Fitch Ratings affirms the 'BBB+' rating on $23.17
million Dormitory Authority of the State of New York revenue bonds
(Mount Saint Mary College Project), series 2003. The Rating Outlook is
Stable.
Strengths of the college include its long history of positive operating performance and its low rate of tuition discounting. The operating margin for fiscal 2005 was 18.2% and has averaged 15.6% over the past four years. Fitch's operating margin median for 'BBB' rated private colleges is 4.4%. The college's ability to keep the tuition discount rate at 11.7% for fiscal 2005 is another key indicator of its ability to maintain its strong financial performance. Fitch's median of the tuition discount rate is 15.6% for private 'BBB' rated colleges.
The primary credit concern is the increase of the Mount Saint Mary's debt burden. The debt burden increased from $23.2 million in fiscal 2005 to $52.8 million in fiscal 2006. The maximum annual debt service would consume 8.2% of the fiscal 2005 unrestricted revenues; Fitch's median for 'BBB' private colleges is 4.9%.
Other credit concerns include the projected decrease in liquidity, heavy reliance on tuition and fees, and limited geographic diversity of the student body. The college's available funds, defined as unrestricted and temporarily restricted cash and investments, increased by 95% from $18.7 million in fiscal 2002 to $36.5 million in fiscal 2005. They had designated $20 million of these funds for future capital projects. The available funds cover 104% of fiscal 2005 unrestricted operating expenses. The median for Fitch's 'BBB' rated private colleges is 70%. Due to the future drawdown for capital improvements the ratio is expected to decline.
In fiscal 2005, 82% of revenues were student generated revenues; thus, a decrease in student enrollment could have a negative effect on the Mount Saint Mary's financial position. There was a decrease in the number of full-time equivalent students (FTEs) from 2,210 in fall 2004 to 2,176 in fall 2005. The college stated that fall 2004 enrollment was slightly higher because of the influx of students who enrolled to be grandfathered into educational certificate courses. To better gauge the trend for enrollment, Fitch compared fall 2005 to fall 2003 and computed a 4.1% increase in FTEs.
Approximately 76% of the college's students are from Orange County, New York, with the remaining students coming from other parts of New York, New Jersey, and Connecticut. While the county is projecting an increase in the number of high school graduates, the projections for the state are flat to declining for the next several years. The lack of geographical diversity places concentrated emphasis on the economy and demographics of the area and could have an impact on the college's attendance. The Stable Outlook assumes that enrollment will remain relatively flat. Any sustained decrease in enrollment could also have a negative impact on the rating.
Mount Saint Mary's is a private college located in Newburgh, NY. The college was founded in 1930 by the Sisters of Saint Dominic of Newburgh.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Strengths of the college include its long history of positive operating performance and its low rate of tuition discounting. The operating margin for fiscal 2005 was 18.2% and has averaged 15.6% over the past four years. Fitch's operating margin median for 'BBB' rated private colleges is 4.4%. The college's ability to keep the tuition discount rate at 11.7% for fiscal 2005 is another key indicator of its ability to maintain its strong financial performance. Fitch's median of the tuition discount rate is 15.6% for private 'BBB' rated colleges.
The primary credit concern is the increase of the Mount Saint Mary's debt burden. The debt burden increased from $23.2 million in fiscal 2005 to $52.8 million in fiscal 2006. The maximum annual debt service would consume 8.2% of the fiscal 2005 unrestricted revenues; Fitch's median for 'BBB' private colleges is 4.9%.
Other credit concerns include the projected decrease in liquidity, heavy reliance on tuition and fees, and limited geographic diversity of the student body. The college's available funds, defined as unrestricted and temporarily restricted cash and investments, increased by 95% from $18.7 million in fiscal 2002 to $36.5 million in fiscal 2005. They had designated $20 million of these funds for future capital projects. The available funds cover 104% of fiscal 2005 unrestricted operating expenses. The median for Fitch's 'BBB' rated private colleges is 70%. Due to the future drawdown for capital improvements the ratio is expected to decline.
In fiscal 2005, 82% of revenues were student generated revenues; thus, a decrease in student enrollment could have a negative effect on the Mount Saint Mary's financial position. There was a decrease in the number of full-time equivalent students (FTEs) from 2,210 in fall 2004 to 2,176 in fall 2005. The college stated that fall 2004 enrollment was slightly higher because of the influx of students who enrolled to be grandfathered into educational certificate courses. To better gauge the trend for enrollment, Fitch compared fall 2005 to fall 2003 and computed a 4.1% increase in FTEs.
Approximately 76% of the college's students are from Orange County, New York, with the remaining students coming from other parts of New York, New Jersey, and Connecticut. While the county is projecting an increase in the number of high school graduates, the projections for the state are flat to declining for the next several years. The lack of geographical diversity places concentrated emphasis on the economy and demographics of the area and could have an impact on the college's attendance. The Stable Outlook assumes that enrollment will remain relatively flat. Any sustained decrease in enrollment could also have a negative impact on the rating.
Mount Saint Mary's is a private college located in Newburgh, NY. The college was founded in 1930 by the Sisters of Saint Dominic of Newburgh.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.