Standard & Poor’s last week revised the outlook on seven Illinois state universities to negative from stable due to their exposure to the state’s liquidity problems that have resulted in delays in state aid payments.
The action affects $2.4 billion of debt, including certificates of participation and auxiliary facilities revenues bonds issued for Eastern Illinois University, Western Illinois University, Southern Illinois University, Northeastern Illinois University, Illinois State University, Governors State University, and the University of Illinois.
“The outlook change reflects our expectation of downward credit actions due to continued cash-flow stress at all public universities in Illinois, and significant related financial uncertainty,” analyst Susan Carlson wrote.
University appropriation expenses have been submitted to the state but most have not been reimbursed, as Illinois’ revenue collections continue to fall below budgeted levels, the rating agency said. The University of Illinois recently announced a series of cost-cutting measures as it struggles with the state payment delays.
