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Vogel: State of Illinois politics a drag on Illinois State

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While the rhetoric got rougher this week in our state government’s irresponsible budget stare-down, there was some good financial news circulating around Hovey Hall on Illinois State’s campus.

Despite the ever-deeper fiscal hole being dug by our elected officials, ISU’s credit rating was reaffirmed by a major credit rating agency, just as the university plans to sell $37 million in bonds. The money will be used to refinance older bonds at what will likely be a significantly lower interest rate, saving ISU $3.7 million in interest.

Moody’s Investors Service noted ISU’s “fiscal stewardship” (a term not normally heard regarding Illinois government), but warned its A3 rating could slip because the state’s budget impasse and drooping economy might result in further reductions in state support and weaker liquidity for ISU.

If you’re an ISU freshman who hoped to enjoy a new $54 million fine arts center, don’t hold your breath. The budget bottleneck has frozen further planning. If and when state funds start flowing again, we might see a less ambitious project or higher costs — or both.

However, the $33 million renovation of Bone Student Center is on track with design work underway. ISU has 85 percent of that money in-hand and would like a good credit rating when it borrows the rest a couple years from now, about the time the project is complete.

Buildings available

Lincoln College is looking for a buyer for its buildings just down the street from Heartland Community College, but plans to maintain a presence in Bloomington-Normal.

Lincoln President David Gerlach says there has been “very strong interest” in the buildings. He says the college “will have to be flexible” but would ideally lease back classroom space for its “Accelerated Bridge to Education” program that combines online learning with some classroom work for students looking to complete bachelor's degrees.

It’s part of Lincoln’s evolution into a four-year university with plans for a dozen bachelor degree programs three years from now. Traditional students will all study at the Logan County campus.

Confidence lacking?

An array of barometers is available to assess Illinois’ not-so-good state of affairs. Here’s another one that’s close to home and may be a little telling.

State Farm’s annual report on holdings inside the municipal bond mutual fund it operates largely for employees and agents seems to indicate Illinois is not the best hunting ground for good muni bond investments.

As of the end of November, only $5.2 million of the fund’s $681 million was invested in our state. Two of the three bonds were issued six years ago by School District 201 in Grundy, Kendall and Will counties. The third was issued 10 years ago by Lake County’s water and sewer system.

Surrounding states appear to inspire more interest. The fund had about $18 million invested in Indiana, $22 million in Iowa, $11 million in Kentucky, $20 million in Missouri, and $17 million in Wisconsin.

States where the company has established new operation “hubs” also attracted more State Farm muni bond investment dollars. There was $36 million in Arizona holdings, $11 million in Georgia and $26 million in Texas.

State Farm declined to comment on whether the relatively few holdings of bonds issued by Illinois entities reflects a lack of confidence in its home state.

Vogel, of rural Bloomington, can be reached at vogelgraph@yahoo.com.

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