Texas A & M University received state and regional approval for their merger. School mergers tend to be very expensive. Often times the institution will have to assume millions in debt or expenses. Other campuses have to be taken over or dissolved. If they are taken over, millions can be spent on financial consultants, attorneys, and experts who have a high price tag. Bringing two schools together is highly complex and can take months just to finish preliminary paperwork. If the campuses are consolidating, assets can be split or sold. Some entities may dissolve. The accounting books on both sides can move buildings and such off their balance sheets and accelerate depreciation of capital expenses such as leases as well as other potential issues.
A&M may also take on whatever outstanding debt the two new institutions have on their respective balance sheets. This can again mean millions in debt added as well as a possible lowering of their credit rating. As of 2012, Moody’s gave Texas A & M University a rating of Aaa. They were found to be risk diversified, liquid and with a healthy operating performance. The one thing that gave them a lower credit rating was their “decentralized campus…management,” according to moodys.com.
Seemingly an answer to Moody’s assessment, A&M’s merger will strengthen the University’s position. Although in the short term it may be more expensive for the University to borrow money, as their higher debt ratios will raise their cost of capital, in the long term, the Health Science Center will likely bring more research grants and possible corporate partnerships. The Law School will also be a revenue generator, and will increase the size of the school as well as its federal grant and subsidy consumption capacity.
According to WTAW news, Texas A&M University President Loftin recently told a gathering of university staff that merger approval for both schools was given by the Texas Higher Education Coordinating Board and the Southern Association of Colleges and Schools Commission on Colleges.
In an email, Doctor Loftin notified the university community that July 14 will be the official merger date. Loftin also wrote, “Over the coming months we will work to appropriately integrate systems and processes across a number of departments and units while maintaining the Health Science Center’s distinct organizational identity. These activities are important steps in preparation for the SACSOC site visit that will occur within the next six months to affirm the accreditation status of the entire university.“