Standard and Poor's Upgrades Art Institute of Chicago's Bond Rating

Long-term rating moves to A+ based on improved investment returns, financial stability, strong operating performance

March 8, 2006

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Erin Hogan
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Standard and Poor's announced yesterday that it raised the Art Institute of Chicago's long-term bond rating to "A+." In its release, Standard and Poor's Rating Services cited numerous factors that contributed to the upgrade, including overall institutional characteristics as well as specific fiscal strategies that have further strengthened the Art Institute's performance. "This is the result of a tremendous team effort by our trustees and employees to control costs, increase gifts, improve our investment strategies, and reduce our debt," said Patricia A. Woodworth, executive vice president for finance and administration/chief financial officer of the Art Institute. "The A+ ranking is a clear sign that our efforts have been successful."

Standard and Poor's Rating Service examined a broad range of criteria used to evaluate the rating and highlighted, among other factors, the reputation of the museum and the School; liquidity relative to operating expenses; strong management of resources and budgets; modest plans to issue bridge financing for the Modern Wing expansion; and good progress in the Art Institute's capital campaign.

The Art Institute of Chicago is home to one of the largest collections of art in the United States and enjoys a national and international reputation for the quality of its collections, exhibitions, and programming. It has the second-largest membership base of American museums and hosted 1.4 million visitors in calendar year 2005. The School of the Art Institute was recently ranked one of the top three Master of Fine Arts programs in the country by U.S. News and World Report, and has seen steady growth in attendance for years.

These institutional characteristics were considered by Standard and Poor's in tandem with specific fiscal policies and performance. The expendable resources of fiscal year 2005 were equal to more than three times the operating expenses and twice the outstanding debt, amounting to good liquidity relative to operating expenses. The Art Institute's budgetary balance was also cited by Standard and Poor's, as was the success of the Art Institute's capital campaign. "Good progress," according to the Ratings Service, has been made on the $350 million being raised for the construction of the new Modern Wing. This campaign is the largest mounted by the Museum and also represents the most significant amount raised by a Chicago civic organization. The strength of the campaign accounts for the modest plans to issue bridge financing, estimated at $80 million, for the addition to the museum.

David J. Vitale, treasurer of the Art Institute of Chicago, said, "We are very pleased with this recognition of the strong financial position of the Art Institute. The fiscal management and discipline that led to this improvement will be important as the museum and school undertake their expansion plans."