Wright State University’s faculty union strike could affect the school’s credit rating if it continues much longer, according to an analyst for Moody’s Investor Services. A lower credit rating could make it more difficult for Wright State to take out loans.
Only two years ago, Moody’s lowered Wright State’s credit rating three notches from A2 to Baa2. At the time, analysts said the school’s, “severe financial deterioration in a short period of time," led to the downgrade.
Last year the agency affirmed the lower rating, noting failure to quickly resolve Wright State's faculty contract dispute could result in another downgrade. Union faculty have been working without a contract since it expired in 2017.
Now, as the faculty union strike stretches into a second week with no end in sight, Moody’s analyst Chris Collins says the ratings agency is keeping tabs on the situation.
“A place like Wright State University, it’s credit quality is largely tied to it’s brand and reputation,” Collins says. A longterm strike, he notes, could damage Wright State’s reputation, and in turn its ability to attract new students.
“It could lead to a drop in enrollment," he says. "And with the drop in enrollment comes a drop in operating revenue. It would just make balancing operations that much more challenging.”
Enrollment at Wright State has declined over the past several years. Last year, nearly 12,000 full-time students were enrolled at the school. That’s down from a peak of over 15,000 full-time students in 2011.
Collins says Moody’s has no immediate plans to downgrade Wright State’s credit rating. But, he says analysts will keep an eye on how the strike is ultimately resolved.