Regent University is in dire financial straits, but it received help last week from the Christian Broadcasting Network, according to a report released on Wednesday by Moody's Investors Service.
M.G. (Pat) Robertson, the influential evangelical broadcaster, founded both the network and Regent University, which was originally called CBN University. Both are located in Virginia Beach, Va., and Mr. Robertson is Regent's chancellor and president.
The university's fiscal footing began to slide in 2006, when its bond rating was downgraded because of deficits and weak fund-raising. Regent's money problems have accelerated since then. Annual operating deficits averaged 26 percent from 2007 to 2009, according to Moody's, and its endowment draw was a whopping 11 percent in 2008, more than double the normal payout rate.
While the balance sheet improved last year, thanks to increased tuition revenue from a growing undergraduate enrollment, Regent has a dangerously small amount of cash on hand to pay the bills.
Moody's reports that last year the university had only $1.3-million in liquid assets, which could cover roughly six days of operating costs. But Mr. Robertson's television network came to the rescue on June 24, relaxing restrictions on a $95-million gift it made to the university in 1992. The money had been classified as "permanently restricted net assets," but now Regent will be able to spend it freely, which will improve the university's liquidity crisis.
But the university is hardly out of the woods. The ratings agency remains negative on its outlook, and it affirmed a relatively weak Baa2 bond rating on Regent's debt. And Moody's says an improvement in Regent's rating is unlikely.
"Moody's negative outlook reflects the expectations that the university will continue to experience deficit operating performance, which will continue to deplete or, at least hamper, financial resource growth," the report says.
Carlos Campo, president-elect of Regent, said the Moody's report "clearly reflects the fact that the university has taken aggressive and appropriate steps to create a sustainable budget model for its future."
"While some fiscal challenges remain," he continued, "the outlook for Regent University is quite strong overall." Mr. Campo also said that the university's expected endowment draw for 2010 and 2011 will be closer to 6 percent, and noted that both applications and enrollments are on the rise.
Mr. Campo said that the university had not received a "bailout" from the Christian Broadcasting Network, but rather that the network had merely confirmed that the gift was no longer restricted.