Ohio’s Wright State University is entering week two of a faculty strike.
Moody’s Investors Service downgraded the school three notches to Baa2 last May and assigned a negative outlook. The rating agency said at the time that a failure to resolve the contract dispute could have an impact on ratings and the school’s already declining enrollment. The school has roughly $68 million in outstanding debt.
At this point, the rating agency said it is in a wait-and-see mode because of ongoing negations between the university administration and faculty member that are on strike.
“There is not necessarily any credit impact but what we are looking at is to see how this ultimately shapes out and what financial impact it ultimately has on the university,” Chris Collins, a Moody’s analyst said. “Any time there is a credit event like this, it does increase the longer term reputational risk and ultimately if this were to carry on for an extended period of time and if students were to have a negative experience as a result of this it could ultimately have negative implications.”
At the start of the year, Wright State University Board of Trustees implemented new working terms and conditions for its bargaining unit faculty members. The terms move faculty union members into a single university-wide health care plan, include no pay raises and allow faculty to be furloughed as part of “cost savings" days.
In response a majority of the union representing more than 500 faculty members went on strike. In its strike notice the union took issue with the furlough policy, changes to health care, new provisions for promotions and tenure appointment, workload policies and a merit pay system. Members have been on strike since Jan. 22.
This week, the State Employment Relations Report declined to rule on the university's request to have the strike declared unauthorized. “While SERB did not rule this strike unauthorized as we had asked, the union’s actions to prevent the university from operating are having a significant toll," University President Cheryl B. Schrader said
“The terms and conditions that were implemented Jan. 4 are good for the university’s finances as they provide some of the structural budget changes that move the university further from the unsustainable status quo and closer to short and long-term financial sustainability,” said Seth Bauguess, a spokesman for Wright State. “It is our expectation that as the university continues to navigate financial recovery, and other situations including the strike, the university will emerge in a better financial position than it has been in for several years.”
Doug Fecher, chairman of the WSU board of trustees, said that a big, long-term strike would have an impact on enrollment. Wright State’s enrollment was projected to dip below 17,000 for the first time this fall since 2007 to around 16,224, nearly 3,550 below the school’s peak in 2010 when a transition from quarters to semesters started taking place, according to a fiscal 2019 budget. Wright State’s full-time enrollment from fiscal year 2012 to fiscal year 2017 dropped 13%.
The school, which is already grappling with falling enrollment and a budget crisis has had to address a $30 million structural budget deficit. At the time of the May downgrade, Moody’s said that the school was projected to have overspent by more than $120 million over the past six years, spending down most of its reserve funds.
