CHICAGO – The University of Missouri's rating has stabilized thanks to its improving balance sheet, according to S&P Global Ratings.
S&P this week revised its outlook to stable from negative on the system's AA-plus long term rating and top short term ratings.
"The revised outlook reflects the system's recent and expected ongoing strong operating performance, fundraising, and financial profile compared with peers despite some softening of enrollment at its Columbia campus, presidential turnover, and prolonged negative media coverage," said S&P analyst Ashley Ramchandani.
Analysts believe the system is poised to resume modest enrollment growth and will develop a focused strategic plan under the guidance of its new president Mun Choi that will benefit its financial profile over time.
The university has outlined some capital spending needs but the size and timing of any debt issuance is uncertain and so was not included in the analysis.
Cash and investments with same-day liquidity as of Dec. 31 totaled approximately $734.3 million providing 2.5 time coverage of the system's $187 million of commercial paper and $96 million of variable-rate bonds.
The university serves 76,000 students at four campuses: its flagship in Columbia, and in St. Louis, Kansas City, and Rolla.
"The stable outlook reflects our expectation that during the next two years, the university system will continue to produce positive operating results on a full-accrual basis and maintain unrestricted net assets relative to debt at or near current levels even with expected debt issuance," Ramchandani wrote. "In addition, we expect applications and enrollment to return to previous levels and the system to develop detailed strategic plans."
The school's negative headlines stemmed from student and teacher protests in 2015 over allegations of racist behavior towards students. The protests led to the resignation of then president Timothy Wolfe as the school faced the threat of funding cuts.
The university also faces challenges due to healthcare exposure and uncertainty over future federal reforms. Healthcare revenues accounted for 30% of total consolidated revenues for fiscal 2016.