD) has reduced poverty among the 60,000 or so Alaska Natives living in small, isolated communities far off the road system. PFDs are cash payments the state government makes to virtually all Alaska residents every year.

Rural Alaska Natives are much more likely than other Alaskans to be poor, mostly because jobs are scarce in remote areas. The author found:

  • Without PFDs, more than 28% of rural Alaska Natives would have fallen below the poverty line from 2011-2015, compared with about 11% among all Alaskans. With PFDs, poverty during that period dropped to about 22% among rural Alaska Natives and 9% among all Alaskans.
  • But those recent rates are higher than in 2000, when PFDs reduced poverty to 14% among rural Alaska Natives and about 6.5% among all Alaskans. PFDs have become less effective at reducing poverty, partly because PFDs didn’t grow as fast as inflation. But also, more Alaskans now have incomes that fall further below the poverty line—so it takes more to lift them out of poverty.

This article is open access. Download “Resource rents, universal basic income, and poverty among Alaska’s Indigenous peoples,”  by Matthew Berman, in World Development, Volume 106. If you have questions, contact the author at matthew.berman@uaa.alaska.edu.

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How is The State Dealing With the Shortfall in Pension Systems?

A new paper by Cliff Groh, in collaboration with ISER faculty, looks at how the state government has dealt so far with a very big problem: the state’s two largest retirement systems for public employees don’t have enough money to cover future costs of pensions and benefits for state and local employees when they retire. Since discovering the shortfall in 2003, the state has made special contributions of nearly $7 billion to the retirement systems.

But analysts believe it will take billions more dollars in the coming years to balance the funds. That poses a major challenge for the state, in this time of big budget deficits, as well as for local governments, which also need to help pay for the unfunded liability.

To learn more about what the state has done—and might do—to deal with the pension shortfall, download the full paper, History and Options Regarding the Unfunded Liabilities of Alaska’s Public Employees’ and Teachers’ Retirement Systems, or the summary.

If you have questions, get in touch with Cliff Groh at cliff.groh@gmail.com.

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How Does Alaska Spending Compare?

A new paper by ISER researchers Mouhcine Guettabi, Trang Tran, and Linda Leask aims to give some context to to the ongoing debate about how much Alaska’s state government should be spending, as it faces big budget deficits. The paper look at state spending in several ways.

As of 2015 (the most recent year for which cross-state data are available), per-person spending by Alaska’s state and local governments was twice the national average. But much of that gap is due to Alaska’s unique spending programs (PFDs being the largest but not the only one), higher living costs, and federal grants that are twice the U.S. average per person.

Adjusting for Alaska’s unique spending and higher living costs, spending per person in Wyoming (another oil-producing state with a small population) was higher than Alaska’s in 2015. Spending in North Dakota (another oil-producer with a small population) was within 15% of Alaska’s.

Over the 20-year period from 1992 to 2015, real (adjusted for inflation) spending per person in Alaska grew much slower than the national rate—50% compared with 73%. Alaska’s spending did grow faster than the national rate in the last years of that period, when oil prices were high.

Download the paper, How Does Spending in Alaska Compare? (PDF, 784KB) A grant from Northrim Bank helped fund this research. If you have questions, get in touch with Mouhcine Guettabi, assistant professor of economics at ISER, at mguettabi@alaska.edu or 907-786-5496.

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What Do We Know to Date about the Alaska Recession and the Fiscal Crunch?

In 2017, job losses in Alaska’s ongoing recession spread from the sectors first affected—primarily oil and gas and state government—to the sectors that depend on household spending, including retail trade, accommodation and food services, and leisure and hospitality. Alaska will continue losing jobs in 2018, but at a slower pace— likely in the range of 0.7%. That slower pace isn’t a sign of recovery, but rather an indication that the initial shock of low oil prices has made its way through the economy.

These are among the findings of a new overview of Alaska’s economic and fiscal conditions, by Mouhcine Guettabi, assistant professor of economics at ISER. He also estimates that the the fiscal uncertainty caused by the state’s current lack of a plan for dealing with its huge budget deficit may be reducing capital investment in Alaska by something on the order of $200 million to $600 million a year. The overview also considers the effects of different rates of withdrawal from the Permanent Fund earnings reserve, should the legislature decide to use some of those earnings to pay for government operations.

Download the report, What Do We Know to Date about the Alaska Recession and the Fiscal Crunch? (PDF, 703KB) By Mouhcine Guettabi, with support from Northrim Bank. If you have questions, get in touch with the author at mguettabi@alaska.edu or 907-786-5496.

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Dayna DeFeo named director of CAEPR,
Diane Hirshberg to focus on Arctic research

Diane Hirshberg, founding director of the Center for Alaska Education Policy Research at ISER, since 2009, has decided to focus on a new goal: building UAA’s, ISER’s, and her own Arctic research portfolio. Dayna DeFeo, senior researcher at CAEPR since 2014, is now the director, a job she sees as “an exciting challenge.”

Dr. Hirshberg, a professor of education policy at ISER, plans to continue doing some education research at CAEPR. But she said her broader interest in Arctic research has increased in recent years, as she studied Indigenous and Arctic education issues and served as advisor to UAA ‘s chancellor on Arctic research and education.

As the director of CAEPR, Dr. DeFeo will continue working with a wide range of groups interested in education issues, and she intends to build CAEPR’s research in three areas: college and career readiness, teacher supply and demand, and Indigenous and Arctic education.

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