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* Reuters…
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.
* Politico…
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.
* Related…
* House Economic Opportunity Committee Meets Discusses SIU’s Impact on the Region
posted by Rich Miller
Friday, Apr 21, 17 @ 8:43 am
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The dismantling is nearly complete.
Comment by Cubs in '16 Friday, Apr 21, 17 @ 8:55 am
When Rauner decides to close Eastern and Chicago State, allow Western to lose accreditation and Rauner makes SIU decide if two campuses are worth it…
… will Democrats finally see that downstate Illinois is worth the time and energy to take Rauner on?
I don’t want to hear “well, UIUC can handle this”
They can’t. UIUC too will face significant and serious damage for a long time, compounded with the damage already taking place, including, at the bare minimum, $800+ million in funding for the U of I system.
What Governor thinks boarding up state universities is “short term pain for big, long term gain”.
Rauner said that months and months ago, just outside his Capitol office.
Diana and Bruce Rauner “donate millions” to what they say they support. Welp, both RaunerS support the starving and destruction of higher education in Illinois, as Bruce criss-crossed the state, on the campaign’s dime, a fund Diana Rauner has her name connected to millions… to force Illinois to either passively destroy higher education and social services, or end the “already damage” to focus on destroying labor for RTW and ending collective bargaining and prevailing wage, all three of these, or parts of snot of the three is the end game.
Governors own.
Governors put their names on buildings, heck Diana and Bruce have their names on buildings at Dartmouth…
Understand… Rauner wants Illinois crippled or capitulated.
The first to face the state-run demise will be… higher education.
Comment by Oswego Willy Friday, Apr 21, 17 @ 8:56 am
I feel bad for the administrators of the Universities that are basically having their name, reputation, and credit worthiness tarnished for reasons that are out of their control.
Lucky are those — like Rauner’s friends — that are in the public bond business for being able to charge excessive interest rates that do not reflect the actual willingness of the entity to pay it’s debt services.
This all just feels like a long con to make some folks millions more on the backs of millions.
Who profits? Bond holders. Who profits? Company’s like Edgar’s that pay a portion of the state’s outlay on a contract in exchange for all of the interest and penalties.
Who loses? The people of Illinois.
Perhaps living here has just taught me that if left unchecked the government is run to the benefit of somebody’s buddies, but I can’t shake the feeling that this is a deliberate scheme.
Comment by Anon Friday, Apr 21, 17 @ 8:56 am
If only the established traditional media in this State would start covering the real stories of the budget crisis in Illinois there just could be even more outrage.
Yet they continue to regurgitate the BVR press releases and his hackneyed quotes at his “non-campaign” photo opportunities as though it is actual “news”.
Thank you Rich for sharing these posts.
Comment by illini Friday, Apr 21, 17 @ 8:58 am
“Perhaps living here has just taught me that if left unchecked the government is run to the benefit of somebody’s buddies, but I can’t shake the feeling that this is a deliberate scheme.” - Yes, Madigan has been taking care of his buddies for decades and look at the debt it has left us. $130 billion in pension debt alone.
Comment by Stand Tall Friday, Apr 21, 17 @ 9:00 am
So our state’s public universities, previous to Rauner’s tenure as governor, were fine. But with Rauner in office, the public universities are being crushed because he’s making demands BEFORE negotiating needed new revenues and spending reductions, that he doesn’t have the votes to pass. Clearly, the fault for this state’s rapidly deteriorating position is his fault for demanding an unpassable set of ideological must haves that he didn’t discuss in the run up to his election, and thus has no mandate for.
Comment by PublicServant Friday, Apr 21, 17 @ 9:01 am
===Yes, Madigan has been taking care of his buddies for decades and look at the debt it has left us.===
… and yet, it’s because of the deliberate withholding of s budget that has printed these downgrades, as, if you read, a budget could allow these universities a chance.
It’s cited a lack of a budget.
Your willful ignorance to that fact, and reading, is noted.
Comment by Oswego Willy Friday, Apr 21, 17 @ 9:06 am
I just got an email response to an inquiry I made last night to my rep with EdwardDJones.
He informs me that his company will never offer bonds to any of their clients once they are on a watch list or fall into the “junk” category. He has no idea what the discount or yield currently is on these bonds.
Comment by illini Friday, Apr 21, 17 @ 9:06 am
=== because he’s making demands BEFORE negotiatin
How true your words are. Rauner in an attempt to fix the states finances has met his match in the Intransigent of state govt unions and the Dems. So here we are 12 million held hostage !
Comment by Texas Red Friday, Apr 21, 17 @ 9:09 am
Just wait until it’s all junk rated, no institutional fund can buy our debt and the vultures that bought all of the debt at a sharp discount start really squeezing us.
Comment by Nickname Friday, Apr 21, 17 @ 9:12 am
Rauner just wants his “ends.”
The state of Illinois will hit junk status soon.
Everyday, the 6,000,000 non-farm workers in Illinois are getting reeled in to make Rauner’s debt dreams come true.
Comment by cdog Friday, Apr 21, 17 @ 9:14 am
>Since the impasse, brought on by a political stalemate between Gov. Bruce Rauner and the Democratic-controlled Legislature
Nice summary by Politico of the devastation. The statement I quoted shows Rauner’s mastery of this narrative. It’s a vague “impasse” without any specifics. So long as Rauner doesn’t feel his chances for re-election are impacted by any blame falling specifically on him, I don’t see things changing.
Comment by Earnest Friday, Apr 21, 17 @ 9:15 am
How is this not a corporate coup taking over our state disguised as the Republican Party.
Seriously, nearly every Republican decision Rauner has made is for the benefit of business and not the people and institutions of Illinois. (see Rodogno)
How can this not be seen as the corporate usurpation of democracy itself?
Prove me wrong
Comment by Honeybear Friday, Apr 21, 17 @ 9:20 am
Yet some of the people, all of the time, will buy the screwball proposition that you can’t pay your bills or have public universities unless term limits or something-something for the economy. It doesn’t make sense.
Downstate voters, pay attention: you’ve been played. The guy feeds you trite, hackneyed “Chicago Machine” rhetoric while he willfully destroys your community institutions in some personal vendetta that I do not understand. But it’s happening.
If you can’t spot the chump the first time the deal goes round, you’re it.
Comment by wordslinger Friday, Apr 21, 17 @ 9:24 am
My two older kids in State Universities. Sending my youngest out of state. Time for both sides to do there job. Compromise for crying out loud. You are ruining is our state!
Comment by Proud Friday, Apr 21, 17 @ 9:31 am
Governor Downgrade!
Comment by Precinct Captain Friday, Apr 21, 17 @ 9:49 am
===How true your words are. Rauner in an attempt to fix the states finances has met his match in the Intransigent of state govt unions and the Dems. So here we are 12 million held hostage !===
@Texas Red - So you’re for bankrupting our universities, tripling our unpaid bills, bankrupting social service providers, so the governor can “fix the states finances” to the tune of 500 million? It’s costing the state 200 million a day, every day, without a budget. It’s been two years. Your math skills must be lacking pal, because that ain’t fixin the “states” finances. We’re financially drastically worse off because your and Rauner’s “fix” doesn’t add up. That’s not saying anything about the social consequences of his demands.
Lastly, the democrats were elected by their constituents to fight against radical Koch-based right wing garbage. If Rauner wants that stuff passed, he needs the votes. He doesn’t have them now. Now, however, the state does need a budget. And the governor alone is refusing to negotiate the budget without first getting capitulation by the democrats on his “agenda”. Blackmail (getting the dems to capitulate) is not compromise.
That you think this failure of a governor is attempting to fix the state finances by systematically bankrupting important state institutions is ludicrous in the extreme.
Comment by PublicServant Friday, Apr 21, 17 @ 10:21 am
=== Rauner makes SIU decide if two campuses are worth it…
A quick comment on this phrase from Oswego Willy (which is similar to things others have said–I’m not singling out OW, whose comments are generally informed and on target). There’s a lot of talk about closing one of the SIU campuses. It’s important to note that the southern part of the state does **not** have two universities: it has **one university**, SIU Carbondale. SIU Edwardsville is in Metro East, a completely different region. Yes, SIUE is part of the same university system, but it’s a (very good) regional teaching university in the greater St. Louis area, while SIUC is a (very good–if endangered) research university in Southern Illinois. The campuses are two hours apart. Don’t let the SIU- prefix fool you. Cutting either one of these two very different campuses isn’t any different than cutting EIU or WIU or NIU or what have you. There’s no redundancy down here.
Full disclosure: I work at SIUC, the campus that would close if the state had to choose between the growing SIUE and SIUC, where enrollment was declining even before the last two years. One reason (not necessarily the only reason) SIUE is growing is because it is in a much more economically vibrant part of the state. Cut SIUC and you deliver a hammer blow to the already weak southern Illinois economy. We need to reinvest in campuses in hard hit areas of the state like southern Illinois. It’s not like coal mining is coming back to Carbon-dale, despite the promises of Trump . . .
Comment by Doc Anonymous Friday, Apr 21, 17 @ 10:40 am
For all those crying out for “Compromise!” for the sake of higher education and social services Who do you think holds the levers of power?
MJM barely controls 50% of the legislative, while Bruce holds one branch and owns 50% of the other.
Comment by Jocko Friday, Apr 21, 17 @ 10:43 am
The above should have been 2 million a day. Sorry bout that.
Comment by PublicServant Friday, Apr 21, 17 @ 10:58 am
Downstate cities are already being devastated and/or threatened by corporate America deciding mid-sized cities and their poor regional air service are not compatible with Fortune 500 HQs. Downstate doesnt need the state inflicting even more economic wounds by killing university towns.
And heartily agree with the commenter upthread that it would be nice if there was a functioning Dem opposition in every one of these university towns Rauner is out to destroy just so Winnetka millionaires like himself can pay less taxes and have money to buy ninth and tenth vacation homes out of state.
Comment by hisgirlfriday Friday, Apr 21, 17 @ 11:13 am
Son just made the choice to go to Murray State Same cost as SIUC for us with no Illinoisbudget concerns. It saddens this SIUC alumni that an Illinois State School legacy is broken because of very real concerns about whether SIUC will be in full operation during our sons 4 years of undergraduate education. Another statistic.
Comment by anon123 Friday, Apr 21, 17 @ 1:12 pm
And not a word out of Bryant,Hammond,or Phillips.
Why?
50 million reasons….
Comment by btowntruth from forgotonnia Friday, Apr 21, 17 @ 1:17 pm
The legislators who have state universities in their districts, and who go along to get along while their universities are hollowed out, will not make it into an Illinois Profiles in Courage.
Comment by anon2 Friday, Apr 21, 17 @ 2:04 pm
MJM barely controls 50% of the legislative, while Bruce holds one branch and owns 50% of the other.
Spot on Jocko at 10:43.
Democrat supporting PACs need to promote this statement 24/7.
Comment by don the legend Friday, Apr 21, 17 @ 3:08 pm
anon123—Why not SIUE? Why not IL State? Why not the University of Illinois?
Comment by Anonymous Friday, Apr 21, 17 @ 3:25 pm
to anonymous
visited all the schools except U of I Our student had the grades and ACT to get in to any of those schools. SIUE does not have the program he need. ISU school visit was unimpressive and did not provide as much dollars. U of I was off the list because of cost. SIU had the program and gave full tuition scholarship but Murray gave about same money give or take $300. (Note I graduated from ISU as well and was really hoping/leaning towards that choice prior to the visit)
Comment by anon123 Monday, Apr 24, 17 @ 10:10 am
needed.
Comment by anon123 Monday, Apr 24, 17 @ 10:11 am