What is the purpose of the proposed constitutional amendment?
The Board is supporting an amendment to the Alaska Constitution to provide constitutional – not just statutory – assurance that a portion of Fund income will always be retained each year to offset the effects of inflation. As Board Chair Clark Gruening points out, this proposal puts emphasis on the word ‘permanent.’ The amendment would accomplish this by providing that annual payouts from the Fund can be up to but no more than 5 percent of the five-year average market value of the Fund. #2. How does a payout of no more than 5 percent inflation-proof the Fund? The Board’s best estimate is that, over the long term, the Fund will earn an inflation-adjusted, “real” rate of return of 5 percent. For example, the Board’s current 5-year target asset allocation is designed to earn an average, annual rate of return of 8.25 percent with an expected inflation rate of 3.25 percent. This proposal sets the maximum payout at 5 percent – the difference between what the Fund earns and what it loses to i
