May 3, 2024

Moody’s maintains OU credit rating, cites ‘good budget discipline’

Oakland University was recently required to undergo a full credit review by Moody’s Investors Service. During the process, we provided Moody’s details on the financial discipline we have exercised against the backdrop of the many challenges facing higher education. In their final report, Moody’s recognized the challenging demographic environment in which we operate, as the declining number of high school graduates in Michigan creates ongoing challenges for OU and other state public universities. 

Despite these and other headwinds we have been facing, Moody’s maintained our current credit rating, citing in particular our “...stable and strong cash flow arising out of good budget discipline...” Their assessment reflects confidence in OU’s strategic planning, financial discipline, and responsible resource allocation. 

It also reflects that our previous cost containment efforts, which we realize were painful for many in our community, were nonetheless critical in setting up the university for future success. We are grateful for the efforts from faculty and staff across all units to help accomplish this.

While we are pleased for the recognition of the hard work and discipline we have demonstrated to this point, the opinion also highlights challenges on the horizon. Specifically, they foresee ongoing credit challenges from the highly challenging student market and the possibility of deteriorated operating performance if we do not have the ability to absorb potentially slower net tuition revenue growth. If not properly managed, these factors could lead to a credit rating downgrade. 

That is why we must remain steadfast in our commitment to sound financial planning, looking to the future as we are guided by our core budget principles: 1). Student affordability, 2). Taking care of our faculty, staff and other employees, and 3). Funding strategic initiatives.

We believe OU's steadfast commitment to delivering high-quality education and research, combined with our continued financial discipline and vigilance, continues to position us as a reliable and secure investment.