Financial Performance

Financial Performance

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 Universitys 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 & nonoperating*) 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 UAs 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 Moodys 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 Capital assets, net of depreciation Total assets Liabilities: Current liabilities

Noncurrent liabilities Total liabilities Net position: Net investment in capital assets Restricted expendable Restricted nonexpendable Unrestricted Total net position ($ in Thousands) $ 171,236 317,348 1,447,301 1,935,885 $ 143,039

337,569 1,280,298 1,760,906 117,980 186,679 304,659 120,515 196,427 316,942 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 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 Expenses:

Student and Academic Research Public Service Operations and Maintenance Institutional Support Auxiliary Enterprises Depreciation Other Expenses 2014 $ 385,887 2013 $ 371,051 186,331

191,809 125,104 127,055 148,339 156,247 73,934 37,717 19,065 25,780 1,002,157 77,801 40,008 18,992 32,226

1,015,189 365,749 129,842 45,361 363,074 132,905 41,360 68,918 95,793 35,714 66,618 6,630 63,364 96,072 35,276 63,403 9,529

11 Revenue Mix Other; 5.50% Auxiliary enterprises, net; 4.62% State, Private and Local Grants; 9.06% State appropriations; 47.30% Tuition and fees, net; 15.33% Federal Grants and Contracts; 18.18% 12 Expenditure Mix by Natural Classification Other; 1.14%

Depreciation; 8.04% Student Aid; 3.31% Supplies and Materials; 6.90% Contractual Services; 18.38% Salaries and Benefits; 62.24% 13 Expenditure Mix by Functio Other; 0.81% Depreciation; 8.04% Auxiliary Enterprises; 4.39% Institutional Support; 11.77% Student and Academic; 44.96% Operations and Maintenance; 8.47% Public Service; 5.60%

Research; 15.95% 14 Net Position $2,000 $1,631 Millions $1,500 $1,444 $1,234 $1,000 $500

$0 2012 2013 2014 Year 15 $200,000,000 Total University of Alaska Debt Outstanding June 30, 2014 $180,000,000 $160,000,000 $140,000,000 $120,000,000

$100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 16 $18,000,000 Total Annual Debt Service June 30, 2014 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000

$2,000,000 $0 17 perating Cash & Investments ($144M) Cash; 17.67% Corporate Bonds; 38.93% Money Market Mutual Funds; 28.48% Federal Agencies; 3.82% International Government Bonds; 1.42% U.S. Treasuries; 9.67% 18 Financial Metrics

19 Viability Ratio (Measures debt burden and debt capacity) 6 Expendable Net Position Debt Norm/Average = 3 (see red line) 5 Value 4 3 2 1

0 2012 2013 Fiscal Year 2014 20 Return on Net Position Ratio 7 (Measures the return on total net position) Change in Net Position Total Net Position Norm/Average = 3 (see red line) 6

Value 5 4 3 2 1 0 2012 2013 2014 Fiscal Year 21 Primary Reserve Ratio (Measures the level of reserves relative to expenses)

5 Expendable Net Position Total Expenses Norm/Average = 3 (see red line) Value 4 3 2 1 0 2012 2013

Fiscal Year 2014 22 Composite Financial Index (CFI) (1 of 2) (Measures overall financial health) 7 6 Norm/Average= 3 (see red line) CFI: 38% Primary Reserve Ratio 37% Viability Ratio 25% Return on Net Position Ratio Score 5

4 3 2 1 0 2012 2013 Fiscal Year 2014 23 Composite Financial Index (CFI) (2 of 2) Primary Reserve Ratio 3.53

5.63 Return on Net Position Ratio 4.84 Viability Ratio Key: Green triangle = University of Alaska Inside triangle = Norm (represents a value of 3) Outside triangle = Outer limit of scale 24

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