CHICAGO, March 9 Illinois' record-breaking
budget impasse, which has led to sporadic funding for higher
education, is increasingly pressuring the finances and
competitiveness of state universities, Moody's Investors Service
said on Thursday.
The credit rating agency said the lack of complete state
funding has forced schools to take "considerable steps,"
including cutting academic programs and raising tuition, in
order to keep operating and preserve financial liquidity.
"Material programming reductions and staffing cuts, while
necessary to keep the state’s public universities operational in
the short-term, will further impair the universities’ abilities
to sustain their strategic competitiveness and attract students
for the upcoming fall 2017 class," Moody's said in a report.
It noted Illinois was second only to New Jersey in the net
number of their high school graduates who attended colleges in
other states in 2014.
Illinois is limping through a second-straight fiscal year
without a budget due to a stalemate between its Republican
governor and Democrats who control the legislature. The
political battle has resulted in significant underfunding for
universities and state grants that subsidize costs for
Ratings for seven universities range from an investment
grade Aa3 for the University of Illinois to a junk rating of B1
for Eastern Illinois University, according to Moody's, which has
a negative outlook on all of the ratings.
The credit standing of the universities has weakened as
Illinois' rating fell to Baa2, the lowest among the 50 states.
(Reporting by Karen Pierog; Editing by Matthew Lewis)