BATON ROUGE (AP) — A number of Louisiana's public colleges face the threat of a credit rating downgrade because of state budget problems.
National credit rating agency Moody's Investors Service announced this week that it has put several campuses on review for a possible downgrade, because of the risk of steep cuts to their state financing and to the state's TOPS free college tuition program.
"Public universities in Louisiana operate in a very challenging environment. Louisiana's four-year universities have endured a severe 47 percent decline in operating appropriations between 2010 and 2014, compared to a median of 9 percent for our rated U.S. public universities," Moody's analyst Karen Kedem wrote in her analysis, released Monday.
Credit ratings determine how much it costs to borrow money. A downgrade could boost debt repayment costs for the schools and make it more difficult for them to borrow.
The schools whose ratings will be reviewed are: LSU's main campus in Baton Rouge, the University of New Orleans, the University of Louisiana at Monroe, LSU Health Sciences Center in New Orleans, Louisiana Tech University, Southeastern Louisiana University, McNeese State University and the Southern University System.
Louisiana faces a shortfall topping $850 million for the financial year that ends June 30 and a gap of more than $2 billion for next year.
Lawmakers meeting in a special session are deciding whether they will raise taxes to close budget gaps, tax increases sought by Gov. John Bel Edwards. But even with tax hikes, higher education still faces some cuts to the money they receive from the state.
Edwards said the Moody's announcement should "serve as a wakeup call for anyone who thinks we can simply cut our way out of this crisis."
"I am hopeful this will bring folks to the table to work with me to avoid making these cuts that will have a negative long-term impact on higher education in this state," the Democratic governor said in a statement Tuesday.
The state of Louisiana's credit rating also is being closely watched.
Moody's and a second national rating agency, Standard & Poor's Rating Services, have the state on a negative credit outlook, raising concerns that if Louisiana doesn't stabilize its budget, it could risk a downgrade.
– by AP Reporter Melinda Deslatte
