After a review period, an investor relations company has moved the university’s credit status slightly.

Moody’s Investor Services released a report March 18 that dropped the university’s credit rating from an A2 stable rating to A2 negative because of Illinois’ weak financial condition. The service’s credit scores are based on a system that uses A, B, and C ratings with several subset levels for each letter. The university’s A2 rating is an upper-middle grade, which reflects high ability to repay short-term debt and shows low credit risk, according to the report.

University officials said the state, which saw a downgraded credit rating in December, is the university’s primary source of financial woes because the university is semi-reliant on state appropriations.

University President Glenn Poshard said even though the rating has dropped, it has held an A2 credit rating since at least 2002.

While the university’s rating moved down a spot, so have other state universities. The University of Illinois, Western Illinois University and Illinois State University dropped from A2 stable grades to A2 negative. Northern Illinois University and Eastern Illinois University dropped from A2 ratings down to A3 ratings.

Despite the drop, Poshard said the university is in better shape than Illinois’ own credit rating. He said the university has done its best to improve its credit rating whenever possible and made some sacrifices to do so. Such sacrifices, he said, include leaving previously occupied positions unfilled as well as cutting travel and equipment budgets.

“We did a lot of good things about our management here to maintain that rating, but there’s nothing we can do about the state having been downgraded in December,” he said.

Chancellor Rita Cheng said Illinois universities aren’t the only facing harder financial times.

“Higher (Education) in the whole country was deemed to be a negative outlook,” she said. “That’s because of the decline in state appropriations and the uncertainty of federal funding support, whether it’s grants for students or research support or other types of support.”

According to Moody’s report, the negative outlook reflects the university’s high reliance on state appropriations in an uncertain state funding environment as well as enrollment declines. The information showed state credit improvements such as stable and timely appropriation payments could improve the university’s rating.

However, the findings also showed the university’s score could decline because of factors such as longer payment delays, whether the state delegates more pension payment responsibility and further enrollment declines.

The state downgrade is not the only issue the university has had to deal with regarding budget management.

Poshard said  the university recieved $248 million in state appropriations in 2002, but it is expected to receive $204 million this year and is still owed about $150 million. Along with fewer state appropriations, Poshard said the university has to accommodate for Gov. Pat Quinn’s state budget plan, which will cause another 5 percent in education cuts; pension funding, which will cost around $6-10 million from the university’s budget; and sequestration on the federal level, which will cause the university to receive cuts in multiple areas such as research grants and military programs.

“If you take all of those things combined, the university is facing the most critical financial state that we will have ever faced,” he said.

Cheng said the university must show financial organizations it can handle its financial situation.

“What will be important is to demonstrate to Moody’s and Standards and Poors that we have the capacity to change what we need to change, to move forward in innovative and exciting ways to meet the educational needs of the students today,” she said.