Moody's Investors Service revised the United Nations International School's outlook to negative Wednesday on concerns that the independent day school in New York City has thin budget flexibility from a high reliance on tuition revenue.
Moody's analysts Faiza Mawjee and Dennis Gephardt said its negative outlook reflects the UNIS having low financial reserves that hampers the school's budgeting. The ratings agency affirmed the UNIS's Baa1 rating, noting the private school's relationship with the United Nations and strong demand from UN families.
"The school has weak budgetary flexibility from very thin financial resources, high reliance on tuition revenue and modest fundraising relative to peers," said Mawjee and Gephardt in their report.
Moody's noted that the UNIS could improve its low investment grade rating with a "substantial increase" in reserves that leads to a stronger financial cushion relative to the school's debt and expenses as well as operating performance improvements that create consistent surpluses.
The kindergarten through 12th grade school could see its rating go down with continued operating deficits, weakened student demand that slows net tuition revenue growth and taking on additional debt without a commensurate increase in financial reserves.
The UNIS was founded in 1947 shortly after the establishment of the United Nations. The school has two campuses including a kindergarten through eighth grade school in Queens and a kindergarten through 12th grade school in Manhattan.
