Inside Rensselaer

CFO Reports on Financial Health of Institute at Town Meeting

* CFO Reports on Financial Health of Institute at Town Meeting

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During the Nov. 16 Town Meeting, Vice President and Chief Financial Officer Virginia Gregg presented a short summary of the current financial health of the Institute. She said The Rensselaer Plan has helped propel the Institute forward from the difficult situation during the 1990s when student demand was weak, growth in research spending was flat, and some of the campus facilities were falling into disrepair.

Research awards and funding have more than doubled since then, she said, while student demand is robust and the physical campus continues to undergo a dramatic transformation. Execution of The Rensselaer Plan’s vision was jump-started by the $360 million transformational gift, and has been continued with effective use of debt and by careful budget redirection.

Still, she explained, the Institute continues to recover from the 2008 economic crisis and Great Recession. The average endowment, including Rensselaer’s, has climbed back to only about 70 to 80 percent of 2007 values, while restructured debt is more expensive but has helped level out ongoing payments.

Challenging financial markets also have impacted the Institute legacy defined benefit pension plans for staff and faculty, which have been closed to new participants since 1993. To help continue funding of those plans, Gregg explained, some of the borrowing by the Institute in recent years has been used for pension purposes.

Gregg later clarified misconceptions about the Institute’s credit rating, informing the community that it is not at a speculative grade, but at an A3, stable rating per Moody’s. “Moody’s U.S. municipal rating definitions indicate that ‘issuers or issues rated A present above-average creditworthiness relative to other U.S. municipal or tax-exempt issuers or issues,’” she said. “Issuers or issues rated at the next rating grouping, Baa1, Baa2 and Baa3, which includes three distinct rating subcategories, represent average credit worthiness, and are not considered speculative grade.

“We are managing our way through these financial challenges,” she said.
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Inside Rensselaer
Volume 5, Number 19, December 9, 2011
©2011 Rensselaer Polytechnic Institute
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