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Presented 02/20/19.
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13° Annual Review of Alaska’s Assets
ME National Park Service US. Fish & Wildlife Ser I) USDA Forest Service
U.S. Armed Forces ') Bureau of Land Management
Manages its assets as:
>» Financial Assets, intended to produce financial return
Total Gross State Product — $51.5 Billion (2017) SJ Alaska’s GSP fell 0.5% from 2016 National Average was up 2.2% ate Industries as a Percentage of GSP Care Estate
PEL All Others mAII Others
Government
Transportation Transportation etd m Finance & Real Estate Mining, Oil & Gas m Edcuation & Health Care
Government 15%
Per Capita Personal Income: $57,179 (2017) Up 2.3% from 2016 111% of the National Average of $51,640
Source: Bureau of Economic Analysis
Alaska’s Assets Up 3%
Total State Assets in Billions
Each Individual Alaskan’s
Share $97,1 63
FY '10 FY '11 FY '12 FY '13 FY '14 FY'15 FY '16 FY'17 FY'18
Total Fisheries Tax Revenue Millions
FY '11 FY '12 FY '13 FY '14 FY '15 FY '16 FY'17 FY'18
Division of Parks and Recreation
Millions Ear FY ‘16 FY 45 Tid FY “13 FY «12
Total Budget $13.39 $14 $14.4 $14.6 $14.1 $13.7 $13.7
Revenue from User $3.73 $4.07 $3.00 ees estimate)
Total No. of Visitors Not available (millions)
Division of Mining, Land & Water
Millions of Acres
Less: Total Land Conveyed
Remaining Total Acquired Lands
*Does not include 65 million acres of submerged land acquired at Statehood.
Oil, Gas, and Geothermal
Millions of Acres Leased
# of Leases 2,094 2,071 2,226 1,997 1,906 1,748 1,569 1,737
State of Alaska, Department of Natural Resources, Division of Oil and Gas, as of October 2018 Beaufort Sea
Oil Search Eni Planning to dri Pikka B and C May resume development appraisal wells at Pikka Unit this drilling at Nikaitchug Unit this Winter from ice roads and ice pads. fall. Planning to drill up to three publicly released to Alaska Geologic Materials Center Engineering Design stage. Final (Umiat 20/3D, Puviag South 3D, Ikpikpuk River 2D, Investment Decision expected in and North Shore 3D). Datasets from two more surveys and 32 wells to be released in November.
Planning pad expansions at CRU in 2019 to Nine at CD2 to accommodate 32 wells at Fiord West. a May drill iste 2018 CD4-95 exploratory welll into from existing CD4 pad in southern CRU.
Achieved first oil from GMT1 in October, expect peak production of 25,000-30,000 BOPD from
Published final Supplemental ElS for GMT2 Rendezvous field development. Preferred 14-acre drill pad capable of up toe 48 wells as x i i _ come online in 2023. Planning to drill three new wells at KRU Drill Site 2M.
Filed lease plan of operations for Winx 1 exploration well to be drilled east of
Captivate Energy. Partners also include @ 2018 =[_] 0818 Gas Unit Boundary:
shale at Icewine 2 and suspended well plans to farm out interest.
Division of Oil and Gas Bid opening for fal lease sales for Beaufort Sea, North ‘Slope, and North Slope Foothilis Areawide sales and three sales of blocks of leases: Gwydyr Bay, Harrison ‘The accuracy of this map Is subject to pending decisions Bay, and Storms scheduled for November 15 at 9 AM. cae ce ped peepee! Combining unleased acreage backed by publicly available information to offer three blocks of leases in fall oil and gas lease sales.
Hilcorp Pian to drill 50-70 wells from Moose pad at Milne Point field. Drilling to Start late 2018 and first production expected in November. Peak Production anticipated to be 16,000 BOPD in 2020 with 30-80 million
Issued final EIS for Hilcrop’s Liberty
project to develop field from gravel
island five miles offshore and utilize
2018 POD called for 7 wells in Prudhoe’s Flow Station 2 region. Planning to conduct field-wide 3D seismic survey. Three additional welts possible at Lisbume PA. Planning for major gas sale in accordance with
AGODC progress on AKLNG project.
Received application from SAExpioration, ASRC, and Kaktovik Inupiat Corp to conduct 3D seismic survey in 1002 area of Arctic National Wildlife Refuge. Proposed Marsh Creek 3D survey would take two winter seasons to complete.
Alaska LNG Project at de-risk regulatory stage. FERC expects EIS to be finalized in late 2019, allowing for Final Investment Decision in 2020 with project execution
Petroleum General Fund Revenues Millions* FV FY?
Petroleum Property Tax $121.6 $120.4 $111.7 $125.2 $128.1 $99.6 $111.2 Petroleum Corporate $67.9 ($59.4) ($58.8) $94.8 $307.6 $434.6 $570.9 Income Tax Severance tax $749.9 $749.9 $125.9 $186.0 $389.7 $2,614.7 “ 050.3 $6,146.1 Petroleum Mineral Bonuses and Rents $23.6 Se $25.1 $22.4 $15.1 $19.0 0 $6.3 Oil and Gas Royalties $9778 8 $676.2 $840.3 $1,051.9 $1,685.0 $1,748.4 $2,022.8 Total Unrestricted Petroleum $1,941.7 $867.9 $1,104.3 $1,684.0 $4,750.5 $6,351.9 $8,857.3 Revenue
Total Unrestricted Nonpetroleum $466.1 $474.2 $423.2 $568.4 $627.3 $576.5 $627.4 Revenue
Source: Alaska Department of Revenue: 2018 Fall Revenue Sources Book
Presentation to Commonwealth North February 20, 2019 Commissioner Bruce Tangeman
Building the Budget: Historical Look-Back
== Revenue
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
Building the Budget: Historical Savings, Revenue & Expenditures
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
Expenditures
Building the Budget: Defining the Problem
FY2019 Management Plan
General
Fund General Fund Revenue Fund Withdrawal
Total Revenue 5,807.8
plus Supplemental Other
Revenue from Fiscal Notes -
Federal
FY2019 Total
General Other
FY2020 Total
Federal
General
Appropriations
Other
FY2019
FY2020
Fund Agency Operations _ _ 4,952.2
Fiscal Notes _ a -
__Statewide Operations == 807.2
Total Appropriations 6,090.4
Restricted
Total
Restricted
Total
Surplus/(Deficit) (282.6)
Balancing the Budget: Streamlined Fiscal Summary
General Fund Revenue Restricted Revenue
Total Revenue
Appropriations
__ Statewide Operations Total Operating
Fiscal Notes
Surplus/(Deficit)
FY2020 Governor's Amended Budget
General Other Federal FY2020
General Other FY2020 Restricted Total
UGF and DGF By Department - 12/14 Budget vs 2/13 Sponsor Substitute
Sustainable, Predictable, Affordable
Balance as of Balance as of Balance as of June 30, 2017 June 30, 2018 Feb 15, 2019 Description ($mm) ($mm) ($mm)
Established in 1991 to provide fiscal stability $3,896.0 $2,360.0 $1,730.0 Restricted use and mandated periodic funding of the reserve
Second reserve to draw in event of cash flow shortfall, requires 75% majority to appropriate, must replenish
Legislatively available portion of Permanent Fund 18,864.0 16,600.0*
SB26 established a statutory limit on the amount that can be drawn from the PFER each year
Reserves
Source for perpetual earnings and budget stability 46,030.0 48,209.0*
Principal balance requires Constitutional amendment to spend; earnings from Permanent Fund does not
*Total PF Balance as of 2/15/19 is $64.8B; Breakdown between Corpus and ERA is an estimate
PERS & TRS - Actuarial Value of Plan Assets $ §=©6©14,706,538 $ 10,393,870 25,100,408
PERS& TRS - Actuarial Accrued Liability $ §=6.21,049,655 $ 10,976,358 32,026,013
Unfunded Actuarial Accrued Liability $ (6,343,117) $ (582,488) (6,925,605) Funded Ratio 69.9% 94.7% 78.4%
PERS& TRS - Actuarial Accrued Liability $ 21,554,703 $ 11,819,482 33,374,185
Unfunded Actuarial Accrued Liability $ (6,848,165)} $ (1,425,612) (8,273,777) Funded Ratio 68.2% 87.9% 75.2%
Source: Division of Retirement & Benefits, Buck
Outstanding “Cashable” Tax Credits
Ending balance of credits available for repurchase, assuming historical interpretation of statutory formula for FY 2020+
Fiscal Year ™ Ending Balance ™ Credits Repurchased
Source: Department of Revenue — Economic Research Per AS 43.55.028, 10% of production tax levied, before credits, when ANS price forecast is $60 or higher and 15% of production tax levied, before credits, when ANS price forecast is below $60. Does not include changes in company behavior or credit transfers.
Changes to 10-Year Unrestricted Revenue Outlook
ANS Oil Price (Nominal $ per barrel) — Fall 2018 vs Spring 2018 FY2019 -FY2020.0-FY2024 = FY. 2022, FY 2023 FY2024 «= FY. 2025 FY 2026 = FY. 2027— = FY. 2028
Fall 2018 $67.96 $64.00 $66.00 $67.00 $69.00 $70.00 $72.00 $74.00 $75.00 $77.00 Spring 2018 $63.00 $64.00 $66.00 $67.00 $69.00 $70.00 $72.00 $74.00 $75.00 change $4.96
Unrestricted GF Revenue excluding PF transfer ($ millions) — Fall 2018 vs Spring 2018 FY2019 FY2020 FY2021 FY2022 FY2023 ‘FY2024 FY2025 FY2026 FY2027 FY 2028
Fall 2018 2,772 2,265 2,304 2,254 2,246 2,235 2,238 2,360 2,496 2,669 Spring 2018 2,259 2,276 2,336 2,343 2,401 2,468 2,625 2,783 2,831 2,983 change 513 “12 -33 -89 “155 -233 -386 -423 -334 -314
Unrestricted GF Revenue (S$ millions) — Fall 2018 vs Spring 2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 Fall 2018 5,495 5,198 5,394 5,345 5,500 5,596 5,670 5,865 6,074 6,321 Spring 2018 2,259 2,276 2,336 2,343 2,401 2,468 2,625 2,783 2,831 2,983 change 3,236 2,922 3,057 3,002 3,099 3,128 3,046 3,082 3,244 3,338
Source: Department of Revenue — Economic Research
ANS Price vs Capital Lease Expenditures, 2009-2028
ANS Price and Capital Lease Expenditures, 2009-2028
Mmmm Capital Lease Expenditures mm-=ANS Price
Source: Department of Revenue — Economic Research, Fall 2018 Revenue Sources Book
Constitutional Budget Reserve Fund
$ Billions FY’18 FY’17 FY’16 FY’15 FY’14 FY’13 FY ‘12/FY'll Net Assets $64.9 $59.8 $52.8 $52.8 $51.2 $44.9 $40.3 $40.1 Income Interest, Dividends, Increase in Market Value of $4.1 $5.6 Investments Total Revenue $0.5 % Return 10.74 12.89
Fiscal Year 2018 Performance? ssetiune 30% 2018
Total Fund 10.74% 7.69% 8.91% 8.86% Passive Index Benchmark 7.83% 649% 6.81% Not Available (60 Stocks 20 Bonds 10RE 10 TIPs)
Performance Benchmark 8.20% 7.08% 7.55% 8.98%
Total Fund Return Objective CPI+5% 7.87% 6.83% 6.54% 7.68%
FYTD VAOKhe Performance as of December 31°, 2018
Total Fund -3.19% 7.58% 6.27% Passive Index Benchmark -6.54% 5.02% 3.38% (60 Stocks 20 Bonds 10RE 10 TIPs)
Performance Benchmark -2.44% 6.90% 5.26%
Total Fund Return Objective CPI+5% 2.18% 7.03% 6.52%
Global Sovereign Wealth Funds
Country Norway
China Kuwait
China - Hong Kong
Saudi Arabia China Singapore Singapore Saudi Arabia Qatar
China
UAE — Dubai South Korea Australia Iran
Russia Libya
US - Alaska Kazakhstan Brunei Kazakhstan Turkey Malaysia
US — Texas
Fund Assets $Billions
Government Pension Fund — Global China Investment Corporation
Abu Dhabi Investment Authority Kuwait Investment Authority
SAFE Investment Company Government of Singapore Investment Corporation Temasek Holdings
Qatar Investment Authority National Social Security Fund Investment Corporation of Dubai Mubadala Investment Company Korea Investment Corporation Australian Future Fund
National Development Fund of Iran National Welfare Fund
Libyan Investment Authority Alaska Permanent Fund Samruk-Kazyna JSC
Brunei Investment Agency Kazakhstan National Fund
Turkey Wealth Fund
Texas Permanent School Fund
Source: Sovereign Wealth Fund Institute November, 2018, $ Billions
Inception
Alaska Mental Health Trust Authority
$ Millions FY ‘18 FY ‘17/ FY ‘16/ FY ‘15 FY ‘14 /FY ‘13)FY ‘12
Net Assets $686.5 $639.8 $593.4 $601.9 $585.6 $527.4 $487.6
Rents and Royalty Income
Alaska Industrial Development and Export Authority ZIDEN.
$ Millions FY ‘18 FY ‘17 FY ‘16 FY ‘15 FY ‘14 FY ‘13 FY ‘12 Net Position (Assets)
Operating Revenue $64.3 $59.9 $77.4 $53.1 $64.9 $51.9 $69.5 Operating Expense $39.2 $49.9 $40.2 $27.8 $29.0 $31.2 $27.4 Net Operating Income! $25.1 $10.0 $37.2 $25.3 $35.9 $20.7 $42.1
Transfers to State of Alaska/Other Agencies $12.9 $63 $17.7 $10.7 $70.7 $20.4 $29.4 Non-operating $13.7 $140.6 $85.2 $23.3
Revenue
Change in Net Position $13.4 $21.2 $28.3 $105.8 $85.5 $36.1
$ Millions FY°18 FY’17 FY?16 FY‘I5 FY‘14 FY‘13 FY‘12 Net Position $1,538.7 538.7 $1,513.6 $1,499.5 $1,485.5 $1,509.9 81,5255 525.5 $1,554.1
Income
Adjusted Change in Net $52.0 $39.3 $40.6 $34.6 $25.4 $10.0 $14.2 Position Dividend to
Alaska Housing Finance Corporation
Housing
Finance Corporation
Net Position $1.55 In Billions
FY '12 FY '13 FY '14 FY '15 FY '16 FY '17 FY '18
AHFC’s Leadership
Commissioner, Department of Commerce,
Vice Chair
North Pacific Rim
Commissioner, Department of Health & Social Services
AHFC’s performance
AHFC Mortgage Delinquency by Month (30+ Days)
Monthly Average
$ Millions FY 18 FY 17 FY ‘16 FY 15 FY 14 FY 13 FY 12 Net Assets _ $1,291.0 $1,297.5/$1,204.9/$1,116.7/$1,038.8] $963.3 $893.2 Operating 9473 $45.8 $472 $53.9 $51.7 $54.3 $54.7 Revenue Operating 5142.0 $134.9 $145.2 $160.8 $166.0 $172.5 $171.0 Expense
Net Income ($94.7) ($89.1) ($98.0) ($106.9) ($114.3) ($118.2) ($116.3)
Net Assets $1,488.9 $1,461.2 $1,395.2 $1,426.8 $1,406.2 $1,180.9 $1,070.3 Operating s40.8 $41.3 $42.3 $56.0 $02.8 $102.4 $98.7 Revenue Operating sgs.s $85.3 $94.1 $136.0 $156.5 $165.9 $160.6 Expense Operating 5.45.0 $-44.0 $-51.8 $-80.0 $-63.7 -$63.5 -61.9 Loss/Gain Income
Capital Contributions $3.5 by the State
Alaska International Airport S) ism
Net Position so14 $896 $883 $864 $903 $906 $864 (Assets) Operating $148 $143 $137 $134 $124 $107 Revenue
Operating siss $168 $140 $148 $151 $146 $139
Expense
Net Op $-25 $-14 $-27 $-38 -$33 Revenue
Capital Contributions $54 $56 $40 $50 $89
UNIVERSITY
f ALASKA $ Millions FY ‘18 FY ‘17 FY ‘16 FY ‘15 FY ‘14 FY ‘13 FY ‘12 Net Capital Assets $1,730.3 $1,692.5 $1,617.9 $1,544.7 $1,447.3 $1,280.3 $1,097.3 Endowment I $150.1 $143.6 $130.2 $143.1 $148.5 $136.7 $127.2 Land Endowment) 617 $62.6 $62.7 $62.4 $626 $62.9 $462 and other Assets Endowment Investment Return UNIVERSITY OF UN UNIVERSITY OF ALASKA one of ALASKA 0 FAIRBANKS learn + engage - change
ANCHORAGE
Fall Fall Fall Fall Fall Fall Fall Fall 2018/FY19 2017/FY18 2016/FY17) 2015/FY16 2014/FY15 2013/FY14 2012/FY13 2011/FY12 Fall Student Headcount; 26,641 27,823 29,171 30,496 31,522 32,696 33,581 34,983 (Non-degree) (7,754) (7,825) (8,100) (8,454) (8,716) (8,992) (9,564) (10,567) Degrees Awarded oe 4,554 4,594 4,794 4,678 4,908 4,491 4,174 High School/College Ma Concurrent Enrollment 20 9 2,721 2,392 1,881 1,522 1,556 1,413 1,313 Headcount Tuition and Fees - UA to Western States 89% 88% 88% 84% 80% 717% 78% 716% Average (4-Year) Total Research October Expenditures ($ $150.7 $159.4 $144.2 $133.9 $138.7 $144.2 $144.9 Millions) (Total Employees) (7,147) (7,247) (7,503) (7,972) (8,430) (8,614) (8,665) (8,523) UNIVERSITY OF UAS UNIVERSITY OF ALASKA
ANCHORAGE
learn - engage - change
OUR MISSION “The University of Alaska inspires learning, and advances and disseminates knowledge through teaching, research, and public service, emphasizing the North and its diverse peoples." (Regents! Policy 01.01.01) Maximize value to Alaska through excellent, accessible, and cost effective higher education OBJECTIVE.: funded by diverse and growing revenue sources CORE PRINCIPLES Focus, Access, Diversity, Excellence, Consistency, Fiscal Sustainability STRATEGY Prepare, Restructure, Implement, Refine UA ANCHORAGE UA FAIRBANKS UA SOUTHEAST Comprehensive metropolitan Research university renowned for Comprehensive regional university university in Alaska’s economic hub, leadership in Arctic and the North, with] focused on interdisciplinary & marinewith primary focus on workforce additional focus on workforce oriented programs, teacher education, development through its several development and community and rural e-Learning, and workforce regional community campuses education development
. oo Arctic science and policy, physical, Social and economic sciences,.:.. Lo. Research health policy biological, and social sciences, Interdisciplinary / environmental engineering and applied energy
Health professions Physical, natural, and related Marine-oriented programs CAMPUS LEAD Business and public policy sciences. (including joint programs with UAF) x Economics Arctic / Northern Studies Teacher education (administration) FOR THE STATE. ys. we Teaching Logistics Rural development / tribal Interdisciplinary degrees/ degree Project Management management completion
Doctoral education Emphasis on regional workforce Mine training priorities, e.g., mine training Fisheries and ocean sciences
Common General Education Requirements ¢ Alaska Native Studies Liberal Arts and Humanities Teacher Education COURSES / PROGRAMS Social Sciences & Natural Sciences Management AVAILABLE ACROSS THE Nursing Mine training UNIVERSITY SYSTEM Engineering Wide choice of non-major courses Distance Education / E-Learning Dual credit with K-12 Career and Technical Education Developmental Education
Goals & Measures 2017-2025
1. Contribute to Alaska’s economic development
ncrease % of educators hired Double number of health program completions row our world class research
Lead the world in Arctic related research ncrease research expenditures ncrease degree attainment Fiscal Year Student Full Time Equivalent (FTE)
5. Operate more cost effectively
Decrease total cost of education (indirect and
Increase annual completions per Full Time Equivalent (FTE)
vow) 2018 2019 2020
Change
Note: Information is reviewed annually as part of the President’s performance compensation (quantitative performance goals)
Goal
Unrestricted General Funds History
(in millions of S) Gov’s Cut $134 (41%)
m Unrestricted General Funds (UGF) m Cummulative Impact =$380M
Center for Northern Security
Institute for Arctic Sustainability
Center for R&D Network Policy Institute Alaska Permanent Capital Institute Center for the Blue Ocean Economy? Sustainable Tourism Center for Excellence in Public Service School of tC Medicine
School for
Arctic Design Institute
Innovation and
Learning Track
Alaskan Autonomous
Arctic Ambassadors
Intergenerational
Platform One Health e
Alaska Center for Teaching Excellence
~ Financial Assets = Permanent fund percentage of value "Long range fiscal plan
= Leveraging financial assets and expertise for Alaska
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