Ratings firm Moody’s Corp. on Friday downgraded the credit ratings of seven public universities in Illinois over concerns about the state’s nearly two-year budget impasse.
The universities were downgraded because of their reliance on the state of Illinois for payments and appropriations, according to Moody’s. Of the seven universities, five of them—Southern Illinois University, Northern Illinois University, Governors State University, Northeastern Illinois University and Eastern Illinois University—now have junk status. […]
In one example, Eastern Illinois University only received $16 million from the state in the 2016 fiscal year, compared with $52 million in the 2015 fiscal year.
Moody’s downgrade marks the end of a 90-day credit review rating for these seven universities.
It also follows a move by both S&P Global and Moody’s to downgrade state of Illinois bond ratings earlier this month. Ratings firms have warned that the state can be downgrade to junk status next month if the partisan gridlock isn’t solved, which would make Illinois the first state with such a rating. [Emphasis added.]
Factors that Could Lead to an Upgrade:
Resumption of steady and consistent state support contributing to improved operating performance
Significant and sustained growth in liquidity
Factors that Could Lead to a Downgrade:
Continuing decline in directly paid state operating support or “on-behalf” payments for pension and other post-retirement health benefits
Inability to adjust further to changes in state funding
Material declines in liquidity
Continued enrollment and net tuition-revenue declines
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June 10, 2017 at 10:07AM