Fitch Affirms University of Maine System's Rev Bonds at 'A+'; Outlook Stable

NEW YORK--(Business Wire)--
Fitch Ratings affirms the unenhanced 'A+' rating on approximately $46.6 million
of outstanding revenue bonds issued by the University of Maine System (UMS, or
the system). The bonds are a general obligation of UMS. The Rating Outlook is
Stable.

The 'A+' rating reflects the system's history of positive operations supported
by a diverse and growing revenue base; limited though adequate liquidity;
manageable debt burden; and its essentiality to the state's goal of economic
development. Primary credit concerns are Maine's declining high school
population and low college attainment levels, and the potential for declining
state support in a slowing economy.

UMS has a history of positive operations. In fiscal 2008, the system's operating
margin was 0.4%. UMS benefits from a diverse revenue base. Although state
operating appropriations represent the largest revenue source (30.4% in fiscal
2008), this proportion has been incrementally reduced by changes in tuition
revenues (24.0%), grants and contracts (20.6%), investment income (2.4%), and
gifts (2.3%). While UMS's liquidity is limited, it is uptrending. As of June 30,
2008, the system had available funds (cash and investments less permanently
restricted funds) of $119.9 million, which represented 18.4% of operating
expenses and 55.1% of total outstanding debt. As a majority of UMS's investments
are held in short- to intermediate-term investments, the system's total
investment portfolio has not been adversely affected by recent market turmoil.
The system's total outstanding debt in fiscal 2008 was $217 million, including
$1.3 million in capital leases. UMS has a manageable debt burden as debt service
represented 2.6% of total revenues. The system's conservative debt profile is
managed under state constitutional debt limits and augmented by general
obligation bonds, which do not burden the balance sheet. All of the system's
outstanding revenue bonds are fixed-rate. The system has reached its $220
million debt authorization set by the state with its 2007 bond issue. However,
the state remains able to issue general obligation debt on behalf of UMS. In
addition, the ceiling excludes refunding revenue bonds, bonds issued to refund
general obligation debt of the state, and debt issued to fund costs of issuance
and reserves.

The University of Maine (UM) in Orono, established in 1865, is the state's only
land and sea grant university and the system's flagship campus. UMS was formed
in 1968 and includes all seven public institutions of higher education in Maine,
except for the Maine Maritime Academy and the state's community and technical
colleges. In addition, UMS offers access to higher education through numerous
outreach centers and web-based distance education programs.

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
Mary Catherine Messner, CFA, FRM, +1-212-908-0738
Douglas J. Kilcommons, +1-212-908-0740
Cindy Stoller, +1-212-908-0526 (Media Relations)
cindy.stoller@fitchratings.com

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