CHICAGO — Moody’s Investors Service hit seven of eight Illinois public universities with a downgrade Friday, including the flagship University of Illinois in action that cuts more than $2 billion of rated debt primarily over exposure to the state’s fiscal woes.

The downgrades and one affirmation were released Friday and conclude Moody’s review of the eight schools launched on June 10 after it downgraded the state. All the universities were assigned negative outlooks. The state carries an A3 general obligation rating and negative outlook from Moody’s.

University of Illinois — whose credit had been spared in past reviews due to its strong balance sheet — saw its rating on $1.56 billion of debt drop one notch to between A2 to Aa3, depending on its backing. Its auxiliary facility system bonds and certificates of participation now are rated Aa3, its south campus development bonds are rated A1, and its health facilities bonds are rated A2. The outlook on all the debt is negative.

“The downgrade reflects the university’s moderately high reliance on the State of Illinois … which for many years in succession has delayed the payment of annually appropriated funds. The negative outlook is based on the risk of ongoing appropriation pressure,” Moody’s wrote of the flagship’s downgrade.

Southern Illinois University and its $318 million of rated debt fell one notch to A3 from A2 due to a reliance on chronically late state aid.  Western Illinois University’s $27 million of debt fell two notches to Baa1 from A2 due to state exposure, enrollment declines, and narrowed operating performance. The agency lowered Governors State University’s $23 million of debt one notch to Baa1 from A3 over its high reliance on state aid and its limited resources to manage through the delays.

Moody’s downgraded Illinois State University’s $132 million of debt one notch to A3 from A2 due to state exposure, enrollment challenges that could limit tuition growth, and expected debt issuance. Moody’s lowered Northeastern Illinois University’s $63 million of debt one notch to Baa1 from A3 over reliance on the state for aid. Eastern Illinois University saw its rating on $121 million of debt fall one level to Baa1 from A3 due to state exposure, enrollment declines, and narrowing operating margins.

Moody’s confirmed Northern Illinois University’s A3 rating but assigned a negative outlook to its $217 million of debt. “The negative outlook is based on the potential negative impact of continued pressures on state funding, combined with declining enrollment and recent leadership changes during a period of volatility,” Moody’s said.

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