AIDEA's enormous cash reserves can do more to help close state deficit
The Alaska Industrial Development & Export Authority has repeatedly boasted that its earnings last year—$65 million—were strong enough that it contributed $20 million to the state general fund.
“We had a very good year financially. I’m expecting significant improvements over that number for 2025. And again more significant improvements in 2026,” Randy Ruaro told legislators this month.
It was such a good year that $20 million should be regarded as a starting number toward what AIDEA should be contributing to the state budget, one of the many steps needed to help preserve state services and the Permanent Fund Dividend.
It was that boasting, in part, that led the state Senate to say that AIDEA should contribute $32.5 million to the general fund, an increase of $12.5 million.
The law that determines how much AIDEA is required to contribute to the general fund puts the amount somewhere between 25 percent and 50 percent, the number to be decided by the board.
But the Legislature can override that, as it has the power of the purse. The Senate capital budget plan now goes to the House.
The Legislature should feel free to direct more of AIDEA’s earnings toward the looming deficit brought on by the oil price drop, the Trump trade war and the economic uncertainty that clouds the investment world. AIDEA can do more to fight the Dunleavy deficit.
AIDEA has hundreds of millions in cash reserves that it does not like to talk about, which is why withdrawing more than 50 percent of last year’s earnings would be reasonable.
The AIDEA board is made up of two Dunleavy employees—Commissioners Adam Crum and Julie Sande—and five other Dunleavy supporters—Dana Pruhs, Bill Kendig, Albert Fogle, Randy Eledge and Bill Vivlamore. Randy Ruaro is a former Dunleavy employee.
AIDEA says it will be earning more money this year and in the future.
“We think that going forward we’re gonna see continued significant increases in the statutory net income and of course that’s important for the Legislature and AIDEA as that number drives the allocation of our dividend by the board with an amount between 25 percent and 50 percent back to the state treasury,” he said at an April 9 hearing.
When the AIDEA board met December 4 last year to decide on the $20 million contribution to the general fund, no one mentioned why they settled on that number.
The board members had obviously decided in secret and there was no debate.
The recording of that meeting posted on the website is incomplete, so you cannot hear the discussion. But the minutes tell the story.
Fogle made a motion to set the dividend at $20 million, which he said was 30 percent of earnings, a proposal seconded by Sande. They didn’t defend that number or say where it came from.
There was no public discussion about why the AIDEA board did not support paying the maximum dividend to the treasury.
As I wrote at the time, the discussion about the $20 million was almost like a script rehearsed in advance:
“That’s a substantial jump from last year’s dividend to the state,” said Adam Crum, the revenue commissioner and an AIDEA board member. “You know what’s the ballpark Randy that this puts like total dividends AIDEA’s paid out?”
“Member Crum this will bring the total historical payment of dividends by AIDEA to the state treasury at nearly half a billion dollars. Half a billion with a b,” said Randy Ruaro, the former Dunleavy chief of staff who is the AIDEA executive director.
“Has AIDEA always paid a dividend to the state each year?” the revenue commissioner asked.
“AIDEA has always paid a dividend to the state,” Ruaro said.
“And you only can do that if you’re profitable and bringing in based on the statutory net income calculation?” asked the revenue commissioner.
“That’s correct. That’s the tie-in,” said Ruaro.
Julie Sande, the commerce commissioner and an AIDEA board member, picked up the “questioning” from there.
“Director Ruaro do you happen to have in front of you just for fun what some of the dividend amounts were over the last five years?” Sande asked.
“The only reason I ask is I want to make sure that we put on the record again, just like Commissioner Crum did just a second ago, you know, the value of those dividends and what they represent in services to the people of Alaska. And the AIDEA staff, the board, you know, how much time and effort is put into each of the decisions that come before us,” Sande said.
“Despite all of that there are times where especially as the executive director you are put in a position to have to defend an organization that in my mind is making really good decisions on behalf of Alaskans,” she said.
The dividends paid by AIDEA to the state treasury demonstrate the agency’s success, she said.
Ruaro said the $20 million proposal was the largest in a decade. The last four years saw dividends of $10 million, $17 million, $6 million and $18 million.
I said earlier that AIDEA does not like to discuss its cash reserves, which a critical 2023 analysis by Gregg Erickson and Milt Barker put at $631 million.
AIDEA paid Northern Economics $250,000 for a study to challenge Erickson and Barker, a report that was finished a year ago and kept secret.
Speaking to the joint state affairs committees April 1, Ruaro said he hoped that a revised report, which AIDEA is changing to make it more supportive of AIDEA, will be out this week.
At that meeting, Ruaro gave this convoluted explanation of AIDEA’s assets:
“We have $1.49 billion in net position. I would mention that the number is made up of roughly $500 million in LPP loans, loan participation program loans. So it’s not cash. We have hard assets of roughly $200 to $250 million, which is the Red Dog road and other fixed assets. And then we have some accounts receivables, I think of about $100 million, $50 to $100 million. And then we have investments. And then we have the revolving fund. So mixed amount of assets make up that number. It is definitely not all cash,” he said.
Definitely not all cash. The non-cash items he mentioned add up to about $850 million, which means that there is something approaching $650 million to $700 million in cash.
“We did increase our net position by $52.8 million in 2024. We increased our net income I believe by roughly 30, 20 to 30 percent, to reach $65 million, the highest statutory net income in the history of AIDEA. And I believe we’re gonna have a significantly better year in fiscal year 2025, through some of the investments that we’ve made this year,” he said.
“That statutory net income becomes the number that the board considers when it is setting the dividend. And it must set the dividend between 25 and 50 percent of that statutory net income. So for the 2026 budget, the dividend was approved by the board at $20 million. That was the highest dividend in a decade. And we’ve approached almost half a billion dollars in total dividends since 1997,” he said.
“I think those numbers are gonna grow. And we look forward to sharing that success with the Legislature through the dividend,” he said.
AIDEA wants to hold onto as much cash as possible, a financial asset that allows it to approve projects that would otherwise go through the budget process in the Legislature, where more real questions would be asked.
State law requires AIDEA to submit an analysis every year by January 10 that shows whether the corporation’s assets “exceed an amount required to fulfill the purposes of the authority,” but AIDEA has never offered a rigorous calculation of that sort, Erickson said.
Your contributions help support independent analysis and political commentary by Alaska reporter and author Dermot Cole. Thank you for reading and for your support. Either click here to use PayPal or send checks to: Dermot Cole, Box 10673, Fairbanks, AK 99710-0673.
A report critical of AIDEA finances by economists Gregg Erickson and Milt Barker in 2023 put AIDEA’s cash holdings at $631 million. They said the Legislature could tap into these reserves for more without crippling AIDEA’s operations.