A leading credit rating agency has issued a positive report for Penn State in the aftermath of the university’s May 3rd board of trustees meeting.
The document, by Moody’s Investor Services, specifically referenced governance changes and increased transparency as reasons for the brightened outlook.
When Penn State last heard from Moody’s in October 2012, the university’s credit rating was downgraded from Aa1 to Aa2 citing financial fallout from the Jerry Sandusky child sexual abuse scandal. That Aa2 rating is unchanged.
But the new assessment is welcome news to school officials.
“Moody’s positive outlook is certainly a boost for Penn State,” said university spokesperson Lisa Powers. “It reaffirms that we are on the right track toward improvement in many areas of the university, specifically in governance and oversight issues.”
Many of these organizational differences stem from the 119 recommendations contained in the Freeh Report issued last July. All but one of those recommendations has been implemented according to Moody’s findings.
“Stressing that the university’s culture and governance were overly dependent on a few senior leaders,” the initial Moody’s report recommended, “expanding board committees, more transparency, establishing a Chief Compliance Officer and a Clery Act compliance coordinator, hiring a new chief legal counsel, and enhancing the human resource function.”
Among the changes implemented at the May board meeting, Penn State’s president and the state governor are now considered ex-officio members and no longer have a vote on board matters. That reduces the number of voting members from 32 to 30.
There are now 12-year term limits for all trustees except ex-officio members and a longer waiting period for university employees before becoming eligible to serve on the board. They must now wait five years before joining the board. Previously, the wait was just three years.
In the just-issued Moody’s report, analysts said, “It [Penn State] is also known for its strong sense of self-affinity and powerful university culture, previously considered only for its positive aspects. That culture is now being pushed toward more transparency and openness by university leaders.”
“The report by Moody’s is a good benchmark for how well we are doing and for how we can continue to move forward,” Powers added.
