S&P Affirms Morgan State University with Seventh Consecutive A+ Rating
by Morgan State UMAY 18, 2023
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Strong Financial Position Bolsters Morgan’s Outlook and Fiscal Status, Placing it Tops Among HBCUs
BALTIMORE — Capping off a successful 2022-2023 academic year that garnered historic milestones for overall student enrollment and its second largest incoming class of first-year students, Maryland’s Preeminent Public Urban Research University continues along its decade’s long path of sustained operational and capital stability by achieving its seventh consecutive positive ratings report from an industry-leading rating agency—Standard & Poor’s (S&P) Global. Following an extensive assessment of Morgan’s fiscal operations, financial position and trend analysis, and debt analysis, S&P affirmed its ‘A+’ issuer credit rating (ICR) on Morgan State University, along with a stable outlook reflecting the University's sound financial profile and robust operating and capital support from Maryland.
The S&P assessment of Morgan’s enterprise rating as strong is characterized by its niche as one of the nation’s more well-established Historically Black Colleges and Universities (HBCUs) with unblemished management and a growing enrollment over the past two years. Additionally, the strong financial profile is marked by the University’s very low debt and robust operating and capital support from the State of Maryland. The ratings agency was also encouraged to learn of the University Board of Regent’s recent decision to maintain Morgan’s current leadership, extending the president’s contract until 2030.
Sidney H. Evans, Jr. M.B.A., executive vice president for Finance and Administration at Morgan added, “The affirmation of our credit rating by S&P Global Ratings is a testament to our commitment to sound financial management. We are proud of the progress we have made in reducing our debt and the support we have received from our partners from the public sectors. We will continue to work diligently to maintain our financial stability while providing our students with the resources they need to succeed.”
Among the following factors that contributed to the S&P positive assessment of Morgan’s standing include:
- Consistent, Milestone Enrollment Gains – 9.5% increase in full-time equivalent (FTE) enrollment in fall 2022, following a similarly high improvement of 11.2% in fall 2021, contributing to a 19.3% increase in FTE enrollment since fall 2018
- Morgan’s Ability to and Documented Record of Repaying Obligations – Very low university debt following the defeasance and refunding of prior long-term debt and forgiveness of approximately $33.7 million in HBCU loans
- Long-term Appropriation of HBCU Settlement Legislation (Fund 41) –Expected legal settlements from Maryland totaling approximately $15.4 million in fiscal 2023 and, thereafter, $24 million through 2032—subject to adjustments based on MSU’s demand metrics relative to other claimant HBCU’s —to support operations and programmatic initiatives; and
- Strong Public Sector Investment – Consistent state support for capital and research initiatives, including $18 million annually to support MSU's six research centers and $62 million so far to fund deferred maintenance.
A range of factors are considered in assessing Morgan’s financial dexterity, including debt structure, strong budgetary discipline, diverse revenue streams, philanthropic support and capital needs. The culmination of these two favorable credit ratings bolsters Morgan’s position as one of the most financially stable and highest-rated HBCUs in the nation.
“During a period of challenged economic forecasting, volatile governance and plateauing enrollment across the higher ed landscape, Morgan continues to buck the trend and exemplify the mark stability,” continued Evans.
Morgan participates in multiple annual audit examinations including financial statement audits by an independent external auditor, audits by the State of Maryland Legislative Office, and audits conducted by Morgan’s own Internal Audit & Management Review office. The collective audit findings assist the University in limiting risks, assessing processes, improving best practices, promoting efficiency and strengthening compliances. Morgan recently began implementing its board-approved Enterprise Risk Management Program, coupled with the hiring of its inaugural director.
