Moody’s: U.S. research universities can cope with federal funding cuts

December 16, 2011

Business, Educational

U.S. research universities can cope with federal funding cuts
NEW YORK– U.S. research universities have sufficient credit strength to maintain high ratings despite a weaker funding outlook, including looming cuts in federal government funding, says Moody’s Investors Service in a new report.
“Except for the temporary boost provided by the 2009 stimulus, federal research funding has been largely stagnant in recent years, a trend likely to worsen for the foreseeable future,” said Moody’s Vice President-Senior Credit Officer Edie Behr, a co-author of the report. “Federal funds account for approximately 60% of research grants awarded to universities, but that share will likely drop as private funding grows.”
There are more than 100 research universities and university systems in the US that borrow in capital markets and are rated by Moody’s. The group includes stand-alone private institutions well known for research such as Johns Hopkins University, Massachusetts Institute for Technology, and Stanford University. But the group also includes large multi-campus public university systems, including the University of California and the University of Texas System.
In addition to federal funding cuts, Moody’s reports that research universities confront other emerging challenges that will lead to subdued financial performance compared to the boom conditions of the past two decades.

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