West Virginia Press Association
CHARLESTON, W.Va. — Dr. Sarah Armstrong Tucker, West Virginia’s Chancellor of Higher Education, today released the following statement following Moody’s Ratings announcing that it has affirmed the West Virginia Higher Education Policy Commission’s Aa3 issuer and revenue bond ratings.
“This affirmation of our bond rating is a direct result of the bold and thoughtful investments made by our state lawmakers. Their confidence in West Virginia’s higher education system has placed the Commission on a solid financial foundation.
“This is evidenced through initiatives like tuition-free community college through West Virginia Invests and no-cost college courses for high school students through our new dual enrollment program, and through strategic investments in campus deferred maintenance and need-based financial aid amid recent FAFSA challenges.
“Through smart new policies and programming, we are empowering students and strengthening our institutions, which in turn bolsters the state’s financial health. As higher education institutions across the country face bond rating downgrades, this good news reflects the effectiveness of our state’s policies and investments in higher education.
“We are grateful for the ongoing partnership with our lawmakers and remain committed to increasing our state’s college-going and attainment rates so our students, communities, and economy can thrive.”
Moody’s release
New York, March 26, 2025 — Moody’s Ratings (Moody’s) has affirmed West Virginia Higher Education Policy Commission’s (WVHEPC) Aa3 issuer and revenue bond ratings. The Commission’s total adjusted debt was $1.7 billion as of June 30, 2024. The outlook is stable.
RATINGS RATIONALE
The affirmation of the WVHEPC’s Aa3 issuer rating is supported by its substantial financial resources and scale, strong institutional management and important role as the largest provider of higher education in the State of West Virginia (Aa2 stable). It benefits from sizeable overall wealth, providing for solid coverage of debt and operations. Strong financial management provides for healthy operating performance with an average EBIDA margin of 13% over the past five fiscal years. WVHEPC’s operations are supported by improving state appropriations, particularly toward strategic academic initiatives. While in-state demographic pressures and low college participation rates suppress enrollment growth prospects, pledged revenues, including state lottery funds, remain relatively stable. Three-year average debt service is a healthy 2.6x as of fiscal 2024.
RATING OUTLOOK
The stable outlook incorporates our expectations of relatively stable pledged revenues providing for above 1.5x coverage of associated debt service. It also incorporates our expectations that the system will maintain sound operating performance and manageable financial leverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
-Material increase in total cash and investments to debt above 2x
-Strengthening in student demand, leading to sustained revenue growth
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
-Sustained decline in operating performance below 10% EBIDA and debt service coverage below 1.5x
-Deterioration in unrestricted liquidity
-Erosion in credit quality of the state or continued decline in state support
LEGAL SECURITY
The commission’s outstanding revenue bonds are secured by a first lien on certain revenues and are on parity with outstanding bonds of the commission. Pledged revenues consist of limited mandatory student fees and a subordinate lien on certain revenues of the State Lottery Commission (Excess Lottery Revenue Fund). Obligations are joint and several liabilities of the 19 distinct constituent institutions in the higher education system in West Virginia. Revenues including student fees, investment earnings and a $15 million annual pledge of lottery revenues provided 1.6x coverage of debt service in fiscal 2024 and management forecasts similar coverage in fiscal 2025. The ability and commitment of the commission and state treasurer to make up a shortfall in the student fee revenues paid by any individual institution with funds from other institutions enhances the legal security.
PROFILE
The West Virginia Higher Education Policy Commission serves as the state agency responsible for developing, establishing, and overseeing the implementation of a public policy agenda for the state of West Virginia’s colleges and universities. The commission also issues debt on behalf of the institutions for academic centered capital needs, which is secured by state/lottery revenues or tuition and fee revenue or both. The public university institutions under WVHEPC have a combined revenue base of $2.3 billion and serve about 49,000 full-time equivalent students.
METHODOLOGY
The principal methodology used in these ratings was Higher Education published in July 2024 and available at https://ratings.moodys.com/rmc-documents/425580. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.
For any affected securities or rated entities receiving direct credit support/credit substitution from another entity or entities subject to a credit rating action (the supporting entity), and whose ratings may change as a result of a credit rating action as to the supporting entity, the associated regulatory disclosures will relate to the supporting entity. Exceptions to this approach may be applicable in certain jurisdictions.
For ratings issued on a program, series, category/class of debt or security, certain regulatory disclosures applicable to each rating of a subsequently issued bond or note of the same series, category/class of debt, or security, or pursuant to a program for which the ratings are derived exclusively from existing ratings, in accordance with Moody’s rating practices, can be found in the most recent Credit Rating Announcement related to the same class of Credit Rating.
For provisional ratings, the Credit Rating Announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating.
Moody’s does not always publish a separate Credit Rating Announcement for each Credit Rating assigned in the Anticipated Ratings Process or Subsequent Ratings Process.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.
Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating.
