NJ Public Colleges Face Credit Rating Downgrades from Moody’s

By Michael Aron
Chief Political Correspondent

Moody’s took a look at the debt held by all of New Jersey’s four-year public colleges and universities and slapped a negative outlook on all of them.

The debt at Rutgers is $2 billion; at Rowan, $656 million; Montclair State, $464 million; NJIT, $308 million; Stockton, $234 million; William Paterson, $165 million; and New Jersey City University, $163 million.

Some had their credit ratings downgraded, some not.

“The downgrade was driven by the state’s continued weak financial position, due largely to ongoing pension contribution shortfalls,” Moody’s reported.

Leaders at the affected schools say a cut in their state appropriations for next year is at the heart of it.

“Because of the cut in the allocation that we get from the state, they also looked at what our margins were, what our operational reserves, as what was the debt. We had just borrowed some money to do some projects for West Campus. And those factors put together I think indicated to Moody’s a need to downgrade us,” said NJCU President Sue Henderson.

The association that represents all the four-year public colleges and universities agrees this is really about state finances, not the institutions.

“The negative outlook that Moody’s and the other credit agencies are now signing to credit reports of these institutions entirely reflects the situation the state finds itself in with its budget. It does not reflect the leadership of the institutions itself,” said NJ Association of State Colleges and Universities Chief Executive Officer Michael Klein.

Also on the higher education front today, the College Affordability Study Commission held its third meeting.

Created by the Legislature, it has 18 months to address a growing concern.

Its chairman is the president of what was Gloucester County College and is now called Rowan College at Gloucester County.

He says college in New Jersey is too expensive.

“We always know and understand that those with money can send their sons and daughters anywhere. They can do that. We’re seeing a growing population in this study in the middle, who literally are middle class individuals where the cost is, they’re getting in conversations with their sons and daughters, we may not be able to do this, send you to higher education,” said Rowan College at Gloucester County President Fred Keating.

One thing the commission is looking at is stronger linkages between two-year and four-year colleges. A student who spends the first two at a community college pays less for a four-year degree.