Ratings Agency Upgrades Outlook for Maine’s Public Universities
Enrollment growth and One University fiscal advancements cited by S&P Global Ratings in the decision to revise outlook from negative to stable and affirm University System’s AA- long-term rating
ORONO, MAINE – S&P Global Ratings has revised its outlook to stable from negative for the University of Maine System and affirmed the System’s AA- long-term rating in a rational released on April 26, 2017 by the internationally renowned credit rating and market research firm. The improvement in the outlook of the University of Maine System comes two years after the ratings agency had downgraded the outlook for the System in light of the demographic, fiscal, and competitive challenges that led to the launch of the One University Initiative.
“We have worked hard in difficult times to restore the fiscal standing of Maine’s Public Universities and set a high standard of stewardship so our campuses can be a stronger partner in tackling Maine’s economic, demographic, and workforce challenges,” said James H. Page, Chancellor of the University of Maine System. “Working as one across our campuses and with our state and community partners we can make the investments and build the workforce development capacity needed to move Maine forward.”
The 2017 upgrade to a stable outlook reflects the first enrollment growth for Maine’s Public Universities in thirteen years and an expectation that enrollment may continue to grow. The universities have been working to expand access to public higher education for learners of all ages and background while employing new strategies to attract students from Maine and elsewhere to the state’s seven campus system.
The rating upgrade also reflects that the financial operating performance of Maine’s Universities turned positive for fiscal year 2016 after two prior years of recurring deficits. The agency anticipates positive operating performance for the current and upcoming fiscal years.
Casey Fox, a Senior Managing Consultant with Public Financial Management Inc., notes, “We anticipate a lower borrowing cost of approximately 5 basis points as a result of the revised outlook from negative to stable. Investors will feel more comfortable based on the strengthened credit profile.”
Public Financial Management Inc. provides financial services to the University of Maine System.
For the first time in recent memory the spending plans for all seven of Maine’s Public Universities are balanced heading into the July 1 start of the fiscal year without a need of additional resources from System reserves. The Board of Trustees Finance, Facilities and Technology Committee will hear a second reading of the FY 2018 Budget at 1:00 PM today.
While S&P cites unfavorable demographics and strong regional competition for students as a concern, it noted the System’s healthy financial management policies and discipline, financial performance, financial resources, and the low debt to contingent liabilities as positives in its report. Maine’s Universities have reduced annual spending by over $80 million while achieving a nation-leading commitment to affordability as a result of difficult and strategic choices on the campuses and through savings and efficiencies achieved as part of the One University Initiative.
In September of 2016 the University of Maine System Board of Trustees approved recommendations to move to a Unified Budget across the System, moving away from an incumbent budgeting process that was built around seven separate campus-based spending plans.