ANN ARBOR, MI – The University of Michigan board of trustees on Thursday approved a recommendation to establish up to $ 1 billion in emergency lines of credit for general use of the university to improve UM’s existing financial safety net.
The recommendation was unanimously approved by the Board of Directors.
At the meeting, UM chief financial officer Kevin Hegarty said directors hope they won’t have to dip into those lines of credit and will look to existing balance sheet reserves to fund operations first. However, in a financial emergency, the $ 1 billion waiting lines would provide a valuable safety net, Hegarty said.
Lines of credit will be established in two ways, according to the board’s request for action document.
- Modification of one or both of the University’s existing lines of credit in the amount of $ 290 million, which is currently only available to support non-remarketed debt, to increase the amount available and to allow use at general operating purposes
- Addition of one or more new lines of credit with one or more additional banks or financial institutions.
The document states that the new lines of credit will be used only for possible liquidity support in the event of the university’s financial emergency.
The size of the credit capacity was based on the overall scale of the university, the amount of monthly salary and benefits and debt service expenses, and the projected capacity spending levels over the next five years, according to the document.
According to the document, if UM ever uses the lines of credit, the principal and unpaid interest on the amounts would be due and payable by December 31, 2030.
At Thursday’s meeting, the regents also approved the appointment of three new university officials and voted unanimously to remove David Daniels from his permanent post at the School of Music, Dance and Drama. Daniels faces several charges of sexual misconduct.
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