Graying of Alaska changes economic trends

Posted: Saturday, March 02, 2002

We are all getting older. On the Kenai Peninsula, that process is collective as well as individual.

Alaska is no longer just for the young and rugged. In fact, demographic changes suggest that the young and rugged are heading elsewhere.

On the peninsula, that means fewer children and more senior citizens, with major implications for the area's economy.

The 2000 federal census numbers tell the tale. The median age on the peninsula was 36.3, up from 31.3 in 1990 and 26.9 in 1980. While the fastest growing age group on the Kenai Peninsula throughout the 1990s was senior citizens, young adult counts were static and the number of children younger than 5 actually was less than it had been a decade earlier.

Seniors' influence grows

The 2000 census counted 3,649 Kenai Peninsula residents aged 65 or older. In 1990, there were 2,015, and in 1980 only 829.

"The senior population is the fastest growing population segment in the nation, but Alaska, with its historically low senior population base, is outpacing national averages," said a study on the senior housing market on the Kenai Peninsula that Black-Smith and Richards Inc. completed last summer for the Alaska Housing Finance Corporation.

The study projected a steep increase in demand for assisted and independent senior housing units by the year 2006.

A survey it cited of Alaska seniors found that 92 percent of them preferred to remain in the state.

The percentage of seniors in Alaska's population has doubled since 1980. Now, about 8.5 percent of the state is 60 or older, compared with 16.3 percent for the United States as a whole. But by 2025, senior numbers are expected to triple, and about one in five Alaskans will be that old.

"I think it changed when the state instituted the longevity bonus. It enticed people to stay around," said Dennis Murray, administrator of Heritage Place, a long-term care facility in Soldotna. "Alaska has been very generous in a number of ways."

He cited the permanent fund dividend, the longevity bonus, tax breaks, modernized services and the closer alignment of the cost of living in Alaska's more urbanized areas with costs in other states.

Alaska Natives traditionally have spent their entire lives in the state. But in the past, migrants to the area often returned to their original states when they retired. Now, more such people are staying, Murray said.

The Kenai Peninsula, particularly the central peninsula and Homer, not only retain elders, but attract them from other parts of the state. It is even becoming more common for elderly parents from other states to move to the peninsula to be close to children and grandchildren. They like the lifestyle and the moderate cost of living, Murray said.

The increased population creates demand for senior housing, medical services and assisted living support.

The demand for skilled nursing care provides job opportunities for younger residents, but also has been a bottleneck at times.

Murray said Heritage Place has adequate staff now, but filling nursing vacancies can be tough, part of a growing national nurse shortage. The biggest need on the peninsula is for certified nursing assistants, and a move is under way to train more in state.

"We struggle," he said, speaking of the elder care sector as a whole. "We haven't kept up enough on the education side."

According to surveys, 44 percent of Alaska's elders have at least one disability, and of every dollar senior citizens spend, an average of 12 cents goes to health care. This is reflected in expanded services, such as the Long Term Care Unit at South Peninsula Hospital in Homer and the new bone density diagnostics Central Peninsula General Hospital began offering in 2001.

Seniors are more than consumers. They work and volunteer, bringing income, pensions and social security payments into the area economy.

Yet about 8.4 percent of Alaska's seniors live below the poverty line. Who will pay for their health care and support them when they become frail is a dilemma, according to a December article in "Alaska Economic Trends."

It said that as seniors age, they spend down their own assets and become increasingly reliant on public support. For example, a study of Alaska nursing homes in 1998 and 1999 showed that 90 percent of their revenue came from government programs such as Medicaid.

Murray predicted that growing need for senior care will center in Soldotna because of the convenient proximity to Central Peninsula General Hospital and other resources. His own facility, which opened its doors in 1986, expanded in 1999 and again in 2000. He and the city of Soldotna are working on plans for additional senior housing.

The goal, he said, it to respond to the rising demand with what he called "a continuum of care."

Children grow up, go away

At the other end of the age spectrum is the dwindling number of Kenai Peninsula children.

Whereas the census found 3,795 preschoolers in 1990, in 2000 it found only 3,288. During the same time period, the overall population on the peninsula grew by almost 22 percent.

The disappearing children are having the biggest impact on the Kenai Peninsula Borough School District, the peninsula's largest employer. Because the amount of funding the state allows districts is tied directly to the enrollment, fewer schoolchildren means fewer dollars for the schools and, by the multiplier effect, the peninsula economy.

Educators track enrollment carefully every day. Until 1997, the Kenai Peninsula Borough School District enrollment climbed nearly every year. But in 1998 it began declining. The district projects that the numbers of school-age children on the peninsula will remain depressed until at least 2008.

Melody Douglas, the chief financial officer for the district, reported in February that the district has lost almost 700 students and, with them, almost $4 million in revenue. Those declines also have led to elimination of teaching positions.

The preliminary budget for next year projects the loss of another 26 district jobs.

Traditionally, the primary grades were the largest in the district. But in the early 1990s, that changed. A demographic "bubble" began moving through the grades.

In 1997, the district's overall enrollment peaked at 10,396 students. But by 2000, something unprecedented had happened: the district's largest class was its graduating seniors, and smallest of all was the kindergarten. That was the opposite of the pattern 10 years earlier.

Although some people have made much of families moving their children to home school or other educational alternatives, the main reason the school enrollment is down is because the children just are not here in the numbers they used to be.

Dr. Nels Anderson is a family physician who has been delivering babies in Soldotna since 1983. He has seen major changes in the birth rate.

According to official records kept at Central Peninsula General Hospital, about 550 babies a year were born there in the mid 1980s. When the oil boom ended and the state went into recession, the birthrate declined.

"After the oil bust in '86 the rate fell right off," Anderson said.

But although other economic indicators recovered in the early 1990s, the birth rate continued to decline. In the early 1990s, the hospital delivered about 450 babies a year; in 1998 the number dipped below 400 for the first time.

"The last two years have just plummeted," he said.

In 2001, the hospital tallied 356 births.

The decrease has made staffing the obstetrics unit at the hospital more difficult. And it has had a more subtle effect. Although area doctors have plenty of work, especially with the growing number of senior citizens, they miss the special gratification that comes with delivering babies, he said.

"What it does do for those of us who love to deliver babies, is it spreads them out among different practitioners," he said.

Alaska mirrors national trends

The demographic changes in Alaska mirror national trends and are dominated by the ubiquitous baby boomers -- the large cohort born after World War II. Around the nation, those children of the 1950s are starting to feel their years and have raised their children, another large cohort sometimes called the baby boom echo, nearly to adulthood.

In Alaska in general and the Kenai Peninsula specifically, economic cycles magnified the influence of the baby boom numbers, Murray said.

The state's oil boom years of the 1970s coincided with the time when the boomers were young adults fresh out of school looking for a place to sample adventure, earn a living and maybe start a family. Alaska fit the bill, and young adults flooded into the booming state.

"There was employment," Murray said. "Without the jobs we would not have had the migration."

But times have changed. Like the baby boomers, the Alaska economy seems less spry than it used to be.

Murray noted that fishing, timber and even oil are not generating the income they once did.

"Our economy has taken some hits," he said.

Anderson agreed.

"I think the unique situation here is we don't have jobs for people coming out of training," he said. "That whole segment of the population who are coming out of schools are leaving and not coming back. ... There are not a lot of jobs for people in the child-bearing years.

"That is the real hooker in the demographics. If we had jobs here, the demographics would be different."

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