Illinois’ budget crisis dragged down the credit ratings of six state public universities and Chicago’s community college system on Thursday in a slew of downgrades by S&P Global Ratings.
The rating for the University of Illinois, the state’s largest system, fell one notch to A after S&P determined it could only be three notches above the state’s BBB rating. S&P also warned of a further downgrade if the state failed to fund the system beyond a stopgap amount of $356 million approved last June. […]
“Given the budget impasse of fiscal 2016, ongoing fiscal 2017 budget impasse, and the absence of an agreement among elected leaders, it is our opinion that state appropriations to public universities in Illinois will remain uncertain in the intermediate term,” S&P said in a report.
Southern Illinois University’s credit rating was dropped into the junk level of BB from BBB, while ratings for Northeastern Illinois and for Eastern Illinois universities fell deeper into junk, at B, from BB. Western Illinois University’s rating was cut to BB-minus from BBB-minus and Governors State University’s rating was downgraded to BB from BB-plus.
S&P also lowered the rating four notches to BBB from A-plus for the City Colleges of Chicago, which operates seven community colleges.
The ratings were placed on a watch list for a potential subsequent downgrades.
That means, as I told subscribers this morning, we now have five universities with junk bond status.
Illinois journalists have reported on the impact of the state’s budget impasse for nearly two years. Activists have decried the closure of senior service centers, rollbacks of funding to those with developmental disabilities; harm done to domestic violence shelters or drug treatment centers. The unpaid bills and growing pension liabilities. The list goes on and on. This newsletter has a separate section every day entitled “budget crisis” (and before that, “grand bargaining” when there was such a thing). Still, there seems to be little outrage at the grassroots level over a lack of a state budget in Illinois even as we near two years without one. The common thinking is that average resident won’t get riled unless schools close, state workers go unpaid, government offices shut down or taxes go through the roof. If one social service agency after another goes under, so be it.
The truth that one expert after another will tell you, however, is that deep, long-lasting damage is being inflicted on the state every day we don’t have a funding plan. The long-term effect on state universities is just one example. On Thursday, our universities suffered another major credit ratings blow, with S&P citing the lack of a budget and the unlikelihood that one is on the way. Since the impasse, brought on by a political stalemate between Gov. Bruce Rauner and the Democratic-controlled Legislature, Illinois universities have lost students to other states. Low-income students who rely on monetary assistance have had to drop out, and industries surrounding university towns are starting to suffer.
* House Economic Opportunity Committee Meets Discusses SIU’s Impact on the Region