O FFICE OF THE A RIZONA S TATE T REASURER 3.9.2011 ARIZONA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS.

OFFICE OF THE ARIZONA STATE TREASURER

3.9.2011

ARIZONA ASSOCIATION OF SCHOOL BUSINESS

OFFICIALS

ARIZONA STATE TREASURER DOUG DUCEY

AGENDA: 3.9.2011

Endowment PerformanceAsset Allocation ChangesEndowment Distribution Formula

State Cash FlowQ & A


ENDOWMENT PERFORMANCE

Through December 2010



Privately-owned land

State trust land

Tribal Reservations

US Forest Service

Bureau of Land Management



$1,600.04M

$1,052.42M

$502.79M


ENDOWMENT MARKET VALUE

UPWARD TREND

$3.15 Billion

!


ENDOWMENT UNREALIZED GAINS

GAINS AT RECORD HIGH

$713 millio

n!


CHANGE SINCE 2010

SHARES

$3,500,000

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

MARKET VALUEBOOK VALUE

$2,0

36,3

03

$23,1

58,9

17 $

2,2

77,2

32

$2,4

41,4

90 $2,6

69,6

74

$3,1

55,2

62

DEC 09 DEC 10

ENDOWMENT FY 11 2ND QUARTER


UNREALIZED GAINS

$392,4

41

$8,000,000

$7,000,000

$6,000,000

$5,000,000

$4,000,000

$3,000,000

$2,000,000

$1,000,000

0

$713,7

72

CHANGE SINCE 2010

DEC 09 DEC 10



UNREALIZED GAINSSHARES MARKET VALUEBOOK VALUE



Endowment Asset

Allocation Changes


ASSET ALLOCATION: 1999

100% BONDS


ASSET ALLOCATION: MARCH 2003

50% BONDS

50% STOCKS


ASSET ALLOCATION: MARCH 2011

49% BONDS

51% STOCKS


TARGET ASSET ALLOCATION: FEB 2011

With +/- 5% market value rebalance triggers.

Sell high, buy low.

40% BONDS

60% STOCKS


Endowment Distribution

Formula


ADJUSTED FOR INFLATION

Formula takes 20% of the returns adjusted for inflation from each of the previous five years.

20%

20%

20%

20%

20%


4.68%

12.07%

-2.46%

-11.40%

11.53%

2.88%

-15%

-10%

-5%

0%

5%

10%

15%

2006 2007 2008 2009 2010 Average

5-YEAR AVG. TOTAL RETURN : 2.88%

HOW THE FORMULA WORKS



3.55%

3.10%

2.03%

1.13%0.85%

2.13%

0%

1%

2%

3%

4%

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Average

5-YEAR AVGERAGE INFLATION: 2.13%SUBTRACT



$1,745

$2,042

$2,377 $2,176

$2,450

$2,158

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 average(in millions)

Results in a $16.2 million K-12 distribution in FY11

Equals .75% multiplied by 5-year average market value of $2.158 billion

ARIZONA STATE TREASURER DOUG DUCEY 2121

WHAT’S THE FORMULA FORECAST FOR 2012?2012 PRELIMINARY ESTIMATE


WHAT’S THE FORMULA FORECAST FOR 2012?2012 PRELIMINARY ESTIMATE


WHAT’S THE FORMULA FORECAST FOR 2012?

= estimated FY 12 distribution of $45 million

2012 PRELIMINARY ESTIMATE


STATE CASH FLOW


STATE CASH FLOWTOTAL OPERATING ACCOUNT AVERAGE MONTHLY

BALANCEBACK IN THE BLACK

$863 million in February


QUESTIONS?

O FFICE OF THE A RIZONA S TATE T REASURER 3.9.2011 ARIZONA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS.

Documents

Transcript of O FFICE OF THE A RIZONA S TATE T REASURER 3.9.2011 ARIZONA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS.