The University of Missouri System has a negative financial outlook but its overall credit rating remains unchanged, Moody’s Investor Services reported Thursday in a new credit opinion.

UM remained in the top 10 percent of higher education institutions with a Aa1 rating, the second highest on Moody’s scale. The outlook was changed from stable to negative due to enrollment declines and reduced state funding, Moody’s stated in a release accompanying the opinion report.

“While the system has identified material cost reductions, some alternative revenue growth prospects, and internal reallocations, management’s ability to successfully execute plans and meet financial targets is yet to be proven,” Moody’s stated.

In a news release, the system stated it was pleased with the report because it maintained the high credit rating. President Mun Choi said he recognizes the fiscal problems identified by Moody’s.

“The University of Missouri is already putting effective plans into action to increase revenues and lower costs throughout the UM System,” Choi said. “Strategic investments in student and faculty success are top priorities on each of our four campuses as we remain focused on our mission of teaching, research and engagement.”

First-time freshmen enrollment for the fall semester on the Columbia campus is expected to be about 4,000 students, more than 2,000 below the record set in 2015. Overall enrollment on the campus is expected to be about 30,800, almost 5,000 fewer than in 2015.

In the same period, the university has seen reductions in its state support, including $31.4 million cut from the budget for the fiscal year that ends Friday and another reduction of at least 6.7 percent in the coming year.

“The negative outlook reflects potential credit pressure should identified (sic) initiatives to reduce expenses and grow revenues fail to result in sustained at least break-even operating performance,” Moody’s stated.

The university’s strengths are a $3.2 billion revenue stream, $3.6 billion in cash and investments and a health system that is performing well, Moody’s stated. The university is also doing well with fundraising, Moody’s statement reported.

MU’s Athletics Department reported a record fundraising year. Figures are not complete for the Columbia campus as a whole, but it raised $177.1 million in the year ending June 30, 2016, a record for the campus.

The strengths are potentially offset by weak enrollment and a growing pension liability, Moody’s stated.

rjkeller@columbiatribune.com

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