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. The credit profile of the University remains sound as enrolment growth combined with no new debt issuance allows debt per full-time equivalent (FTE) student to continue on a downward trend. Conservative fiscal management and limited funding needs also support the rating. Laurier’s greatest single item of financial concern remains its pension plan deficiency. The University also shares the same challenges as other Ontario universities with regard to uncertainty surrounding future tuition and provincial government funding policies.

Laurier recorded an operating surplus of $9.3 million in 2009-2010, an improvement over the small deficit of $665,000 that had been initially budgeted and the $2.5 million dollar shortfall seen the previous year. Enrolment growth of 7.5% and tuition fee increases boosted tuition revenue. Revenue was also positively affected by the decision of the Ministry of Training Colleges and Universities to provide full funding for enrolment growth including full funding for previous years that had been discounted. Overall revenue was up by 6.4% compared with a 1.4% increase in expenditure. Total debt has decreased slightly in each year since 2004-2005 as mortgages amortize. Debt per FTE has fallen to $8,576, a level that provides significant flexibility within the rating category. The pension plan deficit continues to grow, at $77 million as of April 30, 2010, up from $27 million the previous year. Endowment per FTE has recovered somewhat as financial markets pare some of the losses of recent years and now stands at $3,702. Liquidity support increased to $40 million from $28 million. Laurier’s three-year capital plan has increased to $200 million. However, funding obligations remain limited as the plan is primarily financed through federal and provincial government grants although potential capital expenditure related to a contemplated campus in Milton, Ontario may result in higher debt levels

For 2010-2011, Laurier projects to break even on an operating basis with both revenue and expenses forecast to grow by 10%. Revenue increases will be driven by enrolment growth and tuition fee increases with provincial government grants also expected to reflect full funding for each new FTE. Negotiated salary increases and projected benefit and pension plan expense costs are largely responsible for the planned increase in expenses. Projecting further out, the University may have to implement modest budget cuts to remain in balance through 2013-14.

Notes:
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.