Moody's says higher ed cuts could lead to university credit downrgrades

Mar 21, 2012

The Board that oversees Florida’s public universities says the state’s budget for the upcoming year could hurt the school’s bond ratings. Lynn Hatter reports members of the Board of Governor’s say lawmakers built a lot of assumptions into the higher education budget, and the effects are already starting to unfold.

Lawmakers handed down a one-time $300 million budget cut to universities. Half of that money is coming out of the schools’ reserve funds. But the credit rating firm Moody’s, says it views the reserve cut as a credit negative. David Jacobson is the firm’s spokesman.

 “Moody’s does not endorse pieces of legislation or policies. However, when we say “credit negative” we mean that these decisions could have negative impacts on the credit ratings of these universities.”

Moody’s rates 9 out of Florida’s 11 public universities. The schools rely on those ratings to borrow money for construction and building projects.