- In a communication to members, the AAUP termed the Moody’s report “a thin, flawed analysis, which provides little factual basis for its conclusions”. In fact, Moody’s evaluates more than 60 financial measures to assess Rider’s financial health, and publicly reports 17 key financial and enrollment ratios. Moody’s is independent and nationally recognized, and evaluates the finances of more than 500 colleges and universities each year. Its methodology is publicly available on the Moody's web site.
- Moody's always factors in the presence or absence of unions as a standard element of its ratings methodology, because contractual commitments are fixed costs, not out of any union bias as implied in the AAUP’s communication to its members.
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Moody's cited a number of Rider strengths in its report, including strong academic programs and careful financial management.
- Moody’s two primary concerns were the low levels of expendable net assets or financial “reserves,” and the need to use reserves this year to cover the 2014 deficit.
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- Moody's does not provide an explanation of its methodology in the report. Nor does it provide "60 financial measures." The report references an undisclosed methodology on their website, but it is not presented or explained in the report. A small number of figures are provided in the report and listed on the third page, but the specific key financial indicators and ratios used in their analysis are not identified.
- The report is five pages, two pages of which are devoted to general information about Moody's and legal information about the report, leaving approximately three pages devoted to the financial status of the university.
- Moody's may be a widely used financial reporting firm in the U.S., but their reputation is hardly untarnished. Moody's cozy relationship with the banks issuing mortgage derivatives led to grossly misstated risk assessments for these instruments, essentially bad reporting, and together with Standard and Poor's erroneous reports are considered key triggers for the 2008 financial meltdown.
- The Moody's report states in the opening paragraphs that “… with more than half of its [Rider's] full-time workforce unionized, the university has less flexibility to make meaningful cuts”(emphasis added). The labor contract is mentioned three times in the 5 page report. Nowhere in the report is there any analysis which backs the claim that the only meaningful cuts to Rider's expenses must include labor pay It is simple repeated in the Moody’s report as though it were a self-evident truth not to be questioned.
- Moody’s analysis is a tool bond buyers use when deciding whether or not to purchase bonds. Thus its analysis of Universities is not particularly useful as a measure of their long-term health. Vice President Karns notes Moody’s “two primary concerns were the low levels of expendable net assets or financial “reserves,” and the need to use reserves this year to cover the 2014 deficit.”
- The University’s liquid reserves have declined because the administration used them to pay for capital improvements of the campus. Those liquid reserves were not lost, but converted into physical assets. While those liquid assets are no longer available to pay off bond holders (Moody’s primary concern), the physical assets they were converted to are available to advance the University’s primary mission of educating students.
- Karns claims the administration must use reserves to cover a 2014 "deficit." We cannot know this until after the year is over and the audited financial statement is available for analysis. At this time it is simply a claim by the administration—a claim that it has often made prior to labor negotiations and one that has never proved accurate.
- Vice President Karns focuses primarily on operating revenue, which is but one measure of the University’s financial health, and which by its very nature overstates so-called deficits and ignores cash flows. The AAUP report prepared by Professor Fichtenbaum considers both operating revenues and cash flows. Rider’s positive cash flows during the period of the study ranged from a low of $7.6 million to a high of $15.8. In 2013 it was $12 million.
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