Trusteeship - May/June 2020 - 13

"The University System of Georgia case study shows that mergsity at Albany, State University of New York. Azziz previously led a
ers can generate economies of scale that allow institutions to take
University System of Georgia merger that created Georgia Regents
cost savings and reinvest in other areas of education to improve
University (now Augusta University) and served as its founding
retention rates and graduation rates," says Lauren Russell, an assopresident and, with his co-authors, now consults on mergers.
ciate professor of practice at the Fels Institute of Government at
"They need to consider the potential of mergers on a recurring
the University of Pennsylvania.
basis as part of their basic board duties. We think boards should
Russell studied five mergers within the University System of
consider this every second year. This should not just be about saving themselves but also looking for opportunities to grow the insti- Georgia that occurred from 2013 to 2018 for her dissertation. She
found that the mergers decreased the first-year dropout rate by
tution and how to create a better value proposition for students."
eight percent and increased the on-time, four-year graduation rate
Still, there are powerful forces that often prevent optimal
by 29 percent. A second paper Russell authored that examined
actions by boards.
all M&A activity at all public and private nonprofit higher educa■	 Boards are often wedded to the status quo or managing
tion institutions in a 15-year period found evidence that mergers
institutions, not to helping to guide them through dynamic
increased sticker prices paid by students, but these higher sticker
change. Dealing with such change is often outside most or all of
prices appear to be offset by greater financial aid for students
their members' experiences and skill sets.
receiving institutional grant aid. The study also documented a great
■	 Board members can allow personal feelings to cloud their judgdeal of heterogeneity across mergers in their effects and revealed
ments, particularly in cases in which they are alumni with strong
that not all mergers have been
visceral emotions concerning
similarly successful in improvchanging the basic DNA of the
ing student retention rates.
institutions they attended or
"I think what has made the
closing them.
After professionally having spent a whole career
consolidation [at University
■	 Various stakeholders, includtrying to build institutions and make them
System of Georgia] successful
ing students, staff, faculty,
more academically competitive and sustainable,
is that the board of regents
and alumni can, for similar
planned to leverage consolidareasons, push back on such
I had to stand in front of the entire campus
tions to improve student outoptions even when they are
community, and tell them that there would be
comes," Russell says. "Though
in the best interests of all
no school to go to, or place to work or teach,
USG vice chancellors managed
involved. The closure of a
after
June
30.
the overall process, members
higher institution can, particfrom each of the merging instiularly in a small city or town,
tutions were involved in implementation decisions. Furthermore,
be a dramatically negative development for the entire commucost savings from the consolidations were reinvested in students,
nity. The challenges can be even greater for public institutions,
for example, by hiring more academic advisers."
given that state authorization must be sought for major strategic
John Fuchko, University System of Georgia vice chancellor for
actions and a wider pool of stakeholders must be consulted.
organizational effectiveness, agrees. "For example, we combined
■	 The demands of such strategic change are enormous and
Georgia State University, an R1 research university, and Georgia
long-lasting. It takes long-range planning and attention to innuPerimeter College, a state college, and one of the things we did
merable details to consider, plan, and execute a closure of an
was we maintained the admissions standards to get into Perimeter
institution. They may extend beyond the tenures of many board
College for the combined institution, so if students started there
members.
they could get into GSU more easily and, prior to entering, pay
a tuition that is one-third of the cost of an R1 university," Fuchko
When Mergers Make Sense
says. "That allows many students to finish two years at Perimeter
When it comes to mergers, mergers that are problematic tend to
College and roll in the Georgia State four-year program. That way,
gain headlines; it is harder to point to mergers that are definitive
they save money, we don't reduce access, and we increase the gradsuccesses, in part because of the long tail of executing them. The
uation rate of those from Perimeter College. What has helped to
University System of Georgia consolidation is an example of a
facilitate that outcome is that Georgia State is a national leader for
successful merger that has been closely examined with academic
effective interfacing with students from day one, with almost every
rigor. A top-driven wave of consolidations reduced the number
academic event involving student participation tracked at some
of higher education institutions in the system from 35 to 26 from
level. If you don't show up for class or get a 70 grade on a paper, the
2011 through 2018.

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