Understanding the Fund
The Fund Structure
The Fund’s current two-account structure comprises the Principal, the permanent, nonexpendable part of the Fund, and the Earnings Reserve Account (ERA), which is spendable through legislative appropriation. Under this structure, spendable amounts are limited to the realized earnings available in the ERA.
Both are invested together using the same asset allocation, but they differ in how they can be used by law.
Generating Earnings
Revenue for Today & Tomorrow
Providing Stable State Revenues
The Fund’s earnings within the ERA are the source of the 5% POMV draw, which provides more than 55% of Alaska’s unrestricted general fund revenue stream to support government services and the dividend program.
Intergenerational Benefit
Under the two-account structure, the Principal's intergenerational purchasing power is maintained through inflation proofing appropriations.
Constitutionally Protected Corpus
Principal
AS 37.13.010 (a)(1) and (a)(2) The State Constitution directs that at least 25% of Alaska’s mineral royalties be deposited into the Principal. Alaska statutes mandate 50% for leases after 1979.
AS 37.13.010 (a)(3) Legislative deposits from the ERA or another source, such as the General Fund.
AS 37.13.145 (c) Annual appropriation offsets inflation and preserves purchasing power for future generations.
Contributions to Principal
Since Inception | In Billions
Statutory Net Income (SNI)
In Billions
Total SNI to the
ERA over 5 Years
Alaska's Primary Source of Revenue
Earning Reserve Account (ERA)
The Earnings Reserve Account (ERA) is established in state law, AS 37.13.145 (a), as a separate account to hold the net realized income—defined as Statutory Net Income (SNI)—from the Permanent Fund’s investment portfolio. The ERA is the primary source of revenue for Alaska today and for inflation proofing to help ensure the Principal maintains its purchasing power for intergenerational benefit. The ERA is available for the Alaska State Legislature and the Governor to spend through appropriations. To date, the primary use of the ERA has been to pay an annual dividend to the citizens of Alaska.
The ERA grows through the receipt of SNI.
SNI is the direct result of investment activity (decisions to buy and sell) and excludes unrealized gains and losses. There are two components to this income that flow to the ERA:
- Operating Income:
Cash inflows from stock dividends, bond interest, and real estate rental fees available for deposit. - Realized Capital Gains/Losses:
Net income (realized gains minus realized losses) generated by investment sales.
SNI is unpredictable and can vary significantly from one fiscal year to another.
APFC manages the portfolio to provide a maximum risk-adjusted return, not toward SNI or gain realization as a key metric.
Fund Earnings
How are the Realized Earnings from the ERA Used?
Since inception through FY25, the investment of the Fund has generated more than $93.7 billion in net realized earnings deposited into the ERA, which have been used:
- to pay dividends to eligible Alaskans;
- to support government services and programs;
- to support the investment management and operations of the Fund; and
- to partially fund state agencies involved with collecting royalties and distributing dividends.
Understanding the POMV Draw
Percent of Market Value
The Permanent Fund has become a key renewable financial resource for Alaskans, with the annual Percent of Market Value (POMV) draw providing more than 55% of Alaska’s general fund revenue stream.
Per Alaska Statute 37.13.140(b), enacted in 2018, withdrawals from the ERA are based on a percentage of the Fund's average market value ("POMV"), a method designed to ensure no more than a sustainable amount is drawn on an annual basis.
POMV Draws Since FY19
| FY26 | $3.8 billion |
| FY25 | $3.7 billion |
| FY24 | $3.5 billion |
| FY23 | $3.4 billion |
| FY22 | $3.1 billion |
| FY21 | $3.1 billion |
| FY20 | $2.9 billion |
| FY19 | $2.7 billion |
Understanding POMV Calculations
POMV Calculation
The Percent of Market Value (POMV) draw is based on a percentage of the average market value of the Fund for the first five of the preceding six fiscal years; this average creates a smoothing effect across years. The POMV draw provides a certainty of liability for managing the portfolio and a stable, predictable payout from year to year. The draw is subject to appropriation and is set in statute at 5.0%.
The POMV draw for the Fund is limited by the statutory allowable percentage and the amount available for appropriation in the ERA.
FY27 POMV Calculation
AS 37.13.140(b) (Value Based)
| FY25 | $84,675,500,000 |
| FY24 | $80,038,500,000 |
| FY23 | $77,587,500,000 |
| FY22 | $75,912,800,000 |
| FY21 | $81,472,800,000 |
| FY20 | $64,877,800,000 |
$79.9 billion
$4.0 billion
A Rules-Based System
Meeting Known Obligations
As we look toward the future, an inherent risk we face with the two-account structure is the availability of spendable funds in the ERA to fully meet the obligations of:
- The Percent of Market Value (POMV) draw for the state’s general fund to support the dividend program and government services.
- Inflation Proofing to maintain the purchasing power of the Principal.
- Solutions to address this risk are brought forth in Trustees' Paper #10, with the most durable recommendation being a constitutional amendment to establish a single-fund endowment with a limited percent of market value draw.
Two-Account Structure
How is the Alaska Permanent Fund Structured?
This video explains how the Alaska Permanent Fund is organized in its current two-account structure. It focuses on explaining both the Principal and the ERA and how money flows in order to be saved for the future while also supporting Alaskans today.
Maintaining Purchasing Power
Inflation Proofing
Inflation proofing is an appropriation from the ERA to the Principal to protect the value of the Permanent Fund against inflation. Since the Principal does not retain any of the realized gains on investments, it must receive an annual appropriation to offset the effects of inflation by contributing to the Fund to preserve its purchasing power to benefit all generations.
By inflation proofing the Principal, the APFC ensures that the Permanent Fund continues to serve its purpose of benefiting all generations of Alaskans, not just the present one.