State fiscal woes may force Moody’s to downgrade universities’ debt
By David Roeder Business Reporteremail@example.com December 18, 2012 5:36PM
Updated: January 20, 2013 6:23AM
Moody’s Investors Service said Tuesday that Illinois’ dire fiscal condition may force it to downgrade the debt from its public universities.
The announcement is an extension of its decision last week to change the state’s overall outlook for creditworthiness to negative from stable.
The agency cut its rating on Illinois debt earlier this year and it is signaling that more downgrades could come. Lower debt ratings increase borrowing costs for state agencies.
Moody’s said it will evaluate the fiscal 2012 results, enrollment trends and projected revenue for fiscal 2013 involving the public universities. The agency cited concern about appropriations delays and “the universities’ significant dependence on the state for operating funds and fringe benefits.”
“We will also assess the impact of any pension legislation on the universities,” Moody’s said. “We expect to conclude this review within the next 90 days.”
Moody’s currently rates $2.6 billion of debt supporting the Illinois public universities. The review involves the University of Illinois, Eastern Illinois University, Governors State University, Illinois State University, Northeastern Illinois University, Southern Illinois University and Western Illinois University.