Illinois colleges receive credit rating upgrade, but structural problems remain
Many reforms are still needed in Illinois higher education system despite credit rating affirmations and upgrades to seven Illinois universities.
Seven Illinois universities’ credit ratings were affirmed or upgraded by S&P Global Ratings following the passage of an Illinois budget for the first time in more than 2 years, according to The Associated Press.
S&P raised its credit ratings for Northeastern Illinois University, Eastern Illinois University, Southern Illinois University and Governors State University and affirmed the credit ratings for University of Illinois, Illinois State University and Western Illinois University, the AP reports.
In June 2017, Moody’s Investors Service announced credit downgrades for seven Illinois Universities, five of which, Southern Illinois University, Northern Illinois University, Governors State University, Northeastern Illinois University and Eastern Illinois University, became junk rated.
S&P also downgraded six Illinois universities in April.
While the budget impasse may have hastened the arrival of these downgrades, Illinois universities’ financial problems are older and more entrenched than the recent budget crisis.
Many of the Illinois universities financial problems within Illinois’ higher education system stem from mismanagement of funds, administrative bloat, generous executive compensation and out-of-control pension costs.
In order to cover rising administrative and pensions costs, many Illinois universities have resorted to increasing tuition.
Tuition costs at Illinois public colleges skyrocketed from 2006 to 2016, with some universities’ tuition increasing as much as 100 percent.
Illinois’ flagship school, The University of Illinois at Champaign-Urbana, has seen tuition increase by 80% to $15,626 a year in 2016 up from $8,688 in 2006.
As tuition at Illinois schools increases and becomes more unaffordable for the average Illinoisan, more students will continue to leave the state to seek higher education elsewhere. Illinois has already lost 150,000 students to other states since 2000.
To keep students in state, Illinois colleges and universities should focus on making tuition low and affordable for Illinois students by fixing cost drivers.
To keep tuition down, schools should focus on reforming pension costs, cutting down administrative bloat, and cutting executive pay.