Adams State maintains A3 bond rating
Adams State University maintained an A3 bond rating as established by Moody’s Investors Service, which released the rating May 4. Positive factors cited by Moody’s include the university’s strategic position as a designated Hispanic Serving Institution (HSI), its positive growth in net tuition revenue, and sound liquidity.
Moody’s also observed, “New leadership is guiding the ASU 2020 Strategic Plan, building enhanced recruitment pathways that resulted in stable enrollment for fall 2016.”
The bond rating was assigned to the university’s planned $6.2 million of Series 2017A (maturing in 2043) and $1.2 million Taxable Series 2017B (maturing in 2034) Institutional Enterprise Revenue Refunding Bonds to be issued by the Board of Trustees for Adams State University.
Through this refinancing, the university will save $1 million a year for three years, according to Adams State Chief Financial Officer Heather Heersink. She pointed out the university’s debt is primarily invested in the recent construction and renovation of campus buildings, resulting in a relatively young average age of the facilities — another plus. The A3 rating also takes into consideration Adams State’s sound reserve cushion and sound monthly liquidity, which contribute to stability.
Adams State President Beverlee J. McClure noted the ASU 2020 Strategic Plan outlines multiple efforts to improve enrollment and retention, including the first two goals, which focus on academic excellence and student success.
One such initiative is a four-year guaranteed tuition program, begun in fall 2016. “This helps families to better plan for college expenses and gives students incentive to complete their degrees in four years,” McClure said. The university has also revamped its New Student Orientation and First-year Immersion programs, which contributed to a 5 percent increase in retention of students from the first to second year.
“We are confident these strategic initiatives will increase our enrollment, although it may take time before they visibly impact our financial statements. Refinancing these bonds will give these endeavors time to pay off. But we are already showing growth. We ended fiscal year 2016 with noticeable improvement over 2015,” she said. “This is one of our top priorities and is key to fulfilling our mission to provide quality higher education to underserved populations.” During fiscal year 2015–16, the university’s current assets increased by $1.5 million, according to Heersink.
Moody’s assigned a negative outlook to the rating, which reflects the university’s ability to successfully balance operating performance due to limited state operating support and variable enrollment.
Heersink added, “Moody’s recognized that, despite facing headwinds, Adams State has many positive strategic initiatives underway, which allowed us to maintain the A3 rating.” Moody’s identified several positive factors in the university’s favor, including:
- Adams State has established a market niche in southern Colorado, with the unique designation as a Hispanic Serving Institution (HSI).
- Adams State has stable, sound liquidity and monthly days cash on hand (188 days in fiscal 2016).
- Adams State has experienced recent improvements in state operating and capital support.
By Julie Waechter