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Extra Credit - 2020 Sector Outlook: Charters, Higher Education, Municipal Housing


Table Of Contents: S&P Global Ratings Credit Rating Models


Credit Outlook For U.S. Public Finance: Positive Momentum Continues


U.S. Higher Education Rating Actions, 2021


Outlook For Global Not-For-Profit Higher Education: Out Of The Woods, But Not Yet In The Clear

Listen: Extra Credit - 2020 Sector Outlook: Charters, Higher Education, Municipal Housing

Outlook season rolls on here at Extra Credit. Host Bobbi Gajwani joined by S&P Sector Leaders Jessica Wood and Marian Zucker take on 2020 outlooks in the Charter Schools, Higher Education, and Municipal Housing sectors to share what Ratings is monitoring in the upcoming year.

    • Jessica Wood, Senior Director, and Education Sector Leader presents a tale of two sectors in Charters and Higher Education. The outlook for charter schools is stable reflecting the strengths of uplifting credit factors mitigating the credit pressures. Though parent demand for charter schools remains strong, the most dominant risk is political uncertainty. The political landscape is largely mixed with some states passing stricter legislation while other states work to decrease the gap in funding between public schools and charter schools. Jessica concludes her discussion of charter schools highlighting continued favorable economic indicators leading to lower borrowing costs and increased per pupil funding which is expected to remain stable and growing in fiscal 2020.

    • The outlook for the Higher Education sector, by contrast, remains negative for the third consecutive year. 88% of outlooks are stable, however there are nearly three times the number of negative outlooks than there are positive outlooks reflecting the operating challenges schools are facing in the sector. Enrollment pressure and increasing costs remain persistent hurdles for schools to clear, offsetting credit positives including strong economics, increasing state funding, and diverse sources of funding. Looking further into 2020 schools at the higher end of the rating spectrum will likely strengthen their position, while schools around the ‘BBB’ category and below will likely see more rating actions. Click here for the Charter School and Higher Education sector outlooks in full.

    • Marian Zucker, Senior Director, and Municipal Housing Sector Leader provides a look into the housing sector and potential challenges the sector may face in the near future. The sector’s stable outlook reflects strong U.S. economic fundamentals and strong metrics in the public finance housing sector. Marian posits consistent labor force participation, wage growth, and deleveraging household balance sheets could mean increased activity in the housing market during the upcoming year. Headwinds that could challenge the sector’s stability include changes to federal housing policy proposed changes to the Community Reinvestment Act, and outside of legislation, housing affordability and event risk. Learn more about S&P Global’s economic recession model and the complete Municipal Housing sector outlook.

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