Growing up in Anchorage, my banker mom and dad taught me their rendition of the American Dream.

Work hard. Save a portion of all you make. Make sure your savings work as hard as you. Pay all your debts while working. Retire and live off your earnings.

This is the foundation of the federal Social Security System. And the State’s PERS, TRS and judicial retirements. And also, uniquely Alaskan, the Alaska Permanent Fund.

Gov. Jay Hammond had a dream of turning crude oil into cash. He and his allies wanted to invest the cash so that it brought in more cash. Steady investment could benefit Alaskans from dividends to pay the higher cost of living — and staying — in Alaska. Parents invest their children’s dividends in a prepaid program from the University of Alaska. Instead of being burdened via thousands of dollars in college debt, the kids get a good education at home. These were just two of the motivations of the Investment Advisory Committee, appointed by Hammond, to put structure, systems, accountability and safety into the Alaska Permanent Fund Corporation.

Dividends were key for the governor and his advisers such as Elmer Rasmuson, Chairman and majority owner of National Bank of Alaska and first Chairman of the APFC Board of Trustees. Elmer had two concerns he insisted we protect against: Phony investments and inflation. On his advice, we established the corporation with “the prudent man rule”.

From Wikipedia: “The Prudent Man Rule is based on common law stemming from the 1830 Massachusetts court formulation, Harvard College v. Amory. The prudent man rule, written by Massachusetts Justice Samuel Putnam, 1768-1853, directs trustees “to observe how men of prudence, discretion and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested.”

Under the Prudent Man Rule, a fiduciary (investing officer) is required to invest trust assets as a “prudent man” would invest his own property with the following factors in mind:

1. the needs of beneficiaries;

2. the need to preserve the estate (or corpus of the trust); and

3. the amount and regularity of income.

You are the beneficiary of the Alaska Permanent Fund Corporation, and your needs are number one. The need to preserve your Fund was our reason for putting the Constitutional Amendment to the people for a vote so that there would be no question as to who was boss. Your income by amount and regularity of income (dividends) was the third priority.

The prudent man rule does not address other expenses unassociated with the Fund. The focus we adopted in the Investment Advisory Committee was a unique set aside of 25% of Alaska’s royalty income for the people, not the government. We allowed the Legislature to appropriate up to 50% of earnings after the dividend was paid. I thought that was very generous.

Elmer’s other concern, was what he called “that thief in the night” — inflation. We added a provision for the APFC that allowed the APFC Board to set aside funds for inflation proofing, like a make up fund to hold harmless your savings account from the silent ravaging that would devalue your Fund.

Former Governor Walker and the Legislature have done great harm to the people of Alaska and the Alaska Permanent Fund by confiscating half of the required statutory dividend that was due and canceling inflation proofing three years in a row.

The Percent of Market Value, POMV, enacted by the Legislature is a disaster and must be repealed. The POMV cut the umbilical cord of the earnings of the Fund as the formulae for dividends. Without that discipline, the Legislature determined that whatever is left after their spending is good enough for you, the people of Alaska. Governor Dunleavy won his election handily, retiring Governor Walker to teach at Harvard. We wish him well.

Now, action is required in this session of the Legislature to kill the failed POMV, restore the statutory formulae to calculate our dividends and pass a proper constitutional spending cap on state government. The good news is that state agencies have over $5 billion in unspent funds which can be used through reorganization to bridge the general fund deficit. Decades ago, we merged Alaska State Housing Authority into Alaska Housing Finance Corporation. We wrote a check to the state for over $16 million in unspent construction money and saved $1 million per month by combining accounting, management and other common functions and facilities. The Mission work of each got done, just more efficiently. I encourage Governor Dunleavy and the Legislature to use this simple example to bring the “Permanent Fund beneficiaries” back into focus.

• Jim Crawford is a third generation Alaskan entrepreneur who resides in Anchorage with his wife of 35 years, Terri. The Alaska Institute for Growth is a local think tank that studies, reports on and sponsors projects of sustained economic growth for the Alaskan economy. Crawford was a member of the Investment Advisory Committee, appointed by former Gov. Jay Hammond to plan and execute the Alaska Permanent Fund Corporation. Columns, My Turns and Letters to the Editor represent the view of the author, not the view of the Juneau Empire.