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Credit downgrade hits state institutions

UNIVERSITY OF ILLINOIS -- The state pension crisis is now affecting the UI's credit.
UNIVERSITY OF ILLINOIS -- The state pension crisis is now affecting the UI's credit. Moody's Investor Services downgraded its rating and says the school's outlook is negative.

Any immediate impact on the school will be limited, but it could affect the UI's three campuses in the long-run. That's because lower ratings usually mean higher interest rates for bonds.

So, here in Urbana-Champaign, it could cost the university as it prepares for construction on McKinley Hospital, as well as the renovation project planned at the State Farm Center. Moody says the bad score is because of concerns about delayed payments from the state and more reductions in funding. It could also result in increased tuition.

Moody also lowered the credit rating of six other state universities because of the state pension crisis. Moody's report adds it's unlikely for UI to get an upgrade. The university's outlook could move to "stable" if state leaders approve a pension reform which wouldn't "impair the university's financial strengths."
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