University of Alaska System Financial Report FY2014

Annual Financial Report for Fiscal Year 2014 Presentation to: The Board of Regents Ashok K. Roy, Ph.D., CIA, CBA, CFSA Vice President for Finance & Administration/ CFO December 12, 2014

Financial Highlights FY2014 marked a year of stability, strength, and progress for the University of Alaska System. The University s financial assets were $1.9 Billion with net position of $1.6 Billion. Net position increased 13%, or $ 187.3 M (FY13-14). State support very robust 47.3% of revenues. Tuition & Fees 15.3% of revenues. 2

The Universitys college savings plans continue to be ranked among the top performing plans in the nation. (The T. Rowe Price College Savings Plan is one of four college savings plans in the nation awarded a Gold rating by Morningstar for 2014). Portfolio managed on June 30, 2014 = $6.5 Billion. 3

Revenues & Expenses (operating & non-operating*) were $848.7 M and $847.8 M, respectively. *not including Capital Appropriation ($186.3 M). Total Operating expenses grew only 1.6%. Operating funds were invested ( $144.2 M) for necessary liquidity, security, reasonable returns UA s Endowment balance = $146.2 M. Investment return on our Consolidated Endowment Fund =12.5%. 4

Total Debt outstanding = $181.6 M. Annual Debt Service = $17.3M (modest). Annual Debt Service ratio = 2.8% of unrestricted revenues. Maintained high Credit Ratings from both Standard & Poor (AA-) and Moody s Investor Services (Aa2). Total Budget = $914.2 M (FY13 FY14). 5

4 Successful External Audits a) Received unmodified opinion , the most favorable, from external/ independent auditors (Moss Adams LLP). b) Received unmodified opinion from Pricewaterhouse Coopers, LLP. for the Education Trust of Alaska . 6

c) No exceptions/deficiencies noted in rigorous 7 month audit of F & A cost rates by Defense Contract Audit Agency. (These rates are used on Federal grants/contracts for recovering indirect/overhead costs). d) Received from Moss Adams Single Audit reports on federal awards in accordance with Government Auditing Standards and OMB Circular A-133. 7

Bottom-line: We are pleased to report that the University of Alaska System continues to be financially healthy. 8

Graphical Presentation of Data

Condensed Statements of Net Position Net Position 2014 2013 Assets: Current Assets Other noncurrent assets $ 171,236 317,348 $ 143,039 337,569 Capital assets, net of depreciation Total assets 1,447,301 1,935,885 1,280,298 1,760,906 Liabilities: Current liabilities Noncurrent liabilities Total liabilities 117,980 120,515 196,427 316,942 186,679 304,659 Net position: Net investment in capital assets Restricted expendable Restricted nonexpendable Unrestricted Total net position 1,255,355 69,987 130,853 175,031 $ 1,631,226 1,076,861 78,443 131,365 157,295 $ 1,443,964 10 ($ in Thousands)

Revenues/Expenses Revenues: State Operating Appropriations Capital Appropriations & Grants Student Tuition and Fees, net Federal Grants and Contracts State, Local and Private Grants Auxiliary Enterprises Endowment Income Other Total Revenues 2014 2013 $ 385,887 186,331 125,104 148,339 73,934 37,717 19,065 25,780 1,002,157 $ 371,051 191,809 127,055 156,247 77,801 40,008 18,992 32,226 1,015,189 Expenses: Student and Academic Research Public Service Operations and Maintenance Institutional Support Auxiliary Enterprises Depreciation Other Expenses Total Expenses Increase in Net Position ($ in Thousands) 365,749 129,842 45,361 68,918 95,793 35,714 66,618 6,630 814,895 $ 187,262 363,074 132,905 41,360 63,364 96,072 35,276 63,403 9,529 804,983 $ 210,206 11

Revenue Mix Other ($45m, 6%) Auxiliaries ($38m, 5%) State State, Private and Local Grants ($74m, 9%) Appropriations ($386m, 47%) Tuition and Fees ($125m, 15%) Federal Grants and Contracts ($148m, 18%) 12

Expenditure Mix by Natural Classification Depreciation ($67m, 8%) Student Aid ($27m, 3%) Other ($9m, 1%) Supplies & Materials ($56m, 7%) Salaries & Benefits ($506m, 62%) Contractual Services ($150m, 19%) 13

Expenditure Mix by Function Depreciation ($65m, 8%) Auxliaries ($36m, 4%) Other ($7m, 1%) Institutional Support ($96m, 12%) Student & Academic ($365m, 45%) Operations & Maintenance ($69m, 8%) Research ($130m, 16%) Public Service ($46m, 6%) 14

Net Position $2,000 $1,631 $1,444 $1,500 $1,234 Millions $1,000 $500 $0 2012 2013 2014 Year 15

Total University of Alaska Debt Outstanding June 30, 2014 $200 $180 $160 $140 $120 $100 Millions $80 $60 $40 $20 $0 16

Total Annual Debt Service June 30, 2014 $18 $16 $14 $12 Millions $10 $8 $6 $4 $2 $0 17

Operating Cash & Investments ($144M) Cash ($25m, 18%) Corporate Bonds $56m, 39% Money Market Funds ($41m, 28%) Intn'l Govt Bonds ($2m, 1%) Federal Agencies ($6m, 4%) U.S. Treasuries ($14m, 10%) 18

Financial Metrics 19

Viability Ratio (Measures debt burden and debt capacity) Expendable Net Position 6 Norm/Average = 3 (see red line) Debt 5 4 Value 3 2 1 0 2012 2013 2014 20 Fiscal Year

Return on Net Position Ratio (Measures the return on total net position) 7 Change in Net Position Total Net Position Norm/Average = 3 (see red line) 6 5 4 Value 3 2 1 0 2012 2013 2014 21 Fiscal Year

Primary Reserve Ratio (Measures the level of reserves relative to expenses) 5 Expendable Net Position Total Expenses Norm/Average = 3 (see red line) 4 3 Value 2 1 0 2012 2013 Fiscal Year 2014 22

Composite Financial Index (CFI) (1 of 2) (Measures overall financial health) 7 CFI: 38% Primary Reserve Ratio 37% Viability Ratio 25% Return on Net Position Ratio 6 Norm/Average= 3 (see red line) 5 4 Score 3 2 1 0 2012 2013 2014 23 Fiscal Year

Composite Financial Index (CFI) (2 of 2) Primary Reserve Ratio 3.52 Return on Net Position Ratio Viability Ratio 4.84 5.73 Key: Green triangle = University of Alaska Inside triangle = Norm (represents a value of 3 ) Outside triangle = Outer limit of scale 24