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S&P cuts College of DuPage debt rating

Standard & Poor's Ratings Services on Friday lowered its rating two notches to 'AA' from 'AAA' on College of DuPage's outstanding general obligation

bonds and said the outlook is negative.

"The downgrade reflects our view of the college's accreditation status being placed on probation recently by the Higher Learning Commission," analyst Blake Yocom said in a news release.

The debt rating agency also cited a lowered view of the college's financial management, unstable board governance and management turnover. The college was placed on probation for two years in December by its accreditation agency, the board last year fired the college's president and two key financial officers, and the board lately has been split 3-3 so starkly that most meetings have been canceled for lack of a quorum.

"The negative outlook reflects the at least one-in-three chance that we could lower the rating further within the two year outlook period given the uncertainty surrounding the college's probation status and unsettled board turmoil," Yocom said.

Saturday's appointment of a new board member, breaking the 3-3 deadlock, may help the college address some of those issues.

Despite the downgrade, the college's rating is still very strong. S&P cited positives, including the area's diverse economy, a sizable tax base of high-income residents, a very strong financial position and moderate overall debt burden.

"We could revise the outlook to stable should the college improve and adhere to its financial management policies and successfully resolve its accreditation probation while demonstrating stable governance," he said.

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