Illinois’ record-breaking budget impasse, which has led to sporadic funding for higher education, is increasingly pressuring the finances and competitiveness of state universities, Moody’s Investors Service said on Thursday.
The credit rating agency said the lack of complete state funding has forced schools to take “considerable steps,” including cutting academic programs and raising tuition, in order to keep operating and preserve financial liquidity.
“Material programing reductions and staffing cuts, while necessary to keep the state’s public universities operational in the short-term, will further impair the universities’ abilities to sustain their strategic competitiveness and attract students for the upcoming fall 2017 class,” Moody’s said in a report.
It noted Illinois was second only to New Jersey in the net number of their high school graduates who attended colleges in other states in 2014.
Illinois is limping through a second-straight fiscal year without a budget due to a stalemate between its Republican governor and Democrats who control the legislature. The political battle has resulted in significant underfunding for universities and state grants that subsidize costs for low-income students.
Ratings for seven universities range from an investment grade Aa3 for the University of Illinois to a junk rating of B1 for Eastern Illinois University, according to Moody’s, which has a negative outlook on all of the ratings.
The credit standing of the universities has weakened as Illinois’ rating fell to Baa2, the lowest among the 50 states.