by Mish

Grade Point

Moody’s cut Eastern Illinois University’s credit rating to junk territory while Northeastern Illinois University and Northern Illinois University sit one notch just above junk. All three universities are in danger of losing accreditation. More downgrades will come.

The Washington Post reports Illinois Budget Battle Leads Moody’s to Downgrade Several State Universities.


An epic budget battle in Illinois led Moody’s Investors Service to downgrade the credit rating of three of the state’s public universities late Wednesday, the latest setback for schools that have been starved of funding for eight months and now face possible accreditation challenges.
Northeastern Illinois University and Northern Illinois University had their credit ratings lowered to just above junk status, while Eastern Illinois University’s rating is now below investment grade. That means analysts consider revenue bonds issued on behalf of the school to be a credit risk for investors.
“The downgrade is driven by EIU’s increasing vulnerability to the ongoing state budget impasse given its thin liquidity, declining enrollment and high reliance on state funding,” Moody’s said in a statement. “Liquid reserves are expected to be exhausted by the end of the fiscal year.”
Moody’s has held a negative outlook on all eight Illinois universities it rates since the fall because of their diminishing cash flow. Analysts said there was no indication that Illinois would allow its public universities to borrow money during the budget impasse, despite the strain the ordeal has placed on their operations.
Universities in Illinois have not seen a dime from the state in eight months as the Democratic-controlled general assembly and Republican Governor Bruce Rauner have failed to agree on a budget. The governor has tied passage of the $36 billion budget to changes in collective bargaining rights for public employees and worker compensation, business-friendly moves he says will help turn around the state’s flagging economy. If the legislature refuses to sign on to his changes, Rauner wants lawmakers to let him make $3.5 billion in spending cuts in any way he chooses.

Rauner Holds Out For Reform

Rauner repeatedly has stated he will not sign a budget unless Democrats agree to reform. I applaud that stance.

Mike “Mish” Shedlock

Illinois Budget: What it Does and Doesn’t Do (Surprise Giveaway to Muni Bondholders?)

Illinois now has a budget, the first in three fiscal years. An excellent writeup on The Stump entitled Illinois Financial Disaster: Even More Reactions to the Budget explains what passage of the budget does and does not do.

Too Much, Too Little, Too Late: Junk Status for Illinois Coming Up

The House voted to override Rauner’s veto of a budget today following a brief lockdown mode after white powder was thrown at Governor Bruce Rauner.

Illinois Budget Out of Balance Again: Solution More Junk Bonds

An Illinois "Road Show" touts more junk bonds as a solution to a perpetual budget crisis. What a bunch of garbage.

50,000 UAW Workers on Strike and GM is Already Just One Notch Above Junk

Almost 50,000 UAW workers went on strike over the weekend. The sides are far apart according to some reports.

Tracking the Great Escape from Cook County and Illinois

Cook County Illinois has the largest population loss of any county in the nation. Chicago represents just over half of the population of Cook County. Here is a graph I put together of the “Great Escape” from Illinois.

Past Due! Illinois Vendors Furious as Unpaid Bills Top $10 Billion

Past Due. Illinois has not had a budget for 8 months and counting.

Governor Rauner Screws Illinois

Illinois governor Bruce Rauner caved in on tax hikes and got absolutely nothing in return.

3% Growth? Really?!

In Trump Plans to Slash Spending by $3.6 Trillion, Increase Military Spending, Balance the Budget in 10 Years I gave my three primary reasons 3% growth will be extremely difficult to achieve.

Ford's Bonds Crushed on Moody's Downgrade to One Notch Above Junk

Ford bonds are down 4% after being downgraded to one step above junk. Moody's outlook is negative.