7: Bond Rating - The Bugeater

This is part of a series on the financial analysis of the NU System. Go to the previous post or the next post.

This installment of our financial analysis may be the most wonky of all, but it is about one of the most striking aspects of the report: NU’s AA bond rating.

NU is among the top 8% of universities in terms of its bond rating, per the University’s own reporting in 2023. Bond ratings represent the financial health of an organization, including its creditworthiness. Bond ratings are much like a personal credit score. It is safe to say, NU’s bond rating probably looks better than that of any faculty member still waiting on their Public Service Loan Forgiveness. NU’s bond rating demonstrates a low level of risk to investors and results in lower interest rates.

According to the University’s own story from 2023, “S&P’s report also highlights the Board of Regents’ and administration’s conservative budgeting and capital planning practices, NU’s strong fundraising capabilities, historically stable support from the state, and its status as Nebraska’s only public research university system as positive factors.”

The AAUP report includes increases in both research revenues and expenses, including increases from federal funding. It also demonstrates that what has been spent on instruction has been flat to declining.

The 2023 article ends with the statement “The goal is to free up resources to not only close the university’s budget shortfall but invest in priorities to help the university compete at the highest levels.” Shifting away from full-time to adjunct faculty surely could free up resources for other things. Specifically, shifting to adjuncts could hypothetically be used to game the metrics that the AAU (the Association of American Universities, not to be confused with the AAUP!) uses to evaluate universities, because it runs calculations based on full-time faculty members. Replace some full-time faculty with part-time faculty and watch your metric for publications per full-time faculty member rise! In 2024, when Chancellor Bennett was asked how he would resist the urge to shift to adjuncts to improve our AAU metrics, he refused to answer.

Yet, if this is geared at rejoining the AAU–and we have all seen the top-down push to rejoin–it remains unclear how that will happen, especially given that the AAU finds the breadth and quality of graduate programs important, and the programs identified for elimination are heavily focused on graduate education. When President Gold spoke at the State of the University this fall, it was clear that the focus was not on UNL and not on education, the humanities, and the social sciences. Yet, those fields are the very ones that make a university comprehensive, along with our STEM programs.

In other words, if these cuts are engineered to help us rejoin the AAU, the NU system leadership apparently failed to get the message about investing in and valuing the core educational mission and only registered the part about slashing and depriving. And again we ask, to what ends?

The S&P website says that we cannot share NU’s current bond rating information without their permission. So if any of you would like to see what we would describe as NU’s positive outlook for yourselves, you can sign up for your very own free account and look at all their reports on NU going back over a decade, and keep that information to yourselves as well.

Our bond rating is likely a priority for NU leadership–we have to keep it shiny so we can finance the $2.2 billion dollar hospital project in Omaha, with funds likely also coming from this state funding program that was apparently targeted to UNMC, since there are only two medical colleges in Nebraska, UNMC and Creighton.

Without transparency, we are all left guessing how a university consistently in the top 8% of universities for financial strength can be making program cuts and other cuts that endanger the teaching mission of the university.

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