Fitch Ratings affirms the 'BBB-' rating on Barry University's (the university) $24,280,000 of outstanding Pinellas County Educational Facilities Authority revenue bonds, series 2000. The bonds are a general obligation of the university. Additional security is provided in the form of a debt service reserve fund. The Rating Outlook is Stable.
The 'BBB-' rating reflects the university's diverse student population; low debt burden; and the flexibility provided by the use of non-tenured and contract-based faculty. Credit concerns include the university's low student matriculation, low liquidity levels, and significant reliance on student-generated revenues to fund operations.
The university's liquidity remains extremely weak, with available funds of $15.7 million representing a low 11.4% of operating expenses and 30.9% of total debt for fiscal 2007. However, the university's operating margin, which has been volatile in the past, improved for the past two fiscal years. The operating margin was a negative 5.2% in fiscal 2005, breakeven in fiscal 2006, and positive 1.6% in fiscal 2007. The university's ability to sustain breakeven to positive operations is assumed in the 'BBB-' rating. Additional capital needs, none of which are significant, will likely be donor funded. The university's debt burden remains manageable, with maximum annual debt service of $4.1 million representing a low 2.9% of unrestricted revenues in fiscal 2007.
Headcount enrollment declined 3% to 8,733 in fall 2007 from 9,020 in fall 2006. The university's management attributes the decline to the implementation of a more robust application process, which is intended to improve admissions selectivity; competitive pressure at the local level; and the discontinuation of the Barry Early Credit program. While the Barry Early Credit program accounted for 183 students in fall 2006, it represented a minimal percentage of tuition revenues. FTE enrollment has remained flat at over 7,400 students, driven in part by continued growth in the law school. Enrollment is on target to exceed budget for 2008-09, with flat enrollment growth projected going forward. Net tuition revenues were $107 million in fiscal 2007 and represented the university's largest revenue source at 76.4% of unrestricted revenues. Due to this revenue concentration, the university must continue to closely manage its enrollment.
Barry University was founded by the Dominican Sisters in 1940 as a women's Catholic liberal arts college. It became co-educational in 1975 and gained university status in 1981. The university is located on 90 acres in Miami Shores, Florida and offers 60 undergraduate programs, 50 graduate programs, and adult continuing education.
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