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Moody’s: Restrictions could hurt University of Kansas credit

March 11, 2016

TOPEKA, Kan. (AP) — A restriction that the Kansas Legislature placed on the University of Kansas could affect the school’s credit, a credit ratings agency says.

The Legislature placed a provision in the state budget that Gov. Sam Brownback approved last week that bars the university from spending beyond its approved school budget without lawmakers’ permission, The Wichita Eagle reported (http://bit.ly/21naqXk ). The restrictions were put in place in response to the university’s decision to go out of state for a $327 million bond issue in January to avoid the need for legislative approval.

“These restrictions are credit negative because they limit the university’s flexibility to manage its budget on a real-time basis,” Moody’s Investor Services analyst Michael Osborn wrote this week.

Moody’s hasn’t changed the university’s credit rating. It gave the university a negative outlook in December, citing its decision to finance large-scale construction through bonds.

The Legislature’s action doesn’t affect bondholder security, Osborn wrote, but “it highlights the importance and significance of the relationship between a state and its public universities.”


Information from: The Wichita (Kan.) Eagle, http://www.kansas.com

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