The University of Texas System Office of Finance

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The University of Texas SystemOffice of Finance
Quarterly Permanent University Fund
Update Finance and Planning Committee August 6,
2003
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Executive Summary

• As of May 31, 2003, the market value of the PUF
  was 6.85 billion, compared to 6.3 billion on
  February 28, 2003.
• In September, 2003, 348.0 million will be
  distributed to the AUF, representing 5.1 of the
  May 31st PUF market value.
• The debt capacity analyses are based on expected
  average annual rates of return on PUF investments
  of 9.35 (Prior Asset Allocation) and 7.40
  through FY 2009 and 9.35 beginning FY 2010
  (UTIMCO-approved Asset Allocation).
• Based on the current assumptions and anticipated
  LERR allocations, there is an additional 73-121
  million of PUF debt capacity beyond the PUF
  projects currently approved, assuming a 7.40 or
  9.35 investment return, respectively.

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Executive Summary, Cont.

• PUF distributions are projected to decline
  through FY 2006 and to be capped for a period of
  time because the purchasing power of the PUF will
  not have been maintained, as required by the
  Texas Constitution.
• Under the 9.35 scenario, the PUF distribution is
  capped at 364.3 million from FY 2008 through FY
  2012.
• Under the 7.40 scenario the PUF distribution is
  capped at 348.4 million from FY 2008 through FY
  2012.

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PUF Market Value Through May 31, 2003
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Comparison of Projected Trailing 12Q Market
Averages
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Permanent University Fund Distributions
Distributions Capped
Proposition 17 Enacted
PUF Frozen
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PUF Debt Capacity Base Case Assumptions

• The assumptions are the same for both cases
  except for the projected PUF annual rate of
  return, assuming either 9.35 or 7.40, starting
  from the PUF market value as of May 31, 2003.
• PUF Distribution equals 4.75 of the average PUF
  net asset value for the trailing 12 quarters,
  unless restricted by Constitutional purchasing
  power requirements.
• U.T. Austin Excellence Funds equal 45 of the
  income available to U.T. System.
• Includes all PUF projects approved through May
  2003.
• Annual LERR appropriations of 30 million are
  projected to continue from FY 2005 through FY
  2009. For FY 2004, the annual LERR appropriation
  is projected at 40 million.
• New PUF debt service structured as 20-year,
  tax-exempt debt with level debt service.

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PUF Debt Capacity-Base Case at 9.35
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PUF Debt Capacity-Base Case at 7.40
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PUF Debt Capacity Sensitivities at 9.35