Fitch Ratings affirms the rating of 'A+' on Brookdale Community College's (BCC or the college) approximately $22.6 million of parity lease revenue bonds issued by the Monmouth County Improvement Authority, NJ (MCIA). The bonds are a general obligation (GO) of the university. The Rating Outlook is Stable.
The 'A+' rating reflects the strong and consistent support received from the State of New Jersey (rated 'AA+' by Fitch) and Monmouth County (rated 'AAA' by Fitch), solid enrollment trends, and a low debt burden. Primary credit concerns include the local economy and its effects on both the funding and enrollment of the college. County and state appropriations for fiscal 2008 represented approximately 25% and 13%, respectively, of the college's unrestricted revenues. Although county and state support increased 4.5% and 5.6%, respectively, in fiscal 2008, BBC expects reductions in these revenue sources due to the slowing economy and anticipated budgetary problems. The college is modeling its fiscal 2010 budget based on its assumption of appropriation declines of up to 5% and has made revenue and spending plans accordingly. In the past, BCC has increased tuition and cut expenses to offset declines in government support.
BBC's enrollment growth remains solid. The college's full-time equivalent enrollment (FTE) has increased over 16% since fall 2003. In fall 2008, FTEs grew 4.5% to 11,304 students. BBC has increased its yield of Monmouth County graduates to 35%. The college attributes its enrollment strength to its campus expansions, quality of instruction, and the cost of a traditional four-year education. As would be expected, these enrollment increases contribute to increased operating expenses, primarily in the areas of utilities, instruction, and personnel costs. Fitch believes that the college will perform at its existing level or an improved level in the future as it continues to meet the growing need for the educational services provided by the college.
The college has a very low debt burden, with lease revenue bond debt service representing only 1.7% fiscal 2008 operating revenues. In addition to lease revenue bonds, BCC benefits from bonds issued on its behalf by Monmouth County. These bonds are not included in the college's debt profile as they are county GOs.
Typical of community colleges, Brookdale is reliant on the local economy. While the local economy has been strong and funding from the county has been constant, in a weaker economy, government funding may be jeopardized, but the enrollment would likely increase as students pursue additional training. Because of the fluctuations in the economy, Fitch views formalized planning for operations and capital needs as essential. Brookdale reviews both on an annual basis and has a 10-year capital improvement plan.
Brookdale is a comprehensive community college, offering transfer curricular programs, career/vocational/joint entry programs, lifelong learning or continuing education and remedial/development education. Established in 1967, Brookdale is part of the state's network of 19 county colleges.
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