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Education Funding, Viability of Rural Communities at Risk
Governor Murkowski: Fiscal Solution Not Just About Dividends


June 23, 2004

Juneau, Alaska - Governor Frank Murkowski on Tuesday welcomed legislators back to Juneau, but made clear the need to resolve the state's fiscal shortfall by modernizing management of the Permanent Fund and using 5 percent of the value of the Permanent Fund to guarantee a dividend of at least $1,000 and to pay for education and local communities.

"There is a bigger picture with this issue that I hope legislators will take time to fully comprehend," Murkowski said. "Much of the debate over using some of the Permanent Fund's value has centered around what it will do to the individual dividend. But, in fact, the impacts of not doing something will continue to be felt in every community and in every schoolhouse. Further, our proposal would guarantee a dividend of at least $1,000 or 50 percent of the payout, whichever is greater."

Murkowski has introduced legislation to modernize management of the Permanent Fund to an endowment model, which would allow the Legislature to appropriate no more than 5 percent of the fund's value each year. His proposal would dedicate 50 percent of that funding to pay for dividends, but would also direct 45 percent to K-12 and university education, and the remaining 5 percent to local communities, some $70 million.

"We all appreciate the boost to the foundation formula the Legislature passed last session, and I was proud to sign the bill in Soldotna last week," Murkowski said. "The school districts needed the additional $82 million and the Legislature responded to that need. But, as I made clear when I signed the bill, this problem was only addressed for the coming fiscal year. Where do we get the added money in FY 2006, and on into the future? Education needs to have the assurance of adequate funding each and every year."

Murkowski said legislators unwilling to resolve the state's fiscal shortfall should be willing to explain where they intend to get the money to:

  • continue funding for education in FY 2006 and beyond;
  • pay for heating fuel in rural communities;
  • improve transportation infrastructure in Anchorage and Fairbanks;
  • provide facilities needed by the University system to keep up with a growing student population;
  • pay for improvements to Alaska's harbors and airports.

"I do not doubt the cost of providing a quality education to Alaska's children and college students will continue to rise. We must not shrink from our responsibility to address those rising costs in an effective way, which will assure the school districts that the money will be there. Our proposal would provide a base for the foundation formula. We currently invest about $900 million in our K-12 program. Our proposal would guarantee approximately 2/3 of that total would come from the income of the Permanent Fund.

"We also believe it is prudent and responsible to guarantee a basic amount to local communities, the second feature of our proposal. Urban communities face rising property taxes and a myriad of user fees, to pay for the municipal services their residents have said they want and need.

"In rural Alaska, we have a much more difficult situation. Rural communities oftentimes have no tax base, or any other realistic way to generate the funds their basic services require. Things like heating oil, electrical generation for lights, and maintenance and operation of a washeteria, which may be the community's only source of clean water."

Urban areas will also share in the community funding, Murkowski said. Anchorage would receive some $24 million, while Fairbanks and the North Star Borough would get about $7 million. A sample of regional funding is attached.

"While we recognize the popularity of the dividend, and can guarantee the dividend at a level of at least $1,000, we cannot overlook local communities and our children's schools."


Source of News Release:

Office of the Governor
Web Site


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