SENATE JOINT RESOLUTION NO. 14 Proposing amendments to the Constitution of the State of Alaska relating to the Alaska permanent fund and to appropriations from the Alaska permanent fund. 9:13:43 AM ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION (LFD) introduced himself. CONOR BELL, ANALYST, LEGISLATIVE FINANCE DIVISION, introduced himself. Mr. Painter discussed, "SJR 14 Amendment Modeling" (copy on file). He pointed to slide 2, "Probabilistic Modeling": • LFD has two versions of the fiscal model: a linear model which assumes that revenue matches DOR's forecast, and a probabilistic model that shows the impact of revenue volatility • These probabilistic model allows for variation in two variables:  Oil prices (using a range centered around DOR's forecast), which impacts Permanent Fund royalty deposits  Permanent Fund investment returns (using the ranges developed by Callan for APFC) • Median cases using probabilistic models are typically lower than the linear model • These scenarios assume no ERA Overdraws 9:15:17 AM Mr. Bell addressed slide 3, "Modeled Scenarios": Scenarios with POMV Draw formula change beginning FY28  Retain 5-year average of total Permanent Fund value, but vary draw percentage between 4.5 percent and 5.5 percent  Retain 5.0 percent draw percentage, but vary from 3 to 7-year average of total Permanent Fund value Scenarios with POMV Draw formula change beginning FY26  Step Down: 5 percent draw in FY26-27, 4.875 percent FY28-29, 4.75 percent FY30-FY31, 4.625 percent FY32-33, 4.5 percent FY34-35  5.5 percent draw in FY26-FY28 and FY31-33, 5 percent draw in FY29-30 and FY34-35  5 percent draw in FY26-FY28 and FY31-33, 4.5 percent draw in FY29-30 and FY34-35  5 percent draw, except 5.5 percent draw if 5 percent nominal draw amount would be lower than prior year  4.5 percent draw, except 5 percent draw if 4.5 percent nominal draw amount would be lower than prior year Mr. Bell discussed slide 4, "Status Quo POMV Formula with No Overdraws 9:20:57 AM Senator Kiehl asked whether the numbers were nominal dollars or whether they had been adjusted for inflation. Mr. Bell stated that they were nominal dollars, and none of the numbers in the presentation had been adjusted for inflation. Mr. Bell pointed to slide 5, "Delta from Status Quo to 6 Year Average Beginning FY28 Mr. Bell looked at slide 6, "How Uncertain is the POMV Amount from Year to Year? 9:24:56 AM Mr. Bell addressed slide 7, "POMV Draw as Percentage of Prior FY-End Total Perm Fund Balance 9:27:24 AM Mr. Bell displayed slide 8, "Median POMV Draw Amount Mr. Bell pointed to slide 9, "How Does the Median POMV Draw Differ from the Status Quo Formula? Mr. Bell addressed slide 10, "How Uncertain is the POMV Amount from Year to Year? 9:31:13 AM Mr. Bell discussed slide 11, "Longer-Term Impact of Different Draw Rates on Perm Fund Balance Mr. Bell looked at slide 12, "Longer-Term Impact of Different Draw Rates on POMV Draw Mr. Painter shared that there the draw rate and averages were the focus of the presentation. 9:36:21 AM Co-Chair Stedman recalled that the consultants had varied the percentages of the rate throughout the years. Mr. Painter remarked that drawing more or less would adjust the portfolio of risk tolerance. Senator Kaufman wondered whether the modeling was randomly distributed. Mr. Painter replied that the model was distributed randomly. Mr. Bell furthered that there was an assumption of the returns year after year was uncorrelated on the return in the following year. SJR 14 was HEARD and HELD in committee for further consideration. 9:40:42 AM AT EASE 9:43:00 AM RECONVENED