Courtesy of Jon Marcus / The Hechinger Report and TIME MAGAZINE
For many public and private institutions looking to cut costs, A&M now stands for acquisitions and mergers.
People attend a ceremony at Rutgers, officially adding the University of Medicine and Dentistry of New Jersey to the university, in Piscataway, N.J., on July 1, 2013.
Workers at Augusta State University in Georgia are spending the summer putting up new signs, redesigning the school’s website, and carting furniture and files among offices. There are new T-shirts in the bookstore, new logos on the business cards, a new fight song and alma mater–even a new name, for the first time, on the degrees of students who graduated in May.
What was known as Augusta State when those students arrived as freshmen has been combined with the neighboring Georgia Health Sciences University to form Georgia Regents University. It’s a kind of corporate-style consolidation that is becoming increasingly common not only for public institutions, but also for nonprofit, private ones that can pool their resources for marketing, fundraising, purchasing and information technology in a time of falling budgets.
“Size matters, even in academia,” said Ricardo Azziz, president of the new, 10,000-student unified school, which he said cut administrative costs by 3% in just its first few weeks. “A lot of times we talk about students preferring small colleges, and that may be true, but it is much more costly to maintain all of the moving parts at a small college than at a larger university.”
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There have been a few mergers of colleges and universities in the past; the University of Colorado at Denver combined with the University of Colorado Health Sciences Center in 2004, for example, and the Medical University of Ohio merged with the University of Toledo in 2006. But the pace of such consolidations is picking up.
It’s not necessarily that there’s a surplus of colleges and universities, though it is true that demand is down while supply is up; the number of students slipped 1.8% last fall and another 2.3% this spring, according to the National Student Clearinghouse, and while some schools are consolidating now, that follows a 10-year period during which their ranks have actually increased from 6,508 to 7,398, U.S. Department of Education figures show.
But the cost of running all these separate institutions at a time of spiraling tuition and reduced state funding, and the appeal of adding services without duplicating expenses is pushing many schools to merge.
In addition to Augusta State and Georgia Health Sciences University, Georgia has fused six other institutions into three, reducing the total number in its public system to 31, and reorganized 15 of the state’s technical colleges, saving an estimated $6.7 million a year on overhead. The heavily indebted public University of Medicine and Dentistry of New Jersey will be absorbed this year into Rowan and Rutgers. The 10-school Louisiana State University System is merging its chancellorship with the presidency of Louisiana State University A&M, and plans to bring all its separately run campuses together by 2015. And in Baton Rouge, four technical colleges are being merged with Baton Rouge Community College.
“It’s very logical, what’s happening,” said Richard Carter, the incoming president of City University of Seattle, which was just merged with the private, nonprofit National University System based in California, joining several other recent acquisitions including John F. Kennedy University, Spectrum Pacific Learning and WestMed College. “Costs are going up, the number of new students is flat, and a lot of colleges and universities are experiencing the squeeze. Everyone is looking for ways to operate more efficiently, and this is clearly one option.”
“In the business world, the prevailing philosophy has long been that efficiencies and savings can be achieved by getting bigger and building economies of scale,” wrote the authors of a recent report on universities from the nonpartisan New America Foundation. “That is why companies grow or merge with competitors.” The bond-rating agency Moody’s, in a January analysis that was otherwise grim about the financial prospects for higher education institutions, highlighted the consolidation trend as one of the “bolder actions by universities leaders” that can “foster operating efficiencies and reduce overhead costs amid declining state support.”
But while combining colleges and universities to reduce duplication may be logical, it isn’t easy. Legislators who like having higher-education institutions in their districts often resist consolidations. So do students and alumni, who have loyalty to their schools, and faculty and staff who fear losing their jobs.
“It’s not an easy thing politically,” said Richard Novak, senior vice president for programs and research at the Association of Governing Boards of Universities and Colleges. “You certainly have academic departments that will have on the surface the most to lose, and will be the most vocal critics. And faculty, who have tenure and job security, are the most likely to be outspoken about it.”
Fierce opposition by Baltimore boosters who resent what they see as the greater influence of Maryland’s Washington suburbs derailed a proposal to merge the University of Maryland, Baltimore, and the University of Maryland at College Park. A bid in 2004 to combine three public universities in Maine also failed. And several proposals to merge historically black public colleges and universities with predominantly white ones—Southern University at New Orleans and the neighboring University of New Orleans, for instance, which was approved by the Louisiana Board of Regents but died in the state legislature—have been complicated by issues of race.
This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet based at Teachers College, Columbia University.
Read more: http://nation.time.com/2013/07/19/cash-strapped-universities-turn-to-corporate-style-consolidation/#ixzz2ZfzXKqQt