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S&P Global Ratings has revised its outlook for the University of Alabama at Birmingham bond score from steady to optimistic and affirmed its “AA” long-term score on normal income bonds issued by the board of trustees of the University of Alabama System, citing will increase in enrollment and employment, in addition to UAB’s strategic plan, “Forging the Future,” and the establishment’s capacity to soundly navigate the pandemic.
Based on S&P, “The revised optimistic outlook and score mirror UAB’s favorable efficiency by way of the worldwide pandemic thus far with an rising enrollment development, wholesome monetary working efficiency, ample accessible assets for the score and a low debt burden.”
A better credit standing and outlook are general indicators of UAB’s monetary place and enhance the establishment’s capacity to borrow cash at a decrease price and to promote bonds, supporting funding in institutional priorities and strategic progress.
College of Alabama System Chancellor Finis St. John mentioned the optimistic score by S&P is nice information for UAB and the College of Alabama System, however can also be important for Alabama.
“With an annual financial affect properly exceeding $7 billion, UAB’s optimistic S&P monetary outlook is nice information for the Birmingham area and our state as an entire,” St. John mentioned. “UAB – recognized for its world-class training, analysis and affected person care, and its unsurpassed experience in public well being and infectious illness – has been essential to the UA System’s profitable navigation of the COVID-19 pandemic, so it stands to cause that S&P would acknowledge the establishment’s robust efficiency and resiliency.”
In April 2020, within the midst of serious monetary threats and uncertainties ensuing from the pandemic, S&P widely lowered the outlook for colleges and universities, and UAB’s was downgraded from optimistic to steady.
UAB President Ray Watts mentioned whereas UAB’s decrease, steady designation didn’t final lengthy, it took experience and self-discipline to stay financially robust whereas navigating the uncertainties confronted by universities and educational medical facilities in the course of the pandemic.
“We made laborious choices with UA System management within the early days of the pandemic to guard UAB and UAB Drugs’s monetary stability,” Watts mentioned. “As we moved to digital instruction on the college and canceled elective procedures all through the Health System to maintain folks secure, that resulted in furloughs, reductions in compensation, a hiring freeze and the suspension of institutional matches to 403(b) retirement plans, amongst different crucial cost-saving measures. Whereas tough, this allowed us to climate the pandemic.”
S&P cited UAB’s administration and governance as “key credit score strengths, partly as a consequence of oversight supplied by the College of Alabama System. Dr. Ray L. Watts, previously UAB’s senior vp and dean of the School of Medicine, grew to become UAB’s seventh president in February 2013 and has been instrumental in propelling the college’s more and more favorable status.”
Many components contributed to the advance in S&P’s outlook for UAB. The next excerpts from S&P’s report describe the justification of the improve in UAB’s outlook:
- UAB’s headcount grew 15.5% to 22,563 in fall 2020 from 19,535 5 years earlier. Over the identical interval, whole FTE (full-time equal) enrollment elevated 16.3% to 18,472 in fall 2020 from 15,871 in fall 2016.
- Undergraduate FTE enrollment elevated by 1.3% in fall 2020 to 11,998 in comparison with the autumn 2019 enrollment of 11,841 – reasonably exceptional, in our view, given the pandemic’s miserable impact on most school and universities fall 2020 enrollment.
- Graduate FTE enrollment elevated by 5.8% in fall 2020 to five,302. The skilled FTE enrollment has typically grown about 1% to 2% per 12 months and rose 0.4% to 1,172 in fall 2020 from the prior 12 months’s fall enrollment … freshman purposes elevated by 20.5% to 10,391 for fall 2020 from 8,623 within the prior 12 months.
- UAB’s stability sheet in our view is one other of its key credit score strengths with wholesome progress in money and investments and web property plant and gear over the a number of years whereas long-term debt has elevated solely modestly.
In its report, S&P acknowledged UAB’s:
- Function because the premier medical and well being sciences college in Alabama, with a nationally acknowledged educational medical middle, that enjoys favorable enrollment and affected person utilization.
- Very wholesome monetary outcomes on a full-accrual foundation for every of the previous 5 fiscal years, additionally anticipated for fiscal 2021.
- Numerous income stream that’s not tuition-dependent since well being care operations account for roughly 49.6% of adjusted working income in fiscal 2020, and analysis 11.4%.
- Superior accessible assets as of fiscal year-end 2020, with unrestricted web property at 60.8% of adjusted working bills and 232.2% of excellent debt.
- Low 1.1% professional forma debt burden based mostly on most annual debt service of $47 million in fiscal 2021 that excludes hospital-related debt since that debt is individually secured and rated.
- Sturdy administration and governance that’s fiscally conservative in its budgeting, monetary operations and funding administration practices.
UAB Senior Vice President for Finance and Administration Allen Bolton mentioned a optimistic outlook is all the time important, however this outlook is especially important given the timing and S&P World Scores’ general outlook for increased training.
According to Inside Higher Ed, solely 3.2% of S&P-rated faculties and universities had been assigned optimistic outlooks on the finish of 2019. All of these outlooks, together with UAB’s, had been revised to steady in early 2020 as a result of pandemic’s impact on increased training.
“In early 2021, S&P Global Ratings kept in place its negative outlook on the U.S. not-for-profit higher education sector for the fourth straight year,” Bolton mentioned. “This highlights the importance of UAB’s power in our capacity to beat exterior components and transfer again from steady to optimistic in lower than a 12 months. We’re conscious of just one different establishment of upper training with a optimistic outlook presently.”
Watts mentioned the accountability and celebration for this excellent news are shared among the many whole UAB group.
“When receiving the sort of excellent news from S&P, we all the time spotlight the laborious work of the UAB Finance and Administration crew and the unbelievable assist and experience we obtain from the UA System Workplace and Board of Trustees,” Watts mentioned. “However this 12 months, we additionally acknowledge the sacrifices made by our college students, college and workers that helped make this attainable. From college students who made security a precedence so we might maintain the campus open this educational 12 months, to staff who served our mission in new and progressive methods by way of distant, hybrid and on-site work, to front-line well being care heroes who supplied world-class consolation and care to sufferers beneath exhausting and heartbreaking circumstances, we’re all liable for and profit from this information.”
Watts additionally acknowledged the significance of state and federal reduction funds to UAB’s capacity to outlive and thrive within the midst of the unprecedented challenges of the pandemic.
“The general public funds we obtained helped us preserve our essential missions in training, analysis, affected person care and group service all through the pandemic,” Watts mentioned. “We take our accountability to be even handed with public assist critically, and I’m proud we had been in a position to make use of these funds successfully and effectively to keep up the companies they had been supposed to assist.”
This story initially appeared on the UAB News website.
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