Rowan, UMDNJ officials begin working out costs of Christie's education overhaul

Rowan University officials are scrambling to figure out how much Gov. Christie's plan to restructure the state's higher education system will cost them before they have to submit a funding request for next year's state budget in a matter of months.

The deadline for state universities to file has not yet been set, but traditionally is in November, according to the Governor's Office.

Rowan officials, along with their financial analysts, have begun meeting with officials from the University of Medicine and Dentistry of New Jersey to get a complete financial breakdown before they take over its School of Osteopathic Medicine in Stratford in July 2013.

"Just find out the full ledger, what are the revenues and expenses, what are the assets and obligations? . . . It goes on and on from there," university spokesman Joe Cardona said Wednesday. "We literally had our first meeting [with UMDNJ] on Friday."

Rutgers, which is set to take over most of UMDNJ, including its Robert Wood Johnson Medical School in New Brunswick, will file its budget request "in a way that reflects the anticipated changes," spokesman E.J. Miranda said in an e-mail. He declined to go into further detail.

The rush to get the costs figured out - which critics have clamored for since Christie announced his university overhaul plan in January - comes as the universities' finances fall under increasing scrutiny.

On Tuesday, Moody's Investors Service issued a report saying that Rutgers and Rowan were on watch, and that depending on the final cost of taking over UMDNJ, the agency would "assess the implications on credit."

Rutgers, which has a credit rating of Aa2, will take over an estimated $500 million of UMDNJ debt, according to Moody's. Rowan, which has a credit rating of A2, slightly lower than Rutgers but still investment grade, will take over about $50 million in UMDNJ debt.

Analysts at the credit ratings agency were generally buoyant about the restructuring, which Christie signed into law last week, saying the addition of medical and health programs at Rutgers and Rowan would raise the two schools' profiles and could open the door to more research funding.

They also were encouraged by the appointment of Robert L. Barchi as Rutgers' new president, saying the former neuroscience researcher and president of Thomas Jefferson University could help "optimize the research capability of the expanded university."

But they were critical of Rowan's finances, saying the university was "highly leveraged" and would need to increase its revenue to avoid a credit downgrade.

Cardona said it was too early in the process to figure out what costs would fall to Rowan when it takes over the School of Osteopathic Medicine.

"The report talked about their calculation of the extra debt from UMDNJ, but UMDNJ hasn't even told us what the debt is," he said. "We're comfortable with where we are."

Rutgers board members, who have yet to sign off on the university overhaul, have been waiting for months to see the final cost breakdown of taking over UMDNJ. They have hired Cain Bros., a New York investment banking firm, to review the university's books.

Preliminary findings have not been made public.

"We continue our due diligence and are conducting a thorough vetting of the law and its implications," Miranda said in an e-mail.