What Standard and Poor's Ratings Services characterized as a “sharp deterioration in financial operations in fiscal 2012” at Harrisburg Area Community College contributed to its decision to lower HACC's bond rating from A to A-.
Other negative factors that S&P cited in the decision were a decline in enrollment, an accreditation warning issued by the Middle States Commission on Higher Education in November and constrained future state and local funding.
“The future levels of operating support from the college’s local sponsor remains uncertain at this time, and any large decreases in funding levels could result in high tuition increases for sponsored college students and negatively affect college enrollment,” the S&P report said.
The report listed ongoing financial support from the state and 22 local government sponsors as a positive factor and said it expects that “over the two-year outlook period, enrollment will stabilize and the college will balance its financial operations at least on a cash basis and maintain financial resource ratios.”
“The rating is the result of the current environment in which we are operating. As we resolve these issues, the rating will ultimately reflect that,” said HACC president John J. “Ski” Sygielski said in a news release. “This is also a trend that is happening throughout the country, including Pennsylvania.”
The rating is applied to HACC’s $8 million in bonds to finance the Ted Lick Administration Building. HACC said the lower rating will mean a nominal increase in borrowing costs for the bonds.