Illinois colleges' bond status upgraded as budget impasse ends

S&P Global Ratings upgraded four Illinois universities and took three others off watch for a potential downgrade because the state ended a standoff over the budget that had left the schools reeling from the loss of aid.

The legislature's decision this month to override Gov. Bruce Rauner's veto to enact the first full budget in two years lifted a financial threat to the state's public colleges, which had been laying off employees, slashing spending and shuttering programs to cope with funding delays.

"These universities' immediate liquidity risks as a result of the state's failure to provide timely payment of operating appropriations are mitigated with the recent passage of the fiscal 2018 budget and retroactive payment anticipated for fiscal 2017," Ashley Ramchandani, an S&P analyst, said in a statement on Monday.

Southern Illinois University and Governors State University had their ratings lifted one level to BB+, one step below investment grade. Northeastern Illinois University and Eastern Illinois University were upgraded one step to B+, four levels below investment grade. All four were moved from negative to stable outlooks.

University of Illinois, the state's flagship institution, and Illinois State University had the outlooks on their A- ratings, four steps above junk, upgraded to stable from negative, indicating that they're no longer at risk of being downgraded. The outlook on Western Illinois 's BB- rating, three steps below investment grade, was raised to positive from negative.

The 2018 spending plan provides 10 percent less funding than in 2015 and the full impact of the new budget can't be "immediately determined," S&P said.