The downgrade to A1 is based on Haverford College’s relative weakening profile as very low revenue growth in recent years has contributed to ongoing operating deficits. As a result, financial resource growth has been stunted compared to peers and competitors. Operating deficits are expected to continue through at least 2017, albeit at lower levels as the college addresses current issues of fundamental financial imbalance. Financial reserves declined modestly in FY 2015 based on unaudited financial statements despite an ongoing fundraising campaign. Absent increased philanthropy and endowment growth, Haverford’s operating performance will continue to be challenged by its need-blind admissions policy.
The A1 rating positively acknowledges the college’s comparatively strong market position as an elite liberal arts institution in suburban Philadelphia. Liquidity remains ample, fundraising is good, and financial reserves still provide a strong cushion of debt and operations, providing Haverford with significant time to address its current financial imbalance.
Offsetting challenges include elevated financial leverage with minimal principal amortization until 2022 and modest cash flow providing thin debt service coverage.