July 2 - Fitch Ratings has affirmed the 'A' rating on approximately $135.4 million of fixed-rate revenue and refunding bonds issued by the New Jersey Educational Facilities Authority (EFA) on behalf of New Jersey City University (NJCU, or the university). The Rating Outlook is Stable. SECURITY The bonds are an unsecured general obligation of the university, payable from all legally available funds. KEY RATING DRIVERS STABLE CREDIT CHARACTERISTICS: NJCU's historically breakeven operations, relative stability in undergraduate enrollment and an experienced management team are the support for the 'A' rating. Counterbalancing these attributes are the university's slim financial resources and fairly high debt burden. RELATIVE STABILTY IN OPERATING PERFORMANCE: Despite the challenging funding environment in the state, management has produced near-balanced operations over the past five years. Despite a slight deficit in fiscal 2011 (0.9%), indications are that fiscal 2012 will end with a small surplus. GRADUATE PROGRAM DECLINES MANAGED TO-DATE: Over the past few years, the graduate cohort has experienced significant declines. However, the growth of the undergraduate cohort has largely negated the financial impact associated with the declining graduate enrollment. SLIM BUT IMPROVING RESOURCE LEVEL: Available funds are fairly limited; however, the level has increased the past few years. This resource base provides modest coverage of operating expenses and debt. CREDIT PROFILE Total headcount enrollment in fall 2011 was 8,346, of which 6,656 (80%) were classified as undergraduate and 1,690 as graduate. While undergraduate enrollment has continued to show growth, the graduate cohort declined 12% in fall 2011 over the prior year, following a 17% drop the year before. These declines have been attributed to less interest in the graduate education programs due to the economic constraints within the state. The two largest components of the revenue stream are student generated fees and state appropriations, accounting for 39% and 35%, respectively, of total operating revenues. Over the past three years operations were essentially flat, with a three-year average operating margin of approximately (0.97%). Expectations for fiscal 2012 reflect a small surplus, which appears reasonable given Fitch's review of interim statements. This satisfactory financial performance is impressive given the fluctuations in support from the State of New Jersey (GO bonds rated 'AA-' with a Stable Outlook by Fitch) and the university board's desire to keep tuition affordable. The university's liquidity level remains slim, but improving. Available funds (cash and investments not restricted) of $35.6 million are up 10% over the prior year, and equal approximately 25% of operating expenses and debt. NJCU's debt burden has increased in recent years and is fairly high, reaching 7% in 2011. The university's history of balancing operations mitigates some concern over this high burden. There are likely to be additional capital needs within the next few years, including the construction of student housing and a multipurpose academic facility; however, no timing and/or financing methodology has been determined. The university's president has recently retired, therefore non-critical capital projects have been put on hold pending the start of a new president on Aug. 6, 2012. Fitch will monitor the impact any additional debt, if issued, would have on the already highly leverage position. Opened in 1929, and granted university status in 1998, NJCU is a four-year coeducational public university located in Jersey City, NJ. NJCU offers 41 baccalaureate degree programs in the arts and sciences, professional studies and teacher education. In addition, the graduate studies program offers 27 masters degree and diploma programs. NJCU has an urban mission and is primarily a commuter institution, attracting most students from the state's most populated counties.