Nearly everyone living in Alaska gets about $2,000 a year from the state’s $65 billion fund. We asked 9 Alaskans how they spend it.

AP Photo/Mark Thiessen

The Alaska Permanent Fund is a $65 billion fund managed by a state-owned corporation and fueled by oil and gas revenues.
The fund was created in 1976 and began giving an annual dividend (the PFD) to every Alaskan who registered for it — ranging from roughly $1,000 to $2,000 — in 1982.
Depending on an individual’s circumstances, the PFD can be used for a quick splurge, a college fund, or an important way to prepare for a harsh winter.
This article is part of Business Insider’s ongoing series on Better Capitalism.

As the universal basic income movement has gained popularity in the US in recent years, interest in Alaska’s Permanent Fund Dividend (PFD) has grown, but so have misperceptions. It’s not a universal basic income, but it is a unique program in America that has become ingrained in Alaskan life.

It started with former Alaskan Gov. Jay Hammond, a Republican. When he was elected governor in 1974, Alaska had only been a state for 15 years, and had used the highest income taxes in the nation to sustain itself. So, when the Trans-Alaska Pipeline System was completed in 1977, oil seemed a savior. But Hammond was wary. He took OPEC cofounder Juan Pablo Pérez Alfonso’s assessment of oil as "the devil’s excrement," and wanted to work toward "diapering the devil," as he explained in a treatise of the same name — that is, he didn’t want Alaska to burn out its newfound wealth.

He was going to put a portion of Alaska’s oil profits into a permanent fund, stabilizing the state over the long term, and keep taxes low. A few years later, the state established the independent Alaska Permanent Fund Corporation to manage the funds. The permanent fund is split into a corpus that cannot be touched except through a vote by Alaskans, and an earnings reserve that could be adjusted with a legislative vote. Starting in 1982, the state began sending a portion of the earnings reserve to every registered Alaskan, regardless of age or income, as long as they lived in the state for more than a year and were not a convicted felon.

Alaskans register each year from January to March, the year’s PDF amount is announced in September, and Alaskans typically receive their payments in October. The amount usually ranges from $1,000 to $2,000 per person ( $4,000 to $8,000 for a family of four).

Last year, independent Gov. Bill Walker did not run for re-election, and his hugely unpopular reduction of the dividend amount was a key factor. Republican Gov. Mike Dunleavy is now proposing ways to distribute back payments, and the fight over the Permanent Fund’s future is raging.

Business Insider sent out a request to Alaskan readers asking how they spend their dividends. The following responses we’ve collected are not meant to be representative of the entire state, or illustrate all the ways Alaskans use the PFD. That said, they show that while a family’s PFD is far from a salary replacement, it’s cemented into all types of lifestyles.

INSIDER’s Chloe Miller contributed reporting.

Daniel Helmer, pictured here with his dog Galena, and his wife use the dividend to stock up on fuel and food before winter cuts them off from the rest of Alaska.

Courtesy of Daniel Helmer

Helmer is a 30-year-old heavy equipment operator who’s lived in the 1-square-mile town of Eagle his whole life. It’s got a population of around 150 people, and while it’s near the US-Canadian border, it’s separated from the rest of Alaska by the 160-mile Taylor Highway, which is snowed shut from October through March.

After getting their direct deposits, Helmer and his wife immediately spend 50-60% of their dividend on fuel and groceries, which they need to stockpile ahead of winter. They use the rest for "wish list" items, like a TV, laptop, or trip to the lower 48 — what Alaskans call the contiguous US.

"We could survive without the dividend, but knowing it is there every fall definitely helps with our financial planning," he said.

Jordan Iverson used her dividends to pay for college and then get an apartment after graduation.

Courtesy of Jordan Iverson

Iverson, 25, is a nurse who has lived in Anchorage her whole life, except for when she spent four years in Michigan for college.

Her parents set aside her dividends from birth into a college fund, which was a habit she continued through graduation. She managed to graduate with 80% of it left, and used it to purchase a condo.

With those major payments out of the way, Iverson decided to use last year’s PFD entirely for travel.

Christopher Wright and his wife have spent decades as rural Alaskans and use their dividend to keep their home heated and in good shape for the winter.

Courtesy of Christopher Wright

Wright, 73, and his wife are "long retired" and live in the Copper River Basin, whose communities together only have a few thousand people and include a large Alaskan Native population.

He said there’s not a large cash economy in his community, but "heating oil is not something you can trade for and can run $300-400/month for the eight months of winter," so that’s where the PFD comes in.

He and his wife have used their dividend payments over the years for heating oil, a new metal roof for their house, remodeling materials, a new septic system, winter clothing, and medical emergencies.

"Often it feeds me and keeps me warm," Wright said of the PFD. "Many folks in our region could not stay without the help of this fine fund."

See the rest of the story at Business Insider

Source: Business Insider – rfeloni@businessinsider.com (Richard Feloni)