Color me stupid - but, why does Penn State owe more than $1 Billion?

[UpInArms]

http://www.marketwatch.com/story/moodys-may-downgrade-penn-state-debt-rating-2011-11-11?siteid=bnbh

SAN FRANCISCO (MarketWatch) -- Moody's Investors Service said late Friday that it may downgrade the rating on about $1 billion of Penn State's debt because of rising credit risks stemming from a child sexual abuse scandal. Moody's has a Aa1 revenue bond rating on Penn State. "We will monitor possible emerging risks emanating from potential lawsuits/settlements, weaker student demand, declines in philanthropic support, changes in state relationship and significant management or governance changes," Moody's said in a statement.

[rfranklin]

1. Livin' large! And paying multimillion dollar salaries and...

building more facilities. Universities are booming businesses these days.

[supernova]

2. I'm with you

that's a lot for a private mega corp, but a "state" university? Unless they have several big funding bonds on the books. Unis like to go on building sprees.

[alcibiades_mystery]

3. All big universities have financing and bond issues

[Botany]

4. e.z. universities pay for constructions w/ bonds and ..

.... those bonds have almost always been a rock solid and conservative way for people or businesses to invest their money.
Now w/ the liability PSU is facing from the sex abuse scandal the market is gonna look hard at the ability for Penn State to
meet their obligations.

[muriel_volestrangler]

5. It's a big business

30,000 full time employees: http://econimpact.psu.edu/

Yearly income about $4 billion: http://www.budget.psu.edu/factbook/StateAppropriation/TtlOperBudget1112.asp

[UpInArms]

6. thank you and everyone else - for the responses

just seemed to be a bit steep

especially, with the high cost of tuition - and housing, if students use it - when they have so many students who are paying -

[alcibiades_mystery]

7. Do a comparison with other schools of the same size

And you'll find it's in the normal range and even on the low range for some.

In isolation, it seems huge, of course. But that's because it is not being put in context with comparable institutions.