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The Board of Trustees at Seattle Pacific University has been under fire for months for refusing to budge on a policy that bars hiring openly LGBTQ+ individuals, despite widespread opposition across campus. Now that stance, and the fallout, have led S&P Global to lower its bond rating for SPU.

The private, Free Methodist–affiliated university maintains the hiring policy in accordance with church doctrine, which states that marriage should be between a man and a woman.

S&P Global announced in a Tuesday email that it was lowering SPU’s bond rating from A- to BBB+, citing “governance risks and enrollment pressure” directly connected to the hiring policy. (This paragraph has been updated to correct the bond ratings.)

“The downgrade and negative outlook reflect our view of SPU’s ongoing governance risks due to instability in key management positions, the departure of several board members, and exposure to legal actions stemming from the university’s employment policies regarding LBGTQ+ individuals,” S&P Global Ratings credit analyst Megan Kearns said in the email. “The rating also reflects our view of enrollment pressure, including a full-time-equivalent decline of 8% in fall 2022, that has contributed to full-accrual deficits, with a larger deficit expected in fiscal 2023.”

Faculty members have long warned that SPU’s anti-LGBTQ+ hiring policy would lead to negative consequences, which now seems to be playing out in the form of declining enrollment. A number of trustees also resigned in protest after the governing board upheld the policy in the face of strict opposition. The Washington State attorney general has since opened an investigation into the allegedly discriminatory hiring practices at the university, prompting a failed legal effort by SPU to stop the probe. Additionally, six SPU trustees are being sued by students, employees and alumni who accuse them of failing in their fiduciary duties by maintaining the policy.

In a statement to Inside Higher Ed, Seattle Pacific did not address the concerns S&P Global raised about the anti-LGBTQ+ hiring policy.

“Like many small private universities, we are working to resize our annual operational budgets to reflect our smaller student body as we respond to the realities of post-COVID enrollment numbers. We are well underway with an academic prioritization process as well as a presidential search that should identify a new president soon,” Kim Sawers, SPU’s vice president for business and finance, said in an emailed statement. “Resizing budgets, academic prioritization, and new leadership will help position SPU to address many of the issues raised in the report.”