DALLAS — Moody's Investors Service revised Kansas State University's revenue bond outlook to negative from stable April 7.
The outlook revision to the university's Aa2 rating came ahead of a $61.7 million revenue bonds deal that is expected to come to market April 12. The action also affects $384 million of outstanding debt.
"The revision of Kansas State University's outlook to negative from stable reflects a material slowdown in net tuition revenue growth attributable to flat enrollment and state limitations on tuition increases, contributing to weaker operating performance," Moody's analyst Michael Osborn said.
The proceeds of the 2015B Bonds will finance a chilled water plant on the main campus, refund Series 2005A and Series 2007A bonds and pay the costs of issuance.
Revenues pledged for the bonds are all unrestricted revenues, according to Moody's. Unrestricted revenues consist of net tuition and fees, sales of educational services, state appropriations and other operating revenues. There is no debt service reserve fund.
Student enrollment across the Kansas higher education system dropped slightly in 2014, especially among older, non-traditional students, according to an annual report to the Board of Regents.
At the same time, legislative funding for higher education has flattened amid a $600 million deficit in the upcoming fiscal year.
Moody's last year lowered its rating on the University of Kansas to Aa2 from Aa1 in the wake of its downgrade of the state government. However, Kansas State University's Aa2 rating was affirmed.
