#1State of Hawaii Investor Presentation $750,000,000* Taxable General Obligation Bonds of 2023, Series GM *Preliminary, subject to change. STATE AU-KE- 1959 HAWAI •EA-O-KA AINA I KA 0000000 November 22, 2023#2Disclaimer 1 STATE OF HAWAII The Investor Presentation you are about to view is provided as of November 22, 2023 for a proposed offering of the State of Hawaii's ("State") General Obligation Bonds of 2023 (“Bonds"). If you are viewing this presentation after that date, events may have occurred that have a material adverse effect on the financial information presented. Neither the Underwriters mentioned in this presentation ("Underwriters"), nor the State have undertaken any obligation to update this presentation. The information presented is not warranted as to completeness or accuracy and is subject to change without notice. You agree not to duplicate, copy, download, screen capture, electronically store, or record this presentation, nor to produce, publish or distribute this presentation in any form whatsoever. This Investor Presentation is provided for your information and convenience only. Any investment decisions regarding the Bonds should be made only after a careful review of the complete Preliminary Official Statement. This Investor Presentation does not constitute a recommendation or an offer or solicitation for the purchase or sale of any security or other financial instrument or to adopt any investment strategy. Any offer or solicitation with respect to the Bonds will be made by means of a Preliminary Official Statement or Official Statement that will describe the actual terms of the Bonds. In no event shall the State or the Underwriters be liable for any use by any party of, any decision made or action taken by any party in reliance on, any inaccuracies or errors in, or any omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction mentioned herein. These materials have not been prepared with a view toward public disclosure under applicable securities laws or otherwise, and may not be reproduced, disseminated, quoted or referred to, in whole or in part. These materials may not reflect information known to other professionals in other business areas of the Underwriters and their affiliates. The Underwriters makes no representations as to the legal, tax, or accounting treatment of any transactions mentioned herein, or any other effects such transactions may have on you and your affiliates or any other parties to such transactions and their respective affiliates. You should consult with your own advisors as to such matters. Nothing in these materials constitutes a commitment by the Underwriters or any of their affiliates to enter into any transaction. Past performance is not indicative of future returns, which will vary. Transactions involving the Bonds may not be suitable for all investors. You should consult with your own advisors as to the suitability of such securities or other financial instruments for your particular circumstances. Additional information is available upon request. Clients should contact their salesperson at, and execute transactions through, the Underwriters or their affiliated entities qualified in their home jurisdiction unless governing law permits otherwise. Neither the State, Underwriters or their affiliates provide tax advice. Any statements contained herein as to tax matters were neither written nor intended to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on such taxpayer.#3Transaction Summary STATE OF HAWAIT Issuer: State of Hawaii ("State") Issue: $750,000,000* Taxable General Obligation Bonds of 2023 ("Bonds") Ratings: Security: Moody's: Aa2 (Stable), S&P: AA+ (Stable), Fitch: AA (Stable) The Full Faith and Credit of the State of Hawaii Preliminary Amortization (All Serial Bonds)* Maturity Date Series GM 4/1/2024 $48,670,000 10/1/2024 21,155,000 10/1/2025 22,405,000 10/1/2026 23,735,000 Series: Par Amount:* Purpose: Amortization:* Tax Status: Series GM 10/1/2027 25,140,000 $750,000,000 New Money 10/1/2028 26,625,000 10/1/2029 28,165,000 10/1/2030 29,745,000 4/1/2024 10/1/2042 10/1/2031 31,400,000 Federally Taxable; State of Hawaii Tax-Exempt 10/1/2032 33,160,000 10/1/2033 35,035,000 Call Provision:* To be Determined 10/1/2034 37,040,000 Senior Manager: Morgan Stanley 10/1/2035 39,195,000 10/1/2036 41,490,000 Co-Senior Managers: BofA Securities, Citigroup 10/1/2037 43,945,000 Jefferies, J.P. Morgan, Loop Capital Markets, Piper Sandler, 10/1/2038 46,565,000 Co-Managers: Raymond James, RBC Capital Markets, Stifel, Wells Fargo 10/1/2039 49,380,000 10/1/2040 52,405,000 Pricing:* Closing:* Indications of Interest: December 5, 2023 Institutional Order Period: December 6, 2023 December 19, 2023 10/1/2041 55,640,000 10/1/2042 59,105,000 Total $750,000,000 2 *Preliminary, subject to change.#4STATE Key Credit Metrics The State's Economy and Finances Compare Favorably to Pre-Pandemic Levels Economic Indicators Visitor Arrivals Visitor Expenditures Unemployment Rate Median Single-Family Home Price (Oahu) FY 2019 9,952,718 $17,329 MM 2.5% $800,000 FY 2023 9,614,849 $21,035 MM 3.0% $1,050,000 General Excise Tax $3,527 MM $4,409 MM State General Fund Individual Personal Income Tax $2,553 MM $3,100 MM Tax Revenues Transient Accommodations Tax $357 MM $756 MM General Fund Tax Revenues (1) $7,487 MM $9,200 MM Pension Funded Ratio Liabilities (2) Pension Funding Period OPEB Funded Ratio EBRF Balance General Fund Balance Reserves and Liquiditys (3) Total EBRF, HHRF and GF Balance State Treasury Pool (including demand deposits) 55.2% 26 years 16.1% 61.2% 24 years 35.0% OF (4) $378 MM $973 MM $752 MM $1,603 MM $1,314 MM $2,744 MM $7,423 MM $11,237 MM 1) General fund taxes include individual net income, general excise, corporation net income, premiums of insurance companies, transient accommodations, public service companies, tobacco, liquor, inheritance, conveyance, environmental response, franchise (banks and other financial corporations) and rental motor vehicle surcharge. 3 232 2) 3) Based on ERS and EUTF valuation reports. FY 2023 data reflects most recent available 2022 report. Reflects FY 2019 year-end data and estimated FY 2023 year-end data. 4) Does not include an additional $500 million approved in FY 2023 and transferred in October 2023. HAWAII#5Lahaina Wildfire: Recent Developments The Known Costs of the Maui Wildfires on the State's Economy and Finances are Manageable STATE OF HAWAII The State's main objectives and priorities: During the initial response, provided for the well-being of and financial support for those affected Support and work with Maui County and its residents to develop and implement a restoration plan Maximize Federal and private resources for recovery Tourism metrics on Maui temporarily declined but have already started to see a recovery West Maui has fully re-opened as of November 1 Impacted employment represents less than 0.2% of statewide totals According to UHERO's current forecast, the wildfire is estimated to contribute to a 0.5% decline in GDP for CY 2023 and 2024, but influx of federal and private resources should support a 0.5% increase in GDP in CY 2025-2028 The State anticipates reimbursement by FEMA for most near term costs, however, it will be responsible for a share of certain costs, such as those related to debris clean up and non-congregate housing, among other costs - Overview of Impacted Area ThiEully operas funtil Noverbbe8122023 West Maui: 11,936* Kapalua Kahului/Wailuku: 617* WEST MAUI Napili Kapalua Airport NORTH SHORE MAUI Ka'anapali Kahului Airport Wailuku Kahului Pā'ia Makawao EAST MAUI CENTRAL MAUI Ma'alaea: 322* Kula UPCOUNTRY MAUI Kula/Makawao: 113* Häna Airport •Hāna Kihei •Haleakala National Park Hāna: 106* Impacted by wildfires. Lahaina HAWAII TOURISM Wailea/Kihei: 8,510* Wailea Mākena Number of Visitor Accommodations* SOUTH MAUI % of Region Population Hawaii Hawaii 1,455,271 100.0% 81,102 Maui Lahaina 154,100 12,702 10.6% 21,604 0.9% 487 MAU % of Hawaii 100.0% 26.6% 0.6% FEMA upfront support includes 100% of debris removal costs for six months, 100% of emergency protective measures (including non-congregate housing) for three months, and 90% of all other eligible costs within the Public Assistance Program including restoration of disaster damaged facilities The State will be responsible for no more than 10% of debris removal and emergency protective measures, after the 100% FEMA-paid period ends The State anticipates a significant amount of external funds over the long-term to mitigate local costs, including federal funding and private insurance 4 * Indicates number of units/rooms available for visitor accommodations.#6Labor Market Hawaii Has A Strong and Diverse Employment Base Hawaii's economy is diversified with 82% of economic activity in non tourism sectors in recent years (compared to 67% in 1988) Federal (including military), state and local government are stable components of the economy The construction industry remains a sizeable component of the economy, with large public and private sector capital projects ongoing The State's unemployment rate increased at the onset of the pandemic but has steadily declined with increased economic and tourism activity. ■ As of October 2023, the unemployment rate in Hawaii stood at 2.9% Hawaii Nonfarm Employment Base (1) First 10 Months of 2023 Military 7.9% Government. 17.9% Other Services 3.9% Leisure & Hospitality. 17.4% Mining, Logging, and Construction 5.5% Education & Health Services 12.8% Unemployment Rate (2) 2016 to October 2023 (Seasonally Adjusted) 5 1) Source: Department of Business, Economic Development & Tourism. 2) Source: Department of Business, Economic Development & Tourism and Bureau of Labor Statistics. 25% 20% 15% 10% 5% 0% Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Hawaii Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 U.S. Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Manufacturing 1.9% Trade, Transportation, and Utilities 16.9% Information Professional & Business Services 10.5% October 2023 Hawaii: 2.9% U.S.: 3.9% Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 1.3% Financial Activities 4.0% STATE OF HAWAII#71) Start of Safe Travels Program. 6 23 2) Does not include vacation rentals or timeshares. 3) Year to date as of September. Tourism Tourism Has Recovered to Near Pre-Pandemic Levels Visitor Arrivals: Total visitor arrivals as of September 2023 was 93.5% of pre-pandemic levels Monthly Visitor Arrivals by Air October 2020 (1) to September 2023 As a Percentage of the Same Month in 2019 140% 120% - U.S. visitors were 110% of 100% pre-pandemic level during 80% the first 9 months of 2023 60% International air seats are 40% projected to recover to 20% 63.7% of the 2019 level in 0% 2023 - Total statewide passenger 20% Source: State of Hawaii, Department of Business, Economic Development & Tourism. Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Hotel Occupancy: Hotel occupancy has averaged count was 103% of pre-fire (2022) levels as for October Hotel Occupancy (2) 2019 vs. 2022 and 2022 YTD vs. 2023 YTD (3) Total 100% Domestic International Average Monthly Visitor Expenditures 2019 vs. 2022 and 2022 YTD vs. 2023 YTD (3) ($MM) $2,000 75.3% in 2023 YTD and is approaching the 2019 level of 81.3% $1,754 81.3% $1,642 $1,624 75.3% 80% 73.6% 72.7% $1,600 $1,476 Visitor Expenditures: Average 60% $1,200 monthly visitor expenditures for the first 9 months of 2023 40% $800 were 119% of 2019 levels $400 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 0% $0 2019 2022 2022YTD 2023YTD 2019 2022 2022YTD 2023YTD May-23 Jun-23 Jul-23 Aug-23 Sep-23 STATE OF HAWAII#87 over the Last 12 months Home Prices and Construction Home Prices Remain Strong, and Major Private and Public Capital Investment Supports Hawaii's Construction Industry Home Prices: The median Median Single-Family Home Prices (Honolulu)(1) 2016 to First 10 Months of 2023 ($000s) Value of Private Building Permits Issued (3) ($MM) single-family home price in Honolulu was $1.1 million as $1,200 $1,600 of October 2023 $1,000 $1,400 Construction: The $1,200 $800 construction industry $1,000 continues to be an important $600 $800 driver of the economy, with $600 $400 large public and private $400 sector capital projects $200 $200 ongoing $0 $0 Building permits issued 2016 2017 2018 2019 2020 2021 2022 2023 1) Source: National Association of Realtors. 223 2) Includes federal, state and local governments. 3) Source: Hawaii Department of Business, Economic Development & Tourism. 1Q:2008 3Q:2008 1Q:2009 1Q:2008 :2008 totaled $5.5 billion, 37% higher than the year prior Government investment in public projects in Hawaii has averaged $1.3 billion per year since 2009 Value of Government Contracts Awarded in Hawaii (2) ($MM) $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Large Construction Projects by Type (3) (Includes permits over $20 million - $2.2 billion in total) November 2022 to October 2023 ($MM) Residential/Commercial (1 permit), $60.8 Commercial (5 permits), $156.9 Residential (15 permits), $835.2 3Q:2009 1Q:2010 3Q:2010 1Q:2011 3Q:2011 1Q:2012 3Q:2012 1Q:2013 3Q:2013 1Q:2014 1Q:2015 3Q:2015 10:2016 BQ:2016 1Q:2017 BQ:2017 3Q:2018 Hotel (5 permits), $213.6 Education (5 permits), $368.5 Government (4 permits), $594.8 STATE OF HAWAII#9U.S. Military Presence and Federal Government Awards STATE OF The U.S. Military Presence in Hawaii Is a Strategic Asset for National Security, and Federal Government Awards Have Provided Important Stimulus for the Economy Military Presence Defense spending in Hawaii is historically stable, sustaining 49,000 local jobs including more than 30,000 through federal contracts The Hawaii-based Indo-Pacific Command is responsible for over 50% of global command activity and is essential to national security FY 2022 direct Pentagon spending on payroll and contracts totaled $8.8 billion in Hawaii, the second highest of any state in the nation in terms of spending to GDP ratio at 8.9% (1) Federal Government Awards Federal government awards to the Hawaii State government in FY 2022 totaled $5.4 billion, an 18.9% increase versus FY 2021 Federal government awards directly to other Hawaii recipients, including private businesses, universities, and some government agencies, totaled $2.8 billion in FY 2021 and $2.9 billion in FY 2022 In Federal FY 2023, the DOD awarded a $2.8 billion Navy contract to commence work on the new dry dock at the Pearl Harbor Naval Shipyard Major Military Installations in Hawaii ARMY * RCELD ST Schofield Barracks Kaneohe MCB Kauai Pacific Missile Range Jahu Lanai Pearl Harbor - Hickam Joint Base Camp Smith Maui Space Surveillance Complex Molokai Maui Hawaii Coast Guard Base UNITED STATES * ARNY Pohakuloa Training Center HAWAII 8 1) Sources: U.S. Bureau of Economic Analysis and U.S. Department of Defense; Hawaii Department of Business, Economic Development & Tourism; USASpending.gov; Hawaii State FAMIS. Defense spending includes parts of the federal civilians working on the bases.#10State Government Structure Hawaii Has a Centralized State Government with Strong Executive Authority ◉ The Governor's office has significant powers and scope - Governor and the Lieutenant Governor are the only directly elected executive officials (same ticket) - - Executive authority to control spending through ability to restrict, delay or suspend appropriations Broad powers of appointment - Authority to issue Emergency Proclamations STATE OF HAWAII State Legislature has the ability to increase taxes and authorize debt without voter approval The State's Constitution does not provide for voter driven initiatives Hawaii State Capitol Building The Council on Revenues ("Council") provides independent quarterly revenue forecasts that facilitate better budget planning and execution 6 Biennium budgeting and multi-year financial and capital planning#11General Fund Tax Revenue Performance The State's Tax Structure Has Provided Revenue Growth and Has Diversified over Time - Strong revenue growth: FY 2023 general fund tax revenues are 29% higher than FY 2019 FY 2023 general fund tax revenues declined by 1.7% (2) versus FY 2022 due to the constitutional refund of $315 million, which otherwise would have resulted in FY revenue growth of 1.7% FY 2023 revenues reflect average annual growth of 11.2% since 2020, and average annual growth of 5.3% in the last ten years FY 2024 YTD general fund tax revenues are up 7.6% through October versus the same period in FY 2023 ■ Growing diversity: - Hawaii's mix of tax revenue sources have grown more diverse, with no source reflecting a majority of total tax revenue Annual General Fund Tax Revenues (Fiscal Year, $MM) Sources of General Fund Tax Revenues(1) Fiscal Year 2023 (2) Total: $9.2 Billion Individual Income Tax 34% GET 48% Corporate Income Tax 3% Other 7% Transient Accommodations Tax (3) 8% 10 STATE OF HAWAII Monthly General Fund Tax Revenue $10,000 ($MM) $9,000 $8,000 All General Fund Tax Revenues GET Collections $7,000 Individual Income Tax Collections (net) $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 1) 2) 3) 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 $1,400 $1,300 5.34% CAGR $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2019 2022 2023 TAT allocations to counties were eliminated (monies now accrue to general fund) and counties were authorized to assess a county TAT (up to 3.0%) during 2021 special session. Sources: Hawaii Department of Budget and Finance; Hawaii Department of Business, Economic Development & Tourism. Hawaii Department of Taxation. "Other" category includes taxes on: public service companies; insurance premiums; cigarettes and tobacco; liquor; banks and other financial corporations; inheritance and estates; and other miscellaneous taxes. Unaudited.#12STATE OF Update on Council on Revenues Most Recent Council on Revenues Forecast Reflected the Maui Wildfires, but Still Materially Exceeds Pre-Pandemic Forecasts ■ Reduced FY 2024 COR forecast reflected reduced tax collections in FYTD 2024 and near-term impacts of the Maui wildfires Council on Revenues ("COR") Forecast September 2023 Meeting vs. May 2023 Meeting 6.00% 5.20% ■ Better than anticipated non-tax revenue forecast helps mitigate the impact on the General Fund financial plan 5.00% 4.00% ☐ September 2023 forecast exceeds pre-pandemic high forecast (Jan 2020) by 9.9% from 2024-2026, translating to $881 million of 4.00% 3.50% 3.50% 3.50% 3.00% additional revenue per year ☐ The next COR meeting is scheduled for January 2024 2.00% 1.30% 1.00% 0.00% 2024 May 2023 COR Forecast 2025 2026-2030 September 2023 COR Forecast Comparison of COR Forecasted Tax Revenues: May 2023 and September 2023 (Current) versus Jan 2020 (Pre-pandemic High)(1) ($MM) Fiscal Year Current (Sep-23) Versus Pre-pandemic High (Jan-2020) $13,000 $12,000 2024 +9.2% 2025 +10.5% 2026 +10.0% $11,000 $10,000 $9,000 $8,000 $7,000 $6,000 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Jan-20 May-23 Sep-23 11 1) Note: For Jan 2023 and Sept 2023 COR Forecast, data labels reflect actuals for FY 2019-FY 2023. For Jan 2020 Forecast, data labels reflect actuals for FY 2019. HAWAII#13General Fund Financial Plan General Fund Financial Plan (as of October 2023) ($MM) Fiscal Year REVENUES Executive Branch: Revenue Growth Tax revenues Nontax revenues Judicial Branch revenues Other revenues/adjustments: Phase II - GAP Plan TOTAL REVENUES EXPENDITURES Executive Branch: Operating CIP Specific appropriation/collective bargaining Other expenditures/adjustments Wildfire Response/Recovery Major Disaster Fund Infusion STATE OF HAWAII Adj. Act. 2022 Adj. Act. Est. Est. Est. Est. Est. Est. 2023 2024 2025 2026 2027 2028 2029 29.1% $9,358.8 823.4 -1.7% $9,200.3 1.3% $9,319.9 965.4 841.2 5.2% $9,804.5 852.7 3.5% $10,147.7 872.3 29.4 26.6 29.3 29.3 29.3 3.5% $10,502.9 877.9 29.3 3.5% $10,870.5 901.1 29.3 3.5% $11,250.9 917.2 29.3 (0.1) (0.1) 0.9 0.9 $10,211.5 $10,192.2 $10,191.3 (37.5) $10,649.9 0.9 (41.6) $11,008.6 1.0 (54.1) $11,357.0 1.0 1.0 (63.7) $11,738.2 $12,198.4 7,665.8 9,184.3 0.5 10,756.2 384.3 743.6 1,567.6 377.6 10,049.3 254.9 203.0 8,895.9 8,989.5 9,282.2 9,447.1 335.6 4.4 5.0 5.0 259.6 5.0 292.3 5.0 300.4 5.0 300.3 5.0 65.0 FEMA Direct Assistance Debris Removal Non-Congregant Housing Contingency Set Aside Wildfire Funding Redirection Sub-Total - Executive Branch Legislative Branch Judicial Branch OHA Counties Lapses TOTAL EXPENDITURES 150.0 30.0 200.0 100.0 100.0 (164.1) 8,745.0 42.4 166.0 10,756.8 46.3 11,604.0 174.1 46.6 189.5 10,712.2 46.6 190.0 9,260.5 46.6 189.4 9,386.8 46.6 189.4 9,587.6 46.6 9,752.4 46.6 189.4 189.4 66.3 2.3 3.3 3.0 3.0 3.0 3.0 3.0 0.1 REV. OVER (UNDER) EXPEND. (177.2) $8,842.5 1,369.0 (347.3) $10,632.3 (440.1) (80.0) $11,763.4 (1,572.1) (80.0) $10,871.8 (221.9) (80.0) $9,419.5 1,589.1 (80.0) $9,545.8 1,811.2 (80.0) $9,746.6 1,991.6 (80.0) $9,911.4 2,287.0 CARRY-OVER BALANCE (DEFICIT) Beginning Balance 1,249.9 Ending Balance $2,619.0 2,619.0 $2,178.9 2,178.9 $606.8 606.8 $384.9 384.9 $1,974.0 1,974.0 $3,785.2 3,785.2 $5,776.8 5,776.8 $8,063.8 EBRF (adds $500M in FY 2023, Act 115/22; adds $500M in FY 2024 as included 325.8 973.8 1,500.2 1,550.1 1,600.3 1,652.0 1,705.1 1,759.9 in the FB 23-25 Executive Budget Request) Hawaii Hurricane Relief Fund (HHRF) 172.9 Total EBRF, HHRF, & General Fund Total EBRF, HHRF & General Fund as % of prior year revenues 3,117.7 34.6% 169.0 3,321.7 170.0 2,277.0 170.0 170.0 170.0 2,105.0 3,744.3 5,607.2 170.0 7,651.9 170.0 9,993.7 32.5% 22.3% 20.7% 35.2% 50.9% 67.4% 85.1% Sources: Department of Accounting and General Services; Department of Budget and Finance. Note: Due to rounding, details may not add to totals. Please refer to the Preliminary Official Statement for related footnotes. 12#14Reserves and Liquidity The State's Reserves and Liquidity Have Increased Reserve Balances and Reserve Policy ■ FY 2023 reserves and general fund ending balance reached a high of over $3 billion, reflecting the infusion of one-time COVID-related resources Reserves and General Fund Ending Balance Fiscal Year 2016-2024(1) ($MM) $3,500 STATE OF HAWAII To ensure appropriate and prudent reserve levels over the long-term, the State updated its Reserve Policy in December 2022: $3,000 $2,500 At least 10% of prior year's general fund revenue in the emergency and budget reserve fund (EBRF) $2,000 At least 5% of prior year's general fund revenue as a general fund balance $2,619 $1,500 At least 25% of prior year's general fund revenue, or at least 20% of prior year's general fund revenue if the EBRF fund balance objective is met, for overall State reserves (i.e. general fund balance, EBRF and HHRF) $1,250 $1,000 $894 $750 $752 $1,500 $1,028 $992 $974 Emergency and Budget Reserve Fund ("EBRF") $500 ■ $630 million was transferred to the EBRF in FY 2023, increasing the balance to $974 million $101 $187 $0 $311 $376 $59 $182 $178 $184 $191 $378 2016 2017 2018 2019 2020 $320 $326 $187 $173 $169 $170 2021 2022 2023 2024 Proj ☐ $500 million was appropriated during the 2022 Legislative session and an additional $130 million was transferred pursuant to Hawaii Revised Statutes since revenue grew more than 5% for both FY 2021 and FY 2022 The State deposited an additional $500 million to the EBRF in October 2023, which was approved by the State Legislature in 2023, for a total of $1.5 billion HHRF EBRF ■General Fund Ending Balance General Fund Ending Balance and Reserves (EBRF and HHRF) as % of Prior FY GF Revenues Fiscal Year 2016-2024(1) 40% ☐ Requires two-thirds majority of State Legislature to withdraw funds from EBRF Hawaii Hurricane Relief Fund ("HHRF") 34.6% 32.5% 35% 30% 23.2% 25% 21.2% FY 2023 market valuation of $169.0 million 20.0% 19.6% 17.7% 17.2% 20% 16.4% 15.7% Included as part of overall State reserves within the updated State's Reserve Policy 15% 11.2% 10% 7.0% 7.5% 7.3% 6.1% 5.5% 4.4% Liquidity 3.2% 5% The State's treasury portfolio has grown significantly in recent years, from $7.4 billion in 2019 to $10.8 billion at present 0% 2016 2017 2018 2019 2020 2021 2022 2023 2024 Est. 13 1) FY 2023 is actuals and FY 2024 is projected. See General Fund Financial Plan. GF+ EBRF+ HHRF as % of Prior Year GF Revenues EBRF+ HHRF as % of Prior Year GF Revenues#15STATE OF HAWAII Pension - Employees Retirement System ("ERS") Most Recent ERS Valuations and Funding Position Have Improved since the Approval of Act 17 Employer Contribution Increases ◉ The ERS is a multi-employer cost sharing program The State's proportionate share of the net pension liability as of FY 2022 was 57% (excluding the University of Hawaii) The State has made a number of enhancements to the pension system over the years, most recently increasing the employer contribution rates FY 2022 valuation reflects positive results: - 2nd year of decline of the UAAL to $13.5 billion Funded ratio increased to 61.2% Funding period remained at 24 years The Legislature appropriated a $300 million additional contribution to the ERS Pension Accumulation Fund for FY 2024 Asset Valuation ERS Key Metrics (FY 2020 2022) FY 2020 FY 2021 FY 2022 Investment Return UAAL $18.1 billion 1.28% $14.6 billion $19.9 billion $21.3 billion 26.63% $14.2 billion 3.99% $13.5 billion Funded Ratio 55.3% 58.3% Funding Period 26 years 24 years Projected ERS Funded Ratio (FY 2022-2044) 61.2% 24 years 1) 14 ☐ The ERS is required to conduct annual stress tests (one of 12 states required by law), which in 2022 continued to show that the "System is sustainable in a protracted low return environment"(1) 120% 100% 80% 60% 40% 20% 0% Source: Employees' Retirement System of the State of Hawaii FY 2021 and FY 2022 Valuation Reports, and 2016 Impact Statement. Source: 2022 ERS Stress Test by Gabriel, Roeder, Smith & Company. 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044#1615 OPEB - Employer-Union Trust Fund ("EUTF") State Adherence to Funding OPEB Continues to Build on a Substantial Balance in Its OPEB Trust Fund ■ The EUTF is an agent plan with separate accounts for each employer Act 268, Session Laws of Hawaii 2013, phased contributions into the full ARC payment by FY 2019 ◉ The UAAL peaked in 2019, well in advance of earlier projections - and has continued to decline since then ◉ ■ The FY 2022 Valuation report indicated a funded ratio of 35% and a UAAL of $7.1 billion, as compared to $9.7 billion forecast in 2013 As required by Act 268, the State made its pre-funding requirement of $411 million for FY 2023 ◉ The State has contributed $325 million more than required by Act 268 since 2015 STATE ■ A funding mechanism was adopted in July 2021 to manage contribution volatility for employers by limiting the range of the dollar amount contributions to between 101% and 105% of the ARC EUTF - Actual versus Projected UAAL - State Only Fiscal Year 2014-2046 ($MM) $12,000 9,554 $9,000 8,902 8,125 9,315 9,066 9,414 7,087 $6,000 $3,000 $0 2014 2022 Projection Source: Hawaii Employer-Union Health Benefits Trust Fund. 2016 2018 2020 2022 2024 2026 2028 -X-Actual 2030 2032 2034 2036 2038 2013 Projection 2040 2042 2044 2046 OPEB Balance and Funded Ratio - State only(1) ($MM) $4,500 $4,000 35.0% 30.0% $3,500 $3,000 $2,500 21.0% $2,000 16.1% $3,821 $3,477 $1,500 12.1% 8.6% $2,371 $1,000 $1,829 4.9% $500 $1,295 2.4% $880 $481 $0 $221 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal Year OF HAWAII#17Debt Management The State Has a Long Track-Record of Conservative Debt Management " G.O. Bonds have conservative Constitutional constraints on debt structure Debt Service as a % of Prior Three-Year Average of General Fund Revenues Fiscal Year 2000-2023 ― Limits final maturity to 25 years, and principal can be deferred no more than 5 years Requires level debt service or level principal amortization Maximum annual debt service can be no more than 18.5% of the average of the prior three-year General Fund revenues No state-wide vote required for debt issuance " The State conservatively manages its debt portfolio Bonds typically issued with a 20-year final maturity, including during the pandemic 100% fixed rate G.O. debt with no derivatives 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2000 2001 2002 BABS debt service is budgeted on a gross basis ― The State's debt management is governed by a formal Debt Management Policy and the State develops a Debt Affordability Study every two years 100% 100% 90% 84% 80% 68% The State's debt is under its allowable debt limit and 69% amortizes within the next 10 years 70% 60% 50% 40% 30% 20% 10% 0% 1) Excludes reimbursable G.O. Bonds and Bond Anticipation Notes debt service. 16 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Outstanding G.O. Principal by Year as a % of Current Outstanding Principal Fiscal Year 2023-2042 2017 2018 2019 69% of G.O. principal amortizes in the next 10 years 55% 43% 31% 21% 12% 6% 1% 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2020 2021 2022 2023 STATE OF HAWAII#18Investor Relations and Contact Information Please Join Us for a Live Online Investor Presentation on December 4th, 2023 @ 2:00PM EST/9:00AM HST 17 STATE ■ Morgan Stanley (Bookrunner), BofA Securities (Co-Senior), and Citigroup (Co-Senior) are pleased to invite you to a virtual investor presentation from the senior leadership of the State on December 4th, 2023 @ 2:00PM EST / 9:00AM HST ■ Please RSVP by 5:00PM EST on Wednesday, November 29th to: Citi's Debt Capital Markets Team ([email protected]) and Harley Hoy ([email protected]) to receive Zoom information and reach out to your respective sales coverage with any additional inquiries ■ The State would appreciate that questions regarding its credit or financing also be submitted by November 29th to the contacts above so that it can provide as complete a response as possible during the December 4th virtual meeting For further questions, please contact: State of Hawaii Rod Becker [email protected] (808) 586-1612 Morgan Stanley (Bookrunning Senior Manager) Adam Aranda [email protected] (415) 576-2087 Invitation for Virtual Investor Presentation State of Hawai'i Taxable General Obligation Bonds of 2023 $750,000,000* STATE Morgan Stanley (Bookrunner), BofA Securities (Co-Senior), and Citigroup (Co-Senior) are pleased to invite you to a virtual investor presentation from the senior leadership of the State of Hawai'i for the transaction detailed above: When: Where: Monday, December 4th 2023 at 2:00 p.m. E.S.T. Via Zoom, Link and Meeting ID to be Provided with RSVP Please RSVP by 5:00 p.m. E.S.T on Wednesday, November 29 to: Cit's Debt Capital Markets Team ([email protected]) and Harley Hoy ([email protected]) to receive Zoom information and reach out to your respective sales coverage with any additional inquiries. The State would appreciate that questions regarding its credit or financing also be submitted by November 29th to the contacts above so that it can provide as complete a response as possible during the December 4th virtual meeting. • Speakers will include Luis Salaveria, Director of Finance, Sabrina Nasir, Deputy Director of Finance, Roderick Becker, Finance Division Administrator, Neal Miyahira, Budget Division Administrator & Eugene Tian, Ph.D., State Economist. The POS and investor presentation are expected to be released the week of November 20, 2023. The State expects to take Indications of interest for the Bonds on December 5, 2023" and hold a formal order period on December 5, 2023". BofA SECURITIES cíti Morgan Stanley Por, ad the trade shove by any porion in any which it an The notice does norconature an offer color ton of an after to boy, or there be any caled the note wlawful for such persen make an offer, sociais, or sale. Any offer or solicitation with respeci to the Bonds will be made by means of a preliminary official samener or a final official sweet Department of Budget & Finance Investor Relations Home B&F DHHL Airports Harbors Highways DBEDT HHFDC UH Board of Regents Search a Welcome to the Department of Budget & Finance Investor relations web site. DIRECTOR OF FINANCE Type of Debt Fitch Moody's S&P Luis P. Salaveria Department of Budget & Finance Credit Rating General Obligation Bonds AA Aa2 AA+ Certificates of Participation Bond Sales Current Offerings Archived Official Statements Bond Sales Calendar N/A N/A N/A STATE OF HAWAI'I Bond Sales Current Offerings Bond Sales Calendar State Financing Information • Annual Comprehensive Financial Additional information may also be found at: http://investorrelations.hawaii.gov OF HAWAII#19Mahalo! STATE Oahu Kauai Hawaii ("Big Island") Maui 18 OF HAWAII