Source: Moody’s Investors Service, Sector In-Depth, November 18, 2016
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Credit risk related to unfunded pension liabilities for public universities we rate is increasing and aggregate net liabilities now exceed aggregate capital debt. Annual pension expenses are manageable at only 3% of operations (fiscal year 2015 median), but we expect them to rise as investment earnings lag assumptions and certain states continue to shift pension payment obligations to their universities. Currently, universities are better positioned than certain large local governments as it relates to pension liabilities and universities typically have more cash and investments relative to obligations that will help cushion rising pension costs…..
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