Happy PFD Week!

Happy PFD week! PFD is the permanent fund dividend, aka "the oil money."

The Permanent Fund, which was established in 1976, was created because some Alaskans felt the state spent the first oil payoff in 1969 too quickly and too inefficiently. It was established to place some oil profits out of political control, thus ensuring the financial security of the state for generations to come. The Permanent Fund is run by a semi-private corporation who recruit the top notch fund managers from large financial firms in the lower 48. The PFD is the money that the oil money makes.

The PFD was first paid out in 1980 to share the wealth of the Fund. Every Alaskan resident who has lived in the state for at least 6 months of the year and is without a felony conviction is eligible. The catch is that the lag time is almost a year. For example, in January 2007, AK residents began applying for their 2006 PFD, which is paid out in October. The PFD amount this year was just over $1650.

Timing is not on our side. We will not be eligible to apply for the 2007 PFD, since we moved in Sept of 2007. We will have to wait until October 2009 to see our first PFD payout. But given oil prices lately (the PFD is based in part on 5 year oil revenue averages), it may be up over $2K by that time!

People around here count on this money, and retailers milk it for all its worth. For weeks we have seen car commercials, furniture ads, vacation specials, etc promoting PFD sales. People I have met say they are going to use it for bills, put it into college funds (everyone gets one, even the kiddos), buy a camping trailer, pay off credit cards...its like if everyone got their tax return on the same day.

Today I was in Old Navy and in front of me at the checkout was a family of 6. They looked they were experiencing a bit of hard times, but their cart was full of new clothes for everyone. The kids were jumping around and obviously excited. I couldn't help but notice that their total was over $800 and when signing the sales slip, the mom mentioned how well timed the PFD money always is, just in time for warm winter clothes.

Ok..so I sounded a bit like the cheesy oil company commercials we see all the time, with folks hiking and some voiceover about "building a better Alaska," but it is nice to see that in this state, where a lot of people are just barely making ends meet, once a year there is an opportunity for fun and new, warm winter clothes.


PS- the Permanent fund started with an intial investment of $734,000. It is now approx $40 billion!