Moody’s Investors Service has upgraded the University of Central Arkansas’ revenue bond ratings to A2 from A3.
Moody’s announced the university’s new rating and stable outlook on Friday. The new rating reflects “UCA’s healthy size, relatively strong state support, return to healthy operations and progress in building liquid reserves,” according to Moody’s, a leading provider of credit ratings, research, and risk analysis.
The report credits the university’s improvement to “prudent fiscal management that has resulted in three consecutive years of healthy operations and recovery of liquid cash balances supporting debt and operations.” UCA has been able to regain a comfortable level of liquidity, the report states. It also noted stable annual appropriations from the state and scholarship support for tuition through student grants.
The university ended the 2010 fiscal year with $14 million of monthly liquidity, a dramatic change from four years ago when the university had negative cash balances.
“Management projects that unrestricted cash reserves will increase to healthier $19.1 million at the close of the current 2011 fiscal year and expects to maintain cash balances close to that level going forward,” the report states. “…The rating could improve if the University continues to build financial reserves and maintains student market strength and operating support from the state while limiting additional debt.”
“The University is extremely pleased that Moody’s recognizes the tremendous efforts the Board of Trustees, faculty, staff and administration have made over past few years not only to stabilize UCA’s finances, but to place increased emphasis on prudent management and communication,” said UCA President Allen Meadors.
The rating upgrade is a validation of the administration’s commitment to make UCA financially sound, said Diane Newton, vice president for finance and administration.
“Although we are much better, we are not where we need to be, as the report points out,” Newton said. “We continue to focus on cash reserves through conservative budgeting and the implementation of cost saving measures.”