The bill to reorganize New Jersey's universities passes a Senate committee

Posted: June 20, 2012

TRENTON - Political support solidified behind the proposed reorganization of the state's higher education system Monday as proponents said costs would be negligible - no more than $40 million - thanks in part to a change to the plan.

That is far less than cost estimates of more than $1 billion by opponents of the plan.

The $40 million figure was revealed Monday night after a flurry of amendments to the bill to address concerns of North Jersey politicians, and of many unions that represent employees of Rutgers and the other entities involved in the overhaul.

The bill moved out of the Senate budget committee on a 12-0 vote with one abstention. It could face a full vote of the Senate Thursday, but some lawmakers said they had not fully digested all the details or dollar figures.

A "fiscal note" presented by two representatives from Gov. Christie's Department of Treasury, for example, included no total dollar figure for the cost of the reorganization, but projected millions in savings from consolidating services. In testimony, they offered few details despite repeated questions.

Christie supports the plan, and the bill is moving quickly toward passage. It already been approved unanimously by the Senate's Higher Education committee and now must be reviewed by the Assembly.

One key new amendment would delay implementation of the plan until July 2013, in time for the 2013-14 school year, and forbid layoffs of employees for the first year. The union representing the 30,000 workers that would be affected by the reorganization said it was now supportive.

"We negotiated with the sponsors for many weeks and got protections to services, workers, higher education, and based upon those protections we are supporting the bill," said Hetty Rosenstein, director of the Communications Workers of America union.

A source involved in the negotiations said the last holdouts - powerful North Jersey politicians - had now been given the concessions they needed. Among the amendments are protections for University Hospital, which serves the poor in Newark. Another change would add an Essex County representative to Rutgers' board of governors.

Still, Assembly Speaker Sheila Oliver (D., Essex) has not publicly declared her support. Rutgers-Camden faculty and Sen. Ronald Rice (D., Essex) remain opposed.

"You're going to do what you want," Rice told his fellow senators, "but you need to do what is right."

Despite the amendments, the bill's framework is little changed from the original.

The bill would dismantle the state's medical school - the University of Medicine and Dentistry of New Jersey - and distribute most of its parts to Rutgers University in New Brunswick.

UMDNJ's School of Osteopathic Medicine in Camden County would become part of Rowan University, which in turn would enter into an alliance with Rutgers-Camden.

Part of the controversy has centered on the refinancing cost to Rutgers if it loses a significant piece of property - its Camden campus. An analysis commissioned by Rutgers says that pulling the Camden campus out of the main campus, as planned, would lead to $155 million in refinancing costs.

An amendment to the bill essentially eliminates that cost, proponents said, by having the state guarantee the bonds. That would act, they said, as a fail-safe: If anything forces a refinancing, the amendment would nullify the separation of Rutgers-Camden from the main campus.

Still, Candace Straight, a member of the Rutgers board of governors who otherwise supports the overhaul, testified that she would vote "no" as of now because of her concerns about the bonds.

Meanwhile, Rutgers, along with its boards of governors and trustees, has retained a high-powered Washington law firm to advise it. Trustees have said that the bill risks violating Rutgers' legal contract with the state and could invite litigation.

Already, Straight said, deposits from new law students at Rutgers-Camden are down 50 percent from last year because of the controversy.

The state Treasury Department said in its "fiscal note" that the costs would be minimal because the plan would not create a new institution, just reshuffle existing schools and was thus akin to the simple renaming of a school, as when Glassboro State College became Rowan University.

It also said:

Savings in administrative functions would result after consolidation of the functions of the five UMDNJ campuses into its new entities.

There would be minor expenses related to merging personnel and payroll databases, issuing new ID cards, building new websites, and integrating technology. The universities would pick up the tab for this over several years.

Long-term savings would result through more efficient operating systems and combined services, and there would be new revenue in the form of research dollars and investments gained by consolidating the state's schools of higher education into two major research institutions.

Since much of UMDNJ would become part of Rutgers, and since Rutgers has a higher bond rating than UMDNJ, the takeover of UMDNJ's debt by Rutgers could save approximately $40 million.

Since the bill would draw Rowan and Rutgers-Camden into a near-merger, including a joint board to oversee the two schools, a new amendment would restrict one school from tapping into the other's endowment.

Sen. Nellie Pou (D., Passaic) abstained because of outstanding questions she had about costs. "I hope that that information comes forward in time before it gets to the final vote on the floor," she said.

Another bill, which also passed the Senate budget committee late Monday, has been used as a sweetener to those skeptical of the reorganization plan. It would put a referendum on the ballot in November for at least $750 million in new grants for capital projects at the state's colleges and universities.


Contact Matt Katz at 609-217-8355 or mkatz@phillynews.com, or follow on Twitter @mattkatz00. Read his blog, "Christie Chronicles," at www.philly.com/ChristieChronicles.

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