Rating Agency Warns Illinois Universities Over State Budget Failure
Six of Illinois’ state universities have been put on notice for credit downgrades. It’s the latest knock on state government after more than 21 months without a full budget.
The warning is coming from Moody’s Investors Service. It says because state government has failed to provide full funding for state universities for the current budget year, it could downgrade the credit rating of six schools.
That includes the University of Illinois; Illinois and Governors state universities; and Southern, Northern Eastern Illinois universities.
Moody’s also downgraded Northeastern Illinois University by two steps — well below so-called junk status — and says it could go further.
Gov. Bruce Rauner has proposed cutting spending for higher ed — saying the schools need to reduce costs.
Of course, the budget impasse has led to even deeper cuts than he proposed.
A credit downgrade means Moody’s thinks the universities could have trouble meeting their required loan payments. It also means lenders will be able to charge more for future borrowing.