Report on Evaluation of the Proposed Merger of UNT

7/29/2019 Report on Evaluation of the Proposed Merger of UNT

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November 2, 2012

Chancellor Lee Jackson

University of North Texas System1901 Main Street

Dallas, TX 75201

Chancellor Jackson,

The attached documents are in response to your request for us to work together in consideration

of a possible merger of UNT and UNTHSC. We gathered a group of leaders from both

institutions and from the UNT System, formed several work groups, developed work group

reports, and then convened the overall group to build consensus. The detailed document

represents the compiled reports from each of the work groups. The Executive Summary reflects

the general consensus of the group following the convened discussion and an Executive

Summary of the detailed document.

Jennifer Trevio, Vice President of Administration and Chief of Staff at UNTHSC and Kenneth

Sewell, Associate Vice President for Research at UNT worked closely together to coordinate the

compilation of work group reports and the drafting and editing of the Executive Summary. They

provided an opportunity for input and suggestions from all 27 participants in finalizing the

documents, and worked especially closely with Deborah Leliaert, Vice President for University

Relations, Communications, & Marketing at UNT and Tim Doke, Senior Vice President for

Community Engagement at UNTHSC.

As stated above, we believe that general consensus was reached on topics outlined in the

Executive Summary. Of course, some differences of opinion existed among group members

regarding the amount of emphasis to place on specific issues; but no significant substantive

disagreements remained. Thus, the Executive Summary fairly reflects the overall perspectives of

the full group rather than any one persons viewpoint.

We hope you find these documents useful in considering this important matter.

Sincerely,

Scott B. Ransom, President V. Lane Rawlins, President

UNT Health Science Center University of North Texas


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Revised November 1, 2012

Executive Summary of Information Gathered for the UNT System

Board of Regents

Regarding

A Proposed Merger of UNT and UNTHSC

Into a Single Institution of Higher Education

______________________________

Two months ago Chancellor Jackson requested that Presidents Rawlins and Ransom lead a group of UNT,

UNTHSC, and UNT System administrators to evaluate a proposed merger and answer a series of specificquestions that he had posed. More than 20 key leaders worked collaboratively over the past several weeks,

with work groups individually addressing specific areas of questions. The entire group gathered on Saturday,

October 20, to discuss the output of these work groups and, more broadly, to draw specific inferences from

the work group reports.

The group concluded that as long as two major issuesseamless accreditation and formula funding levels

could be resolved favorably, a merger could be undertaken if approved by the Regents and the Legislature. Itwas noted that the exact nature of a proposed merger was unclear. In the absence of a clear definition of the

proposed merger, the group assumed the existing universities would retain considerable autonomy under amerger scenario.

In that case, the group could not identify significant short term benefits (approximately 3-5 years after the

merger) to the merger. The issue of long term benefits, however, is much more difficult to assess and would

depend on such factors as the extent of administrative consolidation and efficiency across the UNT System

and the ability of leaders to pursue opportunities for joint or new programs and earn philanthropic and

community support where the campuses are located, rather than simply identifying simple direct benefits

attributable to scale or other facets of a merger. Specifically, the discussion identified significant one-time

transaction costs that would negatively impact the campuses and the System, both in dollars and in resources.

There was consensus that the merger process itself could create strategic and operational complicationsbefore, during, and for some period following the merger. However, the impact of the merger on

administration or administrative costs cannot be fully considered without thinking about what might happen

to all areas of administration across the UNT System.

While the merged institutions would achieve a gain in NSF rankings and possibly in rankings among Texas

emerging research universities, it would not be sufficient to affect Tier One status or overall national

reputational standing. In addition, the UNTHSC and Texas College of Osteopathic Medicine will likely drop

in their respective national and state rankings among peer academic medical centers as a result of the merger,

at least in the short-term

The impact on state funding surfaced during discussion as the most critical, over-arching question that seems

to preclude any further exploration of a merger until answered; specifically, in what ways would the generalacademic and health institution formulas be applied to specific program areas at a merged institution, andhow would TRBs, special item, and HEAF state support be affected? Other areas of concern were raised

during discussions, such as how a merger might impact fundraising, community support, recruitment and

retention of faculty and staff, tenure, branding and reputation, as well as costs associated with merging

policies, financial infrastructures, accreditation cycles, etc.

In addition, considerable discussion was given to concerns that constituents of both institutions might have in

a merger scenario. Specifically, constituents might be concerned that a merger could impact political


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Executive Summary 2 | P a g e

support, fundraising, reputation, and image in the region and the specific communities where both

universities reside.

Potential benefits might accrue where certain health and general academic areas would work more

collaboratively; however, information relative to significant overhead or cost savings is inconclusive at thistime. The physical distance between the two campuses and the unique cultures of each, would likely

complicate any meaningful collaboration. Moreover, a degree of academic cooperation could occur nowamong some areas, without any merger, through additional investment and resource allocation.

Despite extensive consideration and discussion, no significant short-term benefits to a merger were

identified. Nevertheless, although a merger of any type would be a complicated process, and the

transactional costs might be high, the campus leaders were clear that it certainly would be possible to

implement. It would be essential that all institutional constituents students, faculty, staff, alumni, donors,

as well as community, corporate, and political partners would need to understand the compelling rationale

for merger before they would support the difficulties associated with a transition of this complexity.

Finally, there was discussion that if merger were to be considered further, a study and review by

independent, third-party experts would be beneficial.

What follows in the remainder of this Executive Summary are the key points derived from a set of reports

from several work groups assigned to gather merger-related information for key aspects of institutional

operations. The individual detailed work group reports were assembled and are provided separately as a

single document.

MERGER PURPOSE AND GOALS:

If a merger to a unified institution is to be pursued, it should be for the purposes of leveraging the strengths

of existing academic programs to effectively serve more students, enhancing collaboration and research, andelevating the combined institution toward greater national prominence and capability of serving Texas and

the nation. Such a merger should also strive to improve organizational efficiencies.

Merging institutions would allow for joint reporting of financial and student information such as research

expenditures, enrollments, programs, etc. In at least some contexts, the larger numbers could elevate thestatus of the merged institution in the perceptions of potential students, state lawmakers, the public at large,

etc. However, this was not determined to be a direct benefit per se to merging the institutions; rather, it was

seen as a possibilityand one that might have counter examples.

ACADEMIC AFFAIRS:

The over-arching issue for academic affairs was the concern regarding accreditations (i.e., the ability of the

combined institution to come into existence with no lapses in critical accreditations). The group viewed that

as a fundamental prerequisite to the viability of a merger.

A variety of potential academic collaborations across UNT and UNTHSC were identified that might beincentivized (or at least allowed to pursue collaboration with fewer barriers) under a merged institution.

However, it was generally agreed that such collaborations were possible (even if more complicated) under

the current two-institution structure.

Differences in faculty cultures at the two institutions were also considered as presenting significant

challenges. Models at other institutions suggest that relatively large differences would remain between the

faculty at a medical campus versus those at a comprehensive university campus even with a merged

institution.


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RESEARCH AND CLINICAL SERVICES:

Merging institutions would allow for joint reporting of research expenditures, which might hasten the

combined institutions reaching of state-mandated milestones as an Emerging Research University.However, the arbitrary nature of the state benchmarks leaves open the possibility that the legislature and/or

the THECB might reevaluate the targets for institutions that incorporate a medical or health science centercomponent. The joint reporting of research expenditures at the national level (e.g., the National Science

Foundation report) would result in the combined institution elevating approximately 40 places. Although

perhaps important, given that the Carnegie Classification relies heavily upon the NSF data for their

categorical assignments, the elevated expenditure levels would leave the combined institution squarely

within the same basic category as UNTs current status (i.e., Research UniversityHigh Research Activity).Other metrics used in national rankings, including US News & World Reports, are research expenditures per

faculty member or percent of faculty engaged in funded research. A merger could have a negative impact in

certain situations in which such metrics are used.

Similar to the academic collaborations discussed above, potential research collaborations might be somewhat

easierunder a merged institution. However, it was likewise agreed that such collaborations are feasible (and

indeed, are occurring currently) under the two-institution structure.

Finally, the UNT Health clinical practice would need to (and likely could) remain nimble in its business

practices under a merger scenario. Maintaining agile business processes is critical for the ability of the UNT

Health clinical practice to compete in the open marketplace.

STUDENT EXPERIENCE:

Much like the different faculty cultures discussed above, the students on the two campuses have very

different cultures, and very different needs. Thus, it was agreed that it would be important to preserve as

much of the current campus-specific student services/programs and even student governance systems as

possible. However, a hybrid merging of the two student affairs divisions might allow at least some students

to have access to a broader array of services to meet specialized needs (i.e., in those cases in which the

services/programs available on the other campus are a better match for a particular students needs.)

Many members of the group felt that additional opportunities at the UNTHSC campus might be of benefit to

UNT students, but did not anticipate that similar numbers of UNTHSC students could benefit from

services/programs at the UNT campus (given the differences in the structure and level of curricula, and sheer

sizes of the student populations at each campus).

It was broadly agreed that policies under a merger scenario could support the application of campus-specific

fees and programs, such that students would not need to incur substantial student fees for programs largely

inaccessible to them (i.e., those that specifically benefit students at the other campus).

ADMINISTRATION:

The fundamental questions posed in the opening paragraphs of this Executive Summary were the most

pressing issues for the workgroup that gathered information about a merger of central administration

functions of the two campuses. Unless the accreditation and formula funding questions are resolved,

scenarios for ifor how to merge specific central administrative functions cannot be articulated. Likewise, the

possible structural ways to merge administrative units organizationally are myriad. So the over-arching

structure question looms equally large.


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This work group also entertained timelines for a merger process, assuming that the fundamental questions

can be answered and a merger is deemed desirable and feasible. A process in excess of three calendar years

was projected to obtain appropriate studies, construct implementation plans, secure legislative authorization,

develop accreditation transition approvals, and finally implement actual merger.

FINANCIAL ISSUES:

Although there are currently different budgeting processes for the two campuses, there was general

agreement that there is sufficient management discretionboth currently and under a merger scenarioto

decide either to change or to continue current budgeting practices related to the units on each campus.

As discussed above, the critical issue from a financial perspective would be whether or not a merged

institution would retain the funding stream generated by the medical designation in the state formula.

With any institutional IRS status change, there would be one-time transactional costs associated with revising

or reinstating various partnerships and contracts with the new tax identity. This issue is further complicated

by the contracts UNT Health has with Medicare, Medicaid, and related operations. Not only would there be

the one-time transactional costs associated with revising/reinstating the contracts, but there could be some

temporary funding stream losses given that some of those contracting processes might need to be reinstated

sequentially rather than simultaneously.

STATE AND REGULATORY ISSUES:

As might be expected, the focal concern with this workgroup was the formula funding question discussed

above. Preliminary calculations, utilizing some very broad assumptions, estimate that the application of the

institutional formula to UNTHSC students would result in the loss of several million dollars per biennium,

not including the potential impact on the College of Pharmacy.

Similar questions remain regarding the applicability of various other formula-driven and per-institution

allocation decisions made at the state level (e.g., Infrastructure formula, HEAF allocation, tobacco

appropriations, Research Development Fund, Tuition Revenue Bonds, etc.).

COMMUNICATIONS AND COMMUNITY SUPPORT:

If pursued, the reasons for considering merger need to be clearly articulated for the institutions diverse

internal and external constituencies throughout the exploration discussions. Given the amount of public

communication, internal and external speculation and discussion of the proposed merger, and the need to

control the messaging going forward, there should be a flexible, strategic, and unified communications plan.

The communications plan should be created, executed, and carefully coordinated among the System, UNT,

UNTHSC, as well as any consultants, to ensure accuracy, alignment, and clarity at each step in the process.

The System has a reservoir of experienced communications professionals at both of the institutions, and this

in-house talent is fully capable of developing and executing such a communications plan.

It is important that unified messages flow through the proper communication channels to deliver the right

messages to the right target audiences at the right times. Transparency is key.


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Merger Discussion Participants and Work Group Members:

Robert Adams, Interim Executive Vice President of Clinical Affairs & Business Development,

UNTHSC and Vice President & Chief Medical Officer of UNT Health

Warren Burggren, Provost & Vice President for Academic Affairs, UNTJean Bush, Senior Associate Vice President for Finance & Administration, UNT

David Cistola, Vice President for Research, UNTHSCTim Doke, Senior Vice President for Community Engagement, UNTHSCThomas Fairchild, Vice President of Strategy & Measurement, UNTHSC

Yolanda Flores-Niemann, Senior Vice Provost, UNT

Geoff Gamble, Vice President for Research & Economic Development, UNTRosemary Haggett, Vice Chancellor for Academic Affairs & Student Success, UNT System

John Harman, VP for Finance/CFO, UNT Health

Andrew Harris, Vice President for Finance & Administration, UNT

Danny Jensen, Associate Vice Chancellor for Governmental Affairs/Vice President forDeborah Leliaert, Vice President for University Relations, Communications & Marketing, UNT

Thomas Moorman, Vice President of Student Affairs, UNTHSC

Jack Morton, Vice Chancellor for Governmental RelationsMichael Mueller, Vice President for Finance/CFO, UNTHSC

Terry Pankratz, Vice Chancellor for Finance, UNT System

Scott Ransom, President of UNTHSCLane Rawlins, President of UNT

Kelley Reese, Assistant Vice President for University Relations, Communications & Marketing,

UNTKenneth Sewell, Associate Vice President for Research, UNT

Jean Tips, Vice President of Marketing & Communications, UNTHSC

Jennifer Trevino, Vice President of Administration & Chief of Staff, UNTHSC

Greg Upp, Special Advisor to the President, UNTHSC

Trisha VanDuser, Executive Director of Student Services, UNTHSCElizabeth With, Vice President of Student Affairs, UNT

Thomas Yorio, Provost & Executive Vice President of Academic Affairs, UNTHSC


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Revised October 31, 2012

Detail Information for the UNT System Board of Regents

RegardingA Proposed Merger of UNT and UNTHSC

Into a Single Institution of Higher Education______________________________

Goal: Campus and System Leaders have been asked to collaborate in gathering key information tosupport the UNT System Board of Regents consideration of a merger of the University of North Texas inDenton and the University of North Texas Health Science Center in Fort Worth.

These preliminary observations should address three key questions:

(1) What are potential short- and long-term benefits of unification of our two largest campuses?(2) What challenges and/or obstacles must be addressed to enable a mutually beneficial outcome to

both campuses and to the communities of Denton and Fort Worth?

(3)If the UNT System Board of Regents decides to proceed with a merger, what actions by the TexasHigher Education Coordinating Board, Legislature, Governor, SACS, and others will be necessary

to support a successful consolidation and what is a feasible schedule?

These questions should be addressed at a high level, considering important strategic concepts rather thandetailed implementation planning. Before the November Board of Regents meeting, staff should developan initial inventory of key considerations and observations. Should a merger receive favorableconsideration, additional studies and detailed plans will be necessary going forward.

MERGER PURPOSE AND GOALS:

A. What are the fundamental purposes of a merger of the University of North Texas in Denton and theUniversity of North Texas Health Science Center in Fort Worth? What is the long-term vision of theunified university?

a. The purpose of a merger of the University of North Texas in Denton and the University ofNorth Texas Health Science Center in Fort Worth is to transition the unified university toearn national prominence and to provide greater opportunities for our students, faculty, andstaff by:

1. Leveraging the strengths of existing academic programs to effectively serve morestudents.

2. Enhancing scientific collaboration and funded research among existing units toachieve national recognition.

3. Increasing the opportunity to develop new high quality undergraduate and graduateacademic programs that are nationally recognized for their excellence.

4. Continuing to improve the quality of the freshman class.5. Accelerating the trend of recruiting and retaining highly productive faculty with a

national reputation.6. Enhancing the opportunity for endowment growth by expanding community

engagement and alumni involvement.


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7. Graduating a better educated professional workforce that will provide tremendouseconomic and social benefits to the citizens of Texas and the nation.

8. Reducing administrative and operational expenses and improving organizationalefficiencies.

b. The vision of a merger of the University of North Texas in Denton and the University ofNorth Texas Health Science Center in Fort Worth is to be a leading national university with

high quality academic research scholarship and undergraduate, graduate, and professionalprograms.

B. What are the potential benefits of the merger, described as both short-term (3-5 year) and long-term(10-20 year) goals?

a. Be recognized as a legitimate, emerging tier one university with a growing comprehensivehealth science center noted for excellence by the State of Texas through achieving severaloutcomes (short-term 3-5 year goals).

1. Spend at least $45 million per year in restricted research funds.2. Establish an endowment of at least $400 million.3. Award at least 200 PhD degrees per year.4. Establish a freshman class with high academic achievement as recognized by the

following: greater than 40% of the freshman class from the top 10% of their highschool class, average SAT scores in excess of 1200 (verbal and math combined), andenrollment of several National Merit Scholars.

5. Attain membership in the Association of Research Libraries and/or establish a PhiBeta Kappa chapter.

6. Establish a high quality faculty with at least 5 members of the National Academies,including: National Academy of Sciences, National Academy of Engineering, and theNational Institute of Medicine.

7. Demonstrate commitment to high quality graduate education.8. Continue growing a comprehensive health science center at the current or faster

trajectory as recognized by growing total health professional student enrollment to2,950, expanding program offerings from 10 to 12, growing the clinical enterprise to

over $100 million revenues and over one million patient encounters, and growing thehealth related research revenues to over $55 million.

9. Earn recognition and financial support from the Denton, Fort Worth, and Dallascommunities.

b. Be recognized as a tier one university with national rankings for excellence by beingrecognized for achieving several outcomes (long-term 10-20 year goals)

1. Spend at least $100-200 million per year in restricted research and over $300 millionin total annual research expenditures.

2. Establish an endowment of at least $1 billion.3. Establish ranking by US News & World Reportas a Top 50 National Research

University.i. Listed as a member of the Association of American Universities.

ii. Establish a freshman class with high academic achievement as recognizedby the following: greater than 60% of the freshman class from the top 10%of their high school class, average SAT scores in excess of 1300 (verbal andmath combined), and enrollment of dozens of National Merit Scholars.

iii. Become a comprehensive health science center as recognized by growingtotal health professional student enrollment to over 3,000, expandingprogram offerings to 15, growing the clinical enterprise to over $150 millionin revenues and over 1.5 million patient encounters, and growing the healthrelated research revenues to over $100 million.


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4. Establish a high quality faculty as proven by an average extramural researchfunding in excess of $300,000 per research faculty member as well as severaldozen members of the National Academies, including: National Academy ofSciences, National Academy of Engineering, and the National Institute ofMedicine.

5. Earn significant national and international recognition and donor financialsupport from both alumni and the community.

C. What are the inherent strengths and assets of each institution that will aid in achieving the visionand which need to be protected and enhanced in a merger?

UNTHSCa. US News & World ReportRankings

i. 12th for Rural Medicineii. 15th in Geriatric Medicine

iii. 16th in Family Medicineiv. 35th for Primary Carev. 38th for Physician Assistant Studies

b. Top 20 Medical Schools for Hispanicsi. Hispanic Business magazine

c. Best in Texas for Social Missioni. Annals of Internal Medicine

d. The Health Institutes of Texas (HIT):i. Cardiovascular Research Institute (CRI)

ii. Center for Commercialization of Fluorescence Technologies (CCFT)iii. Focused on Resources for her Health Education and Research (FOR HER)iv. Institute for Aging and Alzheimer s Disease Research (IAADR)v. Institute for Cancer Research (ICR)

vi. Institute of Applied Genetics (IAG)vii. North Texas Eye Research Institute (NTERI)

viii. Osteopathic Research Center (ORC)ix. Texas Prevention Institute (TPI) Center For Community Health (CCH) Primary Care Research Center (PCRC) The Texas Center for Health Disparities (TCHD)

e. Programs supporting law enforcement and assisting families of victims:i. Texas Missing Persons DNA Database

ii. UNT Center for Human Identification (UNTCHI)iii. UNT Center for Human Identification Laboratory

f. 5-Year Trend Highlights: (2008-2012)i. Student Enrollment

Increased by 725 (or 59.1%) to 1949ii. Underrepresented Minorities

Increased by 154 (or 66.1%) to 387iii. Full-Time Faculty

Increased by 37 (or 9.8%) to 415iv. Research and grant activity

Annual grant awards increased by $6M (or 24%) to $36M Annual research expenditures increased by $10M (or 30%) to $42M


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Across UNTHSC, the annual research expenditures per faculty memberexceeds $100K

In the Graduate School of Biomedical Sciences, the annual researchexpenditures per faculty member exceeds $300K

v. Patient Encounters Increased by 36,869 (or 12.2%) to 553,820

UNTa. Rising Research Funding

i. 40%: Federally reported research expenditures are estimated to rise 40% fromFY 2010 to $44 million.

ii. 27%: Restricted research expenditures are estimated to rise 27% from FY 2010 to$16.9 million.

iii. $35 million: As of FY 2012, UNT researchers have been awarded more than $35million in research funding across all disciplines.

b. Growth in High-Quality Facultyi. 23: To date, UNT's collaborative research clusters have attracted nearly two

dozen new faculty members (18 senior hires), many of whom are at the top of

their field.ii. 3: UNTs faculty now includes two National Academy members and a third will

start in February.c. Collaborative Research Clusters

i. 21 collaborative research clusters and strategic research areas that are dedicatedto cross-disciplinary research generating breakthroughs in health, agriculture,renewable products and other area e.g., Signaling Mechanisms In Plantsresearch cluster new faculty have submitted $15.2M in new grant proposals.

d. Discovery Park, a 300-acre research park is home to a technology incubator and thefederally funded Center for Advanced Research and Technology.

e. The Life Sciences Complex, a "living lab" where the study of plants and fish yield cluesto solving human maladies.

f. The new Zero Energy Research Laboratory, where students and faculty get firsthandexperience with whole-building integration of sustainable energy technologies.

g. An NSF-supported Nanofabrication Analysis and Research Facility which includes a3,000-square-foot cleanroom that will come online in early 2013.

h. A high-performance computing facility that provides a tenfold increase in computationalpower and has helped UNT expand our reach in computation-based research.

i. Multiple computer visualization facilities.j. 68 research centers and institutes, including an NSF Industry/University Cooperative

Research Center and two I/UCRC sites.k. Growth in Academically Talented Freshman Class

i. 4,444 students and second year for record enrollment 2012 Freshman Class.ii. UNT's freshman class average SAT scores have increased from 1092 in 2007 to

1105 in fall 2012.l. UNT's Honors College has risen to the top, becoming the largest in the Dallas-Fort Worth

area with nearly 1,650 students.m. UNT continues to be one of the nation's most diverse universities with 6,100+ Hispanic

students and 4,600+ African American students.n. In fall 2012, UNT saw an 11% increase in Hispanic students and a 3% increase in

African American students.o. Stronger Graduate Education and More Ph.D.s Awarded


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i. $6.9 million: UNT increased graduate student support and scholarships by $6.9million in three years.

ii. 1,780: Fall 2012 enrollment includes 1,780+ doctoral students a record high.iii. FY 2012: 225 doctoral degrees (174 Ph.D.s)

p. Endowmenti. FY 2012 $112.6 (estimated)

q. Texas Research Incentive Program (TRIP) Distributioni. FY 2012 Funds Received - $925,382

ii. FY 2013 Funds Received - $375,000 (expected)D. What are the constraints facing each institution that must be taken into consideration in planning

the attainment of the vision?a. Constraints facing each institution would likely fall under the following areas:

i. Administrative/Logistical (e.g., Accreditation)ii. Academic (e.g., Student Affairs)

iii. Research (e.g., Research compliance)iv. Financial (e.g., Merging of finances)v. Cultural (e.g., Policies)

ACADEMIC AFFAIRS:

1. What accreditation issues are presented by the merger and how will they be addressed?A. Benefits:

UNT is accredited by the Southern Association of Schools Commission onColleges (SACS); UNTHSC is also accredited by SACS to award masters anddoctoral degrees.

B. Disadvantages: It may be that both institutions, on technicalities, may have to start over with the

accreditation process, as is the case with new institutions.C. Challenges:

Disciplinary units in both institutions are accredited by various oversightorganizations. Self-study reports prepared for these organizations will need toreflect disciplinary compliance, while promoting the advantages of multi/cross-disciplinarity in possible joint programs.

Notify SACS of merger that would result in having one SACS accreditation for thesingle entity.

Accreditation would primarily be determined by UNT as it is the larger entity. Would require new QEP for entire institution unless SACS would consider current

QEPs at both UNT and UNTHSC.

Would require significant time and resources to develop a single accreditationapplication.

Each institution has professional accreditation bodies that would need to be notifiedand could result in many site visits.

2. What opportunities will the unified university present for new degree program development andcross-campus collaboration?

A. Benefits: The current health care reform calls for moving toward interdisciplinary health

teams that include behavioral and social sciences.

Enhanced competitiveness for faculty recruitment and grants.


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Greater potential for eventual membership in AAU. Medical care training has already become increasingly multidisciplinary over the

years. Some faculty disciplines in both institutions already overlap, providingopportunity for strengthening this curriculum and research through jointprogramming and collaboration. These overlaps currently include social andbehavioral sciences, biology, chemistry, biochemistry, statistics, and environmental

concerns. Academic programs from UNTs Department of Kinesiology, Health Promotion,

and Recreation could easily be better linked to UNTHSC School of HealthProfessions (SHP). Graduate level programs in these areas could be shared with theSHP and common research areas developed.

UNTs Department of Speech and Hearing Sciences could also develop associationwith UNTHSC developing professional programs that link undergraduate andprofessional training.

The presence of the UNTHSC School of Public Health (SPH) could provide jointdegree programs for many of the health-related programs at UNT.

The UNT College of Business could develop MBA programs with UNTHSCprofessional schools, TCOM, College of Pharmacy, as well as those in the SPH andGraduate School of Biomedical Sciences (GSBS).

Graduate School programs at each institution can be reviewed to determine wheresome of these may best be positioned or shared. For instance the BiomedicalEngineering program could have an undergraduate component at UNT and agraduate component at UNTHSC.

Such joined forces would assist the combined institution to reach the requirementsfor the National Research Fund with additional doctoral graduates (200+ graduatesper year needed to qualify).

B. Challenges: Developing a culture of cross disciplinary research and grant writing; changing

culture of silos.

Challenges include differences in tuition, fees, etc. on each campus.

3. What differences in academic policies and procedures must be addressed in merging the twocampuses?

A. Benefits Existing similar general topics and policies, e.g., faculty development leave.

B. Challenges Procedural documents may need to be aligned and merged. Different academic calendars across the two campuses may be a challenge, but may

also present opportunities for courses that start and end at periods of time;UNTHSC already manages different academic calendars across its colleges.

4.

What shared governance processes and faculty issues on each campus (such as promotion and tenure,evaluation, post-tenure review, hiring and recruiting, compensation, incentive compensation,workload, employment contracts, etc.) must be addressed in merging the two campuses?

A. Benefits Both have similar tenure and promotion policies, though UNTHSC requires

evidence of extramural grant funding for promotion to some ranks, and UNT doesnot;

Both expressly value academic freedom; Both have annual and post tenure review polices;


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Both have non tenure track appointment and promotion policies, e.g., Instructor,Adjunct, and/or Lecturer positions;

Both practice shared governance, in part, through a Faculty Senate.B. Challenges:

Ideally, we would combine the Faculty Senates that exist on each campus. Thiscould limit UNTHSC faculty from having a major voice because of differences in

faculty sizes. A benefit of such combination, however, could be increased facultycollaboration.

Differences in Promotion and Tenure criteria. UNTHSC has a nine year tenureperiod for Assistant Professors to achieve tenure, whereas UNTs tenure period issix years.

Differences in faculty workload, promotion and tenure criteria, and merits wouldneed to be mitigated in order for these two different cultures to see themselves as

one university.

There are also differences in the typical faculty contracts UNT uses mostly 9 month contracts UNTHSC has 12 month contracts Incentive programs exist at UNTHSC for research, teaching and clinicalcare No such campus-wide incentive programs exist at UNT UNTHSC requires 30% of salary for faculty conducting research to come

from extramural support.

5. What is the competitive impact and value added on the academic programs by merging the twoinstitutions?

A. Benefits: The Texas Model is one in which health-related institutions are not part of

comprehensive general academic institutions (from UTSA/UTHSCSA mergerstudy). As such, the UNT/UNTHSC would provide unique educational

opportunities for students and research opportunities for faculty. Theseopportunities would afford unique access to members of historicallyunderrepresented and first generation groups in North Texas.

May have a stronger faculty in the life sciences that could be utilized to attract highquality graduate students.

Greater opportunity for developing seamless programs from undergraduate toprofessional that will be an attraction for students to attend UNT.

B. Challenges: Not clear if there would be positive or negative immediate effects on academic

reputation.

6. How would consolidation of the university potentially affect the institutional and program-specificrankings by state and national agencies?

A. Benefits Could rise in ranking about 40 places on the national scale, as measured by NSF

(chancellor memo)B. Disadvantages

Not sure rankings associated with the medical school program would change aslong as the medical school is recognized within the UNT organization structure.


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RESEARCH AND CLINICAL SERVICES:

How would research priorities be set, facilities planned and supported, and programs fundedunder an ideal model of a unified single institution?

The success of the research enterprise will hinge, in part, on the type of leadership structurechosen for the merged institution. Many universities that include health science/medicalcampuses have parallel leadership structures because of widely differing missions andprofiles. The large, mostly undergraduate campus in Denton differs significantly from thehealth science center in Fort Worth, which is focused on graduate student training, clinicalcare delivery, and research programs in biomedicine and population health. Because of thisdivergence in mission and campus culture, it is likely that Chief Research Officers wouldneed to be maintained at each campus. Although research priorities and facilities planningwould be tailored to the goals and targets of the individual campuses, there could nonethelessbe coordination between the two so that university-wide initiatives are considered andprioritized in a concerted way. This will require visionary leadership and exquisite care sothat new cross-cutting efforts do not undermine the existing research strengths of eachcampus.

The mechanism for the allocation of funds to support research programs (including research-intensive academic programs) will be one of the greatest challenges facing the mergeduniversity. The integration of two largely different campus cultures will lead to livelydebates over how to prioritize funding allocations and research investments across UNT.Most significantly, a change in the state funding model from health sciences to generalacademics could have an undesirable financial impact on operations at UNTHSC.

How would research funds be administered and grants allocated under a unified model? Given the geographical distance between the campuses, as well as the differing types of

research activities, Grants & Contracts offices would likely be needed in both Fort Worth and

Denton. These offices assist faculty in submitting grant proposals, negotiating awards andcontracts, and administering external funds in ways that are compliant with applicableregulations, laws, and standards of practice. However, significant synergies in operationalstrategies and economies of scale can be achieved, especially in the purchase andimplementation of university- or system-wide electronic research administration tools and inthe shared use of research support infrastructure. For example, the Department of LaboratoryAnimal Medicine on the Fort Worth campus currently provides the attending veterinariansupport, staffing, and supervision for the animal research activities in Denton. Currently,there is no need to duplicate this infrastructure in Denton. Likewise, some researchcompliance functions involving clinical trials are particularly specialized on medicalcampuses, necessitating a kind of oversight that would be largely irrelevant on thecomprehensive university campus.

Intramural funding for research (seed grants, start-up packages, matching, incentiveprograms, special programs, etc.) would likely be formula-driven based upon the campusresponsible for generating the source of the revenue stream. Examples of such revenues areFacilities & Administration funds generated by external grants, state Research DevelopmentFund allocations, HEAF funding, etc.). However, a combined institution would allow a morerobust framework within which inter-campus seed grants and incentive programs could bedevised to catalyze university-wide research initiatives. These broader initiatives would relyon the infusion ofnew funds, such as new state allocations from the National Research


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University Fund once UNT qualifies. If no new funds are available, the current researchinvestments on each campus could be undermined by a redistribution of existing funds.

How would consolidation affect the rankings of the unified institution by state and nationalagencies and private media?

Regarding the horse-race toward Tier 1 National Research University status, as defined bythe Texas legislature and the THECB, a consolidated institution would offer someadvantages. The combined assets and research resources of the two campuses could elevateUNT above some state competitors, possibly UT Dallas, UT Arlington, UT El Paso, andTexas State University. However, Texas Tech University and University of Houston are in aposition of strength relative to UNT regardless of whether or not the campuses merge.

Regarding public and media perception, a combined institution could further reinforce thenotion that UNT is a major educational institution. However, in some contexts (e.g., certaingroupings in US News and World Reportrankings), it is at least possible that a merger couldpush UNT into different categories that are more competitive and thus could result in adecrease in national rankings.

Would the unified institution be in a position to meet the states requirement for the NationalResearch University Fund and how would participation benefit the two campuses of the unifiedinstitution?

Although it would put UNT in a more competitive position, combining the institutions wouldnot lead to UNT becoming immediately qualified to petition for access to the NRUF. Theearliest possible timeframe would be the 2015 legislative session, but eligibility wouldnecessitate continued research growth on both campuses and significant increases inendowment.

Are there areas of future research potential in which research faculty of the two institutions willbe better positioned to compete for external funding due to the depth of resources available in aunified institution?

In a dream scenario, strong biomedical, clinical, and population research in Fort Worth wouldbe complemented by robust STEM-related and social-behavioral science research in Denton.Such complementary research strengths would offer the best platform for teams of facultymembers across a merged university to compete for large funding initiatives. One example isthe area of pharmaceuticals research, in which basic discoveries in plant science, chemicalmodeling, and cellular biology would be translated by pharmacists and physicians intoclinical trials of new treatments for diverse diseases. In a combined university, large grantsof this kind could be developed without the need for subcontracting. However, substantialinvestments in the recruitment and retention of top faculty research talent would be required

for the merged university to achieve this type of synergy and success. The best researchuniversities got to where they are only after decades of strategic investments in top facultyresearch talent.

One area of low-hanging fruit is in the expansion of research experiences forundergraduatesparticularly those in the biosciences, in pre-medical preparation, and in bio-engineering fields. The NIH is eager to fund such opportunities, and medical and graduateschool faculty members are often eager to include undergraduates in their research programs,


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but lack direct access to undergraduates. Comprehensive universities like UNT have aplethora of undergraduates eager for such experiences.

How would the unified university continue and expand hospital and clinical partnerships andsupport the growth of the UNT Health clinical practice? Would UNT Health have additionalopportunities in Denton County?

Currently, the clinical practice of UNT Health is entirely in Tarrant County. As a strategy forgrowth is developed, one obvious focus of opportunity is along the I35 corridor north toDenton County where significant population growth continues. Whether this strategic growthwould involve the development of a network of primary care providers who refer back tospecialist physicians in Tarrant County, or instead the expansion of specialty practices intoadditional hospitals, is a decision that would need to be made. The matter of a unifieduniversity versus its current configuration would not seem to, in itself, have a significantimpact on these strategic decisions. A unified university does not appear to alter the availableoptions or their respective pros and cons, except perhaps for the public perceptions of UNT asan institution.

It must be borne in mind that the clinical practice must be competitive. Currently, being partof a large organization makes certain business practices more difficult for the UNTHSCclinical practice when compared to the business practices of a similar sized clinical practicein the private sector. If a merger scenario were to compromise the ability of the clinicalpractice to do business in an efficient manner, it would have very negative impacts.

Over-Arching Recommendation from the Perspective of Research and Clinical Practice: If UNT andUNTHSC are to merge, the future success of the research enterprise will hinge on the choice of leadershipstructure for the new institution, the formulas and mechanisms used for allocating research resources, andthe availability of new funding streams needed to invest in top faculty research talent. The combinedinstitution would have to grow considerably in endowment funding and recruit more high-profile researchfaculty members before it would become eligible for Tier 1 funding in Texas. Although some

economies of scale may result from a combined structure, significant savings associated with researchinfrastructure are not at all apparent. In fact, any immediate fiscal savings will be off-set by thecomplications related to the merger. But over the long run, the benefits of joining UNT and UNTHSCstudents, faculty, and staff, to the communities of Denton, Fort Worth, north Texas and the state arepotentially compelling. If the merger is pursued, it should be done in order to enhance our shared goals toprovide students with a first-rate education and to serve Texans by advancing knowledge and offeringsolutions for healthier, more stable communities.

STUDENT EXPERIENCE:

As we evaluate the potential merger between UNT and UNTHSC, maintaining a positive studentexperience for all students on both campuses is vital to determining implementation. This work group

suggests that the current positive student experiences on both campuses need to be maintained.Additionally, merger should provide more opportunities for growth and development to each of ourcampuses, not fewer. In evaluating the comments from the work group, it was determined to proposeoptions, with associated benefits, disadvantages, and challenges for UNT and UNTHSC students.

Primary among our institutional responsibilities and obligations is to enhance the value of our alumnisdegrees. Toward that end, a merger of UNT and UNTHSC would increase the status and prestige of bothinstitutions by:


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1. Affording greater potential to become members of AAU, which would benefit UNT andUNTHSC students.

2. Increasing rankingsUNT could rise in ranking about 40 places on the national scale, asmeasured by NSF.

3. Achieving NRUF statusas UNT reaches the requirements of the National Research Fund withadditional doctoral graduates, students from both institutions will benefit from the added

resources.4. Increased visibilityHealth Science Centers that are part of comprehensive universities seem to

have greater opportunities for visibility and status than do those that stand-alone.

Outlined are three possible avenues by which to merge the institutions with regard to the most pressingconcerns being student fees, student governance, and student services/programs. Regardless of whichoption is pursued, the benefits listed above remain static throughout each. For each option, the specificchallenges or benefits that each would present will be listed for further exploration.

Option 1: Institutions merge with student fees, student governance, and student services/programs

remaining distinct for each location.

Given that our campuses serve very different populations and needs, it makes sense that thecampuses offer programs and services that are best tailored to their students. With these servicesavailable to students come fees that students must pay to secure their access to these services. Ifthese fees were to stay separate with each campus left to determine their own fees and allocations,students would not feel any impact of the merger in a negative way, nor would they be imposedfees for services to which they would have little or no access. At this beginning juncture, thisoption seems the most viable in order for all students to gain optimal benefit overall, whilecausing the least amount of disruption to the students at either campus.

Option 2: Institutions merge with a hybrid of student fees, student governance, and student

services/programs merged as appropriate.

Although students will feel little to no negative impact under Option 1 above, it may make senseover time to critically analyze all fees, services, and programs to ensure the most effective means

of utilizing student services fees. While there are several key differences in the studentpopulations which dictate the need for different services, there may be areas in which sharingresources for programs and services that both campuses students find helpful.

o This may vary in tangible form from commuter students being able to access campusresources that are closer to home even though their home campus is the further of thetwo, and/or;

o Services that are available through digital means or by phone could be shared by bothcampuses to benefit both sets of students. (e.g., 24-Hour Nurse Hotline, Workshopmaterials offered by the Student Money Management Center, Counseling Phone Linethrough third-party vendor, LifeSynch.)

Option 3: Institutions merge with all associated student fees, student governance, and student

services/programs all merged.

Option 3 will potentially cause more of a noticeable change for the students of both campuses as allstudent fees, student governance, and student services/programs will have to be re-evaluated. Theavailable list below includes the most pressing concerns, but is certainly not comprehensive, due to theextent of minor effects or changes the merger could potentially create.

Combining student service fees (SSF) and the allocation of these fees to support campusinitiatives is the most challenging to merge. The current fee structures are very different (UNT


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Denton Student Service Fee is $13.10 per SCH; the UNTHSC the Student Service Fee starts at$120 for the first SCH and goes up to a maximum of $250 at 8 SCH). The annual maximum ateach campus can be vastly different. At UNT the maximum is based upon number of semestercredit hours taken throughout the year (not to exceed 15 hours per semester), while the annualmaximum is $750 per student at UNTHSC. The difference in total cost per student is directlyrelated to the population volume on each campus. If by combining campuses, the UNTHSC

received reduced SSF, many programs and services offered to students could be in jeopardy oflosing funds necessary to support current operations.

The combination of the two institutions could lead to the formation of a single Student FeeAdvisory Committee (Section 54.5031, Texas Education Code). Currently the student feescollected for both campuses are directly allocated to programs and activities by the students ofeach campus per their respective SSF Advisory Committee. Under a single SSF AdvisoryCommittee for a joint UNT institution, the make-up of the students serving on the committeewould need to be reflective of their campus population, which could place the UNTHSC campusat a disadvantage based upon the larger student population on the Denton campus.

The current student government structures on the two campuses are designed to fulfill twodistinctly different purposes. The UNT model is a traditional model which involves a singleleadership group with representation of the various groups that make up the campus population.

The UNTHSC model is a professional school leadership development model with separatestudent governments for each graduate/professional program on campus. All of these studentgovernment bodies (except the Graduate School of Biomedical Sciences) are directly aligned withstate, regional, and/or national professional associations. The students as a result of theirleadership involvement within the student government in their program are eligible to take onleadership roles within the aligned professional associations. This structure could be at risk as aresult of a merger.

While this merger would probably not significantly affect the involvement of students in extra-curricular activity due to distance and time constraints, the possibility for them to explore a neworganization that could be useful and meaningful to their personal development or professionalgrowth does exist.

Currently, each campus satisfies student counseling needs in very different ways. UNT has a fullystaffed counseling center on campus while the UNTHSC utilizes a third party vendor, LifeSynch,although there are a couple of licensed counselors that do serve UNTHSC students on-campusthrough the Center for Academic Performance. The on-campus model serves the Denton campuswell in its traditional structure and LifeSynch allows for services for students who are in clinicaltraining in facilities across the US. Further exploration would need to occur as to best fit theneeds of both campuses with regard to counseling services and appropriate measures foraccreditation.

Retention on both campuses is absolutely essential. However the modeling structure for cohortacceptance at the UNTHSC is vastly different than the rolling acceptance of students at UNT.Retention efforts and services, if merged, would still need to address the specific needs of the twocampuses either by supporting the current retention model at each campus or by restructuring adual model.

Currently housing is not available on the UNTHSC campus. Due to the distance between the twocampuses, it is unexpected that UNTHSC students would utilize housing on the Denton campus,though it is possible.

If merged and rebranded into one entity, the removal of Health Science Center from theinstitutional brand could detract from the perceived value of the degree students at the HSC willbe obtaining upon graduation. The term Health Science Center in the name of the institutionadds a perception of value. Additionally, there would be a perception by some members of thecommunity that the Fort Worth campus had somehow lost its Health Science Center


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designation. This may impact the perceptions of prospective students as well. These perceptionsof loss of credibility would be difficult to mitigate.

If the two institutions are merged, the current across-the-board requirement at UNTHSC for ahard-waiver health insurance plan for students at a Health Related Institution (HRI) could nolonger apply. This could eliminate the requirement for students in the health professions to carryhealth insurance. This would need to be carefully evaluated due to the potential for exposure

during clinical practice (example: needle sticks). The financial burden of particular treatmentscould potentially result in increased attrition. It would need to be possible to have a hard waiverprogram for sub-populations of the campus, rather than requiring all or none to carry this plan.

There are fees charged at each campus that are unique to that campus and it is important thatstudents not pay for services for which they do not have access. It is possible now at UNT, forexample, for online students not to pay the Rec Center fee or Medical fee, and this option willneed to be available with a merger.

Each campus has a separate Code of Conduct and issues related to each will need to be furtherexplored. However, it is assumed that either a merged Code that meets the needs of bothcampuses can be created or that each campus could maintain its own.

UNTHSC has a three year federal loan default rate of .4% (the best among all health relatedinstitutions in Texas which range from .4% to 2.9%). However, UNT currently has a three year

default rate of 10.3% which is above the national average of 9.1%. If the UNT default ratecontinues to rise (penalties imposed at 15%), this could jeopardize the institutions opportunity toprocess single financial aid award disbursements within 10 days of the beginning of a term. Dueto the nature of medical education (large up-front cost; equipment, etc.), it is imperative that a fulldisbursement is provided prior to the onset of each term. This is not as significant a priority forthe other programs at UNTHSC.

ADMINISTRATION:

An important element in the feasibility evaluation of a merger is the administration of the new Universityof North Texas, during and subsequent to the merger. There are many specific aspects of universityadministration that need to be evaluated, such as: Research, Academic, Student Affairs, Facilities,

Finance, Foundations, etc. Each of these components can be evaluated by the subcommittees alignedaround these themes.

This report, however, focuses on aspects ofcentral administration. Unimportant to this preliminaryevaluation of a mergers feasibility is the who. However, the what and, to a lesser extent, thewhere deserve initial attention in this report. However, it is important to recognize that there are twoover-arching issues that certainly include administration, but are larger in scope than that single topic:formula funding and accreditation.

Formula FundingAll comments on cost savings are predicated on the basis of retaining the formula fundingclassification of medical rather than reverting to institutional. If formula funding to the new

university is reduced, the cost to that institution could be in the millions, if not tens of millions, andwould hugely overshadow any other cost-savings that might be achieved through administrative orother consolidations. The University of Texas System and Texas A&M System are seeking specialdispensation with the State Legislature to allow merger of a health science unit without losing theassociated medical formula funding. However, for planning purposes, UNT should be careful notto assume that legislation specifically mentioning UT and A&M is broadly applicable to all publicstate universities (consider PUFF vs. HEAF funds).


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AccreditationUnclear without further extensive consultation with SACS is the status of the institutional SACSaccreditation, and the numerous program accreditations at UNT and UNTHSC. One highly placedSACS representative stated in unequivocal terms that the new university, formed as a result of themerger of UNT and UNTHSC, would have to seek NEW accreditation as a NEW educationalinstitution. Moreover, uncertain at this time would be the status of the dozens of programs,

departments, and colleges that have individual accreditations with a number of accrediting bodies.One scenario that could overcome the untenable situation of either or both existing institutionsoperating for any period of time without accreditation is that theplanning for a merger would occur inparallel with preparation of the accreditation case, but that the merger would not occur unlessaccreditation could be gained concurrent with, rather than subsequent to, the merger. In any event,the costs both financial and in terms of lost opportunities - of seeking even partial reaccreditationwill be significant, and perhaps offset the advantages of a merger for many years.

A. What effective organizational structures in other universities have successfully incorporated

medical schools and health-related colleges into the larger university?

Two general patterns have emerged in US higher education. In the first, the medical school/healthscience center originated as part of flagship campus. In the second pattern, health-related institutionshave merged from stand-alone colleges/campus to flagship. Examples of this latter pattern include:University of Toledo and Medical University of Ohio as well as Augusta State College and GeorgiaHealth Sciences University; New Jersey plans to restructure their public medical schools into generalacademic institutions.

At a more detailed level, the most typical arrangement is that a medical school (sometimes with orwithout the health-related colleges) has a Dean or Executive Dean. Indeed, there are nationalassociations of medical school deans (e.g. the Association of American Medical Colleges Council ofDeans). More variable is the reporting line for that dean. In some universities with medical schoolsand health-related colleges, the dean reports directly to the President in others, the dean reports tothe Provost. Often, this dean is viewed (formally or informally) as a super dean with a greater dealof autonomy than deans of traditional academic liberal arts colleges, likely deriving from the size of a

medical campus budget. Accreditation issues with the School of Public Health, for example, couldargue for retention of the health science center designation.

B. What autonomy or separation should be considered for some administrative functions of the five

colleges at the UNT Health Science Center in Fort Worth in a consolidated university model?

Assuming accreditation issues can be overcome without jeopardizing the operation of either institutionduring the transition, the most parsimonious approach is to have each function performed on bothcampuses brought under one administrative office. For example, all academic programs would be broughtunder one academic administration which could, nonetheless, have divisions that are focused on specificissues. An example here is the special nature of the academic programs at the UNTHSC that must foraccreditation purposes must continue to be located within a health science center. Similarly, other

administrative related aspects of the merger revolve around the retention of the ability to separatelymanage research F&A funds.

C. What are the administrative policies and procedures which may need to be amended, aligned, or

unified in merging the campuses?

The specifics of policy revision are difficult to assess without laying out the two sets of administrativefunctions side by side. Issues are manifold, and range from institutional calendar to compliance to


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human resource policies (that remain institutionally embedded). Issues to consider include, but are notlimited to:

Continuation of moving from consolidated, parallel processes at the BSC for Purchasing, Payroll,Travel, Payment Services, and some HR functions to a System-wide approach that considers theneeds of each campus.

Review and revision of all campus HR policies as part of new UNT System HR. Considerationshould be given to Human Resources or other administrative functions that may be consolidated intosingle offices such as Immigration Services, Workers Compensation, and Occupational Health &Safety Program.

Coordination and management of two, largely different faculty bodies, including consideration of: 12month vs. 9 month contracts, UNTHSC Faculty Compensation Plan and corresponding school/collegeworkload guidelines, Faculty Senate, Faculty Bylaws and Policies.

D. Are there opportunities for administrative cost savings in the process of creating a single

institution of higher education?

Some modest savings can be realized, but not overly so. One presumes that there is one lesspresident, one less provost after the merger, but then further redundancies (and attendant cost savings)

become murkier. It is unlikely that the merger could work effectively (or politically), by eliminatingall upper level administration at the UNTHSC and merging them with the existing functions at UNT(or vice versa). There would not necessarily need to be two vice presidents for research, as just oneexample, but likely a highly placed individual would still be necessary to oversee the distinctlydifferent nature of medical research, with all attendant compliance issues, etc. (see the Research andClinical Practice section for full consideration of these possibilities). Thus, the savings would bemarginal at best in terms of the salary difference between an existing vice president and theadministrator tapped to carry out that function at UNTHSC. This scenario could be flipped, and theargument stays the same. Such arguments could apply to many of the VP level functions (studentaffairs, finance, administration, etc.).

More significant administrative cost savings could possibly be realized if administrative cost savingsat the campus and System levels may be realized if the merger also folds in UNT Dallas, UNT

System College of Law together with UNT and UNTHSC. This approach is most likely to providetrue economies of scale across business and support functions and also prevents a very lopsided maincampus.

E. If determined to be advantageous, what would the best implementation schedule of a merger be

and how should the transition be planned to minimize disruption?

Conceptually, we envisage two phases. In the first phase, Campus Presidents from both UNT Denton andUNTHSC reporting to the University President. Each Campus President could retain current reportingstructure of Provost, Deans, etc. to allow transition time for working through accreditation issues,finance/budget organization, etc. (Functionally, this is not much different than retaining the currentstructure on both campuses while working behind the scenes towards a merger.) Secondary phase:

Streamline administration to reduce redundancies and have a lower level of leadership/management ateach campus location reporting up to the University.

As mentioned above, accreditation is a driving factor, as the merger cannot jeopardize the accreditation ofany of our programs or of the merged institution. Since the prevailing opinion at this early point is thatthe new institution would have to reapply for new accreditation, this could result in a delay of up to twoyears while the accreditation process is carried forward. This also assumes that we can each retain ouraccreditation(s) post-merger while the new institution becomes recognized (see discussion above).


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Assuming accreditation issues can be resolved, the scheduling of actual merger could follow thefollowing schedule:

2013 legislative session seeking clarity on financing and formula funding issues, based onlegislative and THECB board actions involving other systems

2015 legislative session finalize statutory requirements and financing to supportmerger/consolidation

June 2015-August 2016 develop SACS and other accreditation plans, resolve policy issues,develop/finalize organizational and leadership structure and placements, seek THECB approval, etc.(Note: the optimal time for seeking accreditation may be immediately after reaccreditation of UNTand/or UNTHSC, rather than in mid-cycle for either institution.)

September 1, 2016 Implement consolidated university.Actual implementation, regardless of year, is best done on the fiscal year/academic year basis, withevents leading up to a merger at the transition from one fiscal year to another. Depending upon whenLegislative/THECB/gubernatorial approvals came through, the key scheduling issue would then be tochoose the minimally disruptive period for implementation that also provided the most aggressive

schedule (i.e. if we are going to do it, lets do it!). However, if the final approvals came through 8weeks before the new fiscal year, then either we would forgo formal merger for 60 weeks, or we wouldhave a plan fully developed an in place, ready to implement. The disadvantage of the latter approach isthat there would be a huge upfront investment of time, energy and money that essentially bets onapproval occurring.

Conclusions/Recommendations:

1) Prior Resolution of Two Key Items. Two key items formula funding and accreditation loomlarge in the contemplated merger. The Administration sub-committee recommends that duediligence be done to resolve to the extent possible these issuespriorto additional extensiveplanning. Note: Of these two issues, formal inquiries (hopefully generating formal answers) are

probably most readily acquired on the issue of accreditation by discussing the issue with directlySACS, the primary institutional accrediting body for both UNT and UNTHSC.

2) Administrative Structure. The Administration work group recommends an eventual administrativestructure that recognizes that the unique, specialized features of the UNT-HSC will continue todemand on-site administrative functions. In this preliminary analysis, the recommendation is forthere to be one president, one provost (though an alternative proposed model has a provost oneach campus) and single vice presidents for divisions such as Research, Student Affairs,Administrative Affairs, Finance, Equity and Diversity, etc.

3) Implementation Process. Continuing on from the theme of 2) above, implementation isrecommended to consist of the continuation of the current administrative structures while moreintensive planning occurs, and that the administrative restructuring occur concurrent withlegislative and accreditation approvals.

4) Schedule. Notwithstanding the unknowns of legislative, gubernatorial, and THECB approvals as wellas accreditation issues, the recommended schedule includes statutory requirements and financingarrangements as a result of the 2015 legislative session, 2015 through mid-2016 for developingaccreditation plans, developing policy, etc., with a goal of September 1, 2016 for fullimplementation of the merger.


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FINANCIAL ISSUES:

A. What current differences exist in the distribution of revenues and expenses and budgetprocedures on the two campuses and within the units of each campus?

The UNTHSC has a very precise mechanism to allocate earned revenue by school as well as non-earned investment dollars by school. Funding is based on a formula, all schools receive 100% oftheir revenue from the State, and then an overhead-rate is applied to the administrative supportareas of the institutions to cover any remaining dollars needed to operate that are not supportedfrom a direct appropriation from the State or other revenue stream.

UNTHSC utilizes a Strategic Investment Fund 4% from various revenue streams (i.e., State,Local, Indirects) are allocated based on strategic priority to the schools and department to supportthe mission of the institution.

UNT operates a multitiered annual budget process via departments chairs, deans, and the centraladministration by way of the Presidents Finance Council.

B. What are the various revenue streams (e.g. fees, housing, facilities leases, etc.) on each of thetwo campuses and what are the related issues?

Revenue Streams:1. General Revenue UNTHSC, UNT2. Statutory Tuition UNTHSC, UNT3. Designated Tuition UNTHSC, UNT4. Board Authorized Tuition UNTHSC, UNT5. Student Fees* UNTHSC, UNT6. Housing UNT7. Athletics UNT8. Clinical Revenues UNTHSC9. Research UNTHSC, UNT10.HEAF UNTHSC, UNT

* Student Fees please see below in section C a more comprehensive listing of the studentfees, in addition to the Student Experience Section of the Report.

The impact on the financial infrastructure of both campuses requires detailed review. The mergermust maintain the business oriented practices at the UNTHSC or it must be expected thatexternal, competitive, revenue streams will be jeopardized and drop. The UNTHSC competeswith nonacademic business which requires a more traditionally business entrepreneurial approachthan found in a traditional academic setting.

Formula Funding please refer to the State and Regulatory Issues section of the report.C. What issues exist for student revenues and fees, including those in which students make

recommendations for the allocation of funds?

Varying student fee structures and uses on the UNT and UNTHSC also represents a challenge inmerging the two institutions.

Accessibility to participate in and benefit from various programs funded in part by student feeswould vary dramatically, as the UNTHSC campus and UNT campus are approximately 40 miles


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apart. For example, it is unlikely that UNTHSC students would be supportive of athletic fees forprograms such as the new stadium at UNT due to low utilization.

See the Student Experience section for a full consideration of options for deciding upon studentfee structures. If the current fee structure for UNT were applied across-the-board to UNTHSC

students, it would require the graduate and professional students currently on the UNTHSC

campus (40 miles away) to pay fees such as: 1) the intercollegiate athletics fee $10 per SCH (a

total of $2,270 in additional debt per medical student program is 227 SCH); 2) a Technology

Fee of $13 per SCH instead of $2.50 per SCH (a total of $2,383.50 in additional debt per medical

student); 3) a library use fee of $16.50 per SCH instead of the $7.50 per SCH at UNTHSC (a total

of $2,043 in additional debt per medical student); 4) a transportation fee of $3.50 per SCH (a total

of $794.50 in additional debt per medical student); 5) International education fee; 6) Publication

Fee; 7) student union fee; 8) Recreation Center Fee; and 9) other instructional fees. This will lead

to an additional debt burden of about $7,718 per medical student. UNTHSC off-sets some of

these costs with a higher Student Service Fee per full time student of $750 annually verses $450

annually at UNT. This is an additional cost of $1,200 over a four year degree period for

UNTHSC students. Therefore, the total additional fee costs per medical student would be in therange of $5,500 under the UNT fee structure over the course of their degree program. This could

be mitigated by maintaining separate fee structures on the two campuses.

D. What impact will the merger have on the use of revenues from ancillary services? Revenues used to support existing ancillary services should continue to support those functions

on each campus.

E. Will the merger affect the financial ratings of the unified institution? No, the merger will not affect the financial ratings of the unified institution. Currently, the

financial ratings are based on a consolidation of all UNT System components.

F. Will the merger affect existing and potential financial partnerships and contracts? UNTHealth is an $80M clinical enterprise that has numerous service and purchase contracts with

affiliated hospital partners, subcontracted community providers, third party commercial payors,federal payors, the federal department of corrections and numerous vendors. UNTHealth also hasnumerous equipment and facilities leases with affiliated hospital partners and vendors. Mostcontracts are not assignable or assumable by other parties. Hence, there are several potentialissues that could emerge as a result of the proposed merger that could present significantchallenges to continuity of business and serious disruption of cash-flow.

UNTHealth has contracts with Medicare and Medicaid as well as Medicare Advantage andMedicaid MCOs. Medicare begins the credentialing and enrollment process and a providernumber must be obtained before Medicaid or 3rd party commercial payors will credential andenroll providers under their contracts. Medicare contracts are with the institution and are tied tothe IRS tax identification number (FEIN) and group NPI (national provider identification).Medicaid is contracted basically the same way, but after Medicare.


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1. Best case scenario is that Medicare and Medicaid would allow a contract amendment fora revised FEIN number tied to existing institutional contracts for services and wouldcontinue to honor existing individual provider credentialing.

2. Worst case scenario is that Medicare would require a new institutional application andcontract to provide Medicare services, invalidating all current UNTHealth providerMedicare numbers, requiring a re-application and re-credentialing process for providers

under the new institutional FEIN.

UNTHealth has approximately $60M in annual clinical revenue and has 162 contracts withcommercial third party payor insurance companies. Most of these agreements have been in placefor many years and all are tied to the UNTHSC tax identification number (FEIN). The IRSrequires payors to issue Form 1099s each year evidencing payments to contracted providers.

1. The best case scenario is that all commercial payors would require an executedamendment to existing contracts in order to continuing paying for services after themerger and would continue to recognize existing credentialed and enrolled providers.Depending on the timing of the merger, amount of advance notice and the volume ofrequired amendments there could be cash-flow interruptions.

2. The worst case scenario is that UNTHealth and its providers would be treated as ifUNTHealth were a newly contracting entity and/or as if providers had moved to adifferent entity which would require a new institutional contract (possible re-negotiationof terms including fee schedules) and re-application for credentialing and enrollment incommercial 3rd party payor contracts for each provider. This would cause significantdisruption in care delivery to patients, and significant negative impact to clinicalrevenues.

UNTHealth has approximately $20M annually in revenue from comprehensive medical centercontracts with the federal department of corrections. These primary contracts are also supportedby a series of subcontracts with hospitals and long-term care facilities for inpatient services andoutpatient subspecialty services not immediately available through UNTHealth employedproviders for which UNTHealth is responsible for coordination and payment under the primary

contract. The primary contracts are bid out every 5 years and total more than $60M in revenueover the contract term.

1. Best case scenario, all contracts would require an amendment for the change in FEIN.2. Worst case scenario, contracts could require lengthy renegotiation or revision.

UNTHealth has numerous contract with vendors1. These would likely need revision or amendments

Dunn and Bradstreet DUNs number and rating for credit worthiness could impact leasing relatedto equipment and facilities leases.

UNTHealth has numerous facilities leases which would require amendments. UNTHealth has extensive professional service contracts with the Tarrant County hospital District,

Texas Health Resources and Plaza Medical Center which would require amendments and/orrevision.

UNTHealth banking transactions, electronic lockbox and other electronic commerce contractswould require amendments/revision.


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G. Will the rating of endowments, their management, or uses of funds be impacted through theproposed merger?

Endowments which have a specific purpose are not necessarily an issue (affiliated entities) solong as they continue to be targeted towards the donors intent; however operating endowmentswith less specificity will need to be reviewed.

H. Will the distribution of research indirect funding or clinical revenues be affected? As a merged institution the distribution of research indirect funding could be affected. The

impacted would depend on managements approach on how all funds are distributed andbudgeted within a new organization.

As a merged institution there will be little to no impact on the distribution of clinical revenues.UNTHealth, the clinical enterprise for the UNTHSC is a self-supporting operation that generatesrevenues to support its operations. That funding will and should remain encapsulated withinUNTHealth.

I. Are there financial implications in merging the different nine-month and year round schedulesof activity and revenue on the two campuses?

The group felt there would be minimal to no financial impact in merging the different nine-monthand year round schedules of activity and revenue on the two campuses. Mainly because eachcampus shares the same fiscal year start and end dates (September 1, 20XX August 31, 20XX).Revenue cycles for various areas such as UNTHealth for the UNTHSC, and Athletics for UNTwould remain the same.

STATE AND REGULATORY ISSUES:

A. What changes to state formula funding would be needed to assure continued adequate fundingof current programs and future growth?

TAMUS has indicated their merger cannot go forward if it has any negative implications forfunding of any institution/operation

It is imperative that we identify every change, tweak or nudge needed to insure funding willremain the same

1. Preliminary calculation made by UNTHSC staff indicate the negative impact to theGR appropriations for the Instruction & Operations (I&O) formula could be as much

as $8.2 million biennially

a. Current HAI formulas predicated on weighted headcount, at per headcountrate;

b. Current GAI formulas predicated on weighted SCH using a per SCH ratec. UNTHSC calculation converted annual course requirements of UNTHSC

students to SCH

d. UNTHSC calculation assumed SCH weight applicable to UNTHSCprograms


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2. Preliminary calculation made by UNTHSC staff indicate the negative impact to theGR appropriations for the Infrastructure formula could be as much as $200k

biennially

a. Current GAI and HRI space models used to determine average rate per grosssquare foot (gsf)

b. GAI rate is $5.25 per gsfc. HRI rate is $6.25 per gsf3. Will HEAF appropriations be impacted?4. Will tobacco appropriations be impacted?5. Will merger potentially limit TRBs or special item funding?

UNT and UNTHSC should track closely with TAMUS and work with the THECBB. What other state reporting and regulatory procedures would need to be considered in planning

a merger?

CBM Reporting CBM Program Approval

1. The combined institution would have to seek re-approval from THECB for UNTHSCprograms

Accreditation (and certifications)1. Substantive change request from SACS to authorize merger

a. Adjust practicesb. Rewrite policiesc. Compliance reporting

2. Federal financial aid not likely impacted by merger (per UNT EM/FAO) Some (or most?) other state reporting and regulatory procedures assumed to remain the same

C. Which issues would need to be addressed by legislation and which could be addressed by theTHECB?

Legislation1. Chapter 105 Texas Education Code-several sections would require re-write2. References to institutions as separate legal entities in Education Code (e.g. 61.003)

and other Codes would be reviewed

3. Possible legislation prescribing specifics or directing THECB to develop specifics forformula funding (e.g. H.B.9, 82nd Legislature Higher Education Outcomes Based

Funding Act) THECB

1. Recommendation of formula to Legislature (formula adopted in appropriations)2. Response to Legislative directives for formula development

Notes: Several transactional or one-time costs were discussed including establishment of new tax IDnumbers, rewriting legislation for a new university, review of approach to faculty tenure under the newuniversity, extensive policy revisions, etc. Additional analysis is needed to understand the scope andassociated costs associated with these types of costs to a potential merger.


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Report on Evaluation of the Proposed Merger of UNT

Documents

Transcript of Report on Evaluation of the Proposed Merger of UNT