Positive Credit Rating Shows Worcester State Financially Well-Positioned to Weather Pandemic

July 3, 2020
By: Kristen O'Reilly

Amid dire financial outlooks from some institutions of higher education, Worcester State recently received some good news from Moody’s Investment Services, a leading credit rating agency. Worcester State sustained its “A2” rating with a stable outlook, despite Moody’s having a negative outlook for the U.S. higher education sector through 2020.

The recent update resulting in a positive credit rating indicates WSU is in a good position to weather the current crisis brought on by the COVID-19 pandemic, in addition to the challenges of the shifting demographics of college-age students in the region.

The June 16 report states, “WSU’s very good strategic positioning and disciplined fiscal management underpin the recent favorable growth in net tuition revenue. Sound operating cash flow provides ample debt service coverage. Higher financial leverage and debt affordability are cushioned by growth in cash and investments.”

Although the agency noted the COVID-19 pandemic may affect recruitment and retention of students this fall, “actions taken by the university to address potential impacts of the pandemic help mitigate associated risks.”

The report notes Worcester State’s medium size and the fact that 95 percent of students are in-state may insulate it from some pressures facing other schools. “WSU may benefit as students and families make choices about where to attend college in fall 2020 following the coronavirus outbreak,” according to report

Worcester State received $4.2 million in CARES Act funds, of which $2.1 million went directly to students, which Moody’s analysts expect will “hold the 2020 operating performance in line with prior years.”

Ninety-one percent of WSU’s outstanding debt is issued through the Massachusetts State College Building Authority (MSCBA). Chris Gabrieli, chairman of the Massachusetts Board of Higher Education, announced recently that the state is looking to restructure MSCBA’s construction-related debt to give some short-term financial relief to state universities and community colleges.

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