North Idaho College had its outlook revised to negative by Moody’s after management turmoil, including the firing of its president, jeopardized the two-year college’s accreditation.
If the two-year college loses its accreditation, credits students receive for completed courses will not be eligible to transfer to a university. Loss of accreditation could jeopardize federal funding and result in lower enrollment.
Moody’s warned in a December report that unrest or loss of accreditation could affect enrollment.
The community college, located in Coeur d’Alene, is a feeder school of the University of Idaho in Moscow. The college generated nearly $68 million in operating revenue in fiscal year 2021 and had 4,577 students enrolled in fall 2021, Moody’s analysts wrote.
Moody’s revised the outlook from stable to negative and affirmed the college’s A1 issuer and A2 revenue bond ratings.
The college had $8.2 million in outstanding debt as of June 30, 2021, according to Moody’s. The bonds, issued by the North Idaho College Housing Commission, have a final maturity of 2045.
The revised outlook “primarily reflects risks related to governance credibility and board structure,” Moody’s analysts wrote. “These risks are underscored by the dysfunctional board, with a small group of publicly elected board members and high turnover in key leadership positions.”
Rick MacLennan, who has served as president since 2016, was fired in September without cause, according to the spokesman’s review.
The president’s dismissal came at the hands of board chairman Todd Banducci, vice chairman Greg McKenzie and administrator Michael Barnes in a 3-2 vote after instituting a mask mandate to protect the students against COVID-19 following a surge of cases in northern Idaho hospitals, the Spokesperson’s Review reported.
Three vice presidents resigned after the president was sacked.
Michael Sebaaly, who coached wrestling in college, was chosen by the board to serve as interim president until the board could conduct a nationwide search for a replacement.
The “differences between board members and with college leadership have been public, including the dismissal of the college’s former president and complaints against the board’s actions,” Moody’s analysts wrote.
The Northwest Commission on Colleges and Universities, in charge of the school’s accreditation, is planning a visit to assess these governance issues.
The college’s A1 issuer rating affirmation reflects the college’s “significant regional role as a provider of two-year education in Northern Idaho, sound operational performance, growing wealth, and impact of manageable leverage. For fiscal 2021, total cash and investments of $69.5 million covers debt and expenses, or 8.5 times and 1.2 times, respectively, while unrestricted monthly cash of nearly 26 million provide ample cash for 167 monthly days.
These financial strengths, in addition to institutional assistance from the federal government, provide the college with some stability as it seeks to maintain enrollment despite ongoing governance issues, Moody’s analysts wrote.
In early December, Idaho State Board of Education Chairman Kurt Liebich sent a letter to the college’s board of trustees and Governor Brad Little outlining the potential repercussions of losing accreditation. who asked the school to respond immediately to questions from the accrediting body.
“In short, College Board action or inaction that puts accreditation at risk would result in long-term injury to the very students for whom you were elected,” Liebich wrote. “It would also significantly impair the College’s ability to recruit and retain students, faculty and staff. Indeed, the very viability of the College itself could be at stake. We respectfully ask that you set aside parochial or partisan interests and urgently focus on the best interests of students and the College before the two be irreparably harmed.
