Track performance of those assets - and asset managers - against - PowerPoint PPT Presentation

 Report on value, income, and prospects of Alaska’s key assets for the preceding year  Identify emerging public policy issues related to those assets  Ask asset managers to identify what criteria they should be judged upon in the coming year  Track performance of those assets - and asset managers - against that criteria and other metrics

Manages its assets as:  Natural Resources , available for sale, lease, or conservation  Financial Assets , intended to produce financial return  Enterprises , intended to produce both financial return and key infrastructure

Total Gross Domestic Product – 56.6 Billion (2014) Alaska’s real GDP fell 1.4%. National Average was up 4.1% Top state Industries as a % of GDP Resources 27% 28% Government Transportation Real Estate 18% 6% Health Care 9% Other 12% Per Capita Personal Income: $ 54,012 (2014) Grew 5.4% from 2013 (National Average 3.5%) 117 % of the National Average of $ 46,049 Source: Bureau of Economic Analysis

Total Net Assets $82.1 Billions $76.0 $70.1 $71.9 $66.3 $56.4 Each Individual Alaskan’s $51.7 Share $ 97,368 FY '09 FY '10 FY '11 FY '12 FY '13 FY '14 FY '15

1. Financial Reporting – Standards – Audited Financials 2. GASB/GAAP 3. In arrears, past tense, FYE 15 is 6/30/15, 8 months ago! Published 2/1/16 4. Balance sheet – ‘Statement of Net Position’ - Assets less liabilities = Net Position/Net Assets/Capital/Equity/Worth! 5. Income Statement – ‘Statement of Activities’ – 6. Combined is CAFR: “Comprehensive Annual Financial Report” 7. “Qualified” Vs. ‘Unqualified or Clean’ Auditors Opinion a. 2014 was ‘Qualified’ because IS system for Medicaid – ‘pervasive/significant defects’ b. 2015 was ‘Unqualified/Clean’ but ‘restated/prior period adjustment’ primarily caused by GASB 68 for pension liability $6B hit! Combined with deficit spending $11.3B difference in Unrestricted Net Position resulting in 13% drop. 8. Reconciliation with budget/appropriations is important! 9. Cash Flow shortfall, Liquidity – much bigger than legislative discussion

Original ‘Budget’ Deficit $5.3B, Final $6.6B, Actual $8.8B = $ 2.2 worse! Net of $1.2B ‘fund transfers’

• Significant Fiduciary Risk – State Vs Muni/Subdivisions capped at 22% PERS and 12.56% of ‘covered payroll’ as state responsibility • Net position at June 30, 2015 of the two largest pension funds, the Public Employees' (PERS) and Teachers' (TRS) Retirement Systems' funds, were $16.4 billion and $8.2 billion respectively. The funding status for PERS and TRS pensions and postemployment healthcare as of the June 30, 2014, actuarial valuations indicated the actuarial accrued liabilities were 59.7 percent pensions and 87.0 percent postemployment funded for PERS, and 54.5 percent pension and 77.0 percent postemployment funded for TRS.

• As a result of implementing GASB Statement 68, Accounting and Financial Reporting for Pensions, the State recorded $752 thousand net pension asset, $1,196 million deferred outflows of resources, $6,057 million net pension liability, and $704 million deferred inflows of resources for the primary government. This was the primary reason for the $6.3 billion adjustment to the beginning unrestricted net position in fiscal year 2015.

Total Fisheries Tax Revenue Millions 90.50 86.8 81.19 72.36 69.25 68.98 58.66 FY '09 FY '10 FY '11 FY '12 FY '13 FY '14 FY'15

FY ‘15 FY ‘14 FY ‘13 FY ‘12 FY '11 FY '10 Millions Total Budget $14.6 $14.1 $13.7 $13.7 $12.6 $13.5 Revenue from User $3.3 $3.1 $2.9 $3.00 $2.60 $2.8 Fees Total Acres of Land 3.3 3.3 3.3 3.3 3.3 3.3 Total No. of Visitors 4.5 4.6 4.6 5.2 5.2 5.4

FY '15 FY '14 FY '13 FY '12 FY '11 FY '10 FY '09 Millions of Acres 100.5 100.4 100.4 100.4 100.3 100.2 98.5 Less: Total Land -2.2 -2.2 -2.2 -2.2 -2.2 -2.23 -2.2 Conveyed Remaining Total 98.3 98.2 98.2 98.2 99.1 98.9 97.3 Acquired Lands *Does not include 65 million acres of submerged land acquired at Statehood.

2015 Alaska Mineral Activity Exploration: Diverse deposit Production: Five major metal mines, >150 types & commodities: small placer mines, one coal mine: • 7 Major projects • 966,000 ounces gold • 6 Advanced projects • 15,712,000 ounces silver • 14 drilling projects • 149,781 tons lead • 48 Hard rock • 684,814 tons zinc exploration permits • 1.4 million tons coal • 1 Advanced coal First Market Value $2.77 B project (excluding coal, & industrial minerals) • $80 M Estimated Expenditures Development • Donlin Gold – Draft EIS in public review • Chandalar Placer – Completed construction, test production • Chuitina Coal – Draft EIS pending

FY ‘15 FY ‘14 FY ‘13 FY ‘12 FY ‘11 FY ‘10 FY ‘09 Millions of Acres 5.8 5.8 5.8 5.3 6.1 6.4 6.9 Leased # of Leases 1,997 1,906 1,748 1,569 1,737 1,845 1,984

FY‘ 15 FY‘ 14 FY‘ 13 FY ‘12 FY ‘11 FY ‘10 FY ‘09 Millions Petroleum $127.8 $128.1 $99.6 $215.4 $184.3 $118.8 $111.2 Property Tax Corporate $94.8 $344.5 $478.1 $570.9 $601.8 $493.7 $528.6 Petroleum Income Tax Severance Tax (a.k.a. Production Tax) ($264.1) $2,035.2 $3,674.2 $5,946.3 $4,131.4 $2,860.5 $3,537.0 Petroleum Mineral $22.4 $15.1 $19.0 $6.3 $10.3 $9.1 $12.4 Bonuses and Rents Oil and Gas $1,051.9 $1,705.0 $1,895.6 $2,026.8 $1,853.5 $1,523.0 $1,535.3 Royalties Total Petroleum $1,032.8 $4,227.9 $6,166.5 $8,762.2 $6,781.3 $5,005.1 $5,724.5 Revenue Total Nonpetroleum $1,307.9 $2,172.6 $1,787.0 $1,84.2 $1,997.4 $1,403.5 $372.0 Revenue

CBR Net Assets Billions $12.8 $11.6 $10.6 $8.2 $7.0 $8.7 FY '10 FY '11 FY '12 FY '13 FY '15 Jan. 2016

FY’15 FY’14 FY’13 FY ‘12 FY '11 FY '10 FY '09 $ Billions Net Assets 52.8 51.2 44.9 40.3 40.1 33.3 30.0 Statutory Net Income 2.9 3.5 2.9 1.6 2.1 1.6 -2.5 Interest, Dividends, 1.1 1.2 1.1 1.0 0.9 0.8 1.0 Real Estate, Other Increase in Market 1.3 5.8 3.4 -1.0 6.0 2.8 -7.3 Value of Investments Total Revenue 2.5 7.0 4.4 -0.2 6.9 3.3 -6.3 % Return 4.9 15.5 10.9 0.0 20.6 11.7 -18.0

Country Fund Assets $Billions Inception Government Pension Fund – Global Norway $824.9 1990 UAE - Abu Dhabi Abu Dhabi Investment Authority $773.0 1976 China China Investment Corporation $746.7 2007 Saudi Arabia SAMA Foreign Holdings $632.3 n/a Kuwait Kuwait Investment Authority $592.0 1953 China SAFE Investment Company $474.0 1997 China - Hong Kong Hong Kong Monetary Authority Investment Portfolio $442.4 1993 Singapore Government of Singapore Investment Corporation $344.0 1981 Qatar Qatar Investment Authority $256.0 2005 China National Social Security Fund $236.0 2000 Singapore Temasek Holdings $193.6 1974 UAE – Dubai Investment Corporation of Dubai $183.0 2006 UAE – Abu Dhabi Abu Dhabi Investment Council $110.0 2007 Australia Australian Future Fund $95.0 2006 South Korea Korea Investment Corporation $91.8 2005 Kazakhstan Samruk-Kazyna JSC $85.1 2000 Kazakhstan Kazakhstan National Fund $77.0 2000 Russia National Welfare Fund $73.5 2008 UAE - Abu Dhabi International Petroleum Investment Company $66.3 1984 UAE - Abu Dhabi Mubdala Development Company $66.3 2002 Libya Libyan Investment Authority $66.0 2006 Russia Reserve Fund $65.7 2008 Iran National Development Fund $62.0 2011 US - Alaska Alaska Permanent Fund $53.9 1976 Algeria Revenue Regulation Fund $50.0 2000 Malaysia Khazanah Nasional $41.6 1993 Brunei Brunei Investment Agency $40.0 1983 US – Texas Texas Permanent School Fund $37.7 1854 Source: Sovereign Wealth Fund Institute February, 2016, $ Billions

FY ‘15 FY ‘14 FY ‘13 FY ‘12 FY ‘11 FY ‘10 FY ‘09 $ Millions Net Assets $601.9 $585.6 $527.4 $487.6 $501.8 $427.5 $402.0 Rents and Royalty Income $3.6 $3.0 $2.0 $5.3 $6.4 $3.8 $5.0 Investment $25.3 $72.2 $48.2 $1.9 $80.4 $44.5 -$75.8 Income

FY ‘15 FY ‘14 FY ‘13 FY ‘12 FY ‘11 FY ‘10 FY ‘09 $ Millions Net Position $1,290.5 $1,270.8 $1,161.2 $1,075.7 $1,039.5 $1,012.2 $974.5 (Assets) Operating Revenue $53.1 $64.9 $51.9 $69.5 $68.3 $82.5 $69.5 Operating Expense $27.8 $29.0 $31.2 $27.4 $27.2 $23.6 $23.3 Net Operating Income $25.3 $35.9 $20.7 $42.1 $41.1 $58.9 $46.2 Transfers to State of Alaska/Other Agencies $10.7 $70.7 $20.4 $29.4 $23.4 $22.7 $23.8 Non-operating Revenue $13.7 $140.6 $85.2 $23.3 $9.6 $1.5 $5.1 Change in Net Position $28.3 $105.8 $85.5 $36.1 $27.3 $37.7 $28.6

Net Assets In Billions 1.29 $1.27 $1.16 $1.08 $1.04 $1.01 FY ‘11 FY ‘12 FY ‘13 FY ‘14 FY ‘15 FY 10

FY ‘15 FY ‘14 FY ‘13 FY ‘12 $ Millions FY '11 FY '10 Net Position $1,485.5 $1,509.9 $1,525.5 $1,554.1 $1,593.8 $1,624.0 Operating $290.1 $308.1 $315.3 $351.2 $385.7 $397.3 Revenue Operating $281.6 $311.5 $333.2 $381.6 $398.6 $407.0 Expense Operating $8.5 -$3.4 -$17.9 -$30.4 -$12.9 -$9.7 Income Change in $4.7 -$4.8 -$28.6 -$39.7 -$30.2 -$46.5 Net Position

Net Position In Billions $1.62 $1.59 $1.55 $1.53 $1.51 $1.49 FY '10 FY '11 FY '12 FY '13 FY '14 FY '15