Proposed legislation that would allow the State University of New York and City University of New York to set their own tuition rates would have positive credit effects, Moody's Investors Service said last week in a special comment.

Currently, rates for New York's large public university system are set by the state budget process.

"The changes would give SUNY and CUNY more independent tuition-setting powers by allowing them to differentiate tuition rates across campuses and programs as well as eliminate legislative appropriation of tuition funds to the universities," Moody's said. "As long as state funding was not dramatically cut over the short term as a quid pro quo for the new tuition powers, these changes would be a credit positive for New York public universities."

Most other state universities already have tuition-setting powers. SUNY's tuition tends to jump sharply after years of flat tuition and accumulated state funding cuts.

Compared to other state public universities, SUNY generated "much less net tuition revenue" which "reduced its capacity to fund investments in academics, research, student aid, and facilities."

Moody's rates SUNY's dormitory facilities lease revenue bonds Aa2 with a stable outlook.

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