S&P Global Ratings applauded the System’s efforts to combat demographic challenges and acknowledged it was important for the State to continue to increase investment in UMS operations and infrastructure
ORONO — S&P Global Ratings announced yesterday afternoon it had reaffirmed the University of Maine System’s AA- credit rating based on its importance to the state’s future success, effective leadership and financial management, and increasing support from public and philanthropic sources.
Despite “significant” capital needs and “unfavorable” demographics that until this year have driven enrollment decreases, the respected rating agency maintained its second-highest investment grade for the System. For the third straight year, the outlook was negative.
The report from S&P details the age of Maine’s and New England’s population and a declining graduating high school-aged population but lauds the System for its efforts led by Chancellor Dannel Malloy to overcome those demographic difficulties through innovation and new strategic initiatives. Among them are the growth of free UMS early college, a direct admissions pilot, the recently signed Transfer ME agreement that guarantees admissions to Maine community college graduates, enhanced online programming for both undergraduate and graduate students, and strengthened retention efforts
“Overall, we believe the System has faced and continues to face serious challenges stemming from Maine’s demographic situation, but believe that management has implemented numerous, well-derived strategies and is developing further strategies to combat this pressure,” the report notes.
The agency also credits UMS for an “impressive breadth of course and degree offerings” and highlights the University of Maine’s recent achievement of the prestigious Carnegie R1 classification for very high research activity. According to S&P, the flagship’s R1 designation affords UMS and the state the ability to attract significant public and private research funding.
“Today’s rating reflects the strategic vision and the extraordinary efforts of our entire team. I am proud of our progress and excited about what it means for our System and this state, for which Maine’s public universities are the largest driver of workforce and economic development,” said Chancellor Malloy. “I want to thank Governor Mills, the Legislature, and our corporate and community partners for their incredible investment and Maine families for entrusting us with their higher education as well as tuition and tax dollars. By building upon this support and our world-class education and research capabilities, I am confident our System will even further strengthen our fiscal position and our positive impact on Maine’s people and economy.
Amid financial resources that are “somewhat modest” compared to peers, S&P’s ratings reflect the System’s “prudent financial management policies” under the leadership of Vice Chancellor for Finance and Administration Ryan Low, as well as growing appropriations from Gov. Mills and the Maine Legislature for both operations and infrastructure improvements. A historic $320 million grant from the Harold Alfond Foundation, known as UMS TRANSFORMS, also contributed to the System’s strong rating.
S&P concluded that the continued growth of public funding, particularly to address $1.6 billion in deferred maintenance from decades of underinvestment in the UMS statewide physical plant, will be “imperative to the System’s long-term success” as well as maintaining the rating in the future.
