Moody's Investors Service has downgraded Southern University System's issuer rating to A3 from A2 and revenue bond rating to Baa1 from A3.
The rating action affects the system's Series 2006 bonds issued through the Louisiana Public Facilities Authority. The outlook is negative.
The downgrade reflects the system's deep and ongoing enrollment declines which, when combined with reductions in state funding, resulted in materially weaker operating performance in fiscal year 2012 with expectation of some, although limited, future revenue growth.
The negative outlook reflects the expectation for continued enrollment challenges, some improvement in operating support from the state of Louisiana in FY 2014, and uncertainty surrounding success of the system's plans to grow enrollment and return to balanced operations.
