Moody's also cited the university's "weak governance" and noted the recent decision by the
Accrediting agency puts ASU on warning for 6 violations
"Ongoing weak operating performance required a draw on reserves to cover debt service in 2014, and this is expected to continue through at least 2015, if not longer, resulting in weakening liquidity," the release from Moody's states. "A history of weak governance and expense control reduces the prospects that the university will be able to rapidly and strategically restore operating equilibrium."
Moody's downgraded ASU's tuition and fee bond rating from Baa1 to Ba1 and downgraded the school's Series 2005 lease revenue bonds from Baa2 to Ba2. It gave ASU a negative outlook.
ASU officials said they would review the notice from Moody's and comment following the holiday weekend. The university is in the midst of a transition at the top of its financial department, with
The statement from Moody's highlights several weaknesses it said led to the downgrade and potential future financial issues. Those included that ASU is "extremely leveraged, with
Moody's also said ASU's management has been unable or unwilling to address "a growing structural deficit," which signifies weak controls and the likelihood of future deterioration. It also noted the university's "significant governance and management challenges," including an ongoing forensic audit, a new president and SACS issues.
In ASU's favor, Moody's believes, is that Gov.
Bentley's presence at ASU hasn't exactly been welcomed with open arms. The governor ordered a forensic audit of ASU following allegations from former President
Currently, there are two grand jury investigations into potential fraud at ASU. To date, no charges have been brought against anyone at ASU.
(c)2014 the Montgomery Advertiser (Montgomery, Ala.)
Visit the Montgomery Advertiser (Montgomery, Ala.) at www.montgomeryadvertiser.com
Distributed by MCT Information Services