Georgetown University took another financial hit last week when Standard & Poor’s analysts lowered the university’s credit rating due to worsening conditions at the Medical Center , which are driving overall operations losses.

Despite being downgraded one notch to a BBB+ rating from the university’s previous A- rating, the outlook is “stable,” according to Standard & Poor’s. The change comes after a long-term period in which there was general market reluctance to trade Georgetown ‘s outstanding bonds, thereby indicating that they were expected to decline in value.

While Georgetown has maintained its rating with strong student demand and enrollment as well as with recent gains in fundraising with the completion of the $1 billion capital campaign, analysts at Standard & Poor’s found that the university does not have enough money in the event of an emergency.

According to university officials, the downgrading is disappointing, but not completely unexpected.

“There are no immediate financial or operational implications for the university as a result of this changed rating,” university spokeswoman Julie Bataille said. “Georgetown is committed to implementing our five-year financial plan and strengthening our financial position by improving performance at the Medical Center, addressing deferred maintenance, improving our liquidity, outlining cost containment actions and developing new revenue sources.”

After several years of operating losses at the Medical Center , including $84 million losses in fiscal year 1999, the university sold Georgetown University Hospital to Bethesda , Md. , based edStar Health, a non-profit health care corporation.

The inability of the Medical Center to fund expensive research, which had been funded largely by hospital profits in the early 1990s, has led to continued losses even after the sale of the university’s hospital.

Operating results in fiscal year 2003 showed a $20 million deficit and projected numbers for 2004 predict a $28 million deficit. In addition, the university’s outstanding debt has reached $670 million.

In the meantime, Georgetown has completed a round of layoffs in the medical center to bolster funds, and more layoffs may be needed in the future. The jobs eliminated were those attached to projects that were not earning adequate revenue and affected non-tenured staff and researchers.

The university has maintained a positive outlook, both in a letter that University President John J. DeGioia sent to the community this July and as a result of the university’s removal from a credit-rating watchlist by Moody’s Investor Service earlier this year.

“Moody’s view took into account our plans moving forward,” Bataille said. “We believe that implementing a strong financial plan will prove to bond rating agencies that we are headed in the right direction.”

In DeGioia’s letter, he lauded the Medical Center ‘s efforts for improvement, citing that fiscal year 2004’s $27 million deficit will be $16 million above budget.

According to the letter, former executive vice president for health sciences Dr. Daniel D. Sedmak, whose resignation was announced Monday, had begun a two-year plan to eliminate the deficit and balance the budget by fiscal year 2007. The plan will increase tuition and enrollment, but will also work in expense reduction, calling for a total cut of 19.75 million in expenses.

“Looking forward, we intend to work expeditiously, communicate regularly and utilize existing governance mechanisms,” DeGioia said.

In comparison to prestigious peer universities, Georgetown ‘s rating is uncharacteristically low. Duke and Cornell are both five grades above Georgetown , with AA+ ratings and Harvard, Princeton and Amherst all have AAA ratings.

Even among private institutions in the District of Columbia , Georgetown is the lowest. American, Catholic and George Washington universities all have A ratings, and Howard carries an A+.

Moody’s lowered Georgetown ‘s credit rating last September, from A2 to A3. Of the 10 possible ratings for investment grade bonds, Georgetown ‘s credit rating slipped from the sixth- to the seventh-lowest place.