Moody’s Investors Service has downgraded Wright State University’s credit rating from A2 to Baa2 based on the college’s “severe financial deterioration in a short period of time.”
“We shouldn’t be surprised after years of overspending,” said Doug Fecher, chairman of the WSU board of trustees finance committee. “It was inevitable there was going to be a downgrade like this.”
Universities sometimes take out loans to build new buildings on campus, something the new Moody’s rating could prevent WSU from doing.
“With a rating like this, we simply wouldn’t be able to,” Board of Trustees Vice Chair Douglas Fecher remarked.
“This is more of a reputational issue than a financial issue,” Fecher said of the downgrade.
Fecher said he’s confident the university will be able to realign its budget and eventually turn the rating around though.
“It’s just part of what we have to go through to get to where we have to go,” Fecher said. “We’re moving forward with the budget remediation. We have to.”
To improve its credit rating, Wright State would need to improve its cash flow and reserves relative to its debt, according to Moody’s. Failure to so could lead to another credit downgrade.