Western Illinois slides to junk bond status

The state of Illinois is out of money and Summit League member Western Illinois is on the ropes.

When downgrading the Illinois state universities, S&P wrote: “the state has yet to pass a budget for fiscal 2017 and has not conclusively communicated plans for stop-gap funding to support the state’s public higher education institutions.”

Years of overspending in the State of Illinois and under collecting revenue has led to a the state’s new republican Governor pushing for austerity while the democratic state legislature looks to increase taxing revenue. The university system is caught in the middle of the pitched battle.

Recently, S&P Global Ratings lowered the credit score of both Southern Illinois University (Missouri Valley) and Western Illinois University (Summit League) into junk bond status. Eastern, Northeastern and Governors State were already in junk bond territory and their ratings were lowered even further last month. The University of Illinois (B1G), the state’s flagship university, was also downgraded to just three notches above junk status and, like all the other universities, was put on a “credit watch with negative implications,” meaning it could be downgraded again within the next 90 days.

All of the downgrade reports noted that none of the universities have received any funds since their partial “stopgap” appropriation in June of last year. The reports also seemed to advocate for another stopgap funding bill this fiscal year.

According to the Chicago Tribune, WIU  has laid off and furloughed hundreds of workers and cut academic and athletic programs according to university President Jack Thomas. “The budget situation is unacceptable in our state. It has created a crisis of confidence. Illinois has the second largest migration of students to other states.” Add to that, the state’s flagship school, the University of Illinois, has future plans to increase enrollment, largely at the expense of down-state students –  further eroding WIU enrollment which has dropped below 10,000 students, the lowest level in a decade.

The Summit League Commissioner, Tom Dauple, is said to be keeping a close eye on WIU’s status. The conference added North Dakota, a good hedge against the potential loss of Western Illinois.

5 thoughts on “Western Illinois slides to junk bond status”

  1. Wow, that graph shows quite a decline in enrollment. I doubt it’s due to a strategy of exclusivity of admissions. Sucks for the students who are getting no discounts on their education.
    Doubtful it will have a near-term effect on their Summit League membership, but their athletics will take a hit in competitiveness in the next few years.

    Liked by 1 person

  2. We are living in an era where minor, non-revenue sports are now expected to travel great distances to play, and where facilities are expected to be top class in every sport just to stay competitive, and top coaches and support staff expect competitive salaries. Many ‘directional’ or commuter public schools simply don’t have the funding sources to keep up in that kind of arms race. You are going to see further stratification between the “haves” and “have nots”. These schools will be the first to suffer, followed by privates like DU that will eventually get squeezed out by the big schools with more money. Please enjoy DU sports now, before that day comes…

    Liked by 1 person

    1. Only one disagreement…Power-Five schools are generally state-run. States are starting to raid their athletic TV money for general funding. Furthermore, the Power-Five schools have huge TV revenue but are still running an overall deficit – mainly due to football. Also, unplugging and dead-ending TV rights may decline (Big 12 next contract). DU may actually be better positioned than most. I have a story tomorrow on a new threat – especially to football for brain injuries. That could be another game changer – especially for football.

      Liked by 1 person

  3. I was talking about “Directional” schools like “Western” Illinois and commuter schools like IUPUI, that are well down the funding pecking order, not P5 or other top funded state flagship or land grant schools.

    The concussion issue is going to get bigger as we learn more. I think the evolution of helmet sensors is going to be able to add much more timely on-site data to help make the decision to pull a player out of action.

    Liked by 1 person

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