A mong the many unique aspects of Alaska is theÊstate's Permanent Fund Dividend program, created by Alaska law.ÊÊThrough that law, the stateÊdistributes a share of Fund investment earnings to every qualified Alaska resident each year.Ê The Legislature originally passed a version of the program that was later ruled unconstitutional by the U.S. Supreme Court, because it proposed to peg the amount of the dividend to an individual's length of residency in Alaska.Ê The dividend program now in effect was enacted in 1982.

The dividend formula:

1. Add the Fund's Statutory Net Income* from the current plus the previous four fiscal years. This five-year averageÊallows for a "smoothing" effect against year-to-year realized earnings volatility.

2. Multiply by 21 percent. This provides an average of the five years of earnings.

3. DivideÊin half. This amount goes toward dividends. From the half remaining, money is transfered to inflation-proof Fund principal. After these two uses, any residual realized earnings stay invested in the Fund's earnings reserve account, where they are available for the Legislature to spend.

4. Subtract prior year obligations, designated state expenses and the costs of operating the Department of Revenue Permanent Fund Dividend Division.

5. Divide by the number of eligible applicants.ÊThis figure equals the amount of each PFD!

*Statutory Net Income = realized earnings excluding income from the North Slope royalty case, State v. Amerada Hess, et al. Statutory Net Income / realized earnings can be found in the "Notes to Financials Statements" section of each APFC annual report.)

• From www.apfc.org