While many universities nationwide are mired in some economic difficulties, Colorado Mesa University recently received some confirmation of its financial strength.
Moody's Investor Service, a credit rating agency, visited CMU last week and kept the school rated as an A2 organization. This is two tiers below the top grade of Aa1 but still places the university in the "upper-medium" echelon and makes it a low credit risk. The rating also demonstrates a strong ability to repay short-term debt.
The university received the same rating when Moody last visited the school roughly five years ago. Other public Colorado schools — Colorado School of Mines, Fort Lewis College, Adams State University and the University of Northern Colorado — saw their ratings decline.
The rating correlates to a lower interest rate when going into debt, according to CMU President Tim Foster. He believes it validates the direction the school has taken over the past decade.
"The market respects Moody," Foster said.
The school can also use the state's rating when issuing debt, which is in the "excellent" range, one level above CMU's rating.
Foster believes CMU could have received a better rating, but it was downgraded in the category of revenue diversity. Foster said the university could have fared better in this category if it had more money in the bank, but he said instead the school has reinvested those dollars into projects to benefit the university and the campus. Foster estimated CMU has invested $400 million in the campus over the last decade.
Foster noted that Moody's acknowledged the partnerships the school maintains, including the investments in receives from the cities of Grand Junction and Mesa and Montrose counties as positives. Recent agreements with private business, including the new teaching hotel slated to open on campus, also contribute to the financial health of the university.
"CMU sustaining an investment-grade standing from Moody's is a touchstone indicator of CMU's health relative to other institutions in higher education," he said in a statement posted online last week following Moody's campus visit. "As unfunded liabilities within state budgets crowd out funding of higher education, and as competition for a smaller pool of students increases, some of the more esteemed universities in Colorado, and nationwide, have experienced credit downgrades in recent years."