According to a recent report from Moody’s, federal budget cuts that will occur as an effect of the sequestration will have minimal impacts on public universities.
The credit ratings agency says that the general outlook for universities is optimistic in regards to risk factors. A miniscule one percent of universities will see sequestration cuts that are greater than 3 percent of revenue. Stand-alone research universities have the highest risk, as they do not enjoy the same diversity of revenue. Tuition, room and board fees, state appropriations, and other sources of revenue will help most universities absorb the funding cuts.
“We don’t make any statements about whether the government policy on funding is a good idea,” said John Nelson, Moody’s managing director of the health-care and higher-education rating teams. “We’re just saying that universities have a lot of adaptive abilities, and from the perspective of ‘Are bondholders going to get their money back?,’ this is not a serious threat to them.”
The Moody’s analysis assessed the impact on universities from a risk perspective—that is, what the risk of lending money to them is. And from that side of things, Moody’s says universities are still looking strong.
“There are a lot of careers on the line, a lot of disappointed young researchers and older researchers who were used to certain success rates on their grants,” said Nelson. However, he added, “we don’t read this as any kind of major loss in faith in research universities. It’s more a function of the difficult choices that government faces.”
Featured Image: Deejay D via Flickr
Obama did not fully explain the sequester did he? He did not mention why we would have to cut off college tuition programs for our soldiers returning from Iran with missing arms and legs did he? Did he say that we would STILL be spending millions each year to legalize gay marriage in other states and expand gay rights however? The money to spend on Lawmaker paychecks comes from the same department of treasury that will no longer fund college tuition for troops. Oh you think that lawmakers work for free writing new legislature for gay rights expansion programs? That money has to come from somewhere and it is called the department of treasury. We cant support the troops and gay marriage at the same time. Its now being called a sequester.
Unfortunately, the sequester hurts many programs across the nation. While universities are still looking good in terms of credit ratings/risk assessment, there will likely still be jobs lost and programs reduced. The sequester was designed and introduced to be an unattractive option that would push Congress to agree on a national budget. Unfortunately, that has yet to happen.