State News
Moody's Lowers Credit Rating for Pennsylvania State College System
Moody's Investors Service has downgraded the State System of Higher Education's long-term credit rating, citing challenges from declining enrollment and slumping state support to its limited ability to curb labor costs and its escalating construction debt.
The downgrade to Aa3 from Aa2 on the system's outstanding revenue bonds issued through the Pennsylvania Higher Educational Facilities Authority affects $1.5 billion of what Moody's says is pro-forma debt totalling $2.36 billion. It follows a downgrade of the commonwealth's credit rating in July to Aa2 from Aa1.
The system has nearly 115,000 students at its 14 state-owned universities, including California, Clarion, Edinboro, Indiana and Slippery Rock in Western Pennsylvania.
A downgrade can mean higher borrowing costs if investors perceive system bonds as carrying somewhat more risk. Moody's said the system's rating outlook is stable.
Kenn Marshall, a State System spokesman, said Wednesday the action is not a surprise given the state's rating was lowered, and he said even with the downgrade the system's rating is strong. "A slight downgrade like this I don't think will have a significant impact on our ability to borrow if and when we decide to borrow funds again," he said.
Moody's noted political limitations on the State System's ability to raise tuition and fees, "pervasiveness of system labor unions" as a hindrance to spending curbs and growing burden from pensions and other post-retirement costs of $864 million.
Moody's also noted growing debt "driven largely by privatized student housing debt issued for replacement student residences."
The Pittsburgh Post-Gazette this month reported the system's debt had doubled in a decade, not counting those privatized loans that Moody's says the system could be called upon to back.
Moody's also alluded to the ongoing contract dispute with faculty.
(c)2012 the Pittsburgh Post-Gazette
If you enjoyed this post, subscribe for updates.
- Most Viewed
-
- Report: U.S. Teacher Training System is Broken
- Washington State Prepares for Shutdown as Special Session Begins
- Some GOP Lawmakers Refuse to Answer Constituent Questions on Obamacare
- Supreme Court Rules in Favor of Oklahoma in Water War with Texas
- Nonprofits Draw States' Money, But Not Much Oversight
- Comments
-
- Supreme Court to Reexamine Church-State Separation at Government Meetings
"There is everything in the constituation that says laws may not be written such that your..." - Texas Enacts Unemployment Drug-Testing Law
"How about testing for alcohol too?
How about testing for smoking too? People on unemployment..." - Report: U.S. Teacher Training System is Broken
"The education establishment is an industry unto itself. Between insular teacher "training"..." - Maine Gov. LePage Vetoes Medicaid Expansion Bill
"It's frustrating when politicians (and demagogues)avoid explaining their rationale. So,..." - Bill to Keep Dead, Imprisoned People Off Welfare Becomes Michigan Law
"Snyder should also make sure to sign a law restricting dead people from getting driver's..."
- Supreme Court to Reexamine Church-State Separation at Government Meetings
Training Opportunities
Health Care Reform After the Decision- In this Mercer Report, you’ll learn how different organizations plan to tackle the new requirements of ACA and discover where most employer concerns are focused, who expects to be hardest hit, and how different health plans and Medicaid may impact overall costs.
- Crime Prediction and Prevention
- Accelerating Economic Growth and Vitality
GOVERNING Data
Events & Webinars
- High-Performance Government - Building "Better, Faster, Cheaper"
- June 20, 2013
- Nationally, six straight years of revenue declines have put enormous pressure on state and local governments, nevertheless, some are thriving. Standard & Poor's, the credit-rating agency, reports that it issued more bond upgrades than downgrades in 2012.
- Health Care Reform is Here: Are You Ready for the Rush?
- June 27, 2013
- The Medicaid expansion and the Affordable Care Act are in full swing. With the influx of people who will be applying for benefits and the ACA requirement for online enrollment, it is more important than ever to verify the identities of those accessing benefits up front.
Twitter
Facebook
LinkedIn
YouTube
Flickr
RSS
© 2011 e.Republic, Inc. All Rights reserved. |