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Why are fewer Alaskans applying for a Permanent Fund check?

Alex DeMarban
Stepped-up enforcement against scammers may mean that people are getting the message that fraud doesn't pay when it comes to the Alaska's Permanent Fund. istockphoto

Alaska's news media is all over the place when it comes to guessing the size of this year's soon-to-be-announced Permanent Fund dividend check -- from below $800 all the way up to $932 -- but the good news is a surprising drop in applications should mean more for the rest of us.

State officials are keeping mum about the actual dividend amount -- the highly-anticipated figure that will be revealed in a press conference Wednesday.

But Permanent Fund Division Director Dan DeBartolo was willing to ponder why the pool of applicants unexpectedly fell by nearly 7,000 this year -- to 670,865 applicants -- even as Alaska’s population continues to grow.

DeBartolo offered stepped-up enforcement as one possible reason, though he cautioned he wasn't quite sure. However, tips and cases against potential wrongdoers are up notably, so people just may be getting the message that fraud doesn't pay.  

"I think people are probably taking less risks," said DeBartolo, adding that the number of approved applications won't be known until next week.

As you'd expect, applicants have historically risen with the state population since the first check hit the streets in 1982 -- a $1,000 giveaway to launch a remarkable program credited with stabilizing the gap between rich and poor that has widened elsewhere in America.

The pool of applicants has fallen only five times before. Four of the five came during a stretch in the late 1980s as the price of oil dragged the economy down, and some 15,000 Alaskans fled the Far North.

Applications dropped again in 2005-06 by nearly 4,000 -- another surprise and one DeBartolo couldn't explain, in part because it came before his time as director.

But as the checks ballooned -- exceeding $2,000 for the first and only time in 2008 -- applications soared. The numbers jumped 26,000 between 2007 and 2009 alone, with interest in the program rising to levels unseen since the PFD's first few years, when Alaskans were first signing up and the payout hovered around $400.

Perhaps those sizable checks -- Sarah Palin and the Legislature also handed out a special $1,200 energy bonus in 2008 -- boosted the number of fraudulent applicants.

At any rate, the number of tips and PFD fraud cases pursued by criminal investigators is up substantially, said Scott Stair, investigations manager for the Revenue Department.

"There has been a remarkable increase in the number of cases referred to our investigators," he said.

Also, the investigations unit originally housed in the Permanent Fund Division was moved into the Revenue Department's larger investigations unit in 2011, Stair said.

That led to a sharp rise in investigative manpower, because state agents who also pursue tax evaders and parents not paying child support can help when PFD tips increase, as they usually do in autumn when anticipation about the award heats up, Stair said.   

Instead of a few people working those tips, up to a dozen can now respond, Stair said. That helps the state pursue more criminal cases that can result in jail time and more civil cases that may result in fines or forfeitures of checks.   

"We prosecuted a handful of people in 2010 and 2011, but now we're on track to prosecute between 20 and 30 people a year," he said.  

The administrative change "definitely gives us a lot of ability to respond more effectively" during seasonal spikes in tips, which is generally summer for possible tax-fraud and year-round for those not paying child support.

Increased awareness may also be a factor, both Stair and DeBartolo acknowledged. The division has issued more press releases in recent years, and today's electronic technology gives people better access to the rules, letting them know quickly if they're eligible to apply.

Another possibility for the drop, DeBartolo said: Fewer applicants as the checks shrunk in recent years, reaching just $878 last year, the second-smallest check since 1989.  

That theory could be tested when next year's application period ends March 31, he said. Next year's check -- based on a five-year average of the performance of the $45 billion Alaska Permanent Fund -- could zoom above $1,300 because the stock market has rallied in recent years.

Contact Alex DeMarban at alex(at)alaskadispatch.com