Moody's Investors Service has upgraded Teachers College's credit rating to A1 from A3 and has applied the rating to the College's $40 million Series 2002 Revenue Bonds currently being issued through the Dormitory Authority of the State of New York.

The Series 2002 Bonds are secured by a pledge on the College's tuition revenues as well as by its general obligation pledge. Proceeds will be used to fund various campus renovation projects.

In conjunction with this borrowing, the College will use some of its own funds to redeem $4.1 million in outstanding Series 1992 Revenue Bonds. Following this transaction, the College will have no other debt outstanding.

The rating action and stable outlook are based on the College's:

• strong market position underpinned by prestigious reputation and link to Columbia University;
• ample balance sheet resources relative to debt; and
• consistent trend of positive operating results reflecting sound financial management practices.

Fred Schnur, Vice President for Finance and Administration, called the rating upgrade a "significant achievement for the College."

Moody's believes that the College's reputation as a premier graduate school of education and its link with Columbia University will continue to ensure stable enrollments and strong student demand in the near future. Its location in New York City, where demand for skilled teachers is very high, further enhances the College's market position.

Moody's expects the College to maintain a favorable balance sheet position in the near future thanks primarily to a low debt burden and successful fundraising that is likely to boost the College's financial resources.

Moody says, "The College is currently in the midst of a $140 million capital campaign. Over $120 million has already been pledged, (of which $87 million has been collected) with one year left to go in the campaign."

Future borrowing plans include an additional expected $40 million bond issue next year to fund the construction of a badly-needed residence hall. While Moody's has not included this amount in its current pro-forma calculations, it believes the College has enough debt capacity at the A1 rating level to accommodate this "additional leverage."

Moody's "anticipates that the College's recent trend of consistently positive operating performance will continue. Sound financial management practices implemented in the mid-1990s after years of deficits have restored budget balance and addressed large deferred maintenance needs, while increasing the size of the faculty and endowment."

The College's average three-year operating margin of 7.1 percent, according to Moody's "reflects a consistently well-managed annual financial performance."

Published Monday, Feb. 24, 2003