Legislature(2025 - 2026)ADAMS 519
05/01/2025 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: State Debt Summary and Credit Review | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
May 1, 2025
9:07 a.m.
9:07:20 AM
CALL TO ORDER
Co-Chair Schrage called the House Finance Committee meeting
to order at 9:07 a.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Calvin Schrage, Co-Chair
Representative Jamie Allard
Representative Jeremy Bynum
Representative Alyse Galvin
Representative Sara Hannan
Representative Nellie Unangiq Jimmie
Representative DeLena Johnson
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
Representative Andy Josephson, Co-Chair
ALSO PRESENT
Ryan Williams, State Debt Manager, Department of Revenue.
PRESENT VIA TELECONFERENCE
Adam Crum, Commissioner, Department of Revenue.
SUMMARY
PRESENTATION: STATE DEBT SUMMARY AND CREDIT REVIEW
Co-Chair Schrage reviewed the meeting agenda.
^PRESENTATION: STATE DEBT SUMMARY AND CREDIT REVIEW
9:08:35 AM
Co-Chair Schrage reviewed the meeting agenda.
RYAN WILLIAMS, STATE DEBT MANAGER, DEPARTMENT OF REVENUE,
introduced the PowerPoint presentation "State of Alaska:
Credit Rating Outlook and Debt Summary" dated May 1, 2025
(copy on file). He continued on slide 3 that included the
contents of the presentation titled "Framework:"
Recent Bond Refinancing Transactions
.notdef State's Bond Rating Overview
.notdef State's Recent Bond Rating Improvements
.notdef Credit Rating and Market Feedback
.notdef Current Municipal Market Update
.notdef State's Debt Profile
.notdef State's Debt Capacity
Mr. Williams moved to slide 4 titled "State of Alaska
Recent Bond Refinancing Transactions:"
Summary of Bond Refinancing Transactions
.notdef In the last year, DOR has successfully undertaken
five refinancing transactions
.notdef Total par amount $582,990,000
.notdef Total net present value savings $36,893,604
.notdef Release of Debt Service Reserve Fund for Airport
System Refinancing Transaction $7.5 million
Mr. Williams delineated that the terms of the refinanced
loans remained intact.
Representative Johnson wondered what airport debt was for.
Mr. Williams responded that the prior airport debt issue
was for multiple types of projects like building
maintenance, terminal projects, paving, etc. The revenue
bond debt was issued over time to support airport
activities. The transaction refinanced bonds issued in 2016
reducing annual debt service payments to roughly $23
million. Without the transaction, the debt service payment
would ramp up in 2026 and ensuing years. He mentioned that
the transaction ensured a streamlined and smooth annual
debt payment.
9:12:49 AM
Representative Johnson asked how much of the bond was
unspent and if it was for specific projects. Mr. Williams
answered that there were no projects on refinancing
transactions, it was merely refinancing the debt. He
elaborated that all of the proceeds of the bonds pay off
old bonds and reduced interest rates and therefore, did not
reflect project fund transactions that were prior
issuances. Representative Johnson assumed that the
refinancing was not specific to a particular airport. She
asked if lacking any STIP issues how quickly the funding
could be spent. Mr. Williams replied that he was not the
right person to comment on the Department of Transportation
and Public Facilities (DOT) involvement in obtaining
federal grants. He was aware that there was potential to
utilize debt as a tool for certain types of projects.
Co-Chair Schrage noted that Representative Galvin joined
the meeting.
Representative Johnson asked how quickly the money was
available after a bond issuance. Mr. Williams replied that
the project was reviewed by the state bond committee for
the airport system and could take anywhere from 2 to 6
months.
Representative Hannan asked if the debt service bonds were
for the international airports or rural airports or whether
they were not differentiated. Mr. Williams responded that
it was for the international airport system and was for
projects at the Anchorage International Airport.
Representative Hannan asked if Undesignated General Fund
(UGF) money expended or was the enterprise income paying
off the bond. Mr. Williams answered that the airport
revenue bonds were paid off by various contracts the
airport undertook with airlines. Representative Hannan
asked whether the bonds were a risk for the state. She
deduced that they were not because the airport enterprises
generated sufficient revenue to pay off the bonds. Mr.
Williams responded in the affirmative. The bonds were
secured by the gross revenues of the airport along with
other security mechanisms like a reserve fund.
9:19:30 AM
AT EASE
9:19:51 AM
RECONVENED
Co-Chair Foster took over chairing the meeting.
Mr. Williams discussed slide 5 titled "State of Alaska
Recent Bond Refinancing Transactions:"
General Obligation Refunding Bonds-Series 2024 A
Build America Bonds
Refund all the State's outstanding General
Obligation Bonds Series 2010 A Build America
Bonds (BABs)
.notdef State of Alaska exercised optional
extraordinary provision
.notdef Par Amount of Refunded Bonds $119,570,000
.notdef Tax-Exempt Refinancing from the previously
issued taxable BABs
Transaction Highlights
.notdef Gross Savings $4,506,834
.notdef Net Present Value Savings $3,999,992 or 3.35
percent
.notdef Subscription Levels $578 Million
.notdef 5.4X across the board
Mr. Williams advanced to slide 6 titled " State of Alaska
Recent Bond Refinancing Transactions Cont.:"
General Obligation Refunding Bonds Series 2024B and
2025A
Refund all the State's outstanding General
Obligation Bonds Series 2015B and 2016 A&B Bonds
.notdef Par Amount of Refunded Bonds $190,430,000
.notdef $82,940,000 General Obligation Refunding Bonds-
Series 2024B (Bond Tender)
.notdef $107,490,000 General Obligation Refunding Bonds
Series 2025A (Forward Delivery)
.notdef Tax-Exempt Refinancing
Transaction Highlights
.notdef Aggregate Net Present Value Savings
$16,533,796 or 8.10 percent
.notdef Series 2024B (Tender) $8,236,891 or 9.14
percent
.notdef Series 2025A (Forward Delivery) $8,296,904 or
7.29 percent
.notdef Subscription Levels $1,210,400 billion
.notdef 6.3 times across the board 35 Investment
Groups (i.e., Vanguard, Fidelity, Susquehanna,
JPMIM, Brown Brothers, Blackrock)
Mr. Williams continued to slide 7 titled "State of Alaska
Recent Bond Refinancing Transactions Cont.:"
Alaska International Airport System
Refund all the Airport System's 2016A&B Bonds
.notdef Par Amount of Refunded Bonds $117,960,000
.notdef $67,750,000 Revenue Refunding Bonds 2025A Bonds
(Bond Tender)
.notdef $50,210,000 Revenue Refunding Bonds 2025B Bonds
(Forward Delivery)
.notdef Tax-Exempt Refinancing
Transaction Highlights
.notdef Aggregate Net Present Value Savings
$8,876,618 or 6.53 percent
.notdef Series 2025A (Tender) $5,303,723 or 7.16
percent
.notdef Series 2025B (Forward Delivery) $3,572,895 or
5.77 percent
.notdef Debt Service Reserve Fund Release $7.5 million
.notdef Subscription Levels $696.2 million
.notdef 5.9 times across the board 31 Investment
Groups (i.e., Vanguard, Fidelity, Wilmington
Trust, Brown Brothers, Boston Company, Capital
Research and Management)
Representative Johnson asked if the airport revenue was
generated from landing fees, etc. Mr. Williams responded in
the affirmative.
Mr. Williams continued on slide 8 titled "State of Alaska
Recent Bond Refinancing Transactions Cont.:"
Goose Creek Correctional Facility
Refund lease revenue refunding bonds 2025A&B Bonds
.notdef Par Amount of Refunded Bonds $99,460,000
.notdef $63,025,000 Lease Revenue Refunding Bonds 2025A
Bonds (Bond Tender)
.notdef $36,435,000 Lease Revenue Refunding Bonds 2025B
Bonds (Forward Delivery)
.notdef Tax-Exempt Refinancing
Transaction Highlights
.notdef Aggregate Net Present Value Savings
$5,589,231 or 5.35 percent
.notdef Series 2025A (Tender) $3,745,758 or 5.63
percent
.notdef Series 2025B (Forward Delivery) $1,843,472 or
4.85 percent
.notdef Subscription Levels $106.6 million
.notdef 1.1 times across the board 11 Investment
Groups (i.e., J.P. Morgan, Vanguard, Breckenridge
Capital, Goldman Sachs, PIMCO)
Mr. Williams added that the net present value savings of
about $5.6 million decreased the subject to appropriation
commitments for the lease purchase of the Goose Creek
Correctional Facility.
Mr. Williams advanced to slide 9 titled " State of Alaska
Recent Bond Refinancing Transactions Cont.:"
Alaska Municipal Bond Bank
General Obligation and refunding bonds 2025 Series
One and Two
.notdef Par Amount of Refunded Bonds $55,570,000
.notdef $41,900,000 General Obligation and Refunding
Bonds, 2025 Series One
.notdef $13,675,000 General Obligation and Refunding
Bonds, 2025 Series Two
.notdef Tax-Exempt Refinancing
Transaction Highlights
.notdef Aggregate Net Present Value Savings
$1,893,967 or 3.8 percent
.notdef 2025 Series One $1,790,158 or 3.9 percent
.notdef 2025 Series Two $105,866 or 2.1 percent
.notdef Subscription Levels $198 million
.notdef 3.5 times across the board 10 Investment
Groups (i.e., Breckenridge Capital, PIMCO,
Fidelity, Vanguard, Appleton, Loomis, Norther
Trust)
9:23:59 AM
Representative Johnson asked about the Municipal Bond Bank
and to list the municipalities that had access to it. Mr.
Williams replied that all political subdivisions of the
state were able to issue bonds through the bond bank. He
furthered that there was a recent expansion of the bond
bank's authority to fund projects for regional health
organizations, the University of Alaska (UA), and joint
action agencies like the Southeast Alaska Power Agency.
Representative Johnson asked Mr. Willians to name another
joint action agency. Mr. Williams offered to follow up.
Representative Johnson requested a list of all of the
agencies that had authority under the bond bank.
Co-Chair Foster requested that Mr. Williams follow up with
the info.
Mr. Williams continued on slide 10 titled "State's Bond
Rating Overview:"
Bond Rating General Information
.notdef A bond rating is a way to measure the
creditworthiness of a bond, which corresponds
to the cost of borrowing for an issuer. These
ratings typically assign a letter grade to
bonds that indicates their credit quality.
.notdef Bond ratings are provided by third-party
independent rating agencies such as:
Standard & Poor's Global Ratings
Moody's Investors Service
Fitch Ratings Inc.
Kroll Bond Rating Agency
.notdef Rating Agencies conduct a thorough financial
analysis of the issuer based on their published
Public Finance Criteria that generally focus on
different but similar primary credit factors.
Government Framework
Financial Management
Economy
Budgetary Performance
Debt and Liability profile
.notdef Bond ratings are critical to alerting investors
to the quality and stability of the bonds and
the issuer.
Higher rated bonds "investment grade" provide
lower risk and lower borrowing cost
Lower rated bonds "non-investment grade"
provide for higher risk and higher borrowing
cost
Mr. Williams examined slide 11 titled "State's Bond Rating
Overview:"
Importance of Credit Ratings to State of Alaska
Cost of borrowing on capital improvement projects
State bond rating benefits and/or impacts the
Alaska Municipal Bond Bank and underlying issuers
Positive bond ratings attract national and global
investors to the State
9:28:01 AM
Mr. Williams continued to slide 12 titled "State's Bond
Rating Overview:" The slide contained a chart of the Bond
Rating Scale for each bonding agency that began at AAA and
ended at a C rating.
Representative Galvin understood that Moody's current
rating stood at Aa3 which put Alaska at average or below
average to other states. She cited slide 16. She believed
her statement provided context to the state's current
bonding rating. Mr. Williams responded that he would
address the ratings in further detail in later slides. He
indicated that Alaska was only a "few notches off the
highest grade."
Mr. Williams continued to slide 13 titled "State Credit
Bond Rating Improvements:"
Over The Last Year, We Have Seen Six Credit Rating
Improvements
Department of Revenue engaged Kroll Bond Rating Agency
(KBRA) in 2023.
.notdef KBRA assigned an AA (Stable Outlook) to the
State's General Obligation Bonds and AA- for the
Alaska Municipal Bond Bank Authority.
.notdef In connection with the 2024 A Bonds transaction
the State saw credit improvements.
.notdef S&P improved the State's rating from AA- to AA
with Stable outlook.
.notdef Moody's improved the State's rating from Aa3
Stable to Aa3 Positive.
.notdef On March 4, 2024, Moody's upgraded the State of
Alaska Airport System Revenue Bonds to Aa3 from
A1 with Stable outlook.
On February 25, 2025, KBRA upgraded the State of
Alaska General Obligation Bonds to a rating of AA+
with a stable outlook. Highest Bond Rating Since 2016.
Representative Tomaszewski observed that there had been a
lot of recent refinancing. He asked whether the amount of
refinancing was normal. Mr. Williams answered that it was
an extremely active year of refinancing and it had been
years since the bond bank had been so active. He delineated
that part of the reason was a function of when the prior
bonds were issued. The bonds were typically issued with a
10 year par call and many of the refinanced loans were at
10 years of issuance. Analysis of the bonds demonstrated
that it was advantageous to refinance the debt and decrease
future debt service payments. Representative Tomaszewski
inquired whether the bond bank would engage in additional
debt refinancing. Mr. Williams responded that the bank
continually reviewed and monitored outstanding debt and
voiced that it exhausted all debt worth refinancing.
9:33:18 AM
Representative Stapp commented that he had never heard of
Kroll but had heard of Moody's, S&P, and Fitch. He asked
when the agency was established and why the state engaged
with them. Mr. Williams replied that the agency was
established roughly 10 years prior. He furthered that the
impetus for engaging Kroll was for its descriptive and well
written reports and having a good reputation in the
marketplace. He indicated that as part of the initial
engagement, Kroll conducted a robust review of the state.
Mr. Williams continued to slide 14 titled "Recent Bond
Rating Meetings-Credit Summary:"
Diversified and Resilient Revenue Streams
Significant project developments to build and
diversity State revenue stream
Percent of market value transfer has been in
place for seven fiscal years and is a consistent
source of unrestricted general fund (UGF) revenue
Total petroleum revenue was 37.2 percent of UGF
in FY2024 and is estimated to be 29.7 percent in
FY2025
Deeply Experienced Management and Highly Conservative
Debt Program
30+ years of combined experience between Deputy
Commissioner Limani and Debt Manager Williams
Commitment towards a sustainable and long-term
comprehensive Fiscal Plan
Present value savings of over $36.9 million
achieved since June 2024 through issuance of
general obligation and revenue refunding bonds
Ample Reserves: Constitutional Budget Reserve
Fund (CBRF) $2.8 billion, Permanent Fund
balance $80.8 billion
Low debt load and no new bond authorization
Rapid paydown of general obligation debt in the
next 10 years
Well-funded pension obligations PERS 89
percent and TERS 95 percent
Fiscal Discipline
Demonstrated commitment to structural budgetary
balance, including expenditure constraints
Semi-annual revenue forecast that includes outlook
for oil price, oil production, and state
revenues
Annual public debt report, including debt management
policy and debt affordability analysis
Very Strong Financial Position
Ample Reserves: Constitutional Budget Reserve
Fund (CBRF) $2.8 billion, Permanent Fund balance
$80.8 billion
Low debt load and no new bond authorization
Rapid paydown of general obligation debt in the
next 10 years
Well-funded pension obligations PERS 89
percent and TERS 95 percent
Robust Outlook for Near-Term, Statewide Economic
Development
Executive Orders will expand immense
opportunities and ensure the nation's energy
security
Prominent ongoing resource development projects
impacting economic growth
Improved economic demographics
Representative Johnson asked whether the size of the
Earnings Reserve Account (ERA) of the Permanent Fund
impacted the bond ratings. Mr. Williams responded that it
was observed as part of all the state savings and
financials. Representative Johnson wondered whether
changing to a single account structure for the Permanent
Fund would impact the bond ratings. Mr. Williams responded
that the rating agencies were definitely interested in
hearing about a different approach to the current
structure. He was unsure whether it would have any impact.
9:38:03 AM
Representative Stapp asked pointed to the bullet point
stating, "Well-funded pension obligations PERS 89 percent
and TERS 95 percent." He offered that the state was
prohibited from using the overfunded health care portion of
the pension to pay the unfunded liability. He wondered why
a rating agency would view it as a strong financial
position. Mr. Williams answered that the state reported the
information on slide 14 to the rating agencies. The state
reported on each trust in detail. Representative Stapp
reiterated his statement and inquired why the state
presented the pension position as blended. Mr. Williams
responded that all rating agencies undertook their own
analysis on every states' pension systems and Alaska's
information was merely a way to present the information.
Mr. Williams advanced to slide 15 titled "State's Bond
Rating Overview:"
• July 20, 2023: Initiation of "AA" rating on State GO
Debt by Kroll Bond Rating Agency
• April 30, 2024: Upgrade by S&P Global Ratings to
"AA," Outlook revised to Stable
• March 4, 2024: Outlook revised to Positive by
Moody's Investor's Service, "Aa3" rating maintained
• September 27, 2024: Outlook revised to Positive by
Fitch Ratings, "A+" rating maintained
• February 25, 2025: Kroll Bond Rating Agency upgraded
the State of Alaska General Obligation Bonds to
a rating of AA+ with a stable outlook
Mr. Williams continued to slide 16 titled "State's Bond
Rating Overview:" that contained a list of the state of
Alaska compared to other states and reported that the state
was in the mid-range of other states. He addressed
Representative Galvin's question and explained that Alaska
had a unique credit rating because the state did not fit in
with the general criterion of rating agencies.
Mr. Williams quickly advanced to Slide 17 titled "Credit
Rating and Market Feedback:"
Initial Rating Agency Feedback
• Percent of Market Value (POMV) transfer has
been in place for seven fiscal years and is a
consistent source of UGF revenue
• Recent budgetary surplus and deposits to State
savings accounts, including the Constitutional
Budget Reserve Fund
• Significant reduction in State general fund
spending since 2013
• Recently stable oil price environment and
significant available natural resources under
development
• Well-funded pension obligations
• Low debt load and no new bond authorizations,
rapid paydown of GO debt in the next 10 years
• Improved economic demographics
• Prominent ongoing resource development projects
impacting further economic growth
• Ample reserves and recent positive investment
performance Market Feedback on Recent Transaction
• Institutional investors "love" Alaskan paper, very
high-quality credit, highly secured
• More frequency in the market and larger bond
issuances
9:41:51 AM
Representative Galvin acknowledged that the state was
unusual in that the savings were not great, the economy was
not diverse, that state did not have a broad based tax, and
had a volatile and limited revenue stream from oil and
investments. She asked him to discuss what made Alaska
unique compared to other states. Mr. Williams agreed with
her assessment. He related that the state's reliance on oil
and gas was reduced to 30 percent significantly less than
the roughly 80 percent in the past, which was viewed
positively by rating agencies. However, 30 percent was
still fairly high when compared to states with a broad
based tax and it was a more volatile revenue stream to
predict. Representative Galvin asked how many other states
did not have any broad based tax. Mr. Williams would follow
up. Representative Galvin voiced that it was important to
understand why the states were in the middling ratings.
She thought it would save the state money if the ratings
were higher. Mr. Williams cited the Alaska Public Debt Book
published in January 2025. The data contained the metric
that a state used to determine the amount of debt it could
tolerate compared to revenue. He delineated that the state
fit well within the metrics at 4 percent to 7 percent. The
"hurdle" was to prove to the rating agencies that its debt
was high quality but unique compared to other states
structures.
9:48:07 AM
Representative Stapp surmised that if the Permanent Fund
was removed from the equation the state clearly did not
have enough revenue for its debt based on taxation. The
value of the state's investment fund was likely why the
state's credit rating was favorable. Mr. Williams agreed
that the Point of Market Value (POMV) structure was a
credit strength.
Mr. Williams continued to slide 18 titled "Current
Municipal Market Update" and noted the data represented on
the chart and graphs were collected in February 2025 and
was outdated due to the market's recent extreme volatility.
He pointed to the graph in the lower right corner that
showed a spread of 25 to 35 basis points or .25 or .35
percent differential between an AAA to AA rating.
Representative Allard requested an updated version of the
data with the acknowledgment that the market had remained
volatile. Mr. Williams agreed to follow up with the
information.
Mr. Williams continued on slide 19 titled "State's Debt
Profile:"
Authorization Process
.notdef All forms of State debt are authorized first by law
May be a one-time issuance amount or a not-to-
exceed issuance limit in statute
General obligation bonds must then also be
approved by a majority of voters
.notdef General obligation bonds are the only debt secured
by full faith credit and taxing authority
.notdef All State debt must be structured and authorized by
the State Bond Committee
Includes general obligation bonds, subject to
appropriation issues, and state revenue bonds
.notdef The State Bond Committee determines method and
timing of debt issues to best utilize the state's
credit and debt capacity while meeting the authorized
project's cash flow needs
.notdef The State has established other debt obligations
Reimbursement Programs
.notdef The School Debt Reimbursement Program ("SDRP")
or HB 528 reimbursement, administered by Alaska
Department of Education and Early Development and
Department of Transportation and Public
Facilities, respectively
.notdef SDRP: Not currently authorized for new debt and
periodically funded (was most recently partially
funded in 2017, 2020 and 2022, and no
appropriation in 2021; however, supplemental
budget appropriations offset prior year
reductions)
Retirement Systems
.notdef Unfunded actuarially assumed liability (UAAL)
for defined benefit employees is guaranteed by
the constitution
.notdef Annual payments on the UAAL of other employers
is reflected as State debt in the Annual
Comprehensive Financial Report (ACFR)
.notdef Some flexibility in how payments are made
Mr. Williams continued to slide 20 titled "State's Debt
Profile:"
Types of Alaska Public Debt
.notdef State Debt (General Obligation Bonds) - $523.5
million
.notdef State Guaranteed Debt - $86.5 million
.notdef State Supported Debt - $149.5 million
.notdef Unfunded Actuarial Accrued Liability (UAAL) -
$4.404 billion
.notdef State Moral Obligation Debt - $1,179.6 million
.notdef State Supported Municipal Debt Eligible for
State Reimbursement - $379.1 million
.notdef State and University Revenue Debt - $456.7
million
.notdef State Agency Debt - $1,464.8 million
.notdef State Agency Collateralized or Insured Debt -
$1,292.5 million
.notdef Municipal Debt - $3,074.8 million
9:52:37 AM
Representative Johnson wondered how Alaska Industrial
Development and Export Authority (AIDEA) debt factored into
state debt. She asked whether a wall existed between AIDEA
and the state. Mr. Williams answered that AIDEA debt was
not included in state debt. Representative Johnson relayed
that the potential of using AIDEA reserves for funding the
budget could have an impact on its bond rating. She
wondered how AIDEA's bond rating was separate from the
states. Mr. Williams responded that AIDEA's debt was not a
general obligation debt of the state. He recalled that
AIDEA likely had its own security structure.
Representative Hannan asked how much was left on the debt
for the Goose Creek bond. She asked whose obligation was it
to pay it off bond debt if a prison was shuttered. Mr.
Williams responded that the bonding was a Mat-Su Borough
lease revenue bonds that included a subject to
appropriation commitment by the state of Alaska to pay to
lease purchase the facility. Therefore, it was "extremely
important" to make the appropriation payment to purchase
the facility. Representative Hannan asked how much was left
on the debt. Mr. Williams responded that it was about $100
million.
9:55:58 AM
Mr. Williams continued on slide 21 titled "Debt Service
Profile:"
.notdef Debt Activity and Updates
• On 6/4/2024, the State closed on the GO Series
2024A Bonds, which refunded the outstanding GO
Series 2010A, which contained a Federal (Build
America Bond) subsidy. The state achieved total
debt service savings of approximately $4.5
million.
• On 8/15/2024, the State closed on the GO Series
2024B Bonds, and on 8/6/2024, the state priced
the GO Series 2025A Bonds (Forward Delivery) to
refund the outstanding GO Series 2015B, 2016A,
and 2016B Bonds. Upon closure of the GO Series
2025A (Forward Delivery), the overall transaction
reduces total debt service payments over the next
12 years by approximately $19.5 million.
• SDRP Update: The enacted fiscal year 2025
budget funded the SDRP program at 100%, with an
appropriation of approximately $57.5 million to
the Department of Education and Early
Development, including an estimated $44.4 million
from UGF and $13.1 million from the
School Fund.
Mr. Williams relayed the information on the chart regarding
General Obligation Bonds (GO) and noted the total remaining
GO debt was approximately $470 million. He pointed to the
Subject to Appropriation: Certificated of Participation
(COP's) and Lease Revenue, including Goose Creek and the
Anchorage Parking facility that was approximately $140
million which totaled $608 million in remaining debt. He
added that the School Debt Reimbursement Program totaled
roughly $368 million. He indicated that there were no
remaining authorizations to issue GO debt at the state
level.
Mr. Williams advanced to slide 22 titled "Debt Service
Profile:"
GO bonds outstanding decline through FY2041
Recent Activity:
.notdef The State does not have unissued GO bonding
authority and the State's remaining 2012 GO bond
authorization was sold in FY2021 ($453.2 million
funded since 2012)
.notdef Net debt service of $64.2 million in FY2025
declining to final payment of $6.1 million in FY
2041
Mr. Williams highlighted that the state had a "modest debt
program" with an "extremely accelerated principal paydown"
of approximately 87 percent within a 10 year window. The
annual debt payments were $40 million to 60 million over
the next seven years or so.
Mr. Williams moved to slide 23 titled "State's Debt
Profile:" Outstanding Debt as of June 30, 2024 By Type."
He reported that the slide was an excerpt from the Alaska
Public Debt book and broke down the outstanding debt for
each type of bond.
Representative Bynum related that the school bond debt
reimbursement moratorium was being lifted. He wondered what
impact it would have on the state's debt service and bond
ratings. Mr. Williams answered that the program had been in
moratorium for around 10 years. The state's debt
appropriation reimbursement was declining as no new
entrants were allowed in the program. He thought that if it
were reopened, communities could work with Department of
Education and Early Development (DEED) on necessary
projects. He was unsure of any impact or what would
transpire.
9:59:04 AM
Representative Tomaszewski pointed to the Pension System
Unfunded Actuarial Liability (UAAL) and asked about the
unfunded liability of $3.5 billion for the Public
Employees' Retirement System (PERS) and $1 billion for the
Teachers Retirement System (TRS). He noted that on the
previous slide it was reported as 98 percent funded. He
asked for an explanation of the numbers. Mr. Williams
responded that the reporting was combined with the pension
and healthcare trusts. He reiterated that the numbers were
further broken down in the annual actuarial reports and
financial statements. It was common practice to combine
both trusts in the UAAL totals. Representative Tomaszewski
asked how the number totaling $4.4 billion was derived. Mr.
Williams replied that the figure was accepted by the ARMB
board in June 2024, from the 2023 actuarial report.
Representative Tomaszewski ascertained that the ARMB board
was looking at ways to retire debt. He asked what were the
suggestions for "getting rid of the pension debt." Mr.
Williams responded that there was a system to pay it down
overtime and it was the decision of the Alaska Retirement
Management Board.
10:02:10 AM
Mr. Williams turned to slide 24 titled "State's Debt
Profile:" Outstanding Debt as of June 30, 2024 By Type
(cont.)" Mr. Williams underlined the University of Alaska's
(UA) debt of $229 million outstanding. The Alaska Housing
Finance Corporation (AHFC) outstanding debt consisted of
State Agency and Agency Collateralized or Insured Debt
including Capital Project Bonds and Home and General
Mortgage Revenue Bonds.
Mr. Williams continued to slide 25 titled "State's Debt
Profile:" Outstanding Debt as of June 30, 2024 By Type
(cont.)," He noted that the total of Alaska's public debt
was approximately $11.6 billion. He discussed slide 26
titled "State's Debt Profile:"
Historical and Future Debt Service
.notdef GF payment peaked in 2018 at approximately $229
million
.notdef FY2025 GF Debt service payments include
approximately $87.0 million in State GO and State
Supported debt, and approximately $60.0 million
for State Supported municipal debt
.notdef $683.7 million in remaining debt service to
maturity of outstanding GO debt (principal +
interest, as of June 30, 2024, and $599.9 million
as of February 1, 2025, unaudited)
Mr. Williams continued on slide 27 titled " State's Debt
Capacity:"
Debt Affordability Analysis
.notdef Annual analysis required by AS 37.07.045 to be
delivered by January 31
.notdef Discusses credit ratings, current debt levels,
history and projections
.notdef Relies upon debt ratios, limit of four percent for
directly paid state debt, and seven percent when
combined with municipal debt that the state supports
.notdef Identifies currently authorized, but unissued debt
.notdef Establishes refinancing parameters
.notdef Determines a long-term debt capacity at current
rating level and debt profile
.notdef Discusses, but doesn't define, a capacity for short-
term debt
.notdef The 2024-2025 analysis determined that the State had
a debt capacity of approximately $1,625 million
Adjustments made to base analysis to account for
recognition of a POMV split for PFDs vs state budget,
recognition of special funding for PERS/TRS and future
budget uncertainty and volatility in the State's
revenue sources
[Secretary Note: Mr. Williams stated the state's debt
capacity at approximately $1.6 billion and not million as
noted on the slide.]
Co-Chair Foster asked Commissioner Crum if he had closing
comments.
10:04:27 AM
ADAM CRUM, COMMISSIONER, DEPARTMENT OF REVENUE, (via
teleconference), commented that it had been an active year
in the capital markets. He reported that the state's recent
activity had saved the state money and enhanced the overall
economic market. He commended the debt manager and debt
team for its hard work.
Co-Chair Foster reviewed the agenda for the afternoon
meeting.
ADJOURNMENT
10:06:03 AM
The meeting was adjourned at 10:05 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| State Debt Summary and Credit Review H.FIN 05.01.25.pdf |
HFIN 5/1/2025 9:00:00 AM |