Moody’s Investor Service issued an updated credit report for Idaho on March 4 and the news is good. Based on the latest credit check, Idaho is leading the way in economic growth, maintaining strong reserves, while also having low long-term liabilities. According to Moody’s:
“The State of Idaho (Aaa stable) maintains a very strong credit position supported by a growing economy, healthy and stable finances, and low leverage and fixed costs. Idaho continues to be one of the strongest economic performers in the US. It ranks at or near the top of all states in terms of growth in population (including of prime working age residents), employment, GDP and income. The state's economic expansion has driven significant growth in revenue over the past few years, which has supported growth in reserves and fund balance. Strong reserves, which the state is on pace to further increase in the current fiscal 2024, will help the state weather a slowdown in economic momentum or revenue growth, should they occur.”
The one warning sign for the state according to Moody’s is related to the controversial plan by the University of Idaho to purchase the University of Phoenix:
“The potential acquisition of the University of Phoenix, the for-profit university, by an entity related to the University of Idaho (A1 rating under review for possible downgrade) presents some operating risk to the state. The university is in the process of establishing a nonprofit organization that could issue close to $700 million in new bonds to finance the acquisition and then take on the task of managing the online university. The University of Idaho may guaranty a narrow portion of the annual debt service on the bonds. At the same time, as the sole member of the nonprofit organization, the University of Idaho could be exposed to significant operating risk even if its responsibility for debt service is strictly limited to the narrow guaranty. Because the university is a wholly-owned business-type enterprise of the State of Idaho, the risks it assumes could become operating risks of the state.”
Idaho Treasurer Julie Ellsworth said this about that concern in a March 7 press release:
“Idaho taxpayers will pay increased costs if there is a downgrade to Idaho’s credit rating.”
There are several different options under consideration in the legislature right now concerning the University of Idaho controversy. As reported by Idaho Education News:
“Legislative leaders received two opinions Monday. One came from Givens Pursley, a prominent Boise law firm hired to provide outside review of the Phoenix purchase. The second came from Attorney General Raúl Labrador, who already has a Phoenix-related appeal pending before the Idaho Supreme Court.
At their heart, the two opinions reach the same conclusion: The State Board of Education had no authority to approve the U of I’s plan to acquire Phoenix, and operate a private university under the mantle of a U of I-aligned nonprofit, Four Three Education . . .
In a statement provided Wednesday morning, the U of I indicated it might be open to a new approach. ‘We understand that there are conflicting legal opinions, all from respected law firms and we believe there is a legal path forward and are working toward a solution.’”
Strong fiscal discipline and good governance will help provide ongoing dividends for taxpayers. State policymakers are acting wisely to ensure Idaho’s credit rating remains strong.