Fitch Ratings upgrades its unenhanced rating on approximately $6.5 million of outstanding student health center revenue bonds issued by the Florida Board of Education and Florida Board of Governors, on behalf of the University of Central Florida (UCF), to 'A+' from 'A-'.
The Rating Outlook is Stable.
RATING RATIONALE:
--The rating upgrade reflects consistently solid coverage of health center revenue bond debt service, which is paid from a mandatory student health fee assessed to all students at the main campus.
--UCF's strong demand and continued enrollment growth has strengthened the pool of pledged revenues from which student health center revenue bonds are paid.
--Unlike other UCF auxiliaries, the student health center has a low debt burden, with no additional borrowing plans over the near term.
KEY RATING DRIVERS:
--Maintenance of student health care center revenue bond debt service coverage at or above current levels.
--Enrollment stability and/or timely increases in student health fees facilitating the sufficiency of pledged revenues.
SECURITY:
The bonds are secured by a lien on student health fees and associated investment earnings.
CREDIT SUMMARY:
UCF Health Services' main purpose is to provide students with medical care and wellness services. The students are charged a health fee which is part of the tuition for each credit hour for the main campus.
UCF Health Services' operating margins have averaged 10.5 percent for the past three fiscal years. Operating revenues in fiscal 2009 increased due to higher student health fees; the student health fee has been increased to $8.99 per credit hour for fiscal 2010 and the University Fees Committee, made up of faculty and student representatives, has recommended an increase to $9.52 for fiscal 2011. Periodic fee increases provide stability for ongoing operations. However, the health center fee along with the activity and service fee and the athletic fee combined cannot exceed 40 percent of the base undergraduate tuition.
At fiscal year end 2009, outstanding student health center revenue bond debt totaled $6.5 million. Pledged revenues totaled $9.8 million covering MADS by 15.7 times (x). No additional borrowing in support of the student health center is expected over the near term.
Available funds, defined as cash and investments not permanently restricted, while modest at $1.1 million, increased by 105 percent from fiscal 2008. Available funds cover operating expenses of $12 million and MADS of $621,000 by 9.9 percent and 190 percent, respectively.
Outstanding debt totals a low $6.5 million, and currently no additional capacity is required for the health center. The debt burden is low at 4.6 percent, offset by unrestricted revenues of $13.4 million. Pledged revenues as reported totaled $9.7 million covering MADS 15.7x.
Established in 1963 and initiating classes in 1968 as Florida Technological University, UCF is one of 11 institutions of public higher education in the State University System of Florida (rated 'AA' by Fitch). A comprehensive, metropolitan university, UCF offers 214 bachelor and advanced degree programs through 12 colleges, serving over 53,000 students.
Applicable criteria available on Fitch's web site at 'fitchratings.com' include:
'College and University Rating Criteria', Dec. 29.
'Revenue-Supported Rating Criteria', Dec. 29.
Additional information is available at 'fitchratings.com'.
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