Ricardo Azziz has held quite a few government positions in increased training and led the merger that resulted in Georgia Regents College, now Augusta College. He’s principal at Strategic Partnerships in Increased Training Consulting Group.
He writes the common Merger Watch opinion sequence on company restructuring in increased training.
Mergers and different company restructurings in increased training require the approval of a number of regulatory our bodies. Probably the most outstanding of those are the US. Division of Training and the regional accreditors.
To totally grasp the extent of their energy, one want solely keep in mind the rejection of the preliminary plan to merge Connecticut’s neighborhood school system into one group by its accreditor, the New England Affiliation of Faculties and School’s Increased Training Fee.
Likewise, a merger between Marymount California College and Saint Leo College was rejected by a distinct accreditor, the Southern Affiliation of Faculties and Faculties Fee on Faculties, or SACSCOC. That call led to the closure of Marymount California.
To be clear, I’m not criticizing these selections.
Not all mergers are the proper tactic, a minimum of as proposed. As a former member of the SACSCOC trustee board, I do recall how exhausting and punctiliously the accrediting employees labored with institutional leaders to make sure the assessments made have been honest, thought of the scholars, and have been the best resolution.
Once we have been merging establishments in Georgia a decade in the past, few of us had any expertise with consolidating faculties and universities. That included the accrediting company employees, although they tried to be useful. But it surely did really feel like a case of all college students, no academics.
Nevertheless, as the upper training setting has turn out to be more and more more difficult — and because the variety of mergers, acquisitions and, most regularly, closures has risen — accrediting company employees have turn out to be more adept in dealing with these transactions.
And the regulatory setting has additionally continued to evolve.
In September 2022, the Training Division’s Federal Pupil Help workplace launched new steering for establishments contemplating sure sorts of transactions, together with mergers.
Beforehand, the division allowed these transactions to happen as a single-step course of, with the establishment altering possession and concurrently changing into a further location of one other establishment.
Approvals now require two separate steps.
The primary includes the Training Division approving the change in possession of the establishment being acquired. Within the second step, the division approves the realignment of the acquired establishment into its new proprietor’s construction.
In different phrases, first approval of change in possession, i.e., the company merger. Then approval of the construction, i.e., the organizational merger.
The second step is not going to be accepted till each the Training Division and applicable institutional accrediting businesses have greenlit the primary one.
Critically, till each steps are full and accepted, the establishment being acquired has to proceed working as an impartial establishment — together with for Title IV federal monetary assist funds, which should be processed individually for every establishment. The establishments additionally should keep separate state and accrediting company approvals.
In February 2023, the division notified accrediting businesses of this revision, noting that it had finished so to “shield college students, to make sure that establishments have adequate monetary energy following a CIO [change in ownership] to satisfy the Division’s monetary accountability necessities and that they continue to be administratively succesful.”
Whereas it’s unclear to me how this two-step course of truly “protects college students,” what is obvious is that it introduces better complexity and important delay into the merger course of. Moreover, it forces establishments that will already be financially fragile to proceed to function independently regardless of having “merged.” A number of ideas come to thoughts.
First, what advantages college students essentially the most is that their school or college doesn’t shut – and definitely doesn’t shut abruptly and unexpectedly. Thus, accrediting businesses ought to be doing as a lot as attainable to facilitate and foster institutional partnerships, notably mergers or acquisitions, to make sure the continuity of the instructing packages.
The Training Division’s new tips appear to be a step on the contrary. If the division felt that inadequate scrutiny of transactions was occurring with the single-step course of, then maybe better consideration by and coaching of its employees was wanted — not elevated complexity of the method.
Second, now we have repeatedly cautioned that increased training establishments shouldn’t wait too lengthy to contemplate and determine a merger accomplice.
The above modifications now add even better urgency to this consideration. Faculties and universities which can be thinking about discovering a merger accomplice might want to begin earlier and be sufficiently solvent to stay operationally impartial all through all the two-step course of. Maybe that is the Training Division’s precise intent.
Third, accreditors might help not solely by decreasing regulatory burden, but in addition by educating institutional leaders and employees regarding the advantages and dangers of mergers. That features when to contemplate mergers, find out how to embody these discussions in common strategic planning, find out how to start these talks, and so forth. They shouldn’t merely watch for failing establishments to proceed their downward trajectory.
All of us, regulators included, want to know the easy undeniable fact that our nice nation has huge extra increased training capability and lots of establishments is not going to survive as impartial entities. That’s a state of affairs that won’t change any time quickly.
