In 1976, as the Alaska pipeline construction neared completion, Alaska voters approved a constitutional amendment to establish a dedicated fund: the Alaska Permanent Fund.
"At least 25 percent of all mineral lease rentals, royalties, royalty sales proceeds, federal mineral revenue-sharing payments and bonuses received by the state be placed in a permanent fund, the principal of which may only be used for income-producing investments."
The Fund is invested in a diversified portfolio of public and private asset classes. All investments, whether in Alaska or around the world, must be expected to produce income with an acceptable level of risk. The Fund is not invested in projects that are primarily focused on economic or social development.
The Legislature may spend realized Fund investment earnings. Realized earnings consist of stock dividends, bond interest, real estate rent and the income made or lost by the sale of any of these investment assets. Unrealized earnings - those resulting from the change in market value of assets that are held - cannot be spent. Of the spending that has occured from the Fund, most of it has been for dividends to qualified Alaska residents. The Permanent Fund Dividend Division (a separate entity from the APFC) operates the PFD program, which the Legislature established in 1980.
In 1980, the Legislature established the Alaska Permanent Fund Corporation to manage Fund investments.