Moody's lowers W.Va. State University's bonds
CHARLESTON, W.Va. - Moody's recently downgraded West Virginia State University bonds and assigned the same lower rate to two other bond issues, but university officials say the school's finances continue to improve.
In late November, Moody's Investors Service downgraded State's 2002 revenue bonds from an A3 rating to a Baa1 rating. It assigned the same Baa1 rating to 2012 and 2013 revenue bonds.
The new rating is a step lower than the previous one. Larry Rowe, chairman of the university's board of governors, said the change would increase the interest rate on the 2002 bonds by a 10th of a percent.
"There's very little penalty to it," Rowe said Thursday after a board meeting.
The Moody's assessment also says the financial outlook for the university remains negative. It points to declining enrollment and the correlating decline in revenue from tuition as large factors in that outlook.
University President Brian Hemphill agrees.
"The key thing is ... if our enrollment was more stable, we wouldn't have seen that decline," Hemphill said Thursday. "So our focus at this point is to look at how we stabilize our enrollment long term, because who knows what these rates will do over the next five years?"
Enrollment has been a key focus for Hemphill since he took the reins at State in July. He has pledged a renewed focus on recruitment and retention of students through increased marketing and capital improvements on campus.
The school's enrollment dropped by about 1,500 students when it separated from Kanawha Valley Community and Technical College in 2009. Both Hemphill and the Moody's report pointed to this decline.
The final reported fall headcount at State is 2,644. That's down 6.5 percent from last year and 12 percent from 2008, the biggest drop in enrollment of any public school in the state during that time frame, according to data from the state Higher Education Policy Commission.
Katherine McCarthy, interim vice president for enrollment management and student affairs, discussed some of the school's recruitment strategies during Thursday's board meeting.
The school has three territorial managers, each assigned to a portion of Kanawha County, other counties in the state and different states, she said. State also recently met with officials at Capital High School in Charleston, and similar meetings are planned with other area high schools, McCarthy said.
"This (downgrade) is not a surprise for us, but we know that we have to improve recruitment and retention, and overall that goes directly into degree completion," Hemphill said.
"We feel good about where we are. Of course we were a little disappointed, but we feel good about where we are, and we appreciated Moody's thorough review," he continued.
There is $3.38 million outstanding on State's 2002 bonds, according to Moody's. That will be covered in part by the 2013 bonds, worth about $2.8 million, the report states. The 2012 bonds sold for about $9.2 million.
The university expects to retire the bonds through increased revenue thanks in part to revenue from the student union and revenue gleaned from capital projects.
The school is renovating Fleming Hall, a large athletic facility on campus and plans to build a new student housing facility. The building will house roughly 300 students on campus, and the university plans to open the facility by the fall of 2014.
University officials interviewed architecture candidates Thursday for the project, Hemphill said. The school will announce the firm it has chosen sometime next week, he said.