by Mike Harpold
October 30, 2002
For the first ten years we had put the girl's money in U.S. Savings Bonds. But in the late '90's, we switched to mutual funds. One fund specialized in stocks from companies whose stock was expected to increase in value. The other, sold by a company associated with our church, was indexed to the NASDAQ, the red hot exchange featuring the stocks of high tech firms. It was easy to imagine twenty percent annual returns, and at first even higher returns materialized. Best of all my formula was based on a permanent fund dividend that I expected to exceed and remain above $2,000 annually. But as a gesture towards reality, I divided by two to allow for the years that it was less than $2,000.
But then the tech stock bubble burst. The economic recovery fizzled. Investors stayed out of the markets because of corporate scandals and the markets continue to plummet. On the day our quarterly mutual fund earnings statements arrived showing more than twenty percent declines in the girl's funds, there was even worse news. News reports warned that next year's PFD, victim of the same forces that undermined the girl's funds, could be zero. My formula lay in shambles. We no longer have twenty years for income to grow. Elizabeth will start college in three years, Sarah in five.
At a recent Ketchikan Campus Advisory Council meeting, our committee was informed that the University of Alaska was going to ask the Board of Regents to approve a seven percent tuition increase for next year. Ordinarily willing to go along with education funding increases, this time I found my back stiffening. I suspect many other Alaskan parents who expect to help pay their children's tuition with PFD earnings will feel the same way.
True, schools down south are expecting a five to fifteen percent increase next year, according to an article in the morning paper the average tuition hike will be 9.6 percent. But a lot of the increase in college costs to students has to do with states shifting the costs of education to consumers because of the downturn in tax receipts due to a poor economy. Governments do that. The borough did it last spring, balancing its own budget by cutting school funding by a half-million dollars. Alaska's declining oil revenues and nearly depleted constitutional budget reserve fund will make any increase for the university difficult and could put pressure on the next legislature to make cuts in funding for both the university system and local school districts. That is one of the reasons that support for Ballot Proposition C, bonding for school repair and construction is so important. It will help ease that pressure.
No, I wouldn't deny the university a needed increase because my daughters have been the victims of their father's irrational exuberance. A tuition rate increase for the university may be perfectly justified. Other than inflation increases, the UofA has not had a general tuition increase in over ten years. But at the same time the university and the legislature need to keep in mind what is happening to many Alaskan families' college savings plans. State revenue resources have shrunk, but so have family resources. This is not a good time for shifting education costs to families.
As for our family, that stack of savings bonds we stashed away in our family lock box early in our daughters' lives suddenly feels a lot heftier than it did just a few months ago. We'll just do the best we can.
To my readers: This is the first in what is intended to be a weekly column. It will be about government, the institution that we have created to channel our energies, resources, aspirations and ideals for the common good.
Having worked in government for over forty years I have seen the good and the bad of it. Government can be as good as we want it to be, if we give to it the best of our natures. But if we turn our backs on it and leave it to its own devices it can quickly succumb to the three deadly sins of Arrogance, Secrecy and Complacency. Worse, if we leave it to others it can become a tool for the self-interested. In the immortal words of Pogo, "We have met the enemy and he is us."
Through this column I hope to promote interest in government at all levels, perhaps help solve a problem or two, and maybe even promote some local causes like sprucing up Tongass Avenue. I'd like some ideas on that. You can reach me at email@example.com. Or give me a call. I'm in the book.