After a semester in which USF President Judy Genshaft initially announced $12 million in budget cuts over the course of the fiscal year in order to protect the Moody’s AA2 bond rating, a national rating that marks the financial stability of an institution, Moody’s Investors Service re-affirmed the university’s AA2 rating and predicted the university’s outlook as “stable.”
Housing and parking services, which are rated without the financial backing of the rest of the university, received AA3, or a rating one level lower. USF is one of three universities in Florida to maintain the AA2 rating, along with the University of Florida and Florida State University.
The Moody report stated the rating was issued based on “the university’s solid market draw as a large urban comprehensive university with high research activity and adequate financial resources, offset by constrained state funding, a complex debt structure and high competition for students and research.”
USF President Judy Genshaft, along with Chief Financial Officer Nick Trivunovich, Chief Operating Officer John Long and Board of Trustees Chairman John Ramil presented to Moody’s in November, presenting a three-year plan to restore the financial health of the university after a series of what Trivunovich told members of the Faculty Senate last week were “challenging years.” In 2012, USF saw a $91 million operating loss and a $46 million operating loss in 2013, excluding the transfer of the Lakeland branch campus assets to Florida Polytechnic.
“(The three-year plan) contained cost containment, expense reduction, additional investments and some additional revenue we hope to achieve over the next three years,” Trivunovich said.
In November, four months after the initial announcement to implement a freeze on hiring new faculty and staff and “manage the use of carry-forward funds at the enterprise level while allowing our deans and division leaders to manage their priorities” to maintain the bond rating, Genshaft announced USF was not in a financial crisis after a letter from the Board of Governors to USF leadership stated that BOG staff found that USF’s bond rating stability was not under threat and requested that USF “take steps to correct the record” in light of the state Legislature restoring the $300 million cut from the State University System during the previous year.
Trivunovich said the restored funding was helpful in the university’s three-year plan they presented to Moody’s, though one of the things that Moody’s posed as a challenge was the state’s commitment to funding higher education – a nationwide phenomenon that made the agency project a bleak outlook for the field of higher education in general.
“Budget pressures at the state have led to weakened operating performance, including operating deficits for fiscal years 2012 and 2013 and reduced financial resources,” the report stated. “The state held tuition increases flat for FY 2014, further pressuring USF’s ability to grow revenue.”
Trivunovich said while tuition and fees will likely be held steady during the next fiscal year, Moody’s as a strictly financial organization is focused on revenue growing, and in their plan, the group presented a plan that would keep overall enrollment stable, but change the blend of students to increase the number of out-of-state and international students, who at the undergraduate level, pay close to three times the rate of in-state students.
USF Provost Ralph Wilcox said the university would work on maintaining its financial stability, implementing measures to contain costs and grow revenue.
“So long as we sit back and remain dependent on others with the fate of our future, we’re constantly going to remain in a state of flux,” he said. “We have control of our future. There is much we can do as a faculty and student body to change our future.”