Printed copies of the new data book were paid for by Wells Fargo and are available from ISER; call Virgene Hanna, director of Kids Count Alaska, at 907-786-5431

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.

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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.

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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.

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.

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

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