Moody's Investors Service has downgraded Penn State's long-term rating of Aa1 to Aa2 with a stable outlook, after a 90-day review of the University's financial situation and an assessment of the ongoing uncertainty related to possible legal challenges.
However, in its report released today, Moody's indicated that Penn State's research, fund-raising and enrollments remain strong. "We expect that Penn State will remain a leading U.S. public university with favorable student demand, positive operating performance, high donor support and a strong research position," the report read.
"This action will have no impact on tuition, and fortunately, due to historically low interest rates and no anticipated borrowing in the near future, will have a negligible financial impact," said David Gray, senior vice president for Finance and Business/Treasurer.
Penn State has established a 10-member advisory council, comprised of a wide range of individuals from across the University, to provide input and feedback as Penn State administrators and the Board of Trustees work through the 119 recommendations in a July report issued by former FBI Director Louis Freeh.
The Freeh Report, commissioned by the University as part of an independent investigation related to the child sex-abuse scandal involving former assistant coach Jerry Sandusky, recommends changes designed to strengthen policies and performance at Penn State in areas such as safety; reporting misconduct; and governance. To date, one-third of the recommendations have been completed. University officials hope to implement the changes Freeh recommended by the end of next year following a thorough evaluation, or to offer reasons why they would not implement changes.
Nearly 8,000 Penn State employees and volunteers have now attended the University's professional training program designed to help employees recognize and report suspected child abuse.
"As of Oct. 15, we have trained 7,963 employees and volunteers, including the University's Board of Trustees and senior leadership," said Susan Cromwell, director of workplace learning and performance in Penn State's Office of Human Resources. "We have 23 sessions on the calendar through December, and additional sessions still can be scheduled by units as needed."
Face-to-face training sessions began in April so the University could address an immediate need to train employees, also identified as "authorized adults," who would be working with children at numerous summer camps and workshops at University Park and other Penn State campuses across the commonwealth.
Penn State's Board of Trustees will hold a special meeting on Friday, Oct. 26, at The Penn Stater Conference Center Hotel to consider a resolution to authorize a subcommittee of the Board to approve possible settlements of claims made against the University related to the crimes of Jerry Sandusky.
The special board meeting, which is scheduled to begin at 5 p.m. in room 108, will be preceded earlier in the day by an executive session at 4 p.m. Trustees can participate by phone or in person.
At the full board meeting, trustees will discuss giving the Subcommittee on Legal -- an arm of the board’s Committee on Legal and Compliance -- the authority to approve settlements that may be reached related to claims against the University by individuals alleging that Penn State is liable for injuries suffered in connection with sexual abuse by Sandusky. The former assistant coach was convicted on June 22 of the abuse of 10 boys and sentenced to 30 to 60 years in prison.
Penn State University’s credit rating through Standard & Poor’s remains AA. S&P noted the University’s strong performance track record indicating that “Penn State’s current credit metrics remain consistent within the rating category.” As such, the University remains among the top 40 public rated institutions in the country and maintains the same rating as the Commonwealth of Pennsylvania. The University’s S&P outlook will be assessed again within the next two years.