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Depository Services Funds Movement Mcard Vendor Checkwriting - What types of debt does the University issue?
- What is commercial paper?
- What are fixed rate bonds?
- What are variable rate bonds?
- What is tax-exempt debt?
- What is taxable debt?
- What type of security does the University offer in its debt issues?
- What are General Revenues?
- What are Hospital Gross
Revenues?
1. What types of debt does the University issue?
The University issues fixed and variable rate bonds and commercial paper. The debt can tax-exempt or taxable.
2. What is commercial paper?
Commercial paper notes are short-term notes issued in denominations of $100,000 or in an integral multiple of $1,000 in excess of $100,000. Interest on the Notes is payable at maturity and is calculated on the basis of a year consisting of 365/366 days and the actual number of days elapsed. The Notes mature and become payable on such dates as an Authorized Officer or Authorized Representative authorizing such Notes may establish at the time of issuance thereof, provided that no Note shall mature or become payable more than 270 days from the date of issuance thereof, not more than one half (1/2) of t he principal amount of the Notes outstanding at any one time shall mature in any week, and no note shall mature after February 25, 2006.
Debt obligations with fixed interest rates issued in denominations of $5,000 or any integral multiples thereof.
4. What are variable rate bonds?
Debt obligations with variable interest rate issued in denominations of $100,000 or in an integral multiple of $5,000 in excess of $100,000.
Debt obligations with interest excluded from gross income for federal income tax purposes and State of Michigan taxation.
Debt obligations with interest subject to federal and State of Michigan taxation.
7. What type of security does the University offer in its debt issues?
The University presently issues debt backed by a pledge of General Revenues and Hospital Gross Revenues.
General Revenues means all receipts from fees, charges, and income from all or any part of the students of the University, whether tuition, instructional fees, tuition surcharges, activity fees, general fees, health fees or other special purpose fees (before allowances for scholarships); all gross income, revenues and receipts from the ownership, operation and control of the housing, dining and auxiliary systems of the University (before allowances for scholarships); all unrestricted revenues from departmental activities; all patient service or medical service plan revenues; all unrestricted grants, gifts, donations and pledges, and receipts there from (including but not limited to indirect cost recoveries allocated to general operations); and unrestricted investment income; but excluding all of the following:
(a) any deposits required by law or contract to be held in escrow;
(b) appropriations from the State Legislature;
(c) “Hospital Gross Revenues” as defined in the Master Indenture, dated as of May 1, 1986 between the Regents of the University of Michigan and Comerica Bank-Detroit, as Trustee; and
(d) revenues from The Veritas Insurance Corporation, and Michigan Health Corporation.
9. What are Hospital Gross Revenues?
Hospital Gross Revenues means all revenues, income, receipts and money received by or on behalf of the Regents with respect to or arising from the operation of the Hospital, including but not limited to (a) gross revenues derived from its operation and possession of the Hospital, (b) proceeds with respect to, arising from or relating to the operations of the Hospital, and derived from (i) insurance (except to the extent such proceeds are required by the terms of the Master Indenture to be used for purposes inconsistent with their use for the payment of Revenue Obligations), (ii) accounts receivable, (iii) disposition of inventory and other tangible and intangible property, (iv) medical or hospital expense reimbursement or insurance programs or agreements, (v) investment earnings or profits on funds held by the Regents for the account or benefit of the Hospital and (vi) contract rights and other rights and assets now or hereafter owned, held or possessed by or on behalf of the Hospital by the Regents, but excluding (1) appropriations received from the State or Michigan, (2) proceeds of borrowing an interest earned thereon if and to the extent such interest is required to be excluded by the terms of the borrowing, (3) gifts, grants, bequests, donations and contributions received by or allocated to the Hospital, (4) cash on hand or investments held by the Regents at any time for the account or benefit of the Hospital and (5) medical service plan or other physician, dentist or similar payments to the extent not treated as Hospital revenues for Hospital accounting purposes.
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