Citing "sustained decreases" in revenue from students at Saint Michael's College, Moody's Investors Service has downgraded the Colchester school's bond rating.

Net tuition revenue decreased 15 percent between fiscal 2015 and 2019, and enrollment declined 20 percent, according to the February 20 downgrade announcement.

Moody's reported a slip from Baa1 to Baa2 bond status. It also warned of a "negative outlook" for the fiscal health of the college, which was founded in 1904 by the Society of St. Edmund Roman Catholic order of priests.

"The negative outlook reflects the possibility of additional credit deterioration if the college is unable to stem enrollment losses and improve financial results,"
the ratings company wrote.

The announcement noted that leaders of the small Roman Catholic college have taken steps to deal with the enrollment squeeze, including faculty reductions. The college's small size limits its ability to cut costs, Moody's said.

School officials downplayed the significance of the Moody's decision.

“The immediate impact of this recent bond downgrade is very small, as all of our current debt is fixed-rate and we have no current plans to issue new debt," Rob Robinson, St. Mike’s vice president for finance, wrote in an email to Seven Days.

Three colleges in Vermont closed last year and a fourth will shut down this year. Robinson made note of the difficult environment for higher education inside and out of the state.

"Saint Michael’s College is facing the same enrollment pressures as all other schools regionally and nationally, resulting from a well-documented change in behavior in college enrollment, which is decreasing revenues for virtually all colleges," Robinson wrote. "Balancing those forces, Saint Michael’s is acting pro-actively with exciting new programs in health science, the environment and criminology, and under the steady leadership of President Lorraine Sterritt our future is bright."

The outlook could improve for St. Mike's, Moody's allowed, "if enrollment shows signs of stability." 

The college reported operating revenues of $73 million for fiscal 2019 and enrolled 1,721 full-time-equivalent students last fall.