DALLAS — Moody's Investors Service has downgraded Alvin Community College District, Texas to Aa3 from Aa2, citing multiple years of operating deficits that have lowered net assets.
With an enrollment of nearly 5,000 students — down from a high of 5,721 in 2011 — the Houston metro area district has only $15 million of debt outstanding.
"Debt payments equal only 3.5% of the district's operating expenses, with principal amortization above average at 88.8% paid within 10 years," analyst Nathan Louder wrote. "The district does not currently anticipate issuing additional debt in the near future."
The district ended fiscal 2013 with a reported deficit of $1 million, which reduced unrestricted net assets from $5.9 million in fiscal 2012 to $5.1 million, or a narrow 13.5% of revenues, the analyst said.
Financial operations were hurt by a decline in state appropriations. State appropriations have declined $2.6 million from fiscal 2009 as the state payments for both education and retirement have dropped.
State appropriations for education have stabilized, and district officials indicate an increased distribution of $450,000 in fiscal 2014, Louder said. State appropriations equal 22% of operating revenues, which declined by 23% since fiscal 2008, when it equaled 32% of operating revenues.
The district has attempted to offset the loss of revenue from the state through increasing tuition and fees, which now equal 24% of operating revenues, up from 17% in fiscal 2008. Despite the increases in tuition, the district tuition rates for in-district students is 89% of the average community college tuition in Texas using Spring 2014 tuition rates.
