Financial metrics for The Lutheran University Association, Inc., d/b/a/ Valparaiso University, deteriorated further in FY24. Table 1/Row 12 indicates that FY24’s operating deficit increased to (USD 7.4m) from (USD 1.1m) in FY22 and (USD 2.6m) in FY23. These results led to lower debt service coverage of 1.12x in FY24, down from 2.23x in FY22 and 1.88x in FY23 (Row 13). The borrower’s fiscal year ends 30 June.

Valparaiso’s short-term liquidity is also weak. Table 1/Row 3 shows that cash and cash equivalents were USD 9.7m in FY24, an increase from FY23’s USD 8.8m but a decline of 46.3% from FY22’s USD 18.1m. In addition, figures in Table 1A illustrate the extent of Valparaiso’s short-term borrowing. The total amount borrowed under the lines of credit totaled USD 27m at the close of FY24, equal to about 25% of that year’s operating expenses net of depreciation. Cash and cash equivalents on that date of USD 9.7m would have been inadequate to pay the line of credit balances of USD 27m.

The university’s most favorable credit characteristic is that cash and investments in FY24 (Row 6) total USD 347.7m, or 332%, of outstanding long-term debt (Row 7).

Table 2/Row 9 shows that Valparaiso’s full-time equivalent (FTE) enrollment dropped to 2,477 in 2024-25 from 3,032 in 2020-21, a decrease of (18.3%). The school’s acceptance rate (Row 3) remained stable at about 75% annually during this time, but the number of matriculating freshman (Row 4) dropped to 623 from 781. Finally, the retention rate (Row 6) has also declined, to 75.4% from 82.5%.

As indicated in the Debtwire Municipals research report of 18 September, steps taken by Valparaiso to address its financial situation include eliminating academic programs and closing its art museum. In addition, the school’s proposed sale of artwork, worth an estimated USD 15m, would generate funds to renovate dormitories.

Some dissatisfaction with Valparaiso’s leadership is evident in that on 23 October, the school’s faculty senate adopted a “no confidence” resolution regarding José D. Padilla, Valparaiso’s president. Following that vote, the school’s board of directors unanimously affirmed its support of the president.

Table 3 indicates that the university draws its students primarily from the State of Indiana and four neighboring or nearby states. The school is in northern Indiana, about 55 miles southeast of the City of Chicago.

Table 4 (click to enlarge) provides information for Valparaiso and eight of its competitors. Valparaiso is one of the smaller schools in Table 4 with an undergraduate enrollment of 2,342 compared to the sample average of 4,658 (Row 3, Columns A and J). Valparaiso performs unfavorably to the mean in a) median debt after graduation (Row 5, USD 26,942 vs. USD 24,792), b) median earnings (Row 6, USD 63,191/USD 74,088), c) retention rate (Row 8, 79%/86%), d) graduation rate (Row 9, 70%/80%), and e) acceptance rate (Row 10, 94%/66%). The most popular fields of study at Valparaiso are nursing, mechanical engineering, psychology, biology, and health services.

Sample trade data for the 1 October 2044 maturity of the tax-exempt Series 2014 bonds are presented in Table 5.

All Valparaiso bonds were sold by the Indiana Finance Authority. Debt service payments are a general and unsecured obligation of the school. There is no debt service reserve or mortgage for the benefit of bondholders. Under bond documents, creditors with mortgage liens or perfected security interests in other university property will be senior to bondholders.

Table 6 contains details regarding Valparaiso’s bond rating.