UT-MUO merger could cost $30 million

6/10/2006

The costs of merging the University of Toledo and the Medical University of Ohio could approach $30 million, the schools' boards of trustees learned yesterday.

About $15 million would come from moving the UT College of Pharmacy to MUO, which will be known as the health science campus once the merger becomes official July 1.

Other projected expenses, which would range from $7 million to $15 million, include replacing signs to reflect the institutions' combination and new names, integrating the schools' information technology systems, and employee severance.

The merger's new price tag supersedes a Nov. 9 document titled "Successful Merger of MUO and UT" in which MUO President Dr. Lloyd Jacobs, who will lead the combined institution, said merging the two institutions could result in $20 million in transition costs over a three-year period.

UT anticipates paying between $2 million and $5 million in severance and retirement to employees made redundant by the merger.

"I believe this would affect management, maybe to a larger degree," said Dan Morissette, who will be senior vice president for finance and strategy at the merged school. "We won't take out the floor sweepers, so that the floors are dirty while the managers are sitting in their offices."

The university is evaluating its departments for potential cuts, a process that likely will run through September.

Beyond improving purchasing agreements with UT vendors, which could generate $1 million in savings, possible and targeted areas for reductions after the merger are computer contracts, lab services, elevator maintenance, and the departments of facilities, finance, human resources, and information technology.

UT already has spent $644,000, primarily on legal fees and information technology upgrades, implementing the merger.

It also has realized savings of $145,000 from purchasing agreements and lower banking fees.

Merger costs in the upcoming academic year alone could be $4 million, depending on how quickly certain proposals are enacted, Mr. Morissette said.

Given the substantial price tag, there is a question of whether the state legislature will assist UT in financing the merger. Dr. Jacobs recently met with Gov. Bob Taft and left confident about the governor's support of the merger.

The boards of trustees tabled a resolution yesterday asking "that the government of the state of Ohio commit to funding of costs associated with the merger of the institutions."

"We are sending the message that we're assuming right now that our legislative northwest Ohio delegation and legislators are not doing anything yet to help us, which, in fact, we know to be exactly opposite," UT Trustee Richard Stansley explained about the decision to hold off on the resolution.

The boards also heard a recommendation from a merger work group that the MUO College of Nursing, the MUO College of Health Sciences, and the UT College of Health and Human Services be consolidated.

The schools' programs would remain the same, but the College of Nursing and College of Health Sciences and Human Services would replace the three entities.

Research is one of the areas that could be enhanced by the merger, rather than chopped by economies of scale, the trustees were told.

UT received $33.8 million and MUO got $22.8 million this year for research from a variety of outside sources.

Even combined, the schools will trail the University of Cincinnati and Ohio State University in research dollars by several orders of magnitude.

Dr. Jacobs intends to close that gap by recruiting high-profile professors who can attract valuable grants.

"More students, more research dollars, all will be measures of success," Dr. Jacobs said.

When the boards meet again on July 6 to officially approve bylaws, sign an employment agreement with Dr. Jacobs, and elect new officers, they will be one body.

Mr. Stansley was nominated to be chairman, with MUO Trustee David Huey as vice chairman, and MUO Trustee Carroll Ashley as secretary.

During the meeting, Dr. Jacobs announced that a new trustee appointed by the governor yesterday afternoon will join the combined board.

John Szuch, a UT alumnus who is chairman of the Fifth Third Bank of Northwest Ohio, will succeed UT Trustee Dan Brennan and MUO Trustee Charles Dana, whose terms are set to expire.

The merger stipulates that one trustee will replace the two trustees who leave the board each year, eventually whittling the board down to the required nine members.

Contact Joshua Boak at:

jboak@theblade.com

or 419-724-6728.