MONTGOMERY, AL (WSFA) - Credit rating agency Standard & Poor's has upgraded its financial outlook on Alabama State University from "negative" to "stable", according to a statement released Tuesday by the university.
However, S&P has lowered its long-term rating for ASU from a "B" to a "B-". A downgrade to a credit rating can make the interest rates on ASU's loans higher.
ASU says the agency upgraded its outlook based on several factors, including a lack of vacancies on ASU's Board of Trustees, as well as the hiring of a new president and a new chief financial officer.
"We are pleased with the upgrade in our financial outlook..." said ASU President Dr. Quinton Ross, Jr. "The upgrade is especially encouraging when considering a recent report in the Chronicle of Higher Education that Moody's Investors Service has changed its overall outlook for higher education from stable to negative, based on the sector being 'highly exposed to changes in federal policy or funding.'"
"Addressing the University's finances is a priority of this administration and the ASU Board of Trustees," Ross added. "The upgrade shows that we are moving forward as a University and our commitment is to continue to make decisions that are fiscally sound with a goal of placing ASU on a firm financial footing."
Despite the news not being entirely positive due to the drop in ASU's long-term rating, William Hopper, the university's interim vice president for Business and Finance, added that the credit rating downgrade "is based on financial data from the fiscal year that ended in 2016."
"S&P's stable outlook is based on the stability of the Board of Trustees, the appointment of Dr. Ross and the direction the administration is taking," Hopper said. "Although the credit rating was reduced, the new administration has been addressing many of the concerns that were identified by S&P and is confident that we will improve our financial ratings in the future."