Moody's revises Valparaiso University's (IN) outlook to negative

[Vale O. Paradise]

Summary: Moody's Investors Service has revised Valparaiso's (Valpo) outlook to negative from stable. The revision of the outlook reflects the university's competitive student market, highlighted by declining net tuition revenue and a rising discount rate. The A2 rating incorporates the university's recognizable brand, moderate size and generally stable enrollment, along with moderate leverage, management's cost containment initiatives, and fundraising that should augment cash and investments. The rating additionally incorporates limited near-term revenue growth, high dependence on student charges and limited financial flexibility. The negative outlook reflects likely revenue declines and operating deficits resulting from modest to moderate declines in net tuition revenue and steeper discounting.

Full version: https://www.moodys.com/research/Moodys-revises-Valparaiso-Universitys-IN-outlook-to-negative-affirms-A2--PR_903029856


Not the best news, especially after years of retooling.

[covufan]

When is the next endowment fund drive?

[vu72]

When is the next endowment fund drive?

It is underway.  The market crash won't help.

[crusadermoe]

How much raised?    And when did it start?

[agibson]

When is the next endowment fund drive?

It is underway.  The market crash won't help.

I've lost track, has the public phase started?  Or are we still in the "quiet" phase?

[vu72]

When is the next endowment fund drive?

It is underway.  The market crash won't help.

I've lost track, has the public phase started?  Or are we still in the "quiet" phase?

It is in the quiet phase.  If you take a look at the public announcements of late you will see alumni giving millions toward specific goals.  That money is part of the new drive.  Here are a couple of examples:

http://www.valpo.edu/news/2015/12/21/valparaiso-university-receives-1-million-commitment-for-unrestricted-endowment/

http://www.valpo.edu/news/2015/10/26/valpo-alumni-commit-3-million-to-establish-endowed-director-position-for-institute-for-leadership-and-service/

[Vale O. Paradise]

NACUBO's annual endowment study is out.

Valpo:
2015: $204 million (0.8% increase)
2014: $202 million (14% increase)
2013: $177 million

(Values as of June 30 of each year)

http://www.nacubo.org/Documents/EndowmentFiles/2015_NCSE_Endowment_Market_Values.pdf
http://www.nacubo.org/Documents/EndowmentFiles/2014_Endowment_Market_Values_Revised2.27.15.pdf

[78crusader]

For a school that for at least two years has been in the quiet phase of an endowment campaign, a 0.8% increase in the endowment is terribly disappointing. We currently rank #302 out of all institutions. 10 years ago we were #265. The negative rating by Moody's is very troubling. What is going on here?

Paul

[vu72]

NACUBO's annual endowment study is out.

Valpo:
2015: $204 million (0.8% increase)
2014: $202 million (14% increase)
2013: $177 million

(Values as of June 30 of each year)

http://www.nacubo.org/Documents/EndowmentFiles/2015_NCSE_Endowment_Market_Values.pdf
http://www.nacubo.org/Documents/EndowmentFiles/2014_Endowment_Market_Values_Revised2.27.15.pdf

Those gains are pretty solid as very few managers are able to perform as well as the S & P 500 index.  The S & P was up 12.4 in 2014 (Valpo endowment up 14%) and the S & P was down 0.1% in 2015 versus a Valpo gain of 0.8%.

It is a very troubled investment climate at the present with all that is going on in China and elsewhere.  People will not have a lot of excess gains that they will be willing to share in the current environment.

[vu72]

For a school that for at least two years has been in the quiet phase of an endowment campaign, a 0.8% increase in the endowment is terribly disappointing. We currently rank #302 out of all institutions. 10 years ago we were #265. The negative rating by Moody's is very troubling. What is going on here?

Paul

I can't answer your question but do note that over the last six months $12 million of gifts have been noted on Valpo's main page.  I was told by a fund raiser that on occasion they will announce a sizable gift to build some momentum during the quiet phase.

[ValpoFan]

In the last decade, a lot of focus has been on the building and construction of new facilities. These are nice but they come with the responsibility of maintenance and the burden of bills associated with them. Therefore, from a financial perspective, the endowments did not grow and the expenses did.
Another thing is that, with the new buildings, the university is growing but not at the rate that was originally expected.
At the beginning of this campaign, Dr. Heckler very wisely stated that no new buildings will be included in this campaign and that it will be an exclusively endowment campaign.
I tip my hat to the guy for making the less popular, yet responsible decisions.

[78crusader]

All valid points.  But here is my question: if VU is in the quiet (and probably more lucrative) part of an endowment campaign that has been going on for a while now, shouldn't the endowment show a growth of more than 0.8%?  That is you would expect to see if VU had NOT raised any additional money for the endowment over the past 12 months.

Paul

[vu72]

All valid points.  But here is my question: if VU is in the quiet (and probably more lucrative) part of an endowment campaign that has been going on for a while now, shouldn't the endowment show a growth of more than 0.8%? That is you would expect to see if VU had NOT raised any additional money for the endowment over the past 12 months.

Paul

Good question.  I have emailed one of the senior fund raisers who I know and asked the question, "when did the quiet phase begin?"  I suspect the answer is more recently then you might think.  Remember, the report is question cut off June 30, 2015.  Since then (June 30)  $12 million in gifts have been noted in the news on the Valpo main site. That's over 5% growth right there.

[crusadermoe]

Maybe those recent big endowment gifts of $12m are just pledged and are not paid very far yet.   It's a long road to big gains unless the money is cash in.