Moody’s: USNH can ‘absorb’ budget cuts

Ratings agency Moody’s is giving its approval to a new series of bonds issued by the University System of New Hampshire, pointing out it thinks the system can weather the fiscal storm brought on by deep state budget cuts.Moody’s assigned an Aa3 rating, or “high grade, high quality” to $6 million of fixed-rate Series A bonds and approximately $42 million in series B bonds issued by the university system, and gave the organization a stable outlook.Moody’s said the system’s rating “reflects its important role providing public higher education alternatives, including the state’s land grant institution, within New Hampshire and a history of positive operating performance.”The agency added, “We expect the system to absorb anticipated steep cuts in state funding through ongoing expense containment, increased fundraising, growth of student charges, and a temporary modest use of unrestricted reserves to balance the budget in FY 2012.”The ratings agency also cited the university system’s “strong financial management team” and “positive investment performance” as additional strengths.”Historically, the board and senior management team’s market-oriented focus has been critical in light of the System’s high reliance on out-of-state students and modest reliance on state appropriations,” the agency said.USNH received about $100 million in base appropriations from the state in the 2011 fiscal year, but the anticipated budget for FY 2012 and 2013 may cut that nearly in half to $55 million.Moody’s did note some challenges the system faces, including modest fund-raising and high tuition costs.And the agency said it relied “heavily” on the system’s historical tight fiscal policy to keep it out of trouble in the face of the unprecedented funding cuts.The bonds are expected to pay for capital projects as well as refund the outstanding fixed-rate Series 2001 bonds, and bond issuance and interest expenses. – CINDY KIBBE/NEW HAMPSHIRE BUSINESS REVIEW