Moody’s Investors Service downgraded Webster University’s bond rating from A2 to Baa1. The Baa1 rating displays Webster as a moderate credit risk.
Moody’s ratings show the likelihood of bond investors receiving full returns on their investments. The report attributed Webster’s downgrade to missed budget goals and both financial reserves and revenue decline throughout the last five years. Moody’s also expects additional decline for fiscal year 2019.
Joe Mielenhausen works as a senior communications strategist at Moody’s. He wrote in an email that if Webster issued new bonds, it would likely pay a higher interest rate with a Baa1 rating than it would with an A2 rating.
“[Webster’s rating is] not a junk bond rating or anything like that. It’s still, you know, relatively speaking, not terrible,” Mielenhausen said.
Director of Public Relations Patrick Giblin said the university has been finding new ways to lower spending. Webster now reviews every contract it receives from outside companies. In the past, contracts under a certain amount of money could be signed by individual units within Webster.
“So sometimes we’d have three, four or five contracts that were providing the exact same service to three, four, five units,” Giblin said. “Now they’re taking a look at that, identifying them and saying, ‘Well, why don’t we just have one company provide that service to all five units?’”
Webster also began reviewing job vacancies. The university now checks if the job needs to be modernized, filled immediately, or eliminated.
Rick Meyer, Webster’s interim chief financial officer, said he knew the information presented in the report before Moody’s released it. He said the report didn’t change the budget strategies currently up for approval because he already factored in the information.
Meyer never worked in higher education before coming to Webster in August. Meyer said he took an aggressive approach for the 2019-20 fiscal budget despite being new to the education environment.
“I’ve got about 40 years and a lot of gray hairs as far as running businesses and managing budgets,” Meyer said. “Managing this budget process is nothing new.”
Meyer said he wants to be internally creative with the budget, instead of imitating other universities. He said in order to bring a fresh strategic look to Webster, the university hired John Pyle as its chief innovation officer.
Pyle started at Webster in June. He heads four of Webster’s implementation teams: academic partnerships, continuing education and professional development, new programs and current programs.
These teams of volunteer faculty and staff search for ways to increase Webster’s revenue. They provide outlines of whether Webster should implement new programs and projects.
“We’re finding new ways to create content and deliver content that may not be in the traditional degree setting,” Pyle said.
The programs the teams currently create are not degree offerings. They are geared toward students wanting additional training, not seeking a full degree program.
The programs are labeled as a noncredit-bearing certificate, badge, or continuing education unit. Pyle said he wants to find different types of credentials and models to appeal to more students. The programs and opportunities need to match Webster’s mission and enhance student experience, according to Pyle.
“What [the teams have] done is really set the stage on how to expand current programs and then create more of a dated, informed process as we think about new academic programs,” Pyle said.
Pyle said he focused on student demand, market research, and new locations, like Webster’s Master’s degree program in Uzbekistan that started in September. He said he wants to find programs and locations that appeal to a greater range of students.
Webster Provost Julian Schuster said the university is trying to move away from commodity-type programs. He said he wants to focus on sought-after programs like computer science and cybersecurity.
Schuster said these types of programs will help increase Webster’s revenue and reverse the negative trends in Webster’s enrollment.
“Along with improvements in the core structure, our university’s success hinges upon arresting the decline in the enrollment and growing the enrollment.” Schuster said.