By Jeff Murphy,
May 17, 2017
WARRENSBURG, MO – While the University of Central Missouri continues to plan for budget
challenges in Fiscal Year 2018, the university’s attention to sound fiscal management
has gained an A+ stable ratings outlook for the second consecutive year by an internationally
known credit rating agency.
UCM was notified this week by Standard & Poor’s Global that the university is receiving
ratings of A+ regarding the security of three Missouri Health & Educational Facilities
Authority’s (MoHEFA) revenue bonds. All three bonds helped make major facilities construction/renovation
projects possible to improve the campus learning, living and work environment.
The stable ratings outlook includes security for the series 2012A revenue bonds, which
will be retired in October 2017. They were issued to refinance the series 2002 University
Housing system energy savings and library bonds. It also includes series 2013B-2 bonds
issued for improvements at Audrey J. Walton Stadium at Vernon Kennedy Field that included
extensive renovation on the lower level of the stadium, and series 2013C-2 educational
facilities revenue bonds to help construct the university’s first retail-student housing
project, The Crossing–South at Holden.
“Positive S&P ratings are a direct reflection of the university’s ability to provide
solid management of its overall institutional fiscal resources and reporting along
with its management of capital financing and projects,” said UCM President Charles
Ambrose. “We are very pleased about the A+ rating, and are extremely grateful to our
Board of Governors and for the collective efforts of our UCM faculty and staff members
who are dedicated to good stewardship of our financial resources. This is particularly
important as we look to Fiscal Year 2018 and the challenges that go with a much leaner
revenue stream.”
The announcement about the S&P rating comes as the university wrestles with a budget
reset due to declines in state support for public colleges and universities, which
could result in about a 6.6 to 9.1 percent loss of revenue for UCM in FY18, depending
on final legislative decisions. It also is impacted by anticipated changes in student
enrollment largely due to a smaller pool of international students, and the extra
cost of meeting mandatory increases in some areas that are beyond UCM’s control. This
includes increased payments of about $1.48 million to the Missouri State Employees
Retirement System (MOSERS).
“To be facing such challenges and to still maintain the S&P Global A+ rating demonstrates
good faith in UCM and its ability to weather financial obstacles,” Ambrose said. “Years
of consistent positive operations and having processes in place such as the Strategic
Resource Allocation Model contribute to a positive outlook as we continue to implement
management practices that are focused on student success. The S&P Global rating helps
validate our efforts as UCM strives to achieve key performance indicators of growth
with quality, student success, and sustainability and efficiency.”
Information about the S&P Global rating was provided in a document by Ashley Ramchandani,
primary credit analyst. She notes the security for 2013B-2, 2013-C, and 2012A bonds
is viewed by S&P as an unlimited student-fee equivalent pledge of the university,
since pledged revenues exclude only state operating appropriations and funds pledged
to the payment of certain housing system revenue bonds.
The document also states that S&P Global “assessed UCM’s enterprise profile as strong,
characterized by historically stable enrollment growth which softened slightly in
fall 2016, a respectable demand profile with improved selectivity, and reasonable
matriculation. We assessed its financial profile as very strong, with consistently
positive operations, healthy available resources, and a reasonable debt burden. Combined,
we believe these credit factors lead to an indicative stand-alone profile of ‘a+’
and a final rating of ‘A+’.”
“The stable outlook reflects our expectation that during the two-year outlook period,
UCM’s operating results will remain at a minimum, breakeven on a full-accrual basis,
enrollment will remain at or near current levels, and financial resources will continue
to increase. We do not anticipate any additional debt issuances during the outlook
period; however, we expect any additional debt issuance to be commensurate with maintenance
or growth of financial resource ratios.”
In the report, S&P recognizes that UCM faces challenges in enrollment related to declining
demographic factors and factors that could impact the influx of international students
to campus. “However,” the report adds, “we understand that management has implemented
various modifications to its recruiting cycle, has plans to further diversify international
student recruiting, and will expand workforce training and adult education to mitigate
these challenges.”
