DBRS Confirms Wilfrid Laurier University at “A” – Stable Trend

DBRS has today confirmed Wilfrid Laurier University’s (Laurier or the University) Senior Unsecured Debt rating at “A” with a Stable trend. Laurier continues to maintain a sound credit profile supported by its conservative and forward looking fiscal management, downward-trending debt per full-time equivalent (FTE) and limited funding responsibility for its current capital plan. DBRS notes, however, that in addition to stagnant growth in provincial grants and uncertainty surrounding future tuition rate increases, the University’s budgetary pressures have intensified due to the forecast need for notable pension deficiency funding.

Laurier recorded a small deficit of $2.5 million in 2008-2009 which was slightly better than initially budgeted although little changed year-over-year. Revenue grew by 10% and was driven by enrolment growth of 4.9% on an FTE basis which translated into increased provincial funding as well as higher tuition fee revenue. A relatively stable long-term debt burden combined with the enrolment growth to reduce debt per FTE by 5% to $9,237, a level well manageable for the rating. The University’s pension deficit improved to $27 million at April 30, 2009, although, had the discount rate used for valuation not increased, the shortfall would have been much larger. Liquidity support improved modestly as cash balances increased to $28 million while endowment assets saw a modest loss of 10% and now sit at $3,310 per FTE.

For 2009-2010, Laurier’s operating budget has strengthened as it points to a modest deficit of $665,000. Budgeted expenditures are set to rise by 4% driven mainly by academic salary expense growth, while revenues are set to grow by 8% due to higher enrolment and tuition increases. Ancillary services should continue to perform well and have a projected surplus of $1.4 million. Laurier’s three-year capital plan has increased to $152 million in spending, however, the University’s funding obligation remains limited as the plan is primarily financed through federal and provincial government grants. Nonetheless, residence projects have been contemplated that could lead to new debt, although the realization of the projects remains uncertain. DBRS notes that while budgetary pressures are mounting due to a limited outlook for tuition increases and provincial operating grants as well as the projected pension deficiency funding, the University is well positioned to deal with the pressure as it has a positive enrolment outlook and limited capital financing needs.

Note:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Canadian Universities, which can be found on our website under Methodologies.

This is a Corporate (Public Finance) rating.