The University of Alaska’s house is on fire. That much was made clear at the July 30 board of regents meeting. What’s not clear is how a total system merger will help.
The regents directed President Jim Johnsen to put together a plan for consolidating all three UA universities into one. UAF Chancellor Dan White, UAA Chancellor Cathy Sandeen and UAS Chancellor Rick Caulfield argued for a less cataclysmic approach to handling the $135 million funding cut, detailing where they could find savings without massive restructuring. But a majority of regents opted for the dramatic solution.
The problem is that a merger may not be an effective solution. Mergers rarely save money short-term; in fact, they incur extra cost. The list is extensive: rebranding, communications, university relations, infrastructure, redeploying staff, managing facilities, signage, travel and transition management personnel. “Cost savings take time to realize and are generally dwarfed in the face of the many expenses that a merging institution needs to incur,” a TIAA Institute report advises. Yet leaders tend “to exaggerate the potential for financial savings and underestimate the associated costs.”
Mergers take time to execute. Underestimating the transition period leads to increased costs, European University Association leaders warn. The implementation phase can take one to three years, but normalizing the situation may take 10.
Savings typically only show up long-term, if at all. A Pew Charitable Trusts report notes there is “no good data on whether the mergers actually save money,” and there “are plenty of examples around the country since the 1980s that have increased tuition, failed to reduce the costs of running colleges and universities and created tense standoffs.” Researcher Lauren Russell found that the average merger between 2000 and 2015 increased tuition and fees by 5% and did not generate cost savings.
Add to this the risk of a change to single accreditation. Stephen Spinelli Jr., chancellor of Thomas Jefferson University, tells those considering a merger to prepare for accreditation challenges. Meeting the standards of more than 30 agencies may be required. In Alaska, the accreditation of our entire university system will be on the line if a merger occurs.
Accreditation also involves intensive effort, as UA Faculty Alliance Chair Maria Williams pointed out at the board of regents meeting. This claims attention and resources from other projects, incurring significant opportunity cost. TIAA Institute notes the need for 50 to 80 merger workgroups to manage accreditation, legalities, personnel, governance, administrative support and relationships with foundations, alumni and affiliates.
In addition, mergers are difficult to undo, sometimes increase administration and overhead, put more distance between students and management and can reduce choices and access for students. Eliminating programs can result in consumer surplus losses that outweigh possible cost savings. When the merger process is more top-down than bottom-up, dropout rates increase.
In theory, mergers offer many benefits: increased efficiency, economies of scale, expanded offerings, lower administrative cost and enhanced research productivity. But many fail to achieve these results. Corporate mergers have a 20%-50% success rate; university mergers may do slightly better but are still risky. Georgia’s consolidations are a poster child for mergers, but even their savings have been small: 1% of state university funding. In Alaska, similar success would save only $3.3 million, a far cry from the $135 million needed. Even merger proponents caution the conditions must be right. Current conditions in Alaska are far from meeting the mark.
In 2016, Johnsen asked Dana Thomas, a former UA vice president, to assess whether single accreditation was right for UA. Thomas listed no less than 13 negative outcomes that were likely. Research shows that successful mergers should be made from a position of strength. Today, success would be more unlikely than ever.
It’s understandable that the regents and President Johnsen feel they must take extreme action. But they are attempting something that may well have never been done before in our nation: cataclysmically consolidating an entire state education system into one institution, against advice and evidence, in a place where there are few alternatives. Gov. Dunleavy has created an unprecedented problem. President Johnsen is pursuing an unproven and problematic solution. Both of them need to explain to Alaskans how they plan to get a better outcome than anyone has reason to expect.
Rebekah Radcliffe Potter is a former reporter and content editor, University of Alaska Anchorage faculty spouse and home educator. She lives in Anchorage