The University of Nebraska’s plan to tackle a $58 million budget shortfall helped it keep the second-highest grade from a global credit rating agency.
S&P Global affirmed NU’s AA bond rating in a July 13 letter, putting the state’s only public university system among the top 8% of all public institutions rated by the fiscal analyst.
The rating, which remains unchanged from the previous year, will allow NU to borrow money at lower interest rates in the future, which NU President Ted Carter said was “a win” for university students and Nebraska taxpayers.
The letter also cites a five-point plan outlined by NU leaders in June to boost recruitment, strengthen the university's academic profile, improve research expenditures, be more transparent and find operational efficiencies.
Carter brought the plan forward to the NU Board of Regents after multiple years of enrollment losses coupled with increased expenses, muted growth in state funding, and a minimal 3.5% tuition hike have put the university in a budget crunch.
S&P Global said the plan instilled confidence that the university's financial profile would remain strong in both the short and long term, but kept it from being upgraded to the highest "AAA" rating.
"In our view, this is an example of the university managing in a proactive manner to sustain its long-term financial strength," the rating letter said.
The review found NU's finances "very strong," bolstered by a large enrollment base across its four campuses, a sound market position as Nebraska's only state public research university, thoughtful strategic planning, and solid fundraising capabilities.
NU’s stable credit rating could be downgraded “if the system issues a material amount of additional debt,” experiences a significant enrollment decline, or if its financial resources weaken in the near-term, S&P said.
But the agency said it anticipates NU’s financial situation will remain stable in the near term and that the university will not need to borrow to remain solvent.
Regent Tim Clare of Lincoln said Carter met more than 99% of the benchmarks set for him by the board in 2022-23, which made him eligible for the performance-merit based pay.
The board approved awarding Carter the bonus 5-0. Regents Jim Scheer of Norfolk and Kathy Wilmot of Beaver City both abstained, saying that while they supported Carter and believed he is doing a good job, they were not involved in the review process. Regent Rob Schafer of Beatrice was absent from Thursday’s meeting.
Carter will donate a portion of the bonus to the University of Nebraska Foundation for student scholarships.
Regents will meet again on Oct. 5 at the University of Nebraska Medical Center in Omaha.