Research Matters No. 37. Teacher Turnover in Alaska: Is It Changing?
July 25, 2008

Turnover among teachers statewide in 2007 was about 14%, roughly the same as it had been in 1999. That lack of broad change comes after years of efforts by Alaska's state government, universities, and school districts to reduce turnover, especially in rural areas. Teacher turnover in rural districts remains about twice as high as in urban districts—22% compared with 10%. These are among the findings of ISER's annual update of teacher turnover numbers, by Alexandra Hill and Diane Hirshberg. The analysis also reports:

• Efforts to reduce turnover have succeeded in some districts, despite the lack of change in statewide figures.
• Keeping special education teachers in Alaska is particularly difficult, with half the new special education teachers gone within four years after they start.
• Teachers and principals who graduate from Alaska programs are more likely to stay. Of the Alaska graduates who came into the public schools between 2000 and 2005, three-quarters were still there in 2007, compared with only about half among those who graduated from programs outside Alaska.

The findings are reported in an ISER research summary, Turnover Among Alaska Teachers: Is It Changing?

Research Matters No. 36. How Would $1,200 Per Person State Payments Compare with Increased Household Costs for Energy?
July 22, 2008

Alaska's governor, Sarah Palin, has proposed to pay every Alaskan $1,200 to help cover recent big increases in energy costs. The Alaska Legislature is considering that proposal in the current special session.
How would those proposed payments compare with increased energy costs for Alaska households? A new ISER analysis by Ben Saylor and Steve Colt finds that the answer depends on where you live, how you heat your house, how much energy you use, and how many people are in your household.

Read our analysis, How Would $1,200 Per Person State Payments Compare with Increased Household Costs for Energy?

Research Matters No. 35. How Vulnerable is Alaska's Economy to Reduced Federal Spending?
July 18, 2008

The federal government spent $9.25 billion in Alaska in 2006, and about a third of all jobs in Alaska can be traced, in one way or another, to that spending. Big increases in federal spending drove much of the economic growth in Alaska over the past decade. But now federal spending has stopped growing, and many Alaskans are worried that Alaska is vulnerable to cuts in spending, as the federal budget tightens.

A new ISER analysis estimates that Alaska could be vulnerable to spending cuts in the range of $450 million to $1.25 billion—which could cost the economy 7,000 to 20,000 jobs in the future. The author, Scott Goldsmith, emphasizes that it's impossible to predict possible spending cuts with any precision. The estimated range of potential cuts shows the likely magnitude of reductions, given the federal government's budget problems. Any cuts would likely be made gradually, over years, and recent strength in the petroleum and mining sectors would help cushion the effects.

The analysis announced here is ISER's second Web Note: How Vulnerable is Alaska's Economy to Reduced Federal Spending? These Web Notes are timely, short assessments of issues important to Alaskans, and they'll be available only on our Web site:

Research Matters No. 33. Dollars of Difference: What Affects Fuel Prices Around Alaska?
June 6, 2008

Alaskans who depend on fuel oil to heat their houses and generate electricity have been hit especially hard by the high and rising price of oil. Prices for the first fuel deliveries of spring 2008 have already left many Alaskans wondering how they'll pay the much higher fuel bills.

But some rural residents pay much more than others—at times 100% more. The costs of buying and refining crude oil are at the base of fuel oil prices—but what are all the other things that make fuel oil so much more expensive in some places than in others?

A new study by Meghan Wilson, Ben Saylor, Nick Szymoniak, Steve Colt, and Ginny Fay looks at 10 rural communities that reflect all the factors—some obvious and some not so obvious—driving fuel prices around Alaska. The Alaska Energy Authority contracted with ISER to do this research, which the agency hopes can help identify possible ways of holding down future fuel prices. The price information was collected last winter, and fuel oil prices have gone up a lot since then. But the things that influence fuel prices haven't changed. Those include:

• How the fuel is transported and how far
• How difficult it is to reach specific communities, especially on shallow stretches of river
• The number of times the fuel is transferred enroute to a community
• Whether a community can get fuel deliveries year-round or just in the summer
• How much fuel is delivered at once and how much a community can store
• The quality of the local moorage and fuel-handling equipment
• Competition among transporters and suppliers

A summary of the report findings and a new interactive map that allows users to see the special circumstances of getting fuel to each of the study communities are available on ISER’s Web site. Printed copies of the summary are also available from ISER in Anchorage (907-786-7710), and the full report will be available later this summer.For questions about the study call Meghan Wilson at 786-5408.

Two new ISER research summaries report on progress the University of Alaska is making in attracting and keeping students—and providing them with a good, affordable education. Theodore L. Kassier and Alexandra Hill looked at what UA has done toward meeting a number of goals in the past decade, and Diane Hirshberg and Diane Erickson interviewed Alaska Native alumni of UAA to find out what UAA could do to improve Alaska Native graduation rates. So how is UA doing? The researchers found that it's a mixed bag of successes and continuing challenges.

• UA is attracting a growing share of Alaska's college-bound freshmen, up from 42% in 1996 to 63% in 2006. But only about a third of Alaska's high-school students attend college at all, and only 20% attend college in-state.
• Alaska has among the lowest high-school and college graduation rates in the country. Only 27% of all full-time UA students working toward bachelor's degrees get those degrees within six years, compared with 56% nationwide. The college-graduation rate is especially low among Alaska Native students; only about 10% get bachelor's degrees within six years.
• Alaska Native graduates of the Anchorage campus cite a number of personal reasons for the low graduation rate—including lack of role models, difficulty in paying for college, and feelings of dislocation.

But they also report that staff and faculty provided little help in navigating unfamiliar admission and enrollment requirements and didn't provide enough information about the course-level structure, prerequisites, and degree requirements.

• But the Alaska Native graduates also cited several things that helped them succeed, while so many others didn't. Those include participating in many activities, both in high school and college; having support of family, teachers and employers, and—most important—never giving up: being determined to succeed, despite any barriers.
• A UA program that awards four-year scholarships to students who were in the top 10% of their high-school classes is drawing about 40% of those top students. Still, many of the incoming freshmen at UA can't read, write, or do math at college level, and the school offers thousands of hours of remedial courses.
• Tuition for four-year programs at UA has gone up 56% since 2000. But UA is still a relative bargain among four-year programs at public universities, because tuition across the country has gone up 74% since 2000.
• Very high costs to operate UA's remote community campuses are hampering efforts to offer more programs and services for rural Alaskans. But UA has doubled the number of distance-education courses it offers since 1997.

Copies of The University of Alaska: How Is It Doing? and Alaska Native Graduates of UAA: What Can They Tell Us? are available online at ISER's Web site, www.iser.uaa.alaska.edu, and printed copies are also available from ISER in Anchorage (907-786-7710).

• Migration from smaller places toward larger places is an ongoing phenomenon that is more noticeable when birth rates drop;
• There is no systematic empirical evidence that fuel prices, by themselves, have been a definitive cause of migration;
• The pursuit of economic and educational opportunities appear to be a predominant cause of migration;
• Currently available survey data are not sufficient to definitively determine other reasons for migration, which could include concerns about public safety and/or alcohol abuse;
• Most of the survey data pre-date the latest rapid increase (2006-2008) in fuel prices.

Research Matters No. 30. The Political Economy of Oil in Alaska: Multi-Nationals Versus the State
April 22, 2008

Oil dominates Alaska's economy, but what about state politics? The list of legislators and others who have recently been convicted of or are being investigated for taking illegal payments from VECO—an oil-field service business—shows that oil reaches deep into Alaska politics. But a new book by political scientists and economists at the University of Alaska argues that the state has considerable power in dealing with the oil industry—and that the relationship between the two is complex and much different than it was 40 years ago.

The book, The Political Economy of Oil in Alaska, looks at all aspects of the relationship between Alaska and the resource industry that drives the economy and pays most of the state government's bills. The authors are Jerry McBeath, a professor of political science at the University of Alaska Fairbanks; Matthew Berman, a professor of economics at ISER; Jonathan Rosenberg, a professor of political science at UAF; and Mary Ehrlander, an assistant professor of history at UAF. Among the many things the book discusses are:

• How Alaska is similar to and different from Nigeria, Venezuela, Alberta, and other places where oil dominates the economy.
• Why the Permanent Fund dividend has been more successful than any other state investment at helping reduce the state's dependence on oil money—but at the same time has made it political suicide to suggest using Permanent Fund earnings for anything other than writing checks to Alaskans.
• How the state's methods of collecting revenues from the oil industry have changed as both the economics of the oil patch and the financial needs of the state have evolved.
• Why Alaska's Permanent Fund is one of the most successful public investment funds in the world.
• How the oil industry's campaign contributions, advertising, and charitable giving affect elections and public opinion in Alaska.
• How state expertise in dealing with the oil industry has improved over the years, and why Alaska is in a much better position to protect its interests now than it was in the past.

Two of the authors, Jerry McBeath and Matthew Berman, will be at the UAA bookstore on Friday, May 2, from 1 to 3, to talk about the book.
Everyone is invited. The book retails for $59.95, and copies will be available through the UAA bookstore. If you have questions about the bookstore event, please call Rachel Epstein at 786-4782.

Research Matters No. 29. What Helps Small Businesses Succeed?
February 21, 2008

Starting a business in rural Alaska is hard but not impossible, as existing rural businesses around the state prove. So how do some people overcome the barriers created by small markets, remote location, high costs, and harsh climate, while many others fail? ISER researchers recently analyzed business license patterns to identify favorable community characteristics and surveyed 196 business owners in 19 small rural communities to ask what challenges they face and what could help more businesses succeed. We also did detailed interviews with 30 owners of current and former rural businesses.

The research was sponsored by the Rasmuson Foundation, BP Exploration, Wells Fargo Bank, the U.S. Economic Development Administration, and the University of Alaska Foundation. What did business owners tell us?

• Take a hard look at whether there'll be enough demand for what you offer. Identify either a needed service or an opportunity in a growing industry. Almost a third of the businesses in our survey provided groceries, fuel, and general merchandise, and another third were in air transportation, eating places, lodges, Alaska Native arts, and guiding for sport hunting and fishing.
• Draw up a detailed business plan that accounts for all aspects of the business—expenses, estimated cash flow, management and training of employees, and marketing strategies. Some people told us their businesses had failed because they hadn't understood how to estimate all their likely expenses.
• Get training in business planning, financial management, and day-to-day operations. A quarter of the business owners said they could still use help managing their finances and dealing with other aspects of day-to-day operations. They cited hiring and supervising employees, facing competition from other businesses, getting and using new technology, and having sufficient cash flow to cover expenses as ongoing challenges.
• Government agencies and private organizations can best help small rural businesses by offering more training in financial and operations management for both prospective and current owners and improving rural telephone and Internet connections. One in five business owners said such training and better Internet and phone connections would be the biggest help to them. About one in ten said agencies could help by providing more financing for small businesses and by learning more about the big and ongoing challenges rural businesses face.

Besides what businesses told us, our analysis of community characteristics showed that the the cost of getting to a community; access to scenic public lands, fisheries, or natural resources; and a diverse population are the characteristics that most influence business success.

See summary or full report

For more information about rural business development, contact Christi Bell, executive director of the Center for Economic Development at ISER.

ISER Research Matters No. 28. Alaska's Construction Spending: 2008 Forecast
February 4, 2008

Construction spending in Alaska will total about $7 billion in 2008, down 2% from 2007, according to the new construction spending forecast by Scott Goldsmith and Mary Killorin of ISER. The forecast is prepared annually for the Construction Industry Progress Fund and the Associated General Contractors of Alaska. Other findings include:

• At $4.6 billion, spending by private industry will make up 66% of total 2008 construction spending. Private-industry spending is up 2% from last year, with projected growth in the oil and gas, mining, utilities, and other basic sectors.
  
  
• Public agencies are expected to spend $2.4 billion, or 34% of total construction spending. That's a drop of 8% from 2007, mostly because the federal government will spend less for military construction in Alaska this year. Construction spending by state and local governments is expected to increase about 12%.
  
  
• The oil and gas industry will spend the most—about $2.9 billion, or 5% more than in 2007. That spending alone accounts for $4 of every $10 in construction spending. Most spending will be on the North Slope, but something in the range of 10% will be in Cook Inlet.
  
  
• Residential construction spending is expected to drop 35% in 2008. But unlike in many parts of the U.S., the drop is not due to problems associated with the sub-prime mortgage market. It's mostly because housing prices in Alaska have been rising faster than incomes—so the supply of houses exceeds the demand. That's a temporary imbalance, because Alaska's housing market is basically sound. Housing construction will slow down until demand can absorb the excess supply that accumulated in 2007.

Copies of the forecast are available online from ISER and the Associated General Contractors (www.agcak.org).
Hard copies are also available from Associated General Contractors; call 907-561-5354.

ISER Research Matters No. 27. Understanding Alaska's Remote Rural Economy
January 11, 2008

A new ISER publication describes an economy unlike that anyplace else in the United States: the economy of the vast remote region of northern and western Alaska. At 395,000 square miles, the remote rural region is large enough to hold Japan, Germany, and Great Britain. Yet only about 60,000 people live there, and most households keep themselves going with a mix of cash, subsistence, sharing, and non-cash trading. That's a world away from the state's urban economy, and under standard measures like income the remote rural economy lags far behind.

Over the years there have been many efforts to improve that economy. But the new paper by ISER economist Scott Goldsmith argues that standard measures can't capture all the economic activity in a region where subsistence and non-cash trading play such important parts. Also, there are many gaps in the available data. This new paper offers the most comprehensive picture possible, based on available data—and at the same time identifies other information that could improve the picture and make economic development efforts more effective.

• Most of the state's natural resource wealth is produced in remote rural areas—about $17 billion worth in 2006—but more than 90% of that wealth bypasses the remote economy. It is government that directly or indirectly accounts for almost all (perhaps as much as 90%) of the income of regional residents. Local benefits from resource production—through local resource taxes, jobs, and activities of Alaska Native regional corporations—are concentrated in a few areas.
• A big share of the money that does come into the remote rural economy quickly leaks out again, because so many of the workers (an estimated
  40%) are non-locals who spend their paychecks elsewhere, and because residents and local businesses buy many things outside the region. Of the estimated $2.35 billion that entered the remote rural economy as a result of natural resource production and government spending in 2006, about $1 billion quickly leaked out to other areas.
• Official employment figures underestimate the time residents of remote areas spend working, because they can't take into account time spent in subsistence activities and the informal economy. If such time could be included, employment would be larger than published data show and would have a more complex seasonal pattern.
• Thousands of young people in remote areas will soon reach working age, and that growth in the labor force, combined with the constraints on the types of cash jobs the economy can support, will create special challenges for residents. To find jobs, many will need to get specialized training, commute to jobs, or move to areas with more jobs.
• There are opportunities for economic growth in remote areas. But importing goods and services will continue to be expensive, and future government spending will be constrained. Cash will continue to be scarce, and subsistence and informal economic activities will continue to be extremely valuable.

Research Summary       Full Report

ISER Research Matters No. 26. No Health Insurance: How Do Alaskans Cope?
December 4, 2007

It's no surprise that a lot of Alaskans without health insurance say they can't afford it. That's what individual Alaskans and owners of small businesses told us, in focus groups we held to learn more about why so many Alaskans—about one in eight—are uninsured. But Alaskans at the focus groups did more than just confirm what millions of Americans say about the costs of health insurance. A new ISER research summary by Rosyland Frazier and Virgene Hanna, "No Health Insurance: How Do Alaskans Cope?" reports on the focus group findings.

• Uninsured Alaskans don't see health care as an entitlement. They believe they ought to pay for it—they just can't afford the going rates. On average, the people at the focus groups told us they could pay $100 a month per person for health insurance.
• The cost of insurance premiums was the reason most often cited by uninsured Alaskans at the focus groups, but some also said they didn't believe they needed insurance, had pre-existing conditions that kept them from getting insurance, or weren't sure how to go about looking for insurance.
• Most business owners who didn't offer employee insurance also cited the costs, but said other things also influence their decisions. Those include uncertainty about their future business revenues, the difficulty of controlling insurance costs, the complexity of insurance policies, and the additional administrative burden.
• Uninsured Alaskans at the focus groups said they most often get medical care in hospital emergency rooms or community health centers, which have sliding-fee scales for uninsured patients. Those health centers are seeing a fast growing share of all uninsured Alaskans—up from 21% in 2002 to 38% in 2005.

ISER held the focus groups under contract with the Alaska Department of Health and Social Services.
Summary      Full report

ISER Research Matters No. 25. Economic Significance of Ted Stevens Anchorage International Airport
November 9, 2007

The Ted Stevens Anchorage International Airport generates one in eight of all wage and salary jobs in Anchorage, or about 18,400 of the city's total 146,800 such jobs in 2006. The airport also generates the same share of payroll—about one in eight dollars of wage and salary payroll can be traced to the airport. These are among the findings of a new study by Scott Goldsmith and Mary Killorin of ISER. The study was funded by the airport, and other findings include:

• About 55% of the airport-related jobs, or 10,222 jobs, are at the airport itself. The remaining 45%, or 8,212 jobs, are generated in the Anchorage community when airlines and other airport businesses make purchases in the community and when airport workers spend their paychecks.
• Anchorage's airport is about five times bigger than airports in other cities of comparable size. That's because the airport serves not only Anchorage residents but international air cargo carriers, visitors from outside Alaska, and residents of other Alaska places traveling through Anchorage.
• Anchorage is now the third largest cargo airport in the world, based on the total weight of cargo moving through the airport. According to the Airport Council International, Anchorage ranked below Memphis and Hong Kong but above Tokyo, Shanghai, and Frankfurt in 2006.
• The airport's contribution to the economy of Anchorage and Alaska goes beyond jobs and payroll. It's part of the infrastructure that links Alaska residents and businesses to each other and the rest of the world.
  Without it, the costs of living and doing business here would be much higher.

Full report.

ISER Research Matters No. 24. How Much Might Climate Change Add to Future Costs for Public  Infrastructure?
June 27, 2007

Scientists expect Alaska's climate to get warmer over time—and the changing climate could make it roughly 10% to 20% more expensive to build and maintain public infrastructure in Alaska between now and 2030 and 10% more expensive between now and 2080. These are preliminary estimates of how much climate warming could increase the future costs for roads, harbors, schools, the power grid, sewer systems, and all the other public infrastructure that keeps Alaska functioning.

A warming climate will damage Alaska's infrastructure—and make it more expensive to maintain and replace—because that infrastructure was designed for a cold climate. These preliminary estimates of how much infrastructure costs might increase are from a model ISER researchers developed with help from faculty at UAA's School of Engineering and the University of Colorado.

• Even without climate change, the costs of maintaining and replacing federal, state, and local infrastructure in Alaska are considerable—an estimated $32 billion between now and 2030 and $56 billion between now and 2080.
  
• Damage from climate change could add $3.6 billion to $6.1 billion to infrastructure costs between now and 2030 and $5.6 billion to $7.6 billion between now and 2080, depending on the level of climate change and assuming that government agencies adapt infrastructure to changing conditions.
  
• Not all areas of Alaska or types of infrastructure will be equally affected by climate change. The damage will be concentrated in areas where permafrost thaws, flooding increases, and coastal erosion gets worse. Extra infrastructure costs in the next 25 years will mostly be for maintaining or replacing roads, airport runways, and water and sewer systems.

Click here to see either a summary or the full report, Estimating Future Costs for Alaska Public Infrastructure at Risk from Climate Change.

ISER Research Matters No. 23. New Kids Count Alaska Data Book
April 9, 2007

A new look at how well Alaska's children and teenagers are doing, the annual Kids Count Alaska Data Book, reports some good news and some bad news.

• Birth rates among teenage girls continue to fall, and since the 1990s rates in Alaska have fallen faster than the national average. But teenage girls in the northern and southwestern regions of Alaska still have babies at much higher than national rates.
  
• Juvenile crime in Alaska was lower in 2004 than in 1994 and lower than the national average. But teenagers in Alaska still commit property crimes and drive under the influence of alcohol more often than teenagers nationwide.
  
• Alaska's high school students are passing the high school graduation qualifying exam at higher rates now than in 2002, but about 25% still failed the math and reading sections in 2006. Only half of the state's Alaska Native, Black, and Hispanic students graduate from high school.
  
• The share of children without health insurance is lower in Alaska than nationwide, largely because Alaska Native children are eligible for health care through the Alaska Area Native Health Service.

The new data book also includes stories from seven foster families around the state. These families have opened their homes and their hearts to some of the 2,000 Alaska children in foster care. All the families report that the satisfaction they get from helping some of Alaska's most vulnerable children far outweighs the difficulties.

Click here to see the data book. Copies are also available from ISER in Anchorage.
Call 907-786-7710 for information.

The Survey of Living Conditions in the Arctic (SLiCA) is ground-breaking, because it was designed and conducted by researchers and indigenous people acting as partners. More than 7,000 Inupiat, Inuit, and other indigenous peoples were interviewed in Northern Alaska, Greenland, the Chukotka region of Russia, and the Inuit settlement regions of Canada. ISER conducted the survey in Northern Alaska. To see a brief description of the survey and some of the major findings, click here.

ISER Research Matters No. 21. The Economic Importance of Nonprofits in Alaska
March 14, 2007

The 6,000 nonprofit organizations in Alaska are major contributors to the state economy, directly and indirectly supporting 10% of all jobs—significantly more than the 7% of jobs nonprofits support nationwide. That's among the findings of a new ISER study prepared by economist Scott Goldsmith for the Foraker Group.

"Nonprofits" are a diverse group made up of health and social service organizations (including Alaska Native nonprofits), educational and arts groups, recreational clubs, business leagues, veterans' organizations, churches, and many others. What they all have in common is that they are exempt from federal corporate income tax, and they serve some public purpose. Those nonprofits spend $3.4 billion in Alaska annually, with significant economic benefits:

• More than 43,000 Alaska jobs and about $1.5 billion in annual
  payroll depend in one way or another on nonprofit organizations.
• About 28,000 Alaskans work directly for nonprofits, with an annual
  payroll of $1 billion.
• Another 15,000 jobs and $500 million in payroll are generated
  indirectly when employees of nonprofits spend their paychecks or
  when nonprofits buy goods or services from other Alaska businesses.
• Nonprofits make purchases of close to $500 million from Alaska
  businesses annually.
• Nonprofit organizations are everywhere in the state. More than
  three-quarters of the jobs they support are in Anchorage and other
  urban areas. But they also account for a big share of total
  employment in rural regional centers like Nome, Bethel, and
  Dillingham. That's because jobs in regional health, housing, and
  other social service organizations are very important in those
  communities.
  

To see the full report, "The Foraker Group Report on the Alaska Nonprofit Economy", click here.

The debate about wild versus farmed salmon has gotten a lot of attention lately—but that's the wrong salmon debate, according to a comprehensive new study of competition between wild and farmed salmon. Explosive and continuing growth in farmed salmon has changed the salmon industry and salmon markets forever. But wild salmon and farmed salmon each fill a place in world markets that the other couldn't. So rather than debate about which is better, people who care about salmon issues should instead be talking about what policies could help make both the wild salmon and the farmed salmon industries profitable, while at the same time protecting wild salmon resources and the environment.

But thinking about what policies might be most effective requires understanding the many complex and contentious issues surrounding wild and farmed salmon—issues that are often oversimplified and misunderstood. "The Great Salmon Run: Competition Between Wild and Farmed Salmon" is a 300-page report specifically intended to explain the range and complexity of salmon issues. It describes everything from North American wild salmon stocks (primarily in Alaska) to the world salmon farming industry to salmon markets, products, distribution systems, and consumers.

The report was published by TRAFFIC North America, a joint program of the World Wildlife Fund and the World Conservation Union. The authors are Gunnar Knapp, a fisheries economist at ISER, and Cathy Roheim and James Anderson of the Department of Environmental and Natural Resources at the University of Rhode Island. They issue a warning early in the report: "Readers seeking simple answers about salmon issues will be disappointed. Nothing is simple about salmon, salmon fisheries, or salmon markets."

The report is available online. ISER also has a limited number of hard copies, at a price of $25 each. Call ISER at 907-786-7710.

ISER Research Matters No. 19. Effects of Rising Utility Costs on Alaska Households
October 26, 2006

Households in remote Alaska communities face utility costs 50% higher now than in 2000. In Anchorage those costs are up 35% and in other large or road-system communities about 39%. These are among the findings of a new ISER study by Ben Saylor and Sharman Haley of how rising energy prices have increased utility costs for Alaska households since 2000. Utility costs are defined as costs of heat, electricity, and water and sewer systems.

Click here to read the 4-page summary, Effects of Rising Utility Costs on Alaska Households.

ISER Research Matters No. 18. Taxing the Gas Reserves: A Risky Policy
October 23, 2006

On November 7, Alaska voters will decide whether to start taxing the natural gas reserves in the two largest North Slope gas fields. The idea behind the proposal is to jump-start construction of a gas pipeline. A new analysis by ISER economist Scott Goldsmith finds that the proposal carries a big risk of increasing costs for both oil and gas production without speeding up development.

Click here to see a two-page summary, Taxing the Gas Reserves: A Risky Policy
or the full paper, The Gas Reserves Tax Ballot Initiative.

Nearly $1.5 billion a year flows into Alaska from a source that doesn't depend on oil or fish or gold, isn't influenced by world markets, and isn't seasonal.

That cash flow roughly equals what fishermen were paid in 2005 for their Alaska seafood harvests, or the value of zinc, gold, and other metals mined in Alaska in 2004. It's close to what tourists spend in the state every summer.

What's the source? Retired Alaskans. Read a new analysis by Scott Goldsmith and Jane Angvik

ISER Research Matters No. 15. Understanding Alaska: People, Economy, and Resources
June 13, 2006

ISER's newest publication may not tell you everything you always wanted to know about Alaska—but it will tell you a lot about the state's people, economy, and resources. It's an 18-page summary of research under a special ISER program called Understanding Alaska. That's a
series of studies intended to help Alaskans understand how the economy works and how it might grow in the future. The work is funded by the University of Alaska Foundation. Among other things, the summary includes:

• An overview of how and why Alaska's economy has changed since statehood
• A description of who Alaskans are, where they live, and how they are
  changing
• Projections of likely rates of future population and job growth
• A look at the implications of farmed fish and globalization for
  Alaska's wild seafood

Click here to see Understanding Alaska: People, Economy, and Resources.

In the fall of 2005, the federal government implemented major changes, known as "crab rationalization," in management of the BSAI crab fisheries. The earlier derby system, under which boats competed for an overall crab quota, was replaced by an individual fishing quota (IFQ) system, under which boats are limited to catch shares they either were allocated or they lease from other boats. Federal managers say the new system will improve safety and increase efficiency in the crab fisheries. (Another new and controversial feature of the system—which the report does not address—is implementation of quotas for processors and communities.)

The report found:

To see the full report, click here.

ISER Research Matters No. 13. Alaska's $5 Billion Dollar Health Care Bill—Who's Paying?
March 8, 2006

Spending for health care in Alaska was an estimated $5.3 billion in 2005, up from about $1.6 billion in 1991. Taking population growth into account, that's an increase of more than 170% per person in 15 years. Those are among the findings of a new ISER research summary, "Alaska's $5 Billion Health-Care Bill—Who's Paying?" The authors are Mark Foster and Scott Goldsmith. The 8-page summary also reports:

• The $5.3 billion spent for health-care in Alaska in 2005 was about
  one-third the value of North Slope oil exports—in a year
  when oil prices were high. It's one-sixth the value of everything
  Alaska's economy produced last year.

• Individual Alaskans spent about $1 billion of the total in 2005,
  up from $360 million in 1991.

• Employers (government and private) spent over $2 billion in 2005. For
  comparison, employers spent about $11.8 billion for wages last year.

• Government programs paid $2.2 billion of the $5.3 billion total.
  Medicaid alone made up nearly $1 billion of that spending.

• National data show that just 5% of patients account for nearly
  half of all U.S. health-care spending. The average high-cost patient is
  middle-aged, sees doctors several times a year, is in the hospital
  for a few days for surgery, and spends considerable money on
  prescription drugs.

• Health-care spending in Alaska could double again by 2013, if
  current trends continue.

Click here to see the entire research summary.

ISER Research Matters No. 12
November 28, 2005

The Alaska Natural Gas Pipeline: What's It All About?

The first Lee Gorsuch Public Policy Forum, on November 29 from 7 to 9 p.m. in UAA's Wendy Williamson Auditorium, will  examine one of the biggest public policy issues in Alaska today:  potential construction of a pipeline to carry natural gas from the North Slope. Has construction of a $20-billion pipeline now become feasible—and should the state government try to advance the project through its policy choices? Key questions for the state include whether it should invest public money in the pipeline; what it should do with its royalty gas; and whether it should change its tax system.

The forum is free and open to the public. It will bring together industry experts, state and local  government representatives, and  others from public and private organizations. Lee Gorsuch, former UAA chancellor, will moderate the forum.

A new ISER paper, prepared for the forum, discusses the public policy issues surrounding the potential pipeline. Click here to read the paper, and click here to learn more about the forum.

The Lee Gorsuch Public Policy Forum honors Lee Gorsuch's many contributions to Alaska public policy. Future forums will examine other major public policy issues facing Alaska.

ISER Research Matters No. 11
September 21, 2005

Changing Alaska's Salmon Harvesting System: What Are the Challenges?

What will it take, for Alaska's salmon fisheries to once again become—and remain—profitable, given the challenges of increasing competition and changing global seafood markets? Changing the harvesting system is part of the answer, according to Fran Ulmer and Gunnar Knapp, authors of a new ISER publication. Such changes could help by reducing the costs of catching salmon and increasing the quality and value of the harvest. But changing the harvesting system also raises difficult and complex issues—and is unlikely to happen until Alaskans clarify their goals for the fisheries and establish ways to achieve those goals.

Thousands of Alaskans have quit fishing for salmon since the late 1980s, as increased competition and rapidly changing global seafood markets battered prices. Prices and permit values in some fisheries have rebounded somewhat since hitting lows in 2002, but they are still far below what they were 15 years ago.

Changing the harvesting system, or "restructuring," means changing the rules about who can fish, when and where they can fish, and how much they can catch. Examples of potential restructuring options include permit buybacks, fishing co-ops, and community allocations. If these kinds of changes could help the troubled salmon industry, why has the harvesting system remained essentially the same, after more than a decade of economic crisis? For several reasons:

• The 26 salmon fisheries are diverse, with each facing its own issues.

• Making changes will be complex, and not everyone will benefit. There are many possible ways to change the system, and any change carries its own potential benefits, design considerations, concerns—and uncertainties.

• There's a long-standing tension between social and economic goals for the fisheries, and no consensus among Alaskans about what any changes should accomplish—or who should benefit. In particular, there is a tension between the social goal of creating jobs and the economic goal of reducing costs.
  

• No organization in state government has clearly defined responsibility for the economic success of the fisheries; clear and broad authority to make changes in the harvesting system; and resources to study and take action on changes. Clarifying that authority will require the Alaska Legislature itself to act, or to give some state agency clear authority to act.

The authors believe that Alaskans need to find ways of addressing the complex and difficult issue of restructuring, for the Alaska salmon industry to become and remain profitable.

Click here to read the Research Summary,"Changing Alaska's Salmon Harvesting: What Are The Challenges?"

Click here to read an earlier, longer paper, "Challenges In Restructuring Alaska's Salmon Fisheries"

Research Matters No. 10
July 11, 2005

Anchorage at 90

Anchorage reflects—in fact magnifies—three nationwide trends: a growing number of minority residents, a large number of baby boomers on the cusp of retirement, and a fast-growing population over 65. Rapid growth in the adjoining Mat-Su Borough is also making Anchorage more like other cities where the population in the outlying areas is less racially diverse and more concentrated among families. Those changes and many more are described in a new ISER profile of recent economic and demographic change in Alaska's largest city.

• Anchorage's growing minority population is on average younger, less well-educated, and poorer than the white population. Those differences are already changing the labor force, school enrollment, and more.
  
  
• Growing international immigration to Anchorage is reflected in a 26% increase in the number of Permanent Fund dividend applications from non-citizen residents between 1995 and 2004.
  
  
• Anchorage has more baby boomers than almost any place else. Their decisions about when and where to retire will have big effects on the make-up of the population, demand for housing and health care, and more.
  
  
• People over 65 could make up 1 in every 10 Anchorage residents by 2020, up from about half that level in 2000. Older residents help stabilize the economy, because they have income that doesn't depend on jobs, but they also increase demand for health care and related services.

• Education levels among young adults in Anchorage are down slightly, even as it gets harder for those without a college education to find good-paying jobs. In 1980, high-school dropouts in Anchorage could earn 72% as much as college graduates; by 2000, that had dropped to just 43% as much.

• Permanent Fund dividends keep poverty at bay, with dividends making up about $1 of every $5 of income among the poorest 20% of Anchorage households. The likeliest to be poor (as is true in other cities) are single mothers and their children, old people living alone, minorities, and people with less education.

Click here to see the entire publication Anchorage at 90: Changing Fast, With More To Come, by Scott Goldsmith, Lance Howe, and Linda Leask.

Research Matters
No. 8, February 24, 2005

• Cost differences among Alaska's school districts are from 7 percent to more than 100 percent above costs in Anchorage.
  That's the range of  proposed new geographic cost differentials ISER developed for the Alaska Legislative Budget and Audit Committee. The legislature is considering changes in the differentials the state has used since 1998. These cost differentials are one of several factors that go into a complex formula the state uses to calculate state aid to individual districts. The formula is applied to a base allocation per student that the legislature sets each year.

• The proposed differentials are higher than the existing ones, which range from about 1 to 70 percent above Anchorage costs. That's mostly because, in looking at school operating expenses,  ISER researchers (1) attempted to estimate what it would cost to hire and keep comparable teachers and administrators in all districts; and (2) used districts' actual costs for heat and lights when calculating differences in energy costs.

• Recruiting and keeping teachers and administrators with comparable qualifications could cost anywhere from 5 percent to 67 percent more in other districts than in Anchorage.

• Energy costs per student  can be ten times as high in some remote districts as in Anchorage.
      Although energy costs are a much smaller share of operating costs than are salaries, in some districts they contribute significantly to the cost differential.

 Click here to see the full report or a summary of  Alaska School District Cost Study Update, by Bradford Tuck, Matthew Berman, and Alexandra Hill.

Research Matters
No. 7, November 8, 2004

Alaska's population and employment are likely to grow an average of 1 to 1.5 percent a year over the next 25 years. (See Figure 1.)
At that pace, Alaska's population would grow from about 650,000 today to 940,000 by 2030. The number of wage and salary jobs would grow to nearly 400,000—an increase of about 100,000 from the current level. (See Table 1.)

That projected growth is similar to growth in the 1990s—which was much slower than in the oil development boom of the 1970s and 1980s, but more consistent with growth nationwide.
Alaska's economy will continue adjusting to declining North Slope oil production; to the shift of more jobs to lower-wage service industries; to the aging of baby boomers out of the work force; and to other factors.

The Mat-Su Borough will grow three times faster than the statewide average. By 2030 it will have more than twice the people and jobs it has today. (See Figure 2.)
That rapid growth will continue the pattern of the 1990s, when more people working in Anchorage chose to live in the borough, and the borough also captured an increasing share of jobs in the combined Anchorage and Mat-Su region.

These are ISER's new base case projections for Alaska and the southern railbelt, prepared by Scott Goldsmith, who is ISER's director and a professor of economics. The study also includes a set of sensitivity analyses, showing how changes in individual factors—like growth in the number of retirees or construction of a Knik Arm crossing—would change the projections of future growth.

Full report

Research Matters
No. 6, October 13, 2004

ISER's new Kids Count Alaska Data Book provides the good and the bad news about how Alaska's children and teenagers are doing. It's sponsored by the Annie E. Casey Foundation and it reports, among other things:

• A third of the children treated for mental health problems in recent years were sent outside Alaska.
  A 2002 report by UAA's Comprehensive and Specialized Evaluation Services looked at about 1,900 children and teenagers in Medicaid-funded programs in 2000 and 2001 and found that roughly 640 were sent to out-of-state facilities.

• Nearly half the Alaska children without health insurance come from families not considered poor.
  The Population Reference Bureau reports that in Alaska, as is true across the country,  many families earn too much to qualify for government-funded coverage but can't afford private insurance.

• Alaska high-school students are only about half as likely to smoke or use inhalants now as in the 1990s.
  That's from the 2003 Alaska Youth Risk Behavior Survey, carried out by  the Alaska Department of Health and Social Services.

• Aside from other family characteristics, simply being poor puts children at high risk of failing in school.
  That's what nationwide research shows, and the results of the 2004 Alaska High-School Graduation Qualifying Exam support it: just 46 percent of sophomores from low-income families passed reading and math, compared with nearly 70 percent among all students.

More than half of all Alaska Natives may live in urban areas by 2020.
If current rates of migration from rural to urban places continue, the share of Natives living in urban areas will grow from the current 42 percent to 53 percent. Native population growth has been fastest in urban areas for the past 30 years, boosted by an estimated 27,000 Natives moving from rural to urban areas.

Alaska Natives are still about three times more likely than other Alaskans to be unemployed and poor.
That's despite jobs gains in every decade since 1960, especially among Native women. The number of new jobs didn't keep pace with the number of Natives moving into the labor force.

Young adults will be the fastest growing part of the Native population in the next decade, sharply increasing demand for jobs.
Alaska Natives are a young people, with a third of the population age 14 or younger in 2000. That means thousands of young Natives will move into the labor force in the coming years, increasing demand for jobs by more than 35 percent by 2020. This growing job demand will come at a time when Alaska's economic growth is likely to be slower than in the past.

Tens of thousands more Alaska Natives are graduating from high school and attending college, but their educational attainment still lags that of other Alaskans.
In 2000, nearly 75 percent of Natives over 18 held high-school diplomas, up very sharply from past levels but still lagging the 90 percent of non-Natives with diplomas. The gap in four-year college degrees is even larger. Among Alaskans 25 or older, 6 percent of Natives hold four-year degrees, compared with 25 percent of non-Natives.

Illnesses caused or aggravated by poor living conditions among Alaska Natives have been reduced or eliminated, but other types of health problems have increased.
Big improvements in village sanitation, housing, and health care since the 1970s mean that Natives are living longer and fewer babies are dying. But Natives today die from heart disease and cancer more often than other Alaskans, and rates of diabetes among Natives doubled between 1985 and 1999.

Building a law school in Alaska today isn't feasible. Still, there are other ways the state could help Alaskans get a legal education.
A new report by Mary Killorin of ISER finds that there wouldn't be enough students to sustain an Alaska law school and that the number of jobs for lawyers in Alaska won't increase much over the next decade. But the state could help residents by offering a grant program for those attending law school elsewhere and by working with law schools to offer more summer programs and externships in Alaska. Click here to read the full report.

How much energy is produced in Alaska and how is it used?
Scott Goldsmith of ISER has created a graphic display of how much energy from oil, gas, and other resources Alaska produces, how much is exported, and how the rest is used within the state. That graphic is part of a recent report on electric power in Alaska, the first comprehensive look at electric power in the state since 1995. Click here to see the energy flow graphic or read the full report here.

Judges in Alaska are generally fair in sentencing—but the legal system is often harder on minorities and people who can't afford private attorneys.
An ISER analysis of Alaska felony arrests in 1999—done by Matthew Berman and Stephanie Martin for the Alaska Judicial Council—looked at what happens before defendants go to court and what happens at sentencing. After taking into account all the factors you'd expect to influence sentencing (like the severity of the crime), the researchers found no systematic disparity in sentencing based on race. However, for drug crimes, Black and Native defendants appear to get longer sentences. For most felonies, defendants with private attorneys tend to get shorter sentences. The big exception is felony drunk driving, where virtually all defendants get similar sentences. Men tend to get longer sentences than women.

Also, minorities and people who can't hire private attorneys end up spending more time in jail before their cases are decided—and because they're in jail, the charges against them are less likely to be reduced. As a result, they tend to be convicted of more serious crimes, which carry longer sentences. Click here to read the executive summary. The full report can be found on the judicial council's site.

Prudhoe Bay oil so far has been worth seven times more than all the gold, copper, furs, and salmon taken out of Alaska before statehood.
That's value of production, adjusted for inflation. But a new paper by Terrence Cole, a professor of history at the University of Alaska Fairbanks, argues that the huge size of Prudhoe Bay has blinded Alaskans to the reality that oil fields, like gold mines, don't last forever. Read the summary here or go here to see the full paper.

An ISER analysis questions the accuracy of a new "cost of education" index prepared by the American Institutes for Research (AIR).
AIR developed the index for the state legislature to use in allocating state education money to school districts. But in reviewing the index, Bradford Tuck, professor of economics at ISER, found problems with the way AIR estimated several important school costs. Read more here.

Why Economic Development Doesn't Pay—Except for oil, no industry in Alaska pays its own way. A new natural resource job, for instance, costs the state $1,100. Why? Because economic development requires new public services—and under Alaska's current tax structure, households and businesses generally don't pay enough taxes to cover the costs of those services. See:
http://citizensguide.uaa.alaska.edu/11.BUDGET_FAQs/11.1_AK_Disconnect_FAQ.htm

Job Losses from Closing the Fiscal Gap—Closing the state fiscal gap will cost Alaska jobs, because it will take money out of the economy. But using budget cuts alone would cost Alaska the most jobs— 18,500—while an income tax would cost the fewest, about 7,500. A sales tax or a PF dividend cut would eliminate about 9,300 jobs. See:
http://citizensguide.uaa.alaska.edu/11.BUDGET_FAQs/11.2_Fiscal_Gap_FAQ.htm

The Alaska Citizen's Guide to the Budget—This Web site offers a wealth of information on these and many other topics of interest to Alaskans concerned about the state budget. See:
http://citizensguide.uaa.alaska.edu