This budget meets three primary goals established by the governor:
Continue Smart Start progress in child protection, health and prevention;
Encourage excellence in education by reinvesting a significant portion of the school foundation savings into programs such as Quality Schools grants and Head Start, and make a substantial investment into the University of Alaska with the largest proposed operating increase in at least a decade; and
Ensure that all state dollars are spent in the most cost-effective manner possible.

The general fund increase from FY2000 will be $98 million, for a FY2001 operating budget of approximately $2.4 billion. The total budget from all fund sources will be $198 million more than FY2000:
Investments will fund the largest share of the total budget ($1.8 billion or 31%), most of which will be appropriated for Permanent Fund inflation-proofing and dividends.
Federal funds will be the next largest source at $1.7 billion or 27%.
Petroleum revenues (including CBR deposits) will increase $114 million but still be only 24% of the total.

The FY2001 Constitutional Budget Reserve draw will be approximately $850 million if oil prices average $18.26 per barrel as projected in the Fall Forecast.
FY1999 CBR draw was $1,002 million ($1 billion) and oil prices averaged $12.70.
FY2000 draw will be about $500 million based on oil price projections of $20.11.

Even with the governor's proposed $98 million general fund increase, state spending in today's dollars will be $1,647 less per Alaskan than in FY1979, the last pre-oil boom year.

Sixty percent of the proposed increase is in the Children's Budget for Smart Start and Education.
One third of the $62 million children's increase is offset by a $20 million reduction in state general funds needed to fully fund the K-12 foundation program.
Debt service, much of which goes for schools, accounts for $12.3 million of the increase.
Life line formula program services for the poorest adults in Alaska, such as Medicaid, are projected to increase $18.8 million.
The major areas of change in the budget are summarized on the sheet below.