After the yearlong process begun by a Los Angeles Times article exposing the misconduct of now-former University of Southern California (USC) gynecologist Dr. George Tyndall, a $852 million settlement with 710 victims led Moody’s to downgrade USC’s outlook.
In discussing the revision, Moody’s also cited a $215 million federal class action settlement.
“The revision of the outlook to negative reflects the University of Southern California's (USC) material financial exposure stemming from legal issues related to sexual assault by a former university physician, resulting in potential balance sheet strength erosion,” the rating action from Moody’s states.
In a statement released to the Southern California Record, the university said that it was pleased to have its bond ratings affirmed.
“The changes in outlook are understandable and came as no surprise,” the university statement said. “We take those revisions seriously and will work diligently to manage the risks outlined by both rating agencies. Fortunately, the changes do not impact our underlying bond ratings or ability to raise capital at favorable interest rates.”
Despite it taking years and hundreds of complaints for the university to take any action toward Tyndall, a statement regarding the settlement indicated that the administration welcomes the $852 million settlement openly.
“I am deeply sorry for the pain experienced by these valued members of the USC community,” Carol Folt, USC president, said in the release. “We appreciate the courage of all who came forward and hope this much needed resolution provides some relief to the women abused by George Tyndall.”
Rick Caruso, USC Board of Trustees chair, said that the “behavior that was discovered” shocked the university’s conscience to its core. One of the measures of accountability he noted was the installation of Folt as president and the reformation of the board, including his placement as chair.
The university statement regarding the ratings revision said that the ratings indicate that USC’s fundamentals are sound, and that the university is financially healthy and well-positioned within a very competitive higher education marketplace.