Two major international credit rating agencies, Standard & Poor’s and Fitch, have rated $250 million bonds to be issued by City Colleges of Chicago in October as AA stable and AA- stable, respectively, which will be used to support City Colleges’ five-year $524 million capital plan. The plan includes a new Malcolm X College, a new Transportation, Distribution and Logistics Training Center at Olive-Harvey College as well as upgraded classroom technologies and new teaching and learning facilities across the seven college system.
“This is just the latest example of how through solid management and focusing on programs that train our students for 21st century jobs, City Colleges of Chicago is leading the way in creating a highly trained, specialized workforce and ensuring our City’s future economic vitality and competitiveness,” Mayor Rahm Emanuel said. “City Colleges of Chicago is reinvesting these funds into building world-class facilities and providing access to in-demand job training that will put our students on the path to a brighter future.”
Explaining its rating, S&P cited City Colleges’ “recent history of positive financial operations, “diverse operating revenue streams” and “strong available reserves...” Fitch agreed, noting City Colleges’ “solid financial profile” that has “allowed for the buildup of sizable reserves.”
“We are pleased the rating agencies recognized our strong capital reserves, track record of balanced budgets, and sound financial practices in determining their ratings,” said Chancellor Cheryl Hyman. “With the funds available through our bond sale, we will launch major capital improvements to prepare our students for success in further college and careers.”
“Operating trends generally have been positive, with surpluses generated in four of the past five years resulting in the build-up of ample reserves,” Fitch noted, adding that “operating results [are expected] to be positive over the next several years, as the district anticipates deriving $109 million for the capital program from operations.”
Under Chancellor Hyman’s leadership, City Colleges’ fund balance exceeds 20%, including $70M in available working cash. The FY13 operating surplus is expected to be 10% of operating revenues, and current reserves for capital total $170 million. City Colleges consistently generates significant operating surpluses which are then directed to capital to support academic programs after an operating reserve is maintained in general accounts. City Colleges has achieved a balanced budget in the last three years with no increase in property taxes. The College has also made strong academic gains – with the highest number of degrees awarded in City Colleges’ history.These are new ratings for City Colleges of Chicago.
City Colleges expects to sell its 35-year bonds the week of October 7th.