DBRS Confirms University of Windsor at A (high), Stable Trend

DBRS has today confirmed the A (high) rating of the University of Windsor’s (Windsor or the University) Senior Unsecured Debentures. The trend is Stable. The credit profile of the University remains sound as a proactive management approach and declining debt levels support a solid operating position. In the face of weak provincial funding growth and steady upward pressure on labour costs, the University ended the 2009-10 fiscal year with an operating deficit of $518,000, a significant improvement from the $5.9 million deficit posted the previous year and the $4.8 million deficit that had been projected. The University held the line on spending with year-over-year declines in all expenses categories with the exception of salaries and benefits, up a significant 7.2%, and research, up 4.6%. Overall, total expenses were up 2.3%. Preliminary indications suggest that the University finished 2010-11 in close to a balanced position. Windsor’s debt decreased slightly for the third consecutive year to stand at $104.3 million as of April 30, 2010 causing debt per full-time equivalent student (FTE) to decline modestly to $7,601. The downward trend is expected to have continued in 2010-11. This is a moderate debt level compared with other DBRS-rated universities and affordable for the credit. The University maintains reasonable endowment resources, $59.4 million or $4,328 per FTE, and an affordable debt level. Windsor does not have significant borrowing needs over the near- to medium-term.

Notwithstanding the University’s solid operating performance and disciplined fiscal management, a number of factors may pose challenges in the years ahead. Grants from the Province of Ontario (the Province, rated AA (low)), account for approximately 47% of university revenues. As outlined in DBRS’s May 26, 2010 rating report for the Province, Ontario faces its own fiscal realities that may impact funding for post secondary institutions. Compared with other DBRS-rated universities, Windsor also has a relatively disproportionate reliance on tuition fees for revenue growth and flexibility in this area is constrained by provincial policy. The University has also experienced declining enrolment for four consecutive years.

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.