OPINION: It’s time to consider a new Permanent Fund — one just for education

We should consider a new Permanent Fund — one just for education. Why? For one thing, look at property taxes in Anchorage, which are going up by leaps and bounds, as they are in the rest of the United States. Alaska is following the national trend, and the cost of education is a major contributor to the problem.

Most Anchorage residents do not want to pay $5,000-$8,000 per year after they retire for property taxes. The Assembly is effectively forcing seniors out of their homes due to taxes being so high. Property taxes pay for services that are largely essential, especially the 45% that goes to the Anchorage School District. The school budget is almost $900 million, which works out to about $17,000 per student.

The only feasible way to reduce property taxes is to reduce the amount of money going to the school district from municipal government, yet provide long-term revenues for all Alaskan education. Alaskans should start a Permanent Education Fund and use the interest earnings to pay the full cost of operating all schools and all accredited schools in Alaska. Distribution should be based on several factors, including per-student costs. The governing board of such an education fund would manage the money, just like the independent trustees who invest the Permanent Fund for the best interest of all Alaskans. It would obviously take years to build a new fund, but this would be an ideal time to get started.

The main source of municipal revenue for Anchorage is property taxes. The school district and Assembly have become relentless in floating school bonds nearly every single year. Bonds passed by the school district are paid back over 20 years and result in direct tax to current property owners, their children and eventually their grandchildren.

Since 1990, ASD has proposed approximately $2 billion in bonds. Expect more to come every year. All bonds passed are actually property taxes that exceed the tax cap and will be paid as long as you have property. Most city revenue is and will be generated by property taxes, of which two-thirds comes from private residences and one-third from commercial properties. On one hand, the municipality gives you a residential exemption for seniors and others, then takes it back with huge property assessment increases. We can only reduce residential property taxes to lighten the burden on all payers of property taxes. A long-term solution to the politics and bad feelings between the state, governor’s office, legislators, ASD, the University of Alaska and all school districts would be providing continuous funding for planning a year in advance how much money they have to work with — not the dysfunctional system we have now. ASD and UA have no idea in advance of the Legislature setting the budget in May how much they will have to run our institutions. This is absurd.

School districts and the university would know a year in advance how much money they had to work with. Property taxes would go down, bond issues could eventually be reduced altogether and the politicians could all agree that education funding transcends politics. The Permanent Fund was an idea of genius because policymakers in the 1970s knew that no politicians of any party could be trusted to not spend every last nickel available to them. This is the same today, overspending and no long-term thinking for solutions.

The state constitution needs to be changed to have a Permanent Education Fund, just like the existing Permanent Fund. This should be a non-partisan effort to accomplish something that has never been done by any state for all education and for all children. Many projects are coming on board in our state soon. With either of both becoming a reality, the state can expect a revenue windfall. If an education fund were in place, it would be a great place to deposit some of these revenues. Fiscal responsibility, saving and compounding interest are a pathway to success and wealth accumulation for us, our kids, and our future. The PFD grew to $80 billion in 2021. No country, state or institution has had the foresight Alaskans have had. Let’s continue our legacy.

I originally put this idea forward 19 years ago, and still today there still is no long-term solution to properly fund Alaska education and have the budget balance forward every year. Again, distribution should only be done by a non-political board of astute nonpartisan citizens.

Dr. Ken Wynne is a dentist. He lives in Anchorage.

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