Concern over Kansas Finances Lead to Credit Downgrade for State's Public Colleges

May 14, 2014

Uncertainties over the financial outlook for the state of Kansas has led Moody’s Investors Service to cut the debt rating for the University of Kansas and Emporia State University.

The credit service lowered its rating on the University of Kansas by one notch to Aa2 from Aa1, which is still considered high-grade. It also downgraded Emporia State’s debt to A2 from A1, which also is an upper investment-grade level.

Moody’s issued its reports shortly after it cut the state’s credit rating last week from its second-highest rating of Aa1 to its third-highest rating of Aa2. The downgrade was prompted by concerns about the outlook for the Kansas state budget, which has been stressed by massive income tax cuts and revenue shortfalls.

Moody’s evaluated credit ratings on six of the public universities in Kansas, but downgraded only the flagship university in Lawrence and Emporia State.

The other schools reviewed by Moody’s were Kansas State University, Wichita State University, Washburn University, and Pittsburg State University.

A lower credit rating theoretically could lead to higher borrowing costs.

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