By Kayla Walker
The University received its financial health checkup and passed with flying colors.
Moody’s Investors Service upgraded the University’s debt rating, proving its financial health to potential donors and possibly capping tuition costs.
Moody’s is a subscription service that rates businesses, organizations and institutions on their financial health.
The new rating solidifies the University’s standing as an investment-grade university, which it has been since it joined the subscription service in 1973. Moody’s rates financial health by looking at the amount of debt the University has accrued, fundraising, student demand for a University education, level of accreditations and the economic viability variance of the University.
“This rating really affirms what we’re telling prospective donors,” Catherine Hennessy, vice president for Financial Affairs and treasurer, said.
The new rating is important to potential bond donors, the Board of Trustees and general auditors, alumni, foundation and grant agencies and the federal government.
Moody’s cites three aspects that accounted for the rating upgrade since 2003’s score; an increase in total financial resources to $172.5 million from $96 million, improved operating performance, as in student selectivity and tuition costs, and increased fundraising.
“The rating upgrade is a direct result of President [Stuart] Rabinowitz,” Hennessy said. “Over the past five years President Rabinowitz has increased Hofstra’s overall endowment by 85 percent.”
The rating will keep interest rates on bonds used on capital projects, such as construction and renovation, down, which means the University’s overall costs will be kept at a level that could keep tuition costs from rising dramatically.
“Over the past five years, funding for scholarships has increased by 68 percent,” said Hennessy, who attributes the increase to the improved financial health the University has seen since 2000.
Hennessy said part of the University’s earlier rating can be attributed to a time when the University did not budget for the post-retirement benefits program, which was accumulating a substantial debt.
“Hofstra still has an incredibly generous post-retirement plan, but we have established cost-sharing in health care coverage and have eliminated post-retirement medical coverage for new administrators and staff,” she said.
The University’s A3 rating, up from Baa1, puts it into a category with Boston University and Georgetown. Whereas the University’s old rating had it in company with DePaul and Marist Universities.
“In developing our financial resources we’re showing that Hofstra is a place that’s really on the move [to improve its] reputation,” Hennessy said.