The rating on Ohio Higher Education Facilities Commission's bonds, issued for Ashland University (AU), reflects: Limited admissions flexibility, High dependency on student-generated revenues, and Poor operating liquidity. The outlook revision is due to AU's drawn-down cash position. A downgrade is precluded, however, given: Solid finances, Low debt burden, Short-maturity (two years) debt, and Adequate debt liquidity. Historically, operations generate small or break-even margins. Fiscal 1998's surplus was 1.3%, compared with 0.1% in 1997. Student-generated tuition and fees account for 94.4% of revenue, making AU particularly vulnerable to enrollment shifts. Financial aid costs are moderate, accounting for 15.6% of budget. AU's endowment market value has more than tripled since 1990 and now totals $34.9 million. Continued future growth in endowment may
