Weekly Market Update
STATE SPENDING ON HIGHER EDUCATION INCREASED MARGINALLY IN 2018
Thursday, January 25, 2018
According to an annual survey, 2018 state spending on higher education increased only slightly from 2017, despite a strong year for the national economy. Appropriations grew by 1.6% in 2018 compared to 4.2% last year, and 2018's increase was highly concentrated: California, Georgia, and Florida accounted for 57% of the overall increase in spending. Nineteen states cut higher education spending; North Dakota, representing the most severe reduction, cut spending by 14.6%. Many states face funding challenges as revenues struggle to keep pace with increasing costs. Popular political decisions to offer free tuition have further stressed state budgets, and legislators are wary about raising taxes to pay for these programs. The modest increase in 2018 follows a 5-year period where higher education spending increased by 21% nationwide.
In Other News
- International student enrollment in U.S. graduate STEM programs decreased in 2017 after more than a decade of growth. This year's lag is attributed to the high cost of U.S. education, increasing competition from China and other countries, and growing political tensions.
- Iowa's public universities have yet to set tuition for the 2018-19 academic year, forcing financial aid offices to estimate their award packages. The decision on tuition rates has been delayed by the threat of potential midyear budget cuts.
- Washington State University received $114 million for various capital projects from the State of Washington. The funding is a result of the state's $4.3 billion capital budget.
- Construction started on a 14-story student housing community near the University of Illinois Urbana-Champaign campus. The 548-bed facility follows other large external investments in nearby student housing in recent years.
- Standard & Poor's issued a negative outlook for the higher education sector. S&P believes that the operating and credit environment in 2018 will be negative, citing mounting pressures at state and federal levels combined with wide-ranging impacts of the Tax Cuts and Jobs Act of 2017.
- Radford University will merge with Carillion Clinic's Jefferson College of Health Sciences. The combined entity hopes to be better equipped to navigate the increasingly competitive healthcare landscape in Roanoke Valley.
- The NCAA has opened an investigation into Michigan State University for potential rules violations relating to former faculty member Lawrence Nassar's abuse of young women. On Wednesday, Michigan State's president resigned amid public anger over the University's handling of Nassar.
Rating Agency Update
- Moody's assigned A1 to Troy University's Series 2018-A Facilities Revenue Bonds. The outlook is stable.
- Moody's assigned Aa3 to University of Central Florida's Dormitory Revenue Refunding Bonds, Series 2018A . The outlook is stable.
- S&P affirmed Loyola University's A rating. The outlook is stable.
- S&P affirmed North Carolina State University's AA rating. The outlook is stable.
- S&P affirmed Westminster College's BBB rating. The outlook is stable.
- S&P assigned AA+ to University System of Maryland's Series 2018A Revenue Bonds. The outlook is stable.
- S&P affirmed the University of Florida's AA- rating. The outlook is stable.
- S&P affirmed the University of Indianapolis' BBB+ rating. The outlook is stable.
- S&P downgraded McDaniel College's rating from BBB+ to BBB. The outlook is stable.