Moody’s Investors Service last week revised the outlook on Loyola University of Chicago’s A3 credit to stable from negative because of strong operating performance and cash flow as well as operating improvement initiatives being undertaken by the university’s health system.
The action affects $197 million of outstanding debt issued through the Illinois Finance Authority. The university benefits from solid student demand as Chicago’s only Jesuit Catholic university, with enrollment of more than 14,000, up 47% since 2001.
The school has successfully increased tuition revenue. Fiscal 2009’s net tuition per student was $19,947, up nearly 7% higher over fiscal 2008 and up 35% since fiscal 2004. Fundraising also improved. Gift revenue was up to $24 million during the last two fiscal years, from $12 million between fiscal 2002 and 2004.
Over the past 10 years, the school’s operating margins have increased from a loss of 11% in fiscal 2000 to a surplus of 10% in fiscal 2009. Total financial resources have shown strong growth, swelling to $450 million in fiscal 2008, though in fiscal 2009 the level fell to $299 million due largely to investment losses, a $43 million debt payment, and the transfer of $12 million to the health system.
The university’s leaders have taken greater oversight of the health system, strengthening the governance structure and institutional ties between the two organizations, which does pose a challenge to the school. Loyala’s health system is rated Baa3 with a stable outlook.