10 Sep 2024
New York, September 10, 2024 -- Moody's Ratings (Moody's) has affirmed Washburn
University of Topeka, KS' A1 issuer and revenue bond ratings. As of fiscal year end
2023, the university recorded approximately $46 million of outstanding debt. The
outlook is stable.
RATINGS RATIONALE
The affirmation of the A1 issuer rating reflects Washburn University's favorable
revenue diversity with city property taxes, county sales taxes, and state appropriations
accounting for 43% of fiscal 2023 operating revenue. Revenue diversity helps offset
demographic challenges and projected declines in high school graduates, though
enrollment grew 5% in fall 2023. The university has regional educational importance
serving the State of Kansas and City of Topeka, offering diverse academic and
technical programs to traditional and nontraditional age students. Relatively low
financial leverage affords flexibility to invest in programmatic initiatives, with total cash
and investments covering total adjusted debt by 5.6x in fiscal 2023. The university
does not have pension and other post-retirement benefit liabilities. Expense
management efforts and strong fundraising contributed to an excellent EBIDA margin
of 21% in fiscal 2023, which will moderate in fiscal 2024 but remain strong. Wealth
and liquidity have grown modestly over the last five years, with total cash and
investments providing 2.2x coverage of operating expenses in fiscal 2023.
The affirmation of the A1 revenue bonds rating incorporates the issuer rating and
broad pledge of revenues supporting bond repayment.
RATING OUTLOOK
The stable outlook reflects our expectations that the university will continue to
maintain strong EBIDA margins around 15% through expense management
measures, favorable liquidity, and consistent local and state support.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Significant revenue and wealth growth outpacing peers
- Enrollment growth over a multi-year period
- Increased support from state and local sources offsetting reliance on tuition
revenue
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Disruption to state or local support resulting in materially weaker operating
performance with debt service coverage below 2x
- Declines in enrollment leading to sustained weakening of net tuition revenue
- Material increase in leverage
LEGAL SECURITY
While the various rated revenue bonds are payable from the same revenue streams,
the priority of liens differ across the broad pledge bonds. The Series 2021A-1 Bonds
are secured by and payable from property and sales taxes first, then remaining
operating revenues. The Series 2015A, Series 2015B, Series 2018, Series 2021A-2,
and Series 2021B are on parity and are secured by and payable from operating
revenues first (excluding property and sales taxes), then by remaining property and
sales tax revenue.
PROFILE
Washburn was founded in 1865 as a private institution and transformed by voters into
a public university in 1941. It uniquely benefits from county and city tax revenues that
account for 26% of its operating revenue. The university enrolled 4,570 full-time
equivalent students (not including 987 FTE students enrolled at The Washburn
Institute of Technology in Fall 2023) and generated over $132 million of operating
revenues in fiscal 2023.
METHODOLOGY
The principal methodology used in these ratings was Higher Education published in
July 2024 and available at https://ratings.moodys.com/rmc-documents/425580 .
Alternatively, please see the Rating Methodologies page on
https://ratings.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
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 on
https://ratings.moodys.com/rating-definitions .
For any affected securities or rated entities receiving direct credit support/credit
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For ratings issued on a program, series, category/class of debt or security, certain
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Melissa Nicandri
Lead Analyst
Higher Education
Moody's Investors Service, Inc.
7 World Trade Center
250 Greenwich Street
New York 10007
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Emily Raimes
Additional Contact
Higher Education
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
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