Wednesday, April 25th, 2018

Citing management turmoil, ratings agency drops UMaine’s bond outlook to ‘negative’

Posted on March 02, 2015 in News
By USM Free Press

The credit ratings agency Standard & Poor’s revised its outlook on the University of Maine System from “stable” to “negative,” the firm announced Monday, citing dropping enrollments and tuition revenues, as well as unstable leadership throughout the system’s network of seven universities.

“The revised negative outlook and rating reflect our view that UMS is experiencing enrollment pressure, having seen a drop in enrollment for fall 2014 and 2013 and anticipating a further decline in fall 2015,” said Standard & Poor’s credit analyst Ken Rodgers in a statement.

“In addition, historically we characterized the system as having strong governance and management and believe for the most part that remains true today,” he continued. “Nevertheless, a significant turnover in leadership at most of its seven universities over roughly the past two years — and with four of the universities currently served by interim presidents — we feel some weakness in governance and management might be occurring.”

Standard & Poor’s did affirm the system’s long-held “AA-” rating, and assigned the “AA-” long-term rating to the system’s $46.24 million in revenue bonds for 2015.

“S&P has affirmed our ‘AA-’ rating, reflecting the university system’s commitment to sound fiscal management,” said system spokesman Dan Demeritt in a Tuesday morning statement. “The agency’s decision to revise its long-term outlook is a realistic assessment of the demographic, fiscal and competitive challenges that led Chancellor [James] Page and the board of trustees to launch a change initiative that will administratively and academically align our seven institutions into one university.”

The Standard & Poor’s announcement also made note of the state of Maine’s “weak economy” and “an unfavorable demographic trend for college-bound high school seniors” as factors preventing the agency from considering a more positive long-term outlook.

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