(a) The education endowment fund is established as a separate account in the general fund. The fund consists of appropriations from

(1) donations to the fund under AS 43.23.230(b);

(2) transfers to the fund under AS 43.23.230(a);

(3) interest earned on the fund; and

(4) any other money appropriated to the fund.

(b) The commissioner is the fiduciary of the fund. In managing the fund, the commissioner shall

(1) have the same powers and duties as provided in AS 37.10.071; and

(2) invest the fund in a manner likely to achieve at least a four percent nominal return over a five-year period to meet the objectives of the fund.

(c) In managing the fund, the commissioner shall

(1) consider the status of the fund's capital and the income generated on both current and probable future bases;

(2) determine the appropriate investment objectives;

(3) establish investment policies to achieve the objectives; and

(4) act only in regard to the best financial interests of the fund.

(d) On July 1 of each year, the commissioner shall

(1) determine the fund balance for the previously closed fiscal year, including the earnings of the fund; and

(2) when the average market value for that fiscal year exceeds $1,000,000,000, transfer 4.5 percent of the average fiscal-year-end market value of the balance of the fund for the last five fiscal years, including the fiscal year just ended, and including any unrealized gains and losses, to the Department of Education and Early Development for distribution as supplemental grants to school districts according to the average daily membership for each district adjusted under AS 14.17.410(b)(1)(A) - (D), subject to appropriation.

(e) Money appropriated to the fund does not lapse.