Triton 1 of 15 Illinois community colleges in Moody's credit downgrade
The continuing budget woes in Illinois have claimed another casualty, with Moody's Investors Service recently downgrading Triton College's bond credit rating.
Triton College is located in River Grove.
Because of the ongoing budget impasse,Triton College's bond credit rating was downgraded from Aa1 to Aa3. The Aa rating is still a relatively high rating, and the college is still considered at low risk, while the qualifier indicates that the rating has moved from the upper scale of Aa to the lower end of the rating category.
"Despite the State of Illinois' (Baa2 negative) unprecedented year-long delay in approving a full higher education budget, the credit quality of rated Illinois community colleges remains strong due to their sound reserves and diverse revenue streams,” Moody’s said in its report. “However, the state's fiscal challenges have taken a toll, weakening colleges' financial positions and leaving them vulnerable to further state-aid delays and potential increases in pension costs.”
Moody’s also said 23 of Illinois’ colleges “now carry a negative outlook.”
When the state eventually does pass a budget, the downgrade will not be reversed, Moody’s said.
“Our recent rating actions reflect colleges’ exposure to the fiscally challenged State of Illinois for operating support, program and scholarship grants, and pension funding,” the report said. “This exposure will continue beyond passage of a state budget. We would consider reviewing the credits in a positive direction if the state’s credit quality were to improve.”
Last month, Moody’s placed the University of Illinois and six other state universities on review for downgrade after downgrading the State of Illinois from Baa1 to Baa2.
By design, community colleges depend on state funding, tuition and property tax revenue to operate, unlike state universities, which rely mostly on tuition and state appropriations. Despite the added stream of revenue, the budget impasse has taken a heavy toll on community colleges.
“The state has gone nearly a year without adopting a full budget, leaving community colleges with only a fraction of the state support they were expecting," Moody's said. "Most entered the fiscal year with healthy reserves, providing some cushion against the revenue shortfalls. Based on our conversations with community college officials, we expect most will close fiscal 2016 with reduced, though still sound, cash levels. The weakest colleges will likely have narrow reserves, but still retain sufficient liquidity.”
In response to decreased state funding, community-college officials have reduced expenditures, increased tuition rates, and issued short- and long-term debt.
Junior College District 300 was founded in 1964, and the River Grove campus was purchased the following year. When Triton College opened in 1965, it enrolled 1,200 students from three high school districts. Tuition was $5 per semester hour. The college district was expanded in 1972 and 1974, adding five school districts. The current campus covers 100 acres with 15 buildings, including a library, gym, auditorium and the Cernan Earth and Space Center. More than 12,000 students enroll each semester. The college also offers approximately 850 continuing-education classes.