Saturday, February 6, 2016


Falling enrollment, dorm debt squeezes Pa. state colleges

Moody's cuts credit rating

Falling enrollment, dorm debt squeezes Pa. state colleges


Moody's Investors Service has cut the credit rating on $1.5 billion borrowed by West Chester University, Cheney State University, and the 12 other Pennsylvania State System of Higher Education colleges to Aa3, from Aa2.

The state colleges face "weakening state support" under Gov. Tom Corbett, along with "declining enrollment" -- fulltime students dropped below 107,000 this fall, from 112,000 a year ago -- along with "weak" applications from feeder high schools, especially in economically depressed Western Pennsylvania. Moody's also cites "political limitations on the system's ability to raise tuition and fees, and challenges in reducing expenditures" under current labor contracts.

The schools also face "very large and growing liability" for unfunded pensions and healthcare promised retired professors and other staff, along with the Commonwealth of Pennsylvania's credit rating downgrade last July, which left the state rating at Aa2. 

The state colleges' debt load has risen significantly since 2004, thanks partly to fancy new dorms built at the local campuses to lure more students. The debt contributes to the colleges' "high leverage" compared to tuition income and other revenues. Still, Moody's concluded, current cash flow is enough to make bond payments.


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PhillyDeals posts interviews, drafts and updates that Joseph N. DiStefano writes alongside his Sunday and Monday columns and ongoing articles about Philadelphia-area business.

DiStefano studied economics, history and a little engineering at Penn. He taught writing and research at St. Joe’s. He has written for the Inquirer since 1989, except when he left a few times to work at Bloomberg and elsewhere. He wrote the book Comcasted, and raised six kids with his wife, who is a saint.

Reach Joseph N. at, 215.854.5194, @PhillyJoeD. Read his blog posts at and his Inquirer columns at Bloomberg posts his items at NH BLG_PHILLYDEAL.

Reach Joseph N. at or 215 854 5194.

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