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Bond ratings agency places North Idaho College under review for potential downgrade

North Idaho College (FILE PHOTO)
North Idaho College
North Idaho College (FILE PHOTO)

The continuing tumult at North Idaho College may result in a downgrade in the school’s bond ratings, an influential bond ratings agency warned.

In a December 21 message, Moody’s Investors Service said the dysfunction of NIC leadership is endangering its public image and may possibly lead to financial trouble this year, if the turmoil leads to a decline in enrollment or donations.

“The board members' very public disputes with one another, college leadership and external parties are negatively impacting NIC's brand, which in turn, could negatively impact student demand and operations,” the message said.

Moody’s concerns are not purely speculative. A 2022 assessment from the Northwest Commission on Colleges and Universities (NWCCU) found that NIC donors did pull back after a three-person Republican majority on the school’s board of trustees fired NIC’s president without cause and began publicly sparring with fellow board members, faculty, students and members of the public. The school’s fundraising arm, the NIC Foundation, told NWCCU $4.1 million in legacy gifts and $343,000 in major gifts had been jeopardized as of early 2022.

The message also pointed out that NIC faces lawsuits from its president, Nick Swayne, and from a Coeur d’Alene attorney over the board’s conduct since the November election returned the GOP bloc to the majority.

Bond ratings are important for public institutions. They are similar to credit ratings for individuals. The lower the bond ratings, the more of a risk that institution is considered to be, and the more expensive it is for that institution to borrow money.

In December 2021, Moody’s lowered NIC’s bond rating from “stable” to “negative.”

Resolving the ratings agency’s concerns, the December 21 message said, will hinge on several factors. The college will need to furnish financial information, including NIC’s most recent audit, establish a clear plan to stabilize its leadership after putting Swayne on leave in early December, and address NWCCU’s governance concerns. Its next visit is scheduled for April, Moody’s said.

In December, NWCCU sent a letter to NIC expressing concern that the school could be out of compliance with more than a dozen standards for eligibility and accreditation. The school was given a January 4 deadline to respond.

In a statement, North Idaho College said it is financially sound, and that any review by Moody’s would have a minimal effect on the school’s current financial position.

However, NIC also noted that “any change in our Moody’s rating may impact future projects.”

Read the December 21 message from Moody's Investors Services:

Brandon Hollingsworth is your All Things Considered host. He has served public radio audiences for fifteen years, primarily in reporting, hosting and interviewing. His previous ports-of-call were WUOT-FM in Knoxville, Tennessee, and Alabama Public Radio. His work has been heard nationally on Morning Edition, All Things Considered, Here and Now and NPR’s top-of-the-hour newscasts.