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ALASKA MARINE HIGHWAY FUND

Annual Financial Report For the fiscal year ended June 30, 2017

2017


Alaska Marine Highway System Fund

ANNUAL FINANCIAL REPORT For the fiscal year ended June 30, 2017

Prepared by: Alaska Marine Highway System, Department of Transportation and Public Facilities


TABLE OF CONTENTS Alaska Marine Highway System Annual Financial Report

For the Fiscal Year Ended June 30, 2017

page

INTRODUCTORY SECTION

1

Letter of Transmittal

2

Marine Transportation Advisory Board

3

Ports of Call

4

Profile of the Fleet

5

Vessel Information

6

FY 2017 Operating Plan

7

Operating Revenue Chart

8

Operating Expenditures Chart

9

FINANCIAL SECTION

11

Statement of Revenues, Expenditures, and Changes in Fund Balance

12

Statement of Actual and Estimated Revenues from Operations

13

Notes to the Financial Statement

14

STATISTICAL SECTION

15

Operating Revenues by Vessel FY 2006 - FY 2017

16

Operating Expenditures by Vessel FY 2006 - FY 2017

17


INTRODUCTORY SECTION

I

1


LETTER OF TRANSMITTAL

‡’ƒ”–Â?‡Â?–‘ˆ”ƒÂ?•’‘”–ƒ–‹‘Â?ƒÂ?† —„Ž‹… ƒ…‹Ž‹–‹‡•       ƒ”…—‹Â?‡Â?ÇĄ‘Â?Â?‹••‹‘Â?‡” 3132 Channel Drive P.O. Box 112500 Juneau, Alaska 99811-2500 Main: 907.465.3900 dot.state.ak.us

December 22, 2017 Dear Alaska State Legislator: Enclosed is the Alaska Marine Highway System (AMHS) Annual Financial Report for Fiscal Year 2017 (ended June 30, 2017) as required by AS 19.65.070. During FY2017, the AMHS recorded $45.8 million in operating revenues which was down from previous years. A portion of this decrease in revenue was expected due to service reductions as a result of the AMHS budget being cut in FY2017. Additionally, late deliveries of the M/V Columbia and the M/V Tustumena, as well as vessel breakdowns contributed to lower revenue. The planned and unplanned reductions in service along with improved efficiencies and reduced fuel costs resulted in a total operating expenditure of $134.9 million, $10.3 million less than FY2016 and $25.9 million less than FY2015. AMHS operated with an on-time departure rate of 93 percent. Port calls decreased during FY2017, down from 6,504 in FY2016 to 5,767. Service weeks provided by the AMHS decreased to 329.5, down from the previous year’s 355.9. As with the revenues, these decreases were primarily due to the budget cuts and the late deliveries of the Columbia and Tustumena. The Alaska Marine Highway System is meeting the challenge of providing safe, efficient, reliable, and cost effective transportation for the traveling public. The system’s customer satisfaction rating remains strong at 94 percent. I look forward to the opportunity to share more AMHS successes with you in the coming year. Sincerely,

Marc Luiken Commissioner

“Keep Alaska Moving through service and infrastructure.�

2


MARINE TRANSPORTATION ADVISORY BOARD Alaska Marine Highway System Marine Transportation Advisory Board Originally created under Administrative Order 204, a temporary interim Marine Transportation Advisory Board (MTAB) was established by Governor Murkowski on January 15, 2003. Administrative Order 233, signed by Governor Palin and dated March 28, 2007, permanently established the MTAB which was subsequently established in Alaska Statute by House Bill 294 on June 4, 2008. This bill established the Alaska Marine Transportation Advisory Board and set out its powers and duties in Alaska Statute AS 19.65.011 and AS 19.65.110-195, made conforming amendments, and provided an effective date of June 5, 2008. The board was expanded by one seat (from 11 members to 12) with the addition of a representative from the Southwest System under Senate Bill 24 effective September 1, 2013. The following are the MTAB Members as of June 30th, 2017:

CHAIRMAN Robert Venables

MEMBERS Patricia Branson

Northern Southeast Alaska (Haines, Juneau, Skagway)

South Central Alaska

DOT&PF STAFF SUPPORT Captain John Falvey

Shannon Adamson

Labor Unions of the employees of the AMHS

General Manager

Gerald Hope

Shannon Whistler

Central Southeast (Petersburg, Sitka, Wrangell)

Administrative Assistant II

David Reggiani

Prince William Sound / Kenai Peninsula (Cordova, Valdez, Whittier, Yakutat, Chenega Bay, Tatitlek)

Daniel Kelly

Business owner with experience interacting with AMHS - Resident of Ketchikan Gateway Borough

Patty Mackey

Travel Agent / Tourism Specialist

Jack Jensen

Marine Captain / Engineer

Carlin Enlow

Southwest Alaska / Aleutian Chain / Alaska Peninsula (Akutan, Chignik, Cold Bay, False Pass, Homer, King Cove, Kodiak, Port Lions, Sand Point, Seldovia, Unalaska / Dutch Harbor)

Robert Arnold

Member At-Large

Maxine Thompson

Southeast Alaska (Angoon, Hoonah, Kake, Pelican, Tenakee)

Greg Wakefield

Member At-Large / Not directly served by AMHS

3


PORTS OF CALL Alaska Marine Highway System Ports of Call

SOUTHEAST ALASKA

SOUTHWEST ALASKA

Angoon

Akutan

Bellingham, WA

Chenega Bay

Gustavus

Chignik

Haines

Cold Bay

Hoonah

Cordova

Juneau (Auke Bay)

False Pass

Kake

Homer

Ketchikan

King Cove

Metlakatla (Annette Bay)

Kodiak

Pelican

Old Harbor

Petersburg

Ouzinkie

Prince Rupert, BC, Canada

Port Lions

Sitka

Sand Point

Skagway

Seldovia

Tenakee Springs

Tatitlek

Wrangell

Unalaska / Dutch Harbor

Yakutat

Valdez Whittier

4


PROFILE OF THE FLEET Alaska Marine Highway System Profile of the Fleet

M/V Matanuska 408 feet Built 1963

M/V Malaspina 408 feet Built 1963

M/V Taku 352 feet Built 1963 M/V Tustumena 296 feet Built 1964

M/V Lituya 181 feet Built 2004

M/V Columbia 418 feet Built 1974 M/V Aurora 235 feet Built 1977

M/V LeConte 235 feet Built 1974

M/V Kennicott 382 feet Built 1998

FVF Chenega 235 feet Built 2005

FVF Fairweather 235 feet Built 2004

5


9,214 3,824

3,029 1,235 7,200 16.50 234 48 499 450

5 21 79 0 1 106 243 1,960 83 1,675 10

Domestic Tonnage Gross: Net:

hp @ Service Speed Service Speed (kts) Fuel Use (gph) Crew Capacity: COI Passenger Capacity: COI Passenger Capacity: Booking

Staterooms 4 berth 3 berth 2 berth 4 berth ADA 2 berth ADA Total Staterooms Total Berths

Vehicle Capacity (lane-ft.) Quantity (20 foot vehicles) Vehicle Capacity: Booking Van Capacity: Booking

Matanuska 1963 408 74 5,569 16-11 5/8

International Tonnage Gross: Net:

Year Built Length (ft) Beam (ft) Displacement (L/T) Loaded Draft (ft-in)

6 1,960 83 1,675 10

45 0 26 0 1 72 234

8,000 16.50 270 47 499 450

2,928 1,253

9,121 3,667

Malaspina 1963 408 74 5,994 16-10

1,500 75 1,000 5

6 0 32 0 2 40 92

8,000 16.50 253 44 370 350

2,625 1,494

7,302 2,496

Taku 1963 352 74 4,319 17

852 34 680 6

6 0 17 0 1 24 60

5,100 13.30 151 38 174 160

2,174 898

4,529 1,451

Tustumena 1964 296 59 3,067 14-4 1/2

3,200 133 2,660 16

45 0 56 0 3 104 298

14,000 17.30 397 63 600 499

3,946 2,683

13,009 4,932

Columbia 1974 418 85 7,684 17-6 1/8

720 33 660 8

0 0 0 0 0 0 0

4,300 14.50 188 24 247 225

1,328 566

3,124 987

LeConte 1974 235 57 2,132 13-8

Alaska Marine Highway System Vessel Information Table

720 33 660 7

0 0 0 0 0 0 0

4,300 14.50 190 24 300 250

1,280 453

3,124 987

Aurora 1977 235 57 2,132 13-8

1,700 78 1,560 17

48 0 58 3 0 109 320

13,200 16.75 354 55 499 450

9,978 7,354

12,635 3,790

Kennicott 1998 382 85 7,503 17-6

360 15 300 2

0 0 0 0 0 0 0

2,000 11.50 55 5 149 125

97 66

758 227

Lituya 2004 181 50 647 12

720 31 620 3

0 0 0 0 0 0 0

19,310 32.00 600 10 250 210

1,280 870

3,424 1,027

Fairweather 2004 235 60 787 8-6

720 31 620 3

0 0 0 0 0 0 0

19,310 32.00 600 10 250 210

1,333 827

3,420 1,026

Chenega 2005 235 60 787 8-6

VESSEL INFORMATION TABLE


7

Jul 1 BEL

Jul 1 YPR - SGY

Jul 1 CIP

Jul 1 LU

Jul 1 MET

Jul 1 NP

Jul 1 SW

Jul 1 PWS

Jul 1 NLC

Jul 1 CIP

COL

MAT

MAL

TAK

LIT

LEC

TUS

AUR

FWX

CHE

COI

In Transit (IT)

CIP

Layup (LU)

Sep 19 OH

Oct 3 OH

Sep 26 Repairs

Oct 5 BEL

OCT

Oct 06 LU

Sep 12 IT Sep 15 PWS 4X / week

SEP

MET: Metlakatla Service

Mar 01 OH

Mar 04 LU

Mar 13 OH

YPR-SGY: Prince Rupert to Skagway

YPR-JNU: Prince Rupert to Juneau

NLC: North Lynn Canal Dayboat

NP: Northern Panhandle Dayboat

Jan 21 IT Jan 28 OH

Jan 20 IT Jan 22 PWS

PWS: Prince William Sound

SW: Southwest

Jan 26 MET

APR MAY

JUN

Total Operating Weeks

Southwest Vessels

Feeder Vessels

Mainline Vessels

May 25 NLC 3x / week SIT 1x / week

Mar 23 COI Mar 30 BEL - X - GULF

MAR

Feb 20 YPR - SGY

Feb 15 COI

FEB

Jan 14 COI Jan20 20NP IT Jan

Jan 10 OH

Note: Dates represent the ďŹ rst day of the period. Overhaul and refurbishment periods include vessel travel time.

SIT or PSG : Sitka or Petersburg Service

Jan 3 OH

Jan 11 OH

JAN

Jan 06 COI Jan 11 BEL

Nov 29 OH

DEC

Nov 23 COI Nov 29 NP

Nov 13 LU

NOV

BEL - X - Gulf: Bellingham Cross Gulf Southwest

BEL: Bellingham to Skagway

AUG

Overhaul (OH)

On Line

Jul 1 BEL - X- GULF

KEN

JUL

Alaska Marine Highway System FY 2017 Operating Plan

Operating Weeks

329.5

78.1

128.6

122.8

0.0

34.0

41.7

36.4

44.7

49.9

0.0

24.4

45.3

12.4

40.7

FY 2017 OPERATING PLAN


OPERATING REVENUES

Alaska Marine Highway System Fund

Alaska Marine Highway System Fund UNRESTRICTED OPERATING REVENUES Unrestricted Operating Revenues

the fiscal endedJune June 30, For theFor fiscal yearyear ended 30,2017 2017 $45.8 Million $45.8 MILLION

Ticket Sales

82.8%

Stateroom Sales

10.2%

Passenger Services Sales

6.9%

Other Unrestricted Revenue

0.2%

8


OPERATING EXPENDITURES

Alaska Marine Highway System Fund

OPERATING EXPENDITURES For the fiscal year ended June 30, 2017

$134.9 MILLION

Marine Vessel Operations

73.4%

Operations Management

2.8%

Marine Fuel

11.3%

Overhaul

1.2%

Shore Operations

5.6%

Marine Engineering

2.0%

Reservations and Marketing

1.2%

Support Services

2.4%

9


10


FINANCIAL SECTION

F

11


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE Alaska Marine Highway System Fund Statement of Revenues, Expenditures and Changes in Fund Balance For the Fiscal Year Ended June 30, 2017 (In Thousands)

Revenues: Unrestricted Revenues: Ticket Sales Stateroom Sales Passenger Services Sales Facility Rental Concession Fees Other Unrestricted Revenue Total Unrestricted Revenues

Capitalization

AMHS

$

- $ -

37,878 $ 4,649 3,158 7 7 61 45,759

37,878 4,649 3,158 7 7 61 45,759

-

55 604 46,418

55 604 46,418

-

3,281 2,680 1,569 3,836 1,663 7,572 15,299 98,974 55 134,930

3,281 2,680 1,569 3,836 1,663 7,572 15,299 98,974 55 134,930

2,630 -

(88,512) 18,445 89,263 9,465

(88,512) 21,075 89,263 9,465

2,630 $

28,661 $

31,291

Restricted Revenues Indirect Cost Recovery Total Revenues Expenditures: Current Operating: Support Services Marine Engineering Overhaul Operations Management Reservations & Marketing Shore Operations Marine Fuel Marine Vessel Operations AMHS RSA Total Expenditures Excess (Deficiency) of Revenues and Other Financing Sources Financing Uses from Operating Fund Balance, Beginning of Year Reserves and Year End Adjustments Fund Transfer - General Fund Transfer from Community Quota Entity RLF Fund Balance, End of Year; Undesignated

$

The notes to the financial statement are an integral part of this statement.

12

Total


STATEMENT OF ACTUAL AND ESTIMATED REVENUES Alaska Marine Highway System Fund Statement of Actual and Estimated Revenues Budgetary Basis (In Thousands)

Fiscal Year Ended June 30, 2017

Restricted Restricted Revenues Indirect Cost Recovery (ICAP) Total Restricted Unrestriced AMHS Fund Ticket Sales Stateroom Sales Passenger Service Sales Facility Rental Concession Fees Other Unrestricted Revenue Total Unrestricted Total Revenues

Estimated Revenues

Actual Revenues

$

$

55 1,450 1,505

55 604 659

Fiscal Year Ending June 30, 2018 Actual Over (Under) Estimated $

0 (846) (846)

Total Estimated Revenues $

300 1,250 1,550

Fiscal Year Ending June 30, 2019

Estimated Revenues 12/31/2017 $

0 0 0

Estimated Revenues $

200 1,653 1,853

43,845 4,091 5,611 4 10 65 53,626

37,878 4,649 3,158 7 7 60 45,759

(5,967) 558 (2,453) 3 (3) (5) (7,867)

42,596 5,228 3,551 15 10 10 51,410

22,012 2,702 1,835 8 3 0 26,560

42,999 5,278 3,585 4 10 10 51,886

$ 55,131

$ 46,418

(8,713)

$ 52,960

$ 26,560

$ 53,739

The notes to the financial statement are an integral part of this statement. Budgetary Presentation shows all budgeted and actual revenues including budgeted intergovernmental activitiy.

13


NOTES TO THE FINANCIAL STATEMENT Alaska Marine Highway System Fund Notes to the Financial Statement For the Fiscal Year Ended June 30, 2017

NOTE 1 -

Alaska Marine Highway System Fund The Alaska Marine Highway System Fund was established July 1, 1990. All gross revenues generated from the operation of the Alaska Marine Highway System are accounted for and remitted in accordance with AS 19.65.070 which mandates that the money shall be deposited in the Alaska Marine Highway System Fund. Marine Highway Capitalization Account The Marine Highway Capitalization account was established within the Alaska Marine Highway System Fund June 30, 2009. An estimated $9 million in general funds was reappropriated to the new Capitalization Account. Access to this new funding will be restricted and will only occur with approval by the Legislative Budget and Audit Committee. An unexpended and unobligated balance of funds for the off-set of higher fuel costs, estimated at $1.25 million, were reallocated in Chapter 13, SLA 10, Sec 11(c) to the Marine Highway Capitalization Account. In FY2012 and FY2013, a total of $6.55 million of unexpended and unobligated balance of funds for the off-set of higher fuel costs were reallocated to the Marine Highway Capitalization Account. In FY2014, $11.0 million of funds were transferred to the AMHS FY2015 Capital Fund for vessel overhaul projects and $3.0 million in funds were transferred to the AMHS Deferred Maintenance capital fund.

NOTE 2 -

CIP Program Component The Alaska Marine Highway System budget includes a component which authorizes positions directly related to capital projects. Beginning in FY2001, the salary cost of time charged directly to capital projects is not recorded in the Alaska Marine Highway Fund. The cost of time charged to administration or overhead is recorded in the Alaska Marine Highway Fund.

NOTE 3 -

Transfer from Community Quota Entity RLF In FY2017, the Legislature appropriated $9.4 million of the unexpended and unobligated balance from the Community Quota Entity RLF to the Marine Highway Fund. These funds were put into the Marine Highway Fund at the end of FY2017. The authority to use these funds is part of the Marine Highway System's FY2018 operating budget. (CCS HB57 Sec. 40(d)).

NOTE 4 -

Operating Overhaul Overhaul expenditures that are included in the Operating Budget are limited to small maintenance items that arise while the vessels are operating and do not include capital overhaul expenditures. Large vessel overhaul and deferred maintenance items are included in the Capital Budget. In FY2017, the Vessel Overhaul and Deferred Maintenance Capital Budgets totalled $12.5 million.

14


STATISTICAL SECTION

S

15


VESSEL Aurora Chenega Columbia Fairweather Kennicott Leconte Lituya Malaspina Matanuska Taku Tustumena Contract Vessels Non Vessel Revenue TOTAL

16

FY07 2,003 1,963 12,439 2,913 5,831 916 593 7,552 8,146 2,833 3,060 127 32 48,407

FY08 1,347 3,093 6,463 2,605 3,414 1,514 721 11,659 8,841 4,480 3,376 135 47,647

FY09 2,191 3,380 9,713 1,015 5,182 1,808 639 10,980 3,094 5,156 2,992 2 46 46,200

FY10 3,115 1,392 7,924 1,945 3,125 1,757 620 11,446 6,211 4,755 3,525 54 46 45,914

FY11 2,522 3,428 8,939 1,805 7,154 794 724 10,520 6,100 2,265 3,318 39 89 47,697

FY12 1,898 2,889 13,014 1,659 8,151 2,537 822 5,765 9,003 4,001 3,755 12 180 53,684

FY13 2,679 2,221 16,635 1,537 9,195 2,006 774 3,133 9,217 3,839 1,875 2 121 53,234

FY14 2,421 2,358 6,682 1,415 8,425 2,499 769 12,051 7,154 4,789 2,106 207 50,877

FY15 4,059 1,914 11,778 1,684 8,265 854 848 11,036 3,989 5,474 3,828 167 53,896

FY16 FY17 2,721 3,228 675 7,471 5,500 2,049 2,418 7,705 11,198 3,634 4,015 812 1,117 11,316 7,481 7,192 7,863 3,566 2,865 16 74 47,157 45,759

*These figures are close approximations based on reservations and ticketing information. They may be used to show relative magnitude of different vessel operations. They are not accounting figures. Therefore, attempts to reconcile the figures with accounting documents may yield small discrepancies.

FY06 2,327 1,128 15,530 2,257 6,209 1,638 593 7,832 7,418 3,292 2,849 76 53 51,202

Alaska Marine Highway System Unrestricted Revenue by Vessel* Fiscal Years 2006 - 2017 (In Thousands)

OPERATING REVENUES BY VESSEL


VESSEL Aurora Chenega Columbia Fairweather Kennicott LeConte Lituya Malaspina Matanuska Taku Tustumena Vessel Leave All Vessels TOTAL

17

FY07 6,264 6,360 16,735 7,762 16,300 5,485 1,008 9,089 14,814 9,452 8,744 14,576 11,024 127,613

FY08 3,649 8,845 8,892 8,154 11,853 7,141 1,170 14,664 14,160 13,745 9,612 15,164 9,709 126,757

FY09 7,649 9,474 11,231 4,949 15,091 6,912 1,189 14,065 7,260 13,583 6,642 14,268 12,231 124,542

FY10 7,720 4,643 9,587 7,356 10,557 7,070 1,114 14,558 12,611 13,458 9,114 14,375 10,240 122,404

FY11 8,065 10,146 11,861 7,824 18,022 4,858 1,415 16,147 16,246 8,853 10,068 15,949 10,379 139,834

FY12 5,380 8,513 17,292 9,539 17,341 9,807 1,381 11,843 17,390 15,880 10,978 16,605 9,591 151,540

FY13 8,104 8,098 20,380 7,774 21,170 9,533 1,367 8,573 17,669 16,020 6,527 16,695 10,178 152,087

FY14 7,013 7,971 9,706 6,586 16,468 9,915 1,195 16,929 14,644 17,810 9,966 17,234 9,725 145,162

FY15 6,446 6,595 15,757 7,739 15,031 6,677 1,224 15,313 10,683 16,768 10,569 9,006 18,298 140,106

FY16 6,264 3,899 14,312 6,894 17,074 9,087 963 14,794 17,078 3,414 10,884 13,339 7,145 125,147

FY17 7,051 878 13,297 8,248 18,121 9,511 1,065 8,215 15,909 1,261 10,644 13,350 8,347 115,897

Service Agreements (RSA). Not included are the budget components for Marine Engineering, Operations Management, Reservations and Marketing, and Shore Operations.

* Expenditures by vessel include the following operating components: Marine Vessel Operations, Overhaul, Fuel and unbudgeted AMHS Reimbursable.

FY06 6,434 7,778 17,205 5,887 15,624 8,129 961 9,219 11,456 9,436 6,378 11,571 10,123 120,201

Alaska Marine Highway System Operating Expenditures by Vessel* Fiscal Years 2006 - 2017 (In Thousands)

OPERATING EXPENDITURES BY VESSEL


Alaska Marine Highway System Fund

FY 2017 ANNUAL FINANCIAL REPORT State of Alaska, Department of Transportation and Public Facilities

Compiled December 15th, 2017


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