Recent Submissions

  • What do we know about the effects of the Alaska Permanent Fund Dividend?

    Guettabi, Mouhcine (Institute of Social and Economic Research, University of Alaska Anchorage, 2019-05-20)
    The Alaska Permanent Fund Dividend (PFD) has been distributed to Alaska residents for 37 years, providing each resident an equal share of a yearly government appropriation based on the earnings of the Alaska Permanent Fund. While support for the program is high, work assessing the PFD’s influence on the lives of Alaskans is limited. Recently, a number of researchers have analyzed the causal effect of the PFD on a variety of socio-economic outcomes including employment, consumption, income inequality, health, and crime. This paper summarizes this empirical literature and highlights future areas of research.
  • Economic Impacts of the Vetoes on the Alaska Economy

    Guettabi, Mouhcine; Klouda, Nolan (Institute of Social and Economic Research, University of Alaska Anchorage, 2019-07-08)
    On June 28, 2019 Governor Mike Dunleavy announced line-item vetoes totaling $409 million from the State of Alaska budget for Fiscal Year 2020. These vetoes include significant cuts to the University of Alaska, Medicaid, payments to local governments, public assistance programs, state personnel headcounts, and numerous other categories. The full consequences of these cuts on the state economy, fiscal health, population, and policy outcomes will take years to develop. In this paper, we provide the short term impacts of the cuts, how they interact with the current state of the economy, and a descriptive outlook of the some of the future effects. We find the cuts will result in more than 4,000 jobs lost in the short run and will therefore return the Alaska economy into recession. While the short term losses represent a considerable negative shock to the economy, the consequences of these cuts on long term development could be even more pronounced.
  • Alaska High School Graduation Rate Trends

    Tran, Trang; Hill, Alexandra (Institute of Social and Economic Research, University of Alaska Anchorage, 2019-08-05)
    This paper examines trends in Alaska public high school graduation rates from academic year 2010-11 to 2015-16 and explores differences across demographic groups. We focus specifically on students from public neighborhood high schools. These are publicly-funded schools run by district or Regional Educational Attendance Area school boards serving all residents within school attendance boundaries. These schools represent about 88% of Alaska’s high school students.
  • Measuring and Correcting Response Heaping Arising From the Use of Prototypes

    Schmidt, Jennifer; Beaman, Jay; Vaske, Jerry; Huan, Tzung-Cheng (Taylor and Francis, 2015-04-01)
    Imprecision in respondent recall can cause response heaping in frequency data for particular values (e.g., 5, 10, 15). In human dimensions research, heaping can occur for variables such as days of participation (e.g., hunting, fishing), animals/fish harvested, or money spent on licenses. Distributions with heaps can bias population estimates because the means and totals can be inflated or deflated. Because bias can result in poor management decisions, determining if the bias is large enough to matter is important. This note introduces the logic and flow of a deheaping program that estimates bias in means and totals when people use approximate responses (i.e., prototypes). The program can make estimates even when spikes occur due to bag limits. The program is available online, and smooths heaps at multiples of 5 (numbers ending in 5 and 0) and 7 (e.g., 7, 14, 21), and produces standard deviations in estimates.
  • Policy Implications of Freestanding Emergency Departments

    Frazier, Rosyland; Guettabi, Mouhcine (Institute of Social and Economic Research, University of Alaska Anchorage, 2015-05-01)
    Policymakers have a responsibility to look at both the short- and long-term implications of their decisions. The state’s current fiscal situation, coupled with rising health-care costs makes “budget neutrality” highly desirable in decision-making. In spite of efforts to bend the cost curve, health expenditures have grown inexorably in Alaska. As of 2009 our health expenditures per capita were the second highest in the nation. This means that the state spends a larger portion of its budget on health costs, employers allocate more of employees’ compensation to health premiums, and households spend more of their disposable income on out-of- pocket costs, premiums, and co-pays. The evidence we provide in this analysis consistently shows that freestanding emergency departments charge higher prices for services that are available for considerably less in traditional settings. Allowing freestanding emergency departments to enter the Alaska market goes against the many efforts being undertaken to contain health-care costs. Markets forces explain a significant portion of the high health-care prices charged in Alaska, but in this case the state has an opportunity to use its regulatory authority to help prevent even higher prices in the future. Putting costs aside, in considering emergency services one needs to rationalize the hospital and clinical capacity across a region and the needs of the population. In the Alaska health-care system there are problems with coordinating the delivery of care. Freestanding emergency departments pose the risk of exacerbating that lack of coordination, if people use them in lieu of seeing their primary physicians—which can disrupt the continuum of care and potentially hurt outcomes for patients.
  • Benefits and Costs to Rural Alaska Households from a Carbon Fee and Dividend Program - Final Report

    Colt, Steve (Institute of Social and Economic Research, University of Alaska Anchorage, 2015-08-01)
    This paper analyzes the benefits and costs of a carbon fee‐and‐dividend (CFD) policy to individual rural Alaska households. The three study area regions are the Bethel Census Area, the Kusilvak Census Area, and the Northwest Arctic Borough. These three regions have the state’s highest fuel prices and very cold climates. The CFD policy consists of two elements.  The first is a fee of $15 per metric ton of CO2 beginning in 2016 and increasing by $10 per ton in each subsequent year. The second is the complete return of all fees to households in the form of dividends, which are estimated to equal $300 for each adult plus $150 for each child (up to two). The annual dividends would increase in future years commensurate with the nationwide total amount of fees. Baseline conditions.  The study area has a total population of about 32,000 people, many of whom live in large households with low cash income. Fuel prices averaged $6.62 per gallon in January 2015.
  • Identifying the Potential for Cross-Fishery Spillovers: A Network Analysis of Alaskan Permitting Patterns, Working Paper, Resources for the Future

    Addicott, Ethan T.; Kroetz, Kailin; Reimer, Matthew; Sanchirico, James N.; Lew, Daniel K.; Huetteman, Justine (Resources for the Future, 2016-12-01)
    Many fishermen own a portfolio of permits across multiple fisheries, creating an opportunity for fishing effort to adjust across fisheries and enabling impacts from a policy change in one fishery to spill over into other fisheries. In regions with a large and diverse number of permits and fisheries, joint-permitting can result in a complex system, making it difficult to understand the potential for cross-fishery substitution. In this study, we construct a network representation of permit ownership to characterize interconnectedness between Alaska commercial fisheries due to cross-fishery permitting. The Alaska fisheries network is highly connected, suggesting that most fisheries are vulnerable to cross-fishery spillovers from network shocks, such as changes to policies or fish stocks. We find that fisheries with similar geographic proximity are more likely to be a part of a highly connected cluster of susceptible fisheries. We use a case study to show that preexisting network statistics can be useful for identifying the potential scope of policy-induced spillovers. Our results demonstrate that network analysis can improve our understanding of the potential for policy-induced cross-fishery spillovers.
  • Alaska 1332 Waiver- Economic Analysis

    Bibler, Andrew (Institute of Social and Economic Research, University of Alaska Anchorage, 2016-12-01)
    The four guardrails that a successful 1332 waiver must meet are as follows: 1. Coverage - There must be at least a comparable number of individuals with coverage under the waiver as would have had coverage without the waiver. 2. Affordability – The waiver should not result in an increase in out-of-pocket spending required of residents to obtain coverage, relative to income. 3. Comprehensiveness – The waiver should not decrease the number of individuals with coverage that meets the essential health benefits (EHB) benchmark. 4. Deficit Neutrality – The waiver should not have any negative impact on the federal deficit. In this report, the first three guardrails are briefly discussed to reaffirm that the actuarial analysis conducted by Oliver Wyman demonstrates that the proposed waiver meets them. The actuarial report from Oliver Wyman projects that the proposed waiver will increase the number of individuals taking up insurance in the individual market, lower average premiums, and have no impact on the comprehensiveness of coverage. The numbers reported in the actuarial analysis are then used to help evaluate the impact that the proposed waiver will have on the federal budget. There are at least four ways in which the waiver will have an important impact on the federal budget, which are summarized in Table 1. Table 1: Impact of Proposed Waiver on Budget Direction of Effect APTC Savings + Individual Shared Responsibility Payments - Health Insurance Providers Fee - Federal Exchange User Fees - Overall Impact on Budget + The first and most important impact of the waiver is that it will lead to a reduction in premiums. The reduction in premiums reduces the amount of Advanced Premium Tax Credits (APTC) that individuals will be eligible for and generates savings of $50 - $100 million per year from 2018 through 2026. There are also three routes through which the waiver will negatively impact the budget by decreasing revenue: individual shared responsibility payments, health insurance providers fees, and federal exchange user fees. Because the waiver will lead to more individuals taking up insurance in the individual market, fewer individuals will owe 2 Attachment 4 Alaska 1332 Waiver - Economic Analysis December 23, 2016 the individual penalty for not having health insurance. The health insurance providers fee depends on the amount of premiums aggregated to the national level. Because the waiver depresses premiums in the Alaska individual insurance market, it will have a secondary negative effect on the total amount collected through the providers fee for years 2019 through 2026. Lower premiums also reduce the amount collected in federal exchange user fees, a 3.5% tax imposed on premiums sold through the Federally Facilitated Marketplace. The aggregate impact on the budget is positive, because the APTC savings outweigh the combined negative impact of the other three channels. Table 2 summarizes the aggregate impact of the four components on the federal budget. Year Final Savings 2016 $0 2017 $0 2018 $48,973,684 2019 $52,260,336 2020 $56,108,411 2021 $61,486,732 2022 $65,612,013 2023 $72,213,851 2024 $77,717,467 2025 $84,814,665 2026 $91,785,506 Table 2: Estimated Savings from Waiver (Before Pass-Through Funding) The overall impact through these four components is about $49 million in savings in 2018. Savings increase in every year thereafter, reaching nearly $92 million in 2026. The savings listed in Table 2 are before the granting of any pass-through funding, so they suggest that as long as pass-through funding is less than or equal to these figures, the proposed waiver will meet the federal deficit neutrality requirement.
  • The economic impact of the Liberty Oil Project A focus on employment and wages during the construction phase

    Loeffler, Bob; Guettabi, Mouhcine (Institute of Social and Economic Research, University of Alaska Anchorage, 2017-11-01)
    We analyze the employment and wages effects that will stem from the construction phase of the Liberty project in Alaska. These economic impacts were generated using inputs provided by Hilcorp. We used a standard input output model –IMPLAN– to estimate the ripple effects from the employment and wages directly associated with the project. We find the following:  - Direct employment peaks in 2020 at around 300 annualized jobs.  - Direct wages also peak in 2020 at 40 million dollars.  - Total direct employment from 2017 to 2023 is 1,019 jobs.  - Total direct wages from 2017 to 2023 are about 141 million dollars.  - Total direct wages including benefits and burdens are about 201 million dollars. 1  - The total employment- including direct, indirect, and induced- from the Liberty project between 2017 and 2023 is expected to be close 2,700.  - The total wages-indirect and induced- in 2017 dollars from the construction phase add up to 247 million dollars.  - Our results focus on the onsite construction phase of the project and therefore only provide a partial picture of the full range of effects. For example, prolonging the life of the pipeline has broad effects on revenues and employment that we do not try to address.  - We also do not look at the engineering and construction and transportation of drilling and production facilities, of which some portion may be constructed in Alaska.
  • Public and Private Sector Earnings in Alaska

    Bibler, Andrew; Guettabi, Mouhcine (Institute of Social and Economic Research, University of Alaska Anchorage, 2017-12-01)
    We compare earnings in the Alaska public and private sector labor markets from 2001 -2016. Public sector laborers are older and more likely to be female, suggesting that taking these differences into consideration will be important in our comparisons. We also focus on the public-private sector earnings gaps for men and women separately, as the magnitude and even direction of the gap depends on this distinction. We go about this in three ways: unconditional comparisons, conditional earnings gaps, and comparing the earnings and growth of individuals who remain with the same employer. Below are the main findings: • The unconditional average public-private earnings gaps for men and women are of opposing signs (see Table 1). – Men in the public sector earn about $2,129 less in quarterly wages than men in the private sector, on average. – Women in the public sector earn about $498 more in quarterly wages than women in the private sector, on average. • On average, across all occupations, men and women have higher initial earnings in the private sector at the beginning of a job spell. – For men, the difference is $3113 in quarterly earnings. – For women, the difference is $760 in quarterly earnings. • Among workers who remain with the same employer, earnings growth is 1% and 2% higher in the public sector for men and women, respectively. • For men, despite the faster growth, they don’t catch up to the earnings of private sector employees within 10 years of tenure in most occupations (See Tables 9 and 11, and Figure 12). 1 • Women in the public sector earn more than their private sector counterparts within a few years of tenure, on average. • There is substantial heterogeneity in the earnings gap across occupations (See Tables 10 and 12, and Figure 13).
  • What do we know to date about the Alaska recession and the fiscal crunch?

    Guettabi, Mouhcine (Institute of Social and Economic Research, University of Alaska Anchorage, 2018-01-01)
    We provide a broad overview of the state’s economic and fiscal conditions. We show how the economic contraction has spread away from natural resource and mining and state government to household spending dependent sectors. We also show that while the rate at which jobs are being lost has slowed, it is inaccurate to think about that as a sign of a recovery. That is because the engine of growth that is O&G employment as of June 2017 was only 75% of what it was in 2014. Additionally, the softness in spending activity may linger for an extended period of time. We also assess the regional effects of the recession and show the significant heterogeneity in experience. Unsurprisingly, areas with economic bases not associated with Oil and Gas and with relatively little dependence on state government spending are holding up best. After establishing an understanding of the economic conditions, we offer a back of the envelope calculation of the capital investment losses associated with the fiscal uncertainty. Then, we provide a comparison of Alaska’s taxes relative to the rest of the US, and a simulation of the effects of different withdrawal amounts on the permanent fund balance and the earnings reserve.
  • 2018 Alaska's Construction Spending Forecast

    Leask, Linda; Goldsmith, Oliver Scott (Institute of Social and Economic Research, University of Alaska Anchorage, 2018-01-01)
    The total value of construction spending “on the street” in Alaska in 2018 will be $6.6 billion, up 4% from 2017.1, 2,3 The increase is due to a recovery in Petroleum sector spending which will grow 15% to $2.6 billion from its low of $2.2 billion last year. All other construction spending will be $4.0 billion, a decline of 2% from $4.1 billion last year. Private spending, excluding petroleum, will be about $1.5 billion, down 5% from $1.6 billion last year—while public spending will decline 1% to $2.5 billion. Wage and salary employment in construction will decline 3% to 14.5 thousand.4 After falling by half in the last two years, spending by the petroleum industry will start to recover because of the rise in the price of oil, and more support for the industry from the federal and state governments.
  • How Does Alaska's Spending Compare?

    Leask, Linda; Tran, Trang; Guettabi, Mouhcine (Institute of Social and Economic Research, University of Alaska Anchorage, 2018-02-01)
    A laskans have been arguing for years about how much the state government should be spending, ever since low oil prices gouged a big hole in the budget—and the state has been using up its savings to pay the bills. We don’t know how much the state should spend: that answer depends on what things Alaskans want to keep, and what they’ll pay for them. But we can throw some light on the debate.
  • History and Options Regarding the Unfunded Liabilities of Alaska’s Public Employees’ and Teachers’ Retirement Systems

    Groh, Cliff (Institute of Social and Economic Research, University of Alaska Anchorage, 2018-04-08)
    In early 2003, financial analysts working for the State of Alaska announced that the two largest public employee retirement systems in Alaska had become significantly underfunded.3 From fiscal year 2006 (July 1, 2005 through June 30, 2006) to date, the state has paid $6.951 billion— (an average of $534.7 million annually)—to pay down these obligations, which will be called “unfunded liabilities” in this paper.4 The State of Alaska has substantial unfunded liabilities remaining to pay off for these two systems, the Public Employees’ Retirement System (PERS) and the Teachers’ Retirement System (TRS). There is uncertainty about the size of these unfunded liabilities, and there are also different ways of calculating them. For example, the State of Alaska’s snapshot balance-sheet approach, subtracting the accrued liabilities from the assets, based on their actuarial value, produces an estimate of $6.609 billion for the combined unfunded liabilities of PERS and TRS.5 That figure is an estimate of the unfunded liabilities discounted to the present day. Estimates of the size of the unfunded liabilities particularly vary based on the use of different critical assumptions, such as the rate of future returns on investment. As an example, using an estimated rate of return of 2.142 percent instead of the State of Alaska’s assumption of 8 percent produces an estimate of $33.9 billion for the state’s unfunded liabilities. 6 The State of Alaska has committed to paying off the unfunded liabilities under a 25-year amortization schedule that started in 2014, so another highly relevant measurement of those liabilities appears to be the amount actuaries for the state currently project will be needed under that pay-off plan, which runs through fiscal year 2039. The state’s actuaries project that from fiscal year 2019 through fiscal year 2039 the state will pay a total of $10.815 billion in extra contributions—called “state assistance” or “additional state contributions” in this paper—to pay off the unfunded liabilities. 7 In contrast to the state’s snapshot estimate of $6.609 billion, this estimate of $10.815 billion in state assistance represents a flow of annual cash payments. That is, the $10.815 billion is an estimate of the total amount needed to eliminate the unfunded liabilities of PERS and TRS under the 25-year amortization schedule the state adopted in 2014. 4 Note that this state assistance is above and beyond the amount the state is projected to owe in its role as employer in the normal course of funding the two systems.8 Employers other than the state—primarily local governments and school districts—also participate in PERS and TRS, and the figure for state assistance covers not only unfunded liabilities attributed to the state but also a portion of the unfunded liabilities attributed to non-state employers. As explained more later, the state has assumed, by statute, the responsibility to pay for a share of the unfunded liability of these other employers. 9 This paper: • Describes the structure of the Alaska public employee retirement systems in the context of some unusual features of public employment on the Last Frontier • Reviews how the problem of unfunded liabilities came about • Examines how concerns over unfunded liabilities produced both changes and proposed changes in the retirement systems over the past dozen years, including proposals for changes in the allocation of burdens between the state and local governments in paying for retirement benefits • Describes current projections of future amounts needed to pay off the unfunded liabilities • Discusses how future estimates of the unfunded liabilities might change in response to economic and demographic factors • Discusses legal provisions protecting the rights of beneficiaries of the retirement systems • Lays out options for policymakers—other than the current policy of paying down the unfunded liabilities over time—including buyout, bailout, and bankruptcy
  • How Is the State Dealing With the Shortfall in Pension Systems?

    Groh, Cliff (Institute of Social and Economic Research, University of Alaska Anchorage, 2018-04-18)
    I n early 2003, financial analysts gave Alaska state officials some very bad news: the two largest pension systems for public employees wouldn’t have the money to cover all the expected future costs of pensions and health-care benefits for state and local employees when they retired. This shortfall—called the unfunded liability— had been caused by, among other things, several years of poor returns on fund investments and soaring health-care costs. Public pensions are protected in Alaska’s constitution, and the state has already contributed nearly $7 billion to reduce the shortfall. How much more it will need to pay is uncertain, since it depends on many things that are hard to predict. But most analysts believe it will be billions more. That poses a major challenge for the state—which has been dealing with big budget deficits—and for local governments, which need to help pay the unfunded liability but have far smaller financial reserves than the state.
  • Adapting to Environmental and Social Change: Subsistence in Three Aleutian Communities

    Schmidt, Jennifer; Berman, Matthew (Institute of Social and Economic Research, University of Alaska Anchorage, 2018-04-19)
    Our surroundings and society are both constantly evolving. Some changes are due to natural processes. People are responsible for other changes, because of what we do—for example, increasing the size of the population, expanding technology, and increasing mobility and connectivity. And some changes—like climate change—are due to a combination of natural processes and actions of people. In the Arctic, including the Aleutian Islands, marine and coastal ecosystems have seen the largest number of regime shifts with direct and indirect consequences for subsistence activities, commercial fisheries, and coastal communities (Council 2016). This paper describes current subsistence activities and changes local residents have observed over time in three Aleutian Island communities—Akutan, Nikolski, and Atka. As described more later, we did initial household surveys in 2016 and a second round in 2017, as well as more detailed interviews with some residents.
  • How Has the 80th Percentile Rule Affected Alaska's Health-Care Expenditures?

    Guettabi, Mouhcine (Institute of Social and Economic Research, University of Alaska Anchorage, 2018-05-16)
    We use the Health Expenditures by State of Residence data (1991-2014) compiled by Centers for Medicare & Medicaid Services to examine the causal effect of the 80th percentile rule on Alaska's health care expenditures. We find evidence that Alaska's expenditures would have been lower in the absence of rule. The share of the overall increase in expenditures that we attribute to the 80th percentile rule is between 8.61% and 24.65%. It is important to note that using expenditures as a proxy for costs has limitations as it is the product of both quantity of services used and prices.
  • Perceptions of Universal Ballet Delivery Systems

    Hanna, Virgene; Passini, Jessica (Institute of Social and Economic Research, University of Alaska Anchorage, 2018-06-22)
    A total of 412 registered voters in the Bethel, Dillingham, and Kusilvak Census Areas completed surveys with ISER interviewers in March and April of 2018. The majority (74%) of respondents reported their race as Alaska Native and 13% were White. Near the beginning of the survey, interviewers asked respondents how they preferred to receive their ballot and 60% said they preferred to get it in person on Election Day, 21% would prefer to receive it by mail, and 17% would prefer to receive their ballot online. After respondents heard a description of three voting methods being considered: 1) keep voting the way it is now; 2) mail out and mail back; and 3) receive ballot in the mail and have different ways to return it their preferences changed somewhat. Of the three methods, keep voting the way it is now was the first choice by 49% of respondents, followed by 36% for option 3, and 14% for option 2. Respondents had little experience with voting methods other than in-person. When asked what made it difficult for them and other members of their community to vote, personal reasons, such as being sick or out of town, was the most frequent (37%) response. About two-thirds (64%) reported personal reasons made it difficult for people in their community to vote followed by 46% saying that the ballot being written in English made it difficult for people in their community. Over half (56%) of respondents reported they are satisfied with their mail service, only 17% of those who were satisfied said they would prefer to receive or return their ballot by mail.
  • A Regional Assessment of Borough Government Finances And Employment

    Guettabi, Mouhcine (Institute of Social and Economic Research, University of Alaska Anchorage, 2017-06-01)
    Alaska’s state budget revenues declined by more than 90% from 2012 to 2016, mainly due to a sharp drop in oil prices: oil revenues have paid for most state government operations since the 1980s. This loss of so much revenue has led to a shortfall of billions of dollars in the state budget and a sluggish economy. The health of a state’s tax revenues is critical to its economic growth and ability to finance public services. Considerable attention has been paid to the state’s fiscal woes, which are still ongoing. But the state also provides considerable support to Alaska’s local governments—and there has been little analysis of how the decline of state revenues might affect local governments. This analysis reports how much Alaska’s 19 borough governments rely on state aid—individually and as a group—and considers how vulnerable they are to cuts in state aid as time goes on. Alaska also has city governments, both within and outside organized boroughs, but here we look only at borough governments —which are essentially regional governments that, unlike cities, all have the same mandatory powers. We want to emphasize that our figures are estimates; boroughs report their revenues quite differently, and sometimes in ways that make it nearly impossible to identify allocations from the state. Alaska provides three main kinds of aid to local governments: aid for general government operating expenses (revenue sharing), grants for public works projects, and aid for schools. It has mostly relied on its oil wealth to fund that aid to local governments. Revenue sharing helps ensure that all areas of the state can pay for basic public services and have reasonably equitable and stable local tax rates. Aid to schools is a major part of the state’s budget, and it pays for a large share of school costs. State grants for local capital projects can vary sharply by year. In the years when oil prices were high—much of the time between 2008 and 2012—those grants were large. Since then, the state capital budget has shrunk to a small fraction of what it was a few years back.
  • How Do Alaskans Cover Their Medical Bills?

    Leask, Linda; Frazier, Rosyland; Passini, Jessica (Institute of Social and Economic Research, University of Alaska Anchorage, 2017-04-01)
    The Affordable Care Act (ACA) has been at the top of the news lately, with Congress considering but then dropping proposed changes. Congress will try again to change the ACA—but it’s uncertain how or when. This summary looks broadly at all the kinds of health-care coverage Alaskans have now, and how ACA provisions have changed that coverage.

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