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UAA research shows impact of PFD on poverty rates in Alaska

Income from the Permanent Fund dividend lifts between 15,000 and 25,000 Alaskans above the poverty line each year, depending on the size of the check, and the impact is most pronounced in rural parts of the state and among Alaska Natives, according to new research from University of Alaska Anchorage's Institute for Social and Economic Research.

Conversely, cutting the PFD by $1,000 likely means an additional 12,000 to 15,000 Alaskans living below the poverty line, the analysis found.

Matt Berman, a longtime UAA economics professor, presented initial conclusions of his work examining the relationship between the PFD and poverty rates in Alaska on Tuesday at the Anchorage Population and Economic Data Workshop held at the university. 

Berman set out in May to use U.S. census data to examine the way the annual dividend program effects poverty rates in Alaska — a timely question, given an unprecedented state fiscal crisis that has forced a reckoning over the future of the PFD. 

The research set out to answer two major questions: What would be the likely effect of reduction or elimination of the PFD on Alaska poverty rates? And who would it impact the most in the state? No researcher has answered those questions before, to his knowledge, he said. 

But it turned out to be harder than he thought.

Data limitations proved challenging for Berman and co-author Random Reamey, an intern from the First Alaskans Institute: In self-reported U.S. census income data, many respondents don't report PFD income in surveys because of timing and the wording of the questions, they found. And census data doesn't ask about income for children under 15, who can receive dividends in Alaska.

"I discovered that the PFD was severely underreported in the data and we could not determine the effect on poverty without a lot of analysis."

That analysis led to some striking conclusions: The PFD is "much more important in reducing poverty in rural Alaska," according to Berman.

Without the PFD, more than one in five rural Alaskans are poor, his research showed.

The PFD reduces the number of Alaska Natives living in poverty by one-quarter, Berman found.

The income gap between Alaska Natives and non-Natives is closing, he said — but that's not because rural poverty rates are going down. It's because more Alaska Natives are moving to cities, he said, where incomes are higher.

But despite the PFD, poverty rates appear to be rising in Alaska, especially in urban areas. Research noted that a steady influx of about 1,800 immigrants from abroad have arrived in Anchorage every year since 2005. In the years between 2005-2009 some 45 percent of them were poor — and not eligible for a PFD for the first year.

Gov. Bill Walker, whose decision to reduce this year's recently disbursed PFD has been met with criticism, said the reduction was necessary to ensure the fund's future viability.

"The findings of this report underscore why we are working so hard to make sure the permanent fund dividend program continues for our children and grandchildren rather than end in less than four years," Walker said in a statement.

"Some Alaskans struggling to make ends meet rely heavily on government services, like health care, housing, senior benefits and public assistance. Alaska needs to put in place a fiscal plan that includes budget reductions, revenue from taxes and use of the earnings reserve to preserve these services as well as PFDs."

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