'More Market Niches, More Students': Forbes Magazine Cites University of Arkansas

FAYETTEVILLE, Ark. — Forbes magazine credits “more market niches, more students” in a recent analysis of the favorable increase in the University of Arkansas bond-rating score.

The analysis, in the form of a chart, appeared in the Dec. 27, 2004, issue of Forbes magazine and prepared by William P. Barrett, editor of The Informer column.

The chart lists nine institutions that have recently experienced significant changes in bond-rating scores with a heading: “Recent bond-rating changes of colleges with public debt can provide sharp insights into the nature of academe.” According to Barrett  those changes, either positive or negative,  affect an institution’s attractiveness to investors and students.

Other institutions included in the chart are Bennington College, The Citadel, DePauw University, the University of Florida, Georgetown University, the University of Hawaii, Ramapo College and St. Bonaventure University.

The change in bond score provides significant advantages to the university system.

“The University of Arkansas' recent credit rating upgrade will not only assist in reducing the UA System's cost of capital, but will also attract additional investors for future bond sales,” said Ann Kemp, vice president for finance and administration with the UA System Office. “Certain institutional investors, money managers and mutual fund investors will only purchase securities with higher ratings. Since the university is now rated in a higher category, it will significantly enhance the attractiveness of our bonds.”

The chart describes the reasons for the recent improvement in the system’s bond rating and notes that Moody’s Investors Service served as the rating agency for the U of A.

“The increased bond rating is a reflection of the increased strength of the entire UA System, not just the flagship campus,” said Don Pederson, vice chancellor for Finance and Administration. “However, the Fayetteville campus has prospered significantly, especially with increased enrollment and fund-raising efforts, and certainly contributed to the system-wide improvement.

“A higher bond-rating score means the the university can borrow more money at a lower interest rate,” Pederson added.

Pederson said representatives from Moody’s were on the U of A campus and several others during the past year.

In its final report, published Sept. 14, 2004, Moody’s states, “The stable outlook on the University of Arkansas' rating is based on our expectation that the System will continue to experience solid student demand trends for its undergraduate, graduate and professional programs, with continued system-wide financial resource growth and favorable operating performance despite state funding pressures.”

The report also states, “The University of Arkansas [System] is the dominant provider of public higher education in Arkansas, reporting full-time equivalent (FTE) enrollment of 38,314 students for Fall 2003 throughout the system. [The UA System] is the only public institution offering professional programs such as law and engineering in the state. . UAF has seen increased student demand, and a substantial number of students reside on campus. Program offerings include law, engineering and the natural sciences. UAF recruits largely from within Arkansas, with residents accounting for 85 percent of the student population at that campus.”