2008-07-25 23:44:04 -

- Fitch Ratings assigns an 'AA-' rating to the approximately $65,465,000 Trustees of Ivy Tech Community College of Indiana (ITCC, or the college) student fee bonds, series L (the bonds). The bonds are scheduled to sell via negotiation during the week of August 18. At the same time, Fitch affirms the 'AA-' rating on approximately $171,975,000 of outstanding student fee revenue bonds. The student fee revenue bonds are secured by a first lien pledge on student fees, which include all academic fees (including tuition), levied to students attending the college. Beginning in 1971, the legislature provided for the replacement of tuition and fees that were used for student fee revenue bonds debt service. Since then, the legislature has always appropriated

the full fee replacement. The Rating Outlook is Stable.

The 'AA-' rating reflects the fee replacement nature of the bonds, which allows ITCC to recover from the state (lease appropriation bonds rated 'AA' with a Stable Outlook by Fitch) student fees used to pay student fee revenue bonds debt service. Additional strengths include ITCC's steady enrollment growth, geographic diversity, solid operating performance and expenditure flexibility due to the high proportion of adjunct and non-tenured faculty. Major credit concerns for the college include low liquidity and historically limited fundraising. Fitch expects that the college will be able to maintain positive operating margins and modestly increase available funds, and continue receiving strong state support, including timely reimbursement for student fee revenue bonds debt service. In light of projected enrollment growth, the college has developed plans for approximately $100 million in additional debt issuance over the next 1-2 years. However, it is important to note that the issuance of additional bonds is contingent on state approval for full reimbursement of student fees used for student fee revenue bonds debt service.

ITCC's annualized full-time equivalent (FTE) enrollment increased 21% from the 2003-2004 to the 2007-2008 academic years, from 40,913 to 49,445, with approximately 98% of students being Indiana residents. The college projects continued growth with FTEs expected to increase 39%, to more than 68,000, by the 2013-2014 academic year. Since fiscal year 2003 (year end on June 30), operating margins ranged from 6.8% in fiscal 2004 to 3.1% in fiscal 2007. The enrollment growth, along with expense flexibility, contributed to ITCC's solid operating performance.

Fiscal 2007 available funds, defined by Fitch as unrestricted and temporarily restricted cash and investments, were $56.5 million. While the college's ratios of coverage of 14.3% of operating expenses and 22.5% of pro-forma debt are low when compared to other public universities, they are typical for community colleges. Fitch's calculations exclude $48.7 million held by the Ivy Tech Foundation, whose sole mission is to support ITCC.

ITCC was founded in 1963 as the Indiana Vocational Technical College and has grown to 23 campuses throughout the state, with five additional sites expected to be designated as full campuses by January 2009. All of ITCC's various facilities are accredited as a single institution. This past May, the college finalized an agreement with Indiana University, designating ITCC as the primary state provider of two-year associate degrees.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Fitch Ratings, New York
Colin Walsh, 212-908-0767
Eric Kim, 212-908-0527
Douglas J. Kilcommons, 212-908-0740
Sandro Scenga, 212-908-0278 (Media Relations)