NOTE: On March 17, 2022, the press release was corrected as follows: The third sentence of the Ratings Rationale section was changed to “The college's financial position will remain healthy, supported by good liquidity and receipt of COVID-related federal stimulus.” Revised release follows.
New York, March 14, 2022 -- Moody's Investors Service has affirmed the A3 on Rhodes State College's (OH) issuer and outstanding revenue bonds rating and affirmed the Aa2 enhanced rating. The college had $2.9 million of debt outstanding at June 30, 2021. The bonds have an expected final maturity in 2033. The outlook for the underlying rating is stable.
Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBM_PBM907594257 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and identifies each affected issuer.
RATINGS RATIONALE
The affirmation of the A3 issuer rating incorporates the college's regional role as an affordable education provider, improved financial position and low debt burden. Operations at the college will remain stable, benefitting from modest enrollment growth, steady operating support from the State of Ohio (Aa1 stable) and good budget flexibility. The college's financial position will remain healthy, supported by good liquidity and receipt of COVID-related federal stimulus. These positive rating factors balance the college's small scale and high total adjusted debt driven by significant unfunded post-retirement benefit liabilities.
The affirmation of the A3 revenue bond rating and lack of rating distinction between the college's A3 issuer rating reflects the broad revenue stream pledged towards the repayment of outstanding revenue bond debt.
The affirmation of the Aa2 enhanced ratings are based on the strength of the Ohio Board of Regents Community and Technical College Credit Enhancement Program (Aa2 stable), sufficiency of interceptable revenue and the transaction structure. The college's fiscal 2022 interceptable state share of instruction (SSI) provides a strong 37.5x coverage of fiscal 2021 debt service.
RATING OUTLOOK
The stable outlook reflects Moody's expectations of effective enrollment management, stabilized operating performance, maintenance of improved unrestricted financial resources and a low debt burden.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Sustained healthier operating performance that adds to the college's financial reserves
- Stabilized enrollment, allowing for net tuition revenue growth- Upgrade of the Ohio Board of Regents State Credit Enhancement Program (for enhanced rating)
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Inability to sustain positive operating performance or maintain improved liquidity levels beginning in fiscal 2022
- Inability to stabilize enrollment- Downgrade of the Ohio Board of Regents State Credit Enhancement Program (for enhanced rating)
LEGAL SECURITY
Rated debt consists of General Receipt Bonds, which are secured by a gross pledge and first lien on the college's general receipts, including tuition and fees, and other legally available revenue, but excluding state appropriations, and restricted gifts and grants.
In addition to the general receipts pledge for the bonds, the bonds are secured by the Ohio Board of Regents State Credit Enhancement Program, which allows the Chancellor of the Ohio Department of Higher Education to redirect the college's state aid in the form of SSI to the bond trustee to pay debt service if there is a shortfall in general receipts revenue.
PROFILE
Founded in 1971, JRSC is one of 23 community and technical colleges in Ohio that serves a 10-county region in the northwest part of the state. The college has notable programs in health sciences, engineering technology, and information technology, among others. In fall 2021, JRSC enrollment was 3,402 FTEs.
METHODOLOGY
The principal methodology used in the underlying ratings was Higher Education Methodology published in August 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1257002. The principal methodology used in the enhanced rating was State Aid Intercept Programs and Financings published in December 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1067422. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.
REGULATORY DISCLOSURES
The List of Affected Credit Ratings announced here are all solicited credit ratings. For additional information, please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com. Additionally, the List of Affected Credit Ratings includes additional disclosures that vary with regard to some of the ratings. Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBM_PBM907594257 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody's disclosures on the following items:
- Rating Solicitation- Issuer Participation- Participation: Access to Management- Participation: Access to Internal Documents- Endorsement
For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
Maxwell Brekke
Lead Analyst
Higher Education
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