Moody’s Maintains ASU’s Rating of A3; Outlook Negative


After downgrading Adams State University’s (ASU) credit rating in January 2016, Moody’s Investor Service has recently maintained ASU’s rating of A3; Outlook Negative.  An A3 rating is the lowest of the A classification ratings and considered to be on the low end of “investment grade” assets.

In its May 4th, 2017 ratings action statement, Moody’s cited ASU’s “stiff competition for students combined with high reliance on potentially volatile net tuition revenue, and limited state support and available financial resources for strategic investment. A large unfunded pension liability adds further uncertainty for future expense pressures.”

Since the January 26th, 2016 downgrade, ASU was placed on academic probation for violations of integrity in its online coursework.  Moody’s noted, “In addition, the university’s accreditation was placed on probation in February 2016, stemming from oversight concerns pertaining to certain online programming. Remediation will continue to require additional management resources over the next twelve months.”


While ASU’s own press release on the ratings announcement praised its guaranteed tuition program, the university continues its refusal to acknowledge that this program is among the reasons ASU’s credit rating maintains a negative outlook, as Watching Adams previously reported.  ASU’s press release does not link to the original ratings action report published by Moody’s Investor Service.

In its most recent rating action, Moody’s explained that “the negative outlook reflects uncertainty regarding the university’s ability to successfully balance operating performance due to limited state operating support and variable enrollment. Net tuition growth faces pressure from the high-need student population, a newly instituted guaranteed tuition pricing program, and recent HLC accreditation probation status.”

ASU’s press release also fails to address the rising fees which are not controlled by guaranteed tuition.  For two years running, the university has experienced declining enrollment among its undergraduate student population, by a total of -7.6% since spring 2015.

ASU’s press release also mentions Moody’s recognition of the university’s 2020 Strategic Plan.  However, Watching Adams has argued that this plan is essentially a continuation of previous strategic plans with ASU’s New Strategic Plan is Neither, Nor.

As one ASU employee noted, “things are pretty bad when you celebrate staying in the basement. Well, at least we haven’t dropped even lower!”

Another ASU employee reacted to President McClure’s email announcing this rating action by stating, “Yeah, so everything is great since we aren’t slipping further into the abyss. Just maintaining mediocrity at best is good for Bev.”

One former employee familiar with ASU’s finances said, “ASU’s Finance department never discussed working on improvements to get a better rating. They just collected information needed. So, all of this does not surprise me. There is no financial plan coupled with recruitment and retention. This is what happens when you have people in the same position for over 16 years and they are not required to produce results.”