Moody's Investors Service says the pension problem for the State of Illinois is rippling out to public Unniversities. The rating agency says it will review Illinois State University's credit worthiness in light of the state crisis for possible downgrade over the next several months. ISU Vice President for Finance Dan Layzell says he is disappointed because the university believes strong enrollment, relatively modest debt compared to other institutions and relatively low state support of operations should insulate ISU. He also says the impact of a possible downgrade on interest rates is uncertain.
"In the near term we don't have any plans to issue any bonds or certificates of participation so this is less of a concern over the short term."
Layzell does say if the state were to transfer pension contribution expenses to ISU for all faculty and staff, the annual cost would be $22 million. ISU has about $150 million in principle and total debt service of $217 million. Layzell says a significant step down in debt payments will happen with the retirement of several bond issues in five years. Moody's says state delays in operating fund payments are also affecting university credit considerations in Illinois, though ISU historically has had little impact from those delays. ISU's bond rating is currently A2.
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