Opinion: It’s time to consider a new permanent fund dedicated to education

Has been updated: 18 A few minutes ago release date: 18 A few minutes ago

We should consider a new permanent fund dedicated to education. Why? First, look at property taxes in Anchorage. Like the rest of the United States, these rates are rising sharply. Alaska is following the national trend, with education costs contributing greatly to the problem.

Most Anchorage residents don’t want to pay $5,000-8,000 in property taxes each year after retirement. The Legislature is effectively forcing seniors out of their homes because the taxes are too high. Property taxes go primarily to essential services, especially 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 paid by city governments to school districts and provide long-term revenue for all Alaskan education. Alaskans should establish a permanent education fund whose interest income would be used to pay the full operating costs of all Alaskan schools and all chartered schools. Allocations should be based on several factors, including per-pupil costs. The board of directors of such an education fund would manage the funds in the same way that a permanent fund would be an independent trustee that invests the funds for the benefit of all Alaskans. Building a new fund would naturally take years, but now is an ideal time to start.

Anchorage’s primary source of municipal revenue is property taxes. The school district and the Legislature relentlessly issue school bonds almost every year. The bonds passed by the school district are paid off over 20 years and are taxed directly on current property owners, their children, and eventually their grandchildren.

Since 1990, ASD has proposed nearly $2 billion in bonds, with more expected each year. Every bond passed is actually a property tax above the tax cap, paid for as long as you own the property. The majority of the city’s revenue is generated through property taxes, two-thirds of which comes from private residences and one-third from commercial property. Meanwhile, the city gives residential exemptions to seniors and others, then gets it back through large property assessment increases. The only way to reduce the burden on all property tax payers is to cut residential property taxes. The long-term solution to the politics and bad feelings between the state, the governor’s office, legislators, ASD, the University of Alaska, and all school districts is to provide funding to continually plan how much money we have to run a year ahead, rather than the dysfunctional system we have now. ASD and UA have no idea how much money they will need to run our institutions before the Legislature sets their budget in May. This is absurd.

School districts and universities can know a year in advance how much money they have to put to work, property taxes go down, bond issuance can eventually be cut entirely, and politicians can all agree that education funding is above politics. The Permanent Fund was a genius idea because policymakers in the 1970s knew that politicians of any party cannot be expected to not spend every last cent of their available money. This is the same today, with overspending and no long-term thinking on solutions.

The state constitution should be amended to create a Permanent Education Fund similar to the existing Permanent Fund. This should be a bipartisan effort to accomplish something that has never been accomplished in any state before: for all education and all children. There are many projects coming soon in the state. If either of them comes to fruition, the state can expect a surge in revenue. If an education fund is established, it would be the perfect place to deposit some of these revenues. Fiscal responsibility, savings, and compound interest are the path to success and wealth accumulation for us, our children, and our future. The PFD has grown to $80 billion in 2021. No nation, state, or institution has been more visionary than the people of Alaska. Let us continue our tradition.

I first proposed this idea 19 years ago, and to this day there is no long-term solution to adequately fund Alaska education and balance the budget every year. I will say it again: allocations should only be made by a non-political commission of intelligent non-partisan citizens.

Dr. Ken Wynn I’m a dentist and I live in Anchorage.

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