Moody’s Investors Service last week downgraded Concordia University’s rating one notch to Baa1 on $22.8 million of outstanding debt issued in 1998. The school faces stagnant net tuition rates and reduced support from its governing body, the Lutheran Church-Missouri Synod, analysts said.

The university sold its debt through the Wisconsin Health and Educational Facilities Authority.

Concordia has seen it financial cushion weaken for debt and operations as a result of capital spending and investment losses. Between 2005 and 2008, debt grew to $19.1 million from $5.9 million.

The new debt financed projects like a new residence hall and a major restoration of the school’s Lake Michigan shoreline, where its suburban Milwaukee campus is located.

Tuition revenue has been stagnant with net tuition per student at $8,823 annually in fiscal 2008, according to Moody’s. The university limits tuition increases for its graduate students under a cohort pricing model.

Concordia also has seen a dwindling of its support from the Lutheran Church-Missouri Synod to $200,000 in fiscal 2009 from up to $1 million annually within the past 10 years. No funding aid is expected going forward, although Moody’s said that the church would probably provide some support if the university experienced financial distress.

The school’s strengths include robust operating performance and healthy debt service coverage and strong enrollment growth of 30% to 4,922 students between 2004 and 2008.

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