The Eastern Michigan University Board of Regents authorized the issuance and delivery of general revenue bonds at a special meeting March 14 at the Eagle Crest Golf Center.
"The University will save hundreds of thousands of dollars in monthly interest payments by issuing new bonds with a different bond structure," said Janice M. Stroh, vice president of business and finance at EMU.
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Increasing defaults in the residential subprime mortgage market have had a severe negative impact on the bond insurance companies, which have provided credit enhancement to the University's Series 2001 and Series 2006A variable rate demand bonds.
The two insurance companies that insured the University bonds, XL Capital and Financial Guaranty Insurance Company (FGIC), have each had their ratings downgraded as a result of losses they have incurred and are expected to incur on securities tied to pools of residential subprime mortgages.
In response, EMU is seeking alternative credit facilities to replace the existing credit structures.
In other business, the Regents approved the collective bargaining agreement between Eastern Michigan University and the American Federation of State, County and Municipal Employees (AFSCME) Council 25 Local 3866.
AFSCME Council 25 Local 3866 represents approximately 200 skilled tradespersons, groundskeepers, dining service employees and custodians at EMU.
The four-year contract is retroactive to July 1, 2007, and runs through June 30, 2011. The union ratified the contract Feb. 6, 2008.
The new contract includes a compensation-wage adjustment package of a 2.5 percent across-the-board increase in the first year and wage-only increases, based on rank, in the second and third years of the contract. There is a 3 percent across-the-board wage increase for all members of the bargaining unit in the fourth year of the contract.
Also included are enhancements to health care and the employees' retirement plan.
