Moody's Investors Service said it has placed the long-term ratings of all Illinois public universities on review for possible downgrade, specifically Eastern Illinois University, Governors State University, Illinois State University, Northeastern Illinois University, Northern Illinois University, Southern Illinois University, University of Illinois and Western Illinois University.
Placement of the ratings under review for possible downgrade follows the December 13, 2012, revision of the outlook for the state's general obligation and related credit ratings to negative from stable.
Moody's currently rates a total of $2.6 billion of university debt.
Placement of the Illinois public universities ratings under review for possible downgrade reflects the universities' significant dependence on the state for operating funds and fringe benefits, as well as extensive appropriation payment delays in a challenging budget environment that continues to pressure Illinois' public universities cash flow and liquidity.
The review will focus on an assessment of fiscal 2012 financial results, fall 2012 and spring 2013 enrollment, and fiscal 2013 projected operating results, cash flows and reserves. Additionally, Moody's will evaluate pledged revenue coverage of debt service payments, reserve levels, capital projects and debt plans, and the payment timing of the state's fiscal 2013 appropriations.
Moody's will also assess the impact of any pension legislation on the universities. The agency expects to conclude this review within the next 90 days.