In Making Sausage: From Illinois Farm to a 45-Year Career in Public Service in Alaska, Jim
Duncan describes many of the major public policy issues he worked on during his years in the
Alaska Legislature. Among them, few carried greater long-term importance than the Permanent Fund. Duncan explains that the discussion was never simply about annual dividends. From the beginning, the larger goal was to protect Alaska’s future by managing a portion of the state’s oil wealth responsibly.
Having served in the House of Representatives during the creation of the Permanent Fund, Duncan offers readers a firsthand account of the debates, compromises, and decisions that shaped one of Alaska’s most significant public institutions.
The Original Purpose of the Permanent Fund
Jim Duncan explains that many Alaskans know the Permanent Fund because they receive the annual Permanent Fund Dividend. However, he reminds readers that this was not the original purpose behind creating the fund.
According to Duncan, the fund was established to generate earnings that could help support important government programs and services in future years. During the late 1970s, legislators spent considerable time discussing how the fund should be managed, how its earnings should be used, and how Alaska could protect part of its oil revenues for generations to come.
Learning from Alaska’s Earlier Experience
The discussion about the Permanent Fund was influenced by Alaska’s earlier experience with oil revenue.
Duncan recalls that after the discovery of oil at Prudhoe Bay, the state received approximately $900 million from the first lease sale in 1968. Those funds were eventually spent on various new programs. While he believed many of those programs benefited Alaskans during the early years of statehood, he also writes that legislators recognized the need to avoid spending future oil revenues in the same way.
That realization became one of the reasons lawmakers supported creating a permanent savings fund for the future.
Debating How the Fund Should Be Managed
One of the major questions facing the Legislature was how the Permanent Fund should invest its money.
Jim Duncan explains that the House and Senate had different ideas. He even developed a compromise proposal that would combine investments in sound securities with loans for community development projects. Before presenting the idea formally, he discussed it with the Alaska State Chamber of Commerce.
After hearing concerns about the possible risks, Duncan reconsidered his proposal. He concluded that protecting the principal of the fund was more important than pursuing an approach that could expose it to unnecessary political or financial risk.
Looking back, he writes that learning when to set aside one of his own ideas became an important lesson in legislative service.
Protecting the Fund for Future Generations
Ultimately, the Legislature chose a conservative investment approach.
The legislation created the Alaska Permanent Fund Corporation to manage the investments while providing legislative oversight. Duncan explains that the focus remained on protecting the fund’s principal through investments in sound securities.
Over time, the investment strategy evolved, including later changes allowing investments in stocks and management under the prudent investor rule. Duncan notes that the Permanent Fund continued to grow in value, reinforcing his belief that protecting the principal had been the right decision.
Strengthening the Permanent Fund
Jim Duncan also describes the Legislature’s decision to strengthen the Permanent Fund through additional appropriations.
During the 1980 legislative session, legislators approved an additional $900 million deposit into the fund. Duncan explains that this represented repayment of the money received from the 1968 lease sale that had already been spent.
The following year, while serving as Speaker of the House, the Legislature authorized another $1.8 billion to be deposited into the fund, with the final deposits completed during the Sheffield administration.
These decisions reflected the Legislature’s commitment to protecting Alaska’s financial future rather than spending every available dollar immediately.
Why It Mattered Throughout His Career
For Jim Duncan, the Permanent Fund represented responsible long-term planning.
Throughout his memoir, he emphasizes that public officials must think beyond immediate needs and consider the future of the state. The debates surrounding the fund required legislators to balance present demands with the responsibility of protecting resources for future generations.
Duncan never claims to have been one of the primary creators of the Permanent Fund. Instead, he gives credit to Governor Jay Hammond and several legislators who provided leadership during its creation, while acknowledging that all members of the Legislature played a role in shaping its final structure.
Conclusion
Jim Duncan’s discussion of the Permanent Fund reflects one of the central themes found throughout Making Sausage: good public policy requires careful thought, responsible decision-making, and a willingness to protect the future as well as the present.
By participating in the debates over how the Permanent Fund should be managed, structured, and strengthened, Duncan became part of one of the most significant chapters in Alaska’s legislative history. His account reminds readers that the fund was created not simply as a source of annual dividends, but as a lasting resource designed to help support Alaska and its people for many years to come. (Visit Our Website)
