Moody's Investors Service said it placed the ratings of all New Jersey public universities under review for downgrade.
The affected four-year universities include The College of New Jersey; Kean University; Montclair State University; New Jersey City University; New Jersey Institute of Technology; Ramapo College; Rowan University; Rutgers, the State University of New Jersey; Stockton University; and William Paterson University of New Jersey. The rating action also impacts Passaic County Community College.
Moody's currently rates a total of approximately $4.8 billion of public university debt in New Jersey.
The review for downgrade follows the April 16, 2015, downgrade of the state's general obligation bonds to A2 negative from A1 negative.
The downgrade was driven by the state's continued weak financial and liquidity position, due largely to ongoing pension contribution shortfalls. The evaluation of the 11 public universities and colleges will focus on the financial and governmental linkages between the now downgraded state and the relative positioning of its public universities.
Linkages include state appropriations for operations, fringe benefits, and capital, as well as state-appointed boards and, for all but Rutgers and New Jersey Institute of Technology, state-negotiated labor contracts. Moody's will also include an assessment of expected fiscal year (FY) 2015 operating results, budgeted FY 2016 operations, and projected fall 2015 enrollment.
Key drivers will be liquidity, cash flow, reserve levels, and leverage, as well as plans for additional debt.
