Annual Financial Report for Fiscal

Year 2014Presentation to: The Board of

Regents

Ashok K. Roy, Ph.D., CIA, CBA, CFSAVice President for Finance & Administration/ CFO

December 12, 2014

Financial HighlightsFY2014 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.

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• The University’s 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.

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• 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%.

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• 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).

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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”.

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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.

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Bottom-line:

We are pleased to report that the University of Alaska System continues to be financially healthy.

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Graphical Presentation of Data9

Net Position 2014 2013

Assets: Current Assets $ 171,236 $ 143,039

Other noncurrent assets 317,348 337,569 Capital assets, net of depreciation 1,447,301 1,280,298

Total assets 1,935,885 1,760,906

Liabilities:

Current liabilities 117,980 120,515

Noncurrent liabilities 186,679 196,427

Total liabilities 304,659 316,942

Net position: Net investment in capital assets 1,255,355 1,076,861

Restricted – expendable 69,987 78,443

Restricted – nonexpendable 130,853 131,365

Unrestricted 175,031 157,295

Total net position $ 1,631,226 $ 1,443,964 ($ in Thousands)

Condensed Statements of Net Position

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Revenues/Expenses 2014 2013 Revenues: State Operating Appropriations $ 385,887 $ 371,051 Capital Appropriations & Grants 186,331 191,809 Student Tuition and Fees, net 125,104 127,055 Federal Grants and Contracts 148,339 156,247 State, Local and Private Grants 73,934 77,801 Auxiliary Enterprises 37,717 40,008 Endowment Income 19,065 18,992 Other 25,780 32,226 Total Revenues 1,002,157 1,015,189

Expenses: Student and Academic 365,749 363,074 Research 129,842 132,905 Public Service 45,361 41,360 Operations and Maintenance 68,918 63,364 Institutional Support 95,793 96,072 Auxiliary Enterprises 35,714 35,276 Depreciation 66,618 63,403 Other Expenses 6,630 9,529 Total Expenses 814,895 804,983 Increase in Net Position $ 187,262 $ 210,206 ($ in Thousands)

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Other($45m, 6%)

Auxiliaries($38m, 5%)

State, Private and Local

Grants($74m, 9%)

Tuition and Fees

($125m, 15%)

Federal Grants and Contracts($148m, 18%)

State Appro-priations

($386m, 47%)

Revenue Mix

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Salaries & Benefits

($506m, 62%)

Contractual Services

($150m, 19%)

Supplies & Materials

($56m, 7%)

Other($9m, 1%)

Student Aid($27m, 3%)

Depreciation($67m, 8%)

Expenditure Mix by Natural Classification

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Student & Academic

($365m, 45%)

Public Service($46m, 6%)

Research($130m, 16%)

Operations & Maintenance($69m, 8%)

Institutional Support

($96m, 12%)

Auxliaries($36m, 4%)

Depreciation($65m, 8%)

Other($7m, 1%)

Expenditure Mix by Function

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Net Position

$1,234$1,444

$1,631

$0

$500

$1,000

$1,500

$2,000

2012 2013 2014

Year

Mill

ions

15

FY14

FY16

FY18

FY20

FY22

FY24

FY26

FY28

FY30

FY32

FY34

FY36

FY38

FY40

FY42

FY44

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

$140,000,000

$160,000,000

$180,000,000

$200,000,000

Total University of Alaska Debt OutstandingJune 30, 2014

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$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000Total Annual Debt Service

June 30, 2014

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Cash($25m, 18%)

Money Market Funds

($41m, 28%)

U.S. Treasuries($14m, 10%)

Federal Agen-cies ($6m, 4%)

Intn'l Govt Bonds

($2m, 1%)

Corporate Bonds

$56m, 39%

Operating Cash & Investments ($144M)

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Financial Metrics19

202012 2013 2014

0

1

2

3

4

5

6

(Measures debt burden and debt capacity)

Fiscal Year

Val

ue

Norm/Average = 3 (see red line)

Expendable Net PositionDebt

Viability Ratio

212012 2013 2014

0

1

2

3

4

5

6

7(Measures the return on total net position)

Fiscal Year

Val

ue

Norm/Average = 3 (see red line)Change in Net Position Total Net Position

Return on Net Position Ratio

22

2012 2013 20140

1

2

3

4

5

(Measures the level of reserves relative to expenses)

Fiscal Year

Val

ue

Expendable Net PositionTotal Expenses

Norm/Average = 3 (see red line)

Primary Reserve Ratio

232012 2013 2014

0

1

2

3

4

5

6

7 (Measures overall financial health)

Fiscal Year

Sco

re

CFI:38% Primary Reserve Ratio37% Viability Ratio25% Return on Net Position Ratio

Composite Financial Index (CFI) (1 of 2)

Norm/Average= 3 (see red line)

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Primary Reserve Ratio

Viability RatioReturn on Net Position Ratio

3.52

4.845.73

Key:

Green triangle = University of AlaskaInside triangle = Norm (represents a value of “3”)Outside triangle = Outer limit of scale

Composite Financial Index (CFI) (2 of 2)