A Merger on Whose Terms?

The board of Polytechnic University is expected on Thursday to vote to approve a plan for the institution to merge into New York University -- a move that supporters say will give Poly access to the considerable resources of NYU and could give NYU a much desired base in engineering.

Beyond that surface logic for a deal, however, is an intense controversy that has led to unusually strong charges being leveled by some Polytechnic trustees against the university administration and board leaders. The dissident trustees have circulated a memo to the full board, along with many supporting documents, asking that the vote be delayed because of significant flaws in both the proposed agreement and the process by which it was reviewed.

The letter -- by two current trustees and one whose term ended last year -- charges that merger negotiations were started by the administration without informing the board, that Polytechnic board members and faculty members were scared into supporting a merger with reports that NYU might start its own engineering school -- even though there are legal questions about whether that could happen, and that dissenting voices have been squelched. On several of these points, the trustee memo has specific documentation. While supporters of the merger have dismissed as rumor the idea that NYU had ever pledged to stay out of engineering, the critics unearthed a 1973 letter in which the then-president of NYU said that the university had done just that.

Further, these trustees note that the board is preparing to vote to have the institution absorbed by another university without ever having put the matter to a faculty vote -- even for advisory purposes. Several sources said that administrators discouraged a faculty vote on the proposed merger. The president of the university, in an interview Monday, said that the faculty could have voted, but that he believed it was better for them not to have done so. "The board believed they got a fuller, richer view of what faculty thought by talking individually" to some professors than by having professors vote, said Jerry Hultin, the president.

Notably, in 2005, the last time Polytechnic and NYU considered a merger, the Polytechnic faculty voted against such a deal, and that led to the collapse of negotiations. This time, there does not appear to be any risk of a faculty vote or of a delay in the board vote to move ahead. Hultin said that while many of the issues raised in the trustee memo were "interesting," the majority of board members believed that the questions had been "asked and answered" and that there were no remaining issues to consider. He said he expected the merger to be approved with the three-fourths super-majority needed. (Generally, the criticism is coming from Polytechnic supporters and is of their own institutional leaders, not of NYU.)

NYU and Polytechnic announced merger talks in August -- and the initial criticisms came largely from Poly's alumni leaders. The merger was seen as a way to get more money and other support for Polytechnic, which has never had the resources of the top science and engineering programs. For NYU, the merger was seen as a way to broaden its reach significantly. In the last few decades, NYU has been transformed from a regional to a national university, attracting top faculty members and students from all over the world. But NYU's strengths have been in the professional schools and the humanities and social sciences. In a 1973 financial crisis, NYU gave up engineering programs, and sold off one of its campuses, in a state-brokered deal that resulted in most of the engineering faculty ending up at Polytechnic.

The dissident trustee letter -- which was sent to Inside Higher Ed by sources other than its authors, Deborah L. Devedjian, Michael E. Hora, and Steven M. Rittvo -- said that when the idea of a merger was presented to the board, these trustees were not necessarily opposed and in fact saw potential benefits. But as time went on, these trustees wrote that they found more and more reasons to be concerned over the process being used and the potential decision to be absorbed by NYU.

Here are some of the issues raised and the response from Hultin (who provided answers not only for himself but for the board leadership):

Faculty input: The trustee letter called for a secret ballot of faculty members on the proposed merger, saying that the issue was of serious enough importance that a formal view of professors needed to be considered. The letter said that engineering faculty appear to be the most supportive of the deal, but that many others are not, and that many professors fear "recrimination and retribution" if they speak out against the merger.

Robert Flynn, chair of the Faculty Senate at Polytechnic, declined to comment on the letter or on the proposed merger, except to say that no vote of the faculty has taken place or is scheduled. He also declined to characterize faculty views on any of the issues involved. Other senior faculty, who asked not to be identified, said that the trustee letter was accurate, both in characterizing the split among professors and the fear about speaking out. Several said that administrators had made clear that the Polytechnic board did not want a faculty vote on the issue.

Hultin, the Polytechnic president, denied that there was any effort to squelch faculty views. "This is not a university of intimidation and control," he said. As to why the board could adequately get input on such an important issue without a vote, he said: "It's not an up or down thing. Everyone has their own interests. I think we'd get an up vote. But faculty have brains. We want their brains, not a check in a box."

While Hultin said he could not discuss details of the NYU agreement, because it is "confidential and proprietary," he said that it assured currently tenured faculty members at Polytechnic of their jobs with continued tenure. As to those without tenure, he said, "the rights they have now are protected." The trustee letter noted that many without tenure believe that their jobs are at risk.

At NYU, Sylvain Cappell, chair of the Faculty Senators Council and a professor of mathematics, said that professors have been consulted about the merger, and that most are supportive, seeing some hot areas of research -- he cited biomedical engineering as an example -- where current professors would benefit from an engineering program. "There could be opportunity here that neither school could pursue itself," he said.

Evaluating the options and the NYU competitive threat: The trustee letter faults the Polytechnic board leaders for not considering other options (staying independent or combining with other universities) and for giving what the letter describes as an unfairly ominous portrait of NYU's intentions without a merger. The letter notes that Polytechnic leaders have said that there would be a real risk of NYU starting its own engineering school, and competing head on with Polytechnic.

Indeed Hultin said Monday that NYU could do so, and that it was important for Polytechnic to consider that possibility.

But the dissident trustee letter goes public with documentation about something that has been rumored in Polytechnic circles for some time: that NYU may be barred right now from starting an engineering program. The deal in which NYU gave up engineering and a campus in 1973 involved state financial support to buy a campus (that went to the City University of New York) and state officials didn't want to support all of these transfers of programs and money only to have more competition later. So -- rumor has had it -- NYU pledged not to start up a new engineering program, so that the one at Polytechnic could succeed.

While not all documents related to this agreement are available, critics have a 1973 letter from James M. Hester, then president of NYU, in which he outlines the deal -- including the interpretation of state education officials that the agreement meant NYU would not offer engineering "at Washington Square or elsewhere."

As a result of seeing this letter, critics of the deal say that Polytechnic leaders have duped their campus into thinking they needed to act to prevent NYU competition -- when in fact NYU couldn't compete because it had given up that right. John Beckman, a spokesman for NYU, after being provided a copy of the letter, said: "We'll look into this letter, but we're not aware of any prohibition -- either in the law and or in charter -- that would prevent us going forward with Poly."

Hultin, the Polytechnic president, asked about the documents suggesting NYU had pledged to stay out of engineering, said "we researched that and got every document related to that." As to the 1973 statement, Hultin said that "wasn't a commitment" and that "it's 2008 now. The nation needs engineers and scientists and technologists." He predicted that if NYU wanted to open an engineering program and had some obstacle, the state would help it out. "The thought that the governor would say to NYU 'you can't open an engineering school' is a pretty thin reed on which to defend Poly against a major competitor."

Conflict of interest. Without identifying individuals, the trustee letter raises a question about conflicts of interest on the board. Sources at Polytechnic noted that the law firm of one trustee has been hired to negotiate the formal merger agreement -- a sufficiently complicated deal that it will result in many lucrative billable hours. Another trustee -- while the merger talks were going on -- was appointed "a distinguished scientist in residence" at NYU. Others said that Hultin has talked about his continued employment after Polytechnic becomes part of NYU, showing that he has an interest in the deal going through.

Beckman of NYU said that there is no deal with Hultin, and while several people reported hearing him talk of a deal, he said that those who heard him were confusing his talk of his "hope" of staying with the university with a firm arrangement. He did say that he has talked with his board about continuing to lead Polytechnic as it becomes part of NYU, but that no deal is final.

Hultin also denied that there was any problem on the board with one trustee getting a title at NYU (Hultin said he isn't being paid) or another having his law firm get a contract for work that wouldn't be performed if the deal fell apart. He said that outside lawyers had reviewed the matters and that the board had decided that there was no conflict of interest. He also said that the trustee whose law firm is getting the contract was taking steps so he wouldn't personally profit from the work.

Secret negotiations. The trustee letter states that Polytechnic board members were negotiating with NYU for the first half of 2007 without the knowledge of most board members, and that talks on such an important matter should not have taken place without board authorization. Hultin acknowledged Monday that he did not tell the full board of his talks with NYU for months after they started, but he said that the reason for this was to save the board time. He said that after a failed attempt at merger several years ago, he wanted to be sure that a merger was really viable before he told trustees about the talks.

Hultin said he was "negotiating a floor or basic set of things in place" before going to trustees. "Otherwise why go through the heartache of a conversation that is going to fail?"

Further, Hultin said that all of the issues in the memo have been discussed and that all trustees are fully involved -- a claim that runs counter to the trustee memo, which said that once trustees raise objections, they tend to get shut out of discussions.

One person who has observed board meetings backed the letter's contention. Thomas Mauro, a past alumni association president, has "advisory" status that allows him to attend board meetings. He said that the trustee letter's contentions about how the board didn't fully examine alternatives, and how those questioning a merger were largely dismissed were "completely accurate." He also said many of the questions raised in the trustee letter -- about failure to discuss limits on NYU's ability to compete, and other options -- are also accurate, and that these matters were discussed minimally if at all in full board meetings. He added that he has also been approached by professors afraid to speak out, and that the trustee letter was accurate on that front as well.

Behind the Debate

While much of the trustee memo focuses on perceived flaws in the process by which the board has considered the merger, there is also a philosophical debate going on. Hultin and NYU officials have spoken of the tremendous resources (and prestige) NYU can lend to Polytechnic. And since NYU stands to benefit as well, this is theoretically a case where the sum is greater than its parts.

There are good examples in American higher education of research universities built from combinations -- Carnegie Mellon University (from Carnegie Institute of Technology and the Mellon Institute) or Case Western Reserve University (from the Case Institute of Technology and Western Reserve University).

But more recently, many mergers -- especially those in which there was a dominant partner -- haven't ended up well for the institution being absorbed. Fordham University shut down Marymount University after five years of attempting to improve its numbers; DePaul University shut down Barat College, after absorbing it and saying its resources would turn it around; George Washington University in the 1990s paid off the debt of Mount Vernon College in return for control of the college, and when the college could not revive itself financially, it shut down.

In the case of NYU and Polytechnic, university leaders have pointed to their many similarities -- especially as institutions that are proudly about New York City and both have histories of educating immigrants and their children. Both are also more diverse than much of higher education. But in recent decades, while Polytechnic has stayed focused on students from the New York City metropolitan area, NYU has become truly international in its reach and only a minority of students come from New York State. And while NYU's diversity would be the envy of many other institutions, it is a majority white institution -- while Polytechnic is majority minority.

According to the Economic Diversity of Colleges database, Polytechnic's percentage of students who are Pell Grant recipients is 47 percent, while at NYU the figure is 19 percent.

It's not that NYU is bad, say critics of the merger. It's that NYU's successes have taken it in a different direction from Polytechnic. And so while current Poly students will benefit from the NYU resources and name, the fear is that future generations will be more like current NYU students, however much the university has pledged to uphold the diversity of Polytechnic. And that's why they say they are so upset by a sense that the board is rushing to approve the merger, without fully considering the possibilities.

"We're going to lose the rich history of Poly, and it's going to become white bread," said Edward Sawchuck, an alumni leader at Poly. "The trustees have not been fully briefed and have not done their due diligence, and they are going through with this like it is some incidental transaction, like changing their socks."