Seattle Pacific University’s Board of Trustees has been under fire for months refusing to budge on politics that prohibits the hiring of openly LGBTQ+ people, despite widespread opposition across campus. This position and the fallout have now led S&P Global to downgrade SPU’s bond rating.
The private university, affiliated with the Free Methodists, maintains a hiring policy consistent with church doctrine that states marriage must be between a man and a woman.
S&P Global said in an email on Tuesday that it was downgrading SPU’s bond rating from AAA to B-minus, citing “management risks and enrollment pressures” directly related to the hiring policy.
“The downgrade and negative outlook reflect our view of SPU’s ongoing governance risks due to instability in key leadership positions, the departure of several board members and the impact of lawsuits stemming from the university’s LBGTQ+ employment policies,” S&P credit analyst Global Ratings. Megan Kearns said in an email. “The rating also reflects our view of enrollment pressures, including an 8% decline in fall 2022 full-time equivalents, resulting in a shortfall in full enrollments, with a larger shortfall expected in FY2023.”
Faculty have long warned that SPU’s anti-LGBTQ+ hiring policy would have negative consequences, which now appear to be manifesting in declining student numbers. A number of trustees also resigned in protest after the governing board backed the policy in the face of fierce opposition. Subsequently, the Washington state attorney general launched an investigation into alleged discriminatory hiring practices at the university, prompting failed legal efforts on the SPU to stop the probe. In addition, students, staff and alumni sued six SPU trustees, accusing them of failure to fulfill their fiduciary duties by keeping policies.
In a statement to Inside the higher edSeattle Pacific did not address S&P Global’s concerns about anti-LGBTQ+ hiring policies.
“Like many small private universities, we are working to resize our annual operating budgets to reflect our smaller student population as we respond to the realities of post-COVID enrollment. We are well on our way with the academic prioritization process as well as the presidential search, which should quickly identify a new president,” Kim Sowers, SPU’s vice president for business and finance, said in an emailed statement. “The resizing of budgets, academic prioritization and new leadership will help position SPU to address many of the challenges raised in the report.”