S&P gives Western an AA+
Published on Tuesday, April 20, 2010
Standard & Poor's has bumped Western Technical College's credit rating up two notches based on the college's fiscal soundness and future direc¬tion.
The rating agency moved the college to AA+ from AA- based on “a large and diverse economic base, economic indicators we consider adequate to strong, stable financial operations with very strong reserves, and low to moderate debt burden with rapid amortization," Standard and Poor's wrote in its analysis of the college's standing. "The outlook is stable."
An AA+ rating is a notch below the highest AAA rating that Stan¬dard & Poor's gives out.
"The stable outlook reflects Standard & Poor's expectation that the district’s management will maintain a level of reserves consistent with historical trends as it continues to manage its enrollment and capacity needs,” the analysis states.
Western Technical College District’s management practices are considered “good” under Standard & Poor’s Financial Management Assessment, indicating that the finance department maintains financial management policies in most areas. These policies include: active budget oversight by the district’s board throughout the fiscal year, a formal fund balance policy that requires the general fund to have at least 10-15 percent of general fund expenditures on hand, and the existence of financial and capital planning.
Mike Pieper, Western’s vice president of Finance and Operations, said receiving this industry-respected, third-party validation of the college’s finances important when planning for the next several years. It will reduce the college’s capital interest costs, which will save the college annually by reducing debt levy for interest costs.
Standard & Poor’s Definition of an AA+ Bond Rating: A rating of AA means the organization has a very strong capacity to meet financial commitments. A plus (+) or minus (-) may be applied to a rating to denote relative status within major rating categories.