While institutions from banks to governments spanning the globe have experienced credit downgrades, two credit rating agencies recently have affirmed strong ratings for The University of Toledo and positive, stable outlooks for the institution’s financial future.
Moody’s has assigned UT a rating of A1 with a stable outlook, and Standard & Poor’s has assigned UT a rating of A+/stable.
According to Moody’s, “UT’s board and senior leadership demonstrate solid fiscal stewardship through multi-year planning, ongoing monitoring of financial results relative to budgeted expectations, and building up institutional reserves. The senior leadership team crafts the annual budget to align with specific performance criteria set by the board. Moody’s believes that the management team budgets conservatively, including budgeting for revenue and expense contingencies to mitigate negative variances between actual financial outcomes and the budget.”
Standard & Poor’s echoed that view in its report: “The stable outlook reflects our expectation that during the two-year outlook period, the University will manage effectively through an expected period of constrained state operating appropriations. We expect that the issuance of any additional debt will be modest and parallel growth in revenues and financial resources.”
David Dabney, chief financial officer and vice president for finance, said the ratings show that UT is on the right financial path.
“Despite some very trying economic challenges over the course of the last several years, UT’s Board of Trustees and senior leadership have exercised prudent, responsible financial management, and these ratings are third-party validations that we’re on the right track,” Dabney said.
Dabney noted that UT still has work to do to shore up its financial position, including strengthening its reserves — a step both Moody’s and Standard & Poor’s recommended.
“The strength of our financial position, especially in these economic times, ensures The University of Toledo’s ability to meet our commitments to our students and our communities as set forth in our strategic plan,” said UT President Lloyd Jacobs. “By improving the ways we operate, we have been able to increase UT’s stature and reputation around the world and serve as the leadership institution this region increasingly needs us to be.”
Both rating agencies said external trends are UT’s biggest challenges moving forward; these include a dynamic health-care industry, state budget challenges and changing Ohio student demographics. But Moody’s added that as the only academic medical center and teaching hospital in northwest Ohio, the agency “expects that the University’s market position will continue to benefit from the 2006 merger with the Medical University of Ohio.”