Agencies say SIU is good borrower

By Gus Bode

The state is threatening to tighten the university’s budget.

Enrollment numbers indicate fewer students are opting to spend their tuition dollars at SIUC.

But regardless of what might seem like financial hard times, two independent rating agencies recently said lenders should still consider SIU a safe bet.

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Due in part to the large amount of money brought in by student fees, the rating companies said financial institutions are taking little risk when they allow the university to borrow their money.

The university plans to take out nearly $32 million in loans this year to pay for security upgrades and sprinkler installations in university housing, the expansion of SIU-Edwardsville’s fitness center and the construction of a Student Success Center at SIUE.

Two agencies, Moody’s and Standard and Poor’s, assigned SIU a rating that is one point lower than the University of Illinois Urbana-Champaign. SIU has received the same rating for the past few years.

Duane Stucky, vice president for financial and administrative affairs, said the rating is one indicator of how the university is viewed by other institutions.

‘It’s unfortunate that the way we’re strong is the fact that we’ve increased student fees, but that’s what makes our bond ratings strong,’ Stucky said.

Stucky said the rating is also a reflection of the university’s money management, leadership and fundraising. Although enrollment at SIUC has dropped in recent years, Stucky said it was important that this year’s drop – 20 students – was smaller than those of previous years.

‘It was critical this year that the enrollment drop that we began to experience was really almost reversed and it looks like the trend is going to be reversed,’ he said.

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Standard and Poor’s report said SIUC’s declining enrollment was balanced by SIUE’s increases.

The report also cited a ‘limiting state funding environment’ as a problem the university faces. Gov. Rod Blagojevich proposed a budget earlier this year that provides no increase in funding for public universities. The governor has also suggested possibly taking millions of dollars from higher education to fill a hole in the budget.

Stucky said a higher credit rating means the university will have to pay less interest on its loans.

Tina Galik, assistant vice president for finance and administrative affairs, said the university is rated each time it sells bonds, which it does almost every year. Projects such as the first phase of Saluki Way, a plan to revamp the campus core, also require the university to take out loans, she said.

Typically major projects don’t start until after the bonds are sold, she said.

‘We generally don’t want them to sign the award of contract for the big work until the money is actually in the bank,’ Galik said.

Jessica Matsumori, associate director at Standard and Poor’s, said her agency visits campus roughly every five years to interview university officials when assigning ratings. The company does phone interviews when it cannot make it to campus, she said.

Matsumori said SIU received a high rating, although she cautioned against assigning more meaning to the report than what is intended.

‘We’re looking at this purely from the standpoint of whether or not they can repay debt,’ she said.

Joe Crawford can be reached at 536-3311 ext. 254 or [email protected]

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