November 2, 2012 Chancellor Lee Jackson University of North Texas System 1901 Main Street Dallas, TX 75201 Chancellor

Jackson, The attached documents are in response to your request for us to work together in consideration of a possible merger of UNT and UNTHSC. We gathered a group of leaders from both institutions and from the UNT System, formed several work groups, developed work group reports, and then convened the overall group to build consensus. The detailed document represents the compiled reports from each of the work groups. The Executive Summary reflects the general consensus of the group following the convened discussion and an Executive Summary of the detailed document. Jennifer Trevio, Vice President of Administration and Chief of Staff at UNTHSC and Kenneth Sewell, Associate Vice President for Research at UNT worked closely together to coordinate the compilation of work group reports and the drafting and editing of the Executive Summary. They provided an opportunity for input and suggestions from all 27 participants in finalizing the documents, and worked especially closely with Deborah Leliaert, Vice President for University Relations, Communications, & Marketing at UNT and Tim Doke, Senior Vice President for Community Engagement at UNTHSC. As stated above, we believe that general consensus was reached on topics outlined in the Executive Summary. Of course, some differences of opinion existed among group members regarding the amount of emphasis to place on specific issues; but no significant substantive disagreements remained. Thus, the Executive Summary fairly reflects the overall perspectives of the full group rather than any one persons viewpoint. We hope you find these documents useful in considering this important matter. Sincerely,

Scott B. Ransom, President UNT Health Science Center

V. Lane Rawlins, President University of North Texas

Executive Summary of Information Gathered for the UNT System Board of Regents
Regarding A Proposed Merger of UNT and UNTHSC Into a Single Institution of Higher Education

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Two months ago Chancellor Jackson requested that Presidents Rawlins and Ransom lead a group of UNT, UNTHSC, and UNT System administrators to evaluate a proposed merger and answer a series of specific questions that he had posed. More than 20 key leaders worked collaboratively over the past several weeks, with work groups individually addressing specific areas of questions. The entire group gathered on Saturday, October 20, to discuss the output of these work groups and, more broadly, to draw specific inferences from the work group reports. The group concluded that as long as two major issuesseamless accreditation and formula funding levels could be resolved favorably, a merger could be undertaken if approved by the Regents and the Legislature. It was noted that the exact nature of a proposed merger was unclear. In the absence of a clear definition of the proposed merger, the group assumed the existing universities would retain considerable autonomy under a merger scenario. In that case, the group could not identify significant short term benefits (approximately 3-5 years after the merger) to the merger. The issue of long term benefits, however, is much more difficult to assess and would depend on such factors as the extent of administrative consolidation and efficiency across the UNT System and the ability of leaders to pursue opportunities for joint or new programs and earn philanthropic and community support where the campuses are located, rather than simply identifying simple direct benefits attributable to scale or other facets of a merger. Specifically, the discussion identified significant one-time transaction costs that would negatively impact the campuses and the System, both in dollars and in resources. There was consensus that the merger process itself could create strategic and operational complications before, during, and for some period following the merger. However, the impact of the merger on administration or administrative costs cannot be fully considered without thinking about what might happen to all areas of administration across the UNT System. While the merged institutions would achieve a gain in NSF rankings and possibly in rankings among Texas emerging research universities, it would not be sufficient to affect Tier One status or overall national reputational standing. In addition, the UNTHSC and Texas College of Osteopathic Medicine will likely drop in their respective national and state rankings among peer academic medical centers as a result of the merger, at least in the short-term The impact on state funding surfaced during discussion as the most critical, over-arching question that seems to preclude any further exploration of a merger until answered; specifically, in what ways would the general academic and health institution formulas be applied to specific program areas at a merged institution, and how would TRBs, special item, and HEAF state support be affected? Other areas of concern were raised during discussions, such as how a merger might impact fundraising, community support, recruitment and retention of faculty and staff, tenure, branding and reputation, as well as costs associated with merging policies, financial infrastructures, accreditation cycles, etc. In addition, considerable discussion was given to concerns that constituents of both institutions might have in a merger scenario. Specifically, constituents might be concerned that a merger could impact political

Revised November 1, 2012

support, fundraising, reputation, and image in the region and the specific communities where both universities reside. Potential benefits might accrue where certain health and general academic areas would work more collaboratively; however, information relative to significant overhead or cost savings is inconclusive at this time. The physical distance between the two campuses and the unique cultures of each, would likely complicate any meaningful collaboration. Moreover, a degree of academic cooperation could occur now among some areas, without any merger, through additional investment and resource allocation. Despite extensive consideration and discussion, no significant short-term benefits to a merger were identified. Nevertheless, although a merger of any type would be a complicated process, and the transactional costs might be high, the campus leaders were clear that it certainly would be possible to implement. It would be essential that all institutional constituents students, faculty, staff, alumni, donors, as well as community, corporate, and political partners would need to understand the compelling rationale for merger before they would support the difficulties associated with a transition of this complexity. Finally, there was discussion that if merger were to be considered further, a study and review by independent, third-party experts would be beneficial. What follows in the remainder of this Executive Summary are the key points derived from a set of reports from several work groups assigned to gather merger-related information for key aspects of institutional operations. The individual detailed work group reports were assembled and are provided separately as a single document. MERGER PURPOSE AND GOALS: If a merger to a unified institution is to be pursued, it should be for the purposes of leveraging the strengths of existing academic programs to effectively serve more students, enhancing collaboration and research, and elevating the combined institution toward greater national prominence and capability of serving Texas and the nation. Such a merger should also strive to improve organizational efficiencies. Merging institutions would allow for joint reporting of financial and student information such as research expenditures, enrollments, programs, etc. In at least some contexts, the larger numbers could elevate the status of the merged institution in the perceptions of potential students, state lawmakers, the public at large, etc. However, this was not determined to be a direct benefit per se to merging the institutions; rather, it was seen as a possibilityand one that might have counter examples. ACADEMIC AFFAIRS: The over-arching issue for academic affairs was the concern regarding accreditations (i.e., the ability of the combined institution to come into existence with no lapses in critical accreditations). The group viewed that as a fundamental prerequisite to the viability of a merger. A variety of potential academic collaborations across UNT and UNTHSC were identified that might be incentivized (or at least allowed to pursue collaboration with fewer barriers) under a merged institution. However, it was generally agreed that such collaborations were possible (even if more complicated) under the current two-institution structure. Differences in faculty cultures at the two institutions were also considered as presenting significant challenges. Models at other institutions suggest that relatively large differences would remain between the faculty at a medical campus versus those at a comprehensive university campus even with a merged institution.

Executive Summary

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RESEARCH AND CLINICAL SERVICES: Merging institutions would allow for joint reporting of research expenditures, which might hasten the combined institutions reaching of state-mandated milestones as an Emerging Research University. However, the arbitrary nature of the state benchmarks leaves open the possibility that the legislature and/or the THECB might reevaluate the targets for institutions that incorporate a medical or health science center component. The joint reporting of research expenditures at the national level (e.g., the National Science Foundation report) would result in the combined institution elevating approximately 40 places. Although perhaps important, given that the Carnegie Classification relies heavily upon the NSF data for their categorical assignments, the elevated expenditure levels would leave the combined institution squarely within the same basic category as UNTs current status (i.e., Research UniversityHigh Research Activity). Other metrics used in national rankings, including US News & World Reports, are research expenditures per faculty member or percent of faculty engaged in funded research. A merger could have a negative impact in certain situations in which such metrics are used. Similar to the academic collaborations discussed above, potential research collaborations might be somewhat easier under a merged institution. However, it was likewise agreed that such collaborations are feasible (and indeed, are occurring currently) under the two-institution structure. Finally, the UNT Health clinical practice would need to (and likely could) remain nimble in its business practices under a merger scenario. Maintaining agile business processes is critical for the ability of the UNT Health clinical practice to compete in the open marketplace. STUDENT EXPERIENCE: Much like the different faculty cultures discussed above, the students on the two campuses have very different cultures, and very different needs. Thus, it was agreed that it would be important to preserve as much of the current campus-specific student services/programs and even student governance systems as possible. However, a hybrid merging of the two student affairs divisions might allow at least some students to have access to a broader array of services to meet specialized needs (i.e., in those cases in which the services/programs available on the other campus are a better match for a particular students needs.) Many members of the group felt that additional opportunities at the UNTHSC campus might be of benefit to UNT students, but did not anticipate that similar numbers of UNTHSC students could benefit from services/programs at the UNT campus (given the differences in the structure and level of curricula, and sheer sizes of the student populations at each campus). It was broadly agreed that policies under a merger scenario could support the application of campus-specific fees and programs, such that students would not need to incur substantial student fees for programs largely inaccessible to them (i.e., those that specifically benefit students at the other campus). ADMINISTRATION: The fundamental questions posed in the opening paragraphs of this Executive Summary were the most pressing issues for the workgroup that gathered information about a merger of central administration functions of the two campuses. Unless the accreditation and formula funding questions are resolved, scenarios for if or how to merge specific central administrative functions cannot be articulated. Likewise, the possible structural ways to merge administrative units organizationally are myriad. So the over-arching structure question looms equally large.

Executive Summary

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This work group also entertained timelines for a merger process, assuming that the fundamental questions can be answered and a merger is deemed desirable and feasible. A process in excess of three calendar years was projected to obtain appropriate studies, construct implementation plans, secure legislative authorization, develop accreditation transition approvals, and finally implement actual merger. FINANCIAL ISSUES: Although there are currently different budgeting processes for the two campuses, there was general agreement that there is sufficient management discretionboth currently and under a merger scenarioto decide either to change or to continue current budgeting practices related to the units on each campus. As discussed above, the critical issue from a financial perspective would be whether or not a merged institution would retain the funding stream generated by the medical designation in the state formula. With any institutional IRS status change, there would be one-time transactional costs associated with revising or reinstating various partnerships and contracts with the new tax identity. This issue is further complicated by the contracts UNT Health has with Medicare, Medicaid, and related operations. Not only would there be the one-time transactional costs associated with revising/reinstating the contracts, but there could be some temporary funding stream losses given that some of those contracting processes might need to be reinstated sequentially rather than simultaneously. STATE AND REGULATORY ISSUES: As might be expected, the focal concern with this workgroup was the formula funding question discussed above. Preliminary calculations, utilizing some very broad assumptions, estimate that the application of the institutional formula to UNTHSC students would result in the loss of several million dollars per biennium, not including the potential impact on the College of Pharmacy. Similar questions remain regarding the applicability of various other formula-driven and per-institution allocation decisions made at the state level (e.g., Infrastructure formula, HEAF allocation, tobacco appropriations, Research Development Fund, Tuition Revenue Bonds, etc.). COMMUNICATIONS AND COMMUNITY SUPPORT: If pursued, the reasons for considering merger need to be clearly articulated for the institutions diverse internal and external constituencies throughout the exploration discussions. Given the amount of public communication, internal and external speculation and discussion of the proposed merger, and the need to control the messaging going forward, there should be a flexible, strategic, and unified communications plan. The communications plan should be created, executed, and carefully coordinated among the System, UNT, UNTHSC, as well as any consultants, to ensure accuracy, alignment, and clarity at each step in the process. The System has a reservoir of experienced communications professionals at both of the institutions, and this in-house talent is fully capable of developing and executing such a communications plan. It is important that unified messages flow through the proper communication channels to deliver the right messages to the right target audiences at the right times. Transparency is key.

Executive Summary

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Merger Discussion Participants and Work Group Members: Robert Adams, Interim Executive Vice President of Clinical Affairs & Business Development, UNTHSC and Vice President & Chief Medical Officer of UNT Health Warren Burggren, Provost & Vice President for Academic Affairs, UNT Jean Bush, Senior Associate Vice President for Finance & Administration, UNT David Cistola, Vice President for Research, UNTHSC Tim Doke, Senior Vice President for Community Engagement, UNTHSC Thomas Fairchild, Vice President of Strategy & Measurement, UNTHSC Yolanda Flores-Niemann, Senior Vice Provost, UNT Geoff Gamble, Vice President for Research & Economic Development, UNT Rosemary Haggett, Vice Chancellor for Academic Affairs & Student Success, UNT System John Harman, VP for Finance/CFO, UNT Health Andrew Harris, Vice President for Finance & Administration, UNT Danny Jensen, Associate Vice Chancellor for Governmental Affairs/Vice President for Deborah Leliaert, Vice President for University Relations, Communications & Marketing, UNT Thomas Moorman, Vice President of Student Affairs, UNTHSC Jack Morton, Vice Chancellor for Governmental Relations Michael Mueller, Vice President for Finance/CFO, UNTHSC Terry Pankratz, Vice Chancellor for Finance, UNT System Scott Ransom, President of UNTHSC Lane Rawlins, President of UNT Kelley Reese, Assistant Vice President for University Relations, Communications & Marketing, UNT Kenneth Sewell, Associate Vice President for Research, UNT Jean Tips, Vice President of Marketing & Communications, UNTHSC Jennifer Trevino, Vice President of Administration & Chief of Staff, UNTHSC Greg Upp, Special Advisor to the President, UNTHSC Trisha VanDuser, Executive Director of Student Services, UNTHSC Elizabeth With, Vice President of Student Affairs, UNT Thomas Yorio, Provost & Executive Vice President of Academic Affairs, UNTHSC

Executive Summary

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Detail Information for the UNT System Board of Regents

Regarding A Proposed Merger of UNT and UNTHSC Into a Single Institution of Higher Education

______________________________
Goal: Campus and System Leaders have been asked to collaborate in gathering key information to support the UNT System Board of Regents consideration of a merger of the University of North Texas in Denton and the University of North Texas Health Science Center in Fort Worth. These preliminary observations should address three key questions: (1) What are potential short- and long-term benefits of unification of our two largest campuses? (2) What challenges and/or obstacles must be addressed to enable a mutually beneficial outcome to both campuses and to the communities of Denton and Fort Worth? (3) If the UNT System Board of Regents decides to proceed with a merger, what actions by the Texas Higher Education Coordinating Board, Legislature, Governor, SACS, and others will be necessary to support a successful consolidation and what is a feasible schedule? These questions should be addressed at a high level, considering important strategic concepts rather than detailed implementation planning. Before the November Board of Regents meeting, staff should develop an initial inventory of key considerations and observations. Should a merger receive favorable consideration, additional studies and detailed plans will be necessary going forward.

MERGER PURPOSE AND GOALS: A. What are the fundamental purposes of a merger of the University of North Texas in Denton and the University of North Texas Health Science Center in Fort Worth? What is the long-term vision of the unified university? a. The purpose of a merger of the University of North Texas in Denton and the University of North Texas Health Science Center in Fort Worth is to transition the unified university to earn national prominence and to provide greater opportunities for our students, faculty, and staff by: 1. Leveraging the strengths of existing academic programs to effectively serve more students. 2. Enhancing scientific collaboration and funded research among existing units to achieve national recognition. 3. Increasing the opportunity to develop new high quality undergraduate and graduate academic programs that are nationally recognized for their excellence. 4. Continuing to improve the quality of the freshman class. 5. Accelerating the trend of recruiting and retaining highly productive faculty with a national reputation. 6. Enhancing the opportunity for endowment growth by expanding community engagement and alumni involvement.

Revised October 31, 2012

7. Graduating a better educated professional workforce that will provide tremendous economic and social benefits to the citizens of Texas and the nation. 8. Reducing administrative and operational expenses and improving organizational efficiencies. b. The vision of a merger of the University of North Texas in Denton and the University of North Texas Health Science Center in Fort Worth is to be a leading national university with high quality academic research scholarship and undergraduate, graduate, and professional programs. B. What are the potential benefits of the merger, described as both short-term (3-5 year) and long-term (10-20 year) goals? a. Be recognized as a legitimate, emerging tier one university with a growing comprehensive health science center noted for excellence by the State of Texas through achieving several outcomes (short-term 3-5 year goals). 1. Spend at least $45 million per year in restricted research funds. 2. Establish an endowment of at least $400 million. 3. Award at least 200 PhD degrees per year. 4. Establish a freshman class with high academic achievement as recognized by the following: greater than 40% of the freshman class from the top 10% of their high school class, average SAT scores in excess of 1200 (verbal and math combined), and enrollment of several National Merit Scholars. 5. Attain membership in the Association of Research Libraries and/or establish a Phi Beta Kappa chapter. 6. Establish a high quality faculty with at least 5 members of the National Academies, including: National Academy of Sciences, National Academy of Engineering, and the National Institute of Medicine. 7. Demonstrate commitment to high quality graduate education. 8. Continue growing a comprehensive health science center at the current or faster trajectory as recognized by growing total health professional student enrollment to 2,950, expanding program offerings from 10 to 12, growing the clinical enterprise to over $100 million revenues and over one million patient encounters, and growing the health related research revenues to over $55 million. 9. Earn recognition and financial support from the Denton, Fort Worth, and Dallas communities. b. Be recognized as a tier one university with national rankings for excellence by being recognized for achieving several outcomes (long-term 10-20 year goals) 1. Spend at least $100-200 million per year in restricted research and over $300 million in total annual research expenditures. 2. Establish an endowment of at least $1 billion. 3. Establish ranking by US News & World Report as a Top 50 National Research University. i. Listed as a member of the Association of American Universities. ii. Establish a freshman class with high academic achievement as recognized by the following: greater than 60% of the freshman class from the top 10% of their high school class, average SAT scores in excess of 1300 (verbal and math combined), and enrollment of dozens of National Merit Scholars. iii. Become a comprehensive health science center as recognized by growing total health professional student enrollment to over 3,000, expanding program offerings to 15, growing the clinical enterprise to over $150 million in revenues and over 1.5 million patient encounters, and growing the health related research revenues to over $100 million.

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4. Establish a high quality faculty as proven by an average extramural research funding in excess of $300,000 per research faculty member as well as several dozen members of the National Academies, including: National Academy of Sciences, National Academy of Engineering, and the National Institute of Medicine. 5. Earn significant national and international recognition and donor financial support from both alumni and the community. C. What are the inherent strengths and assets of each institution that will aid in achieving the vision and which need to be protected and enhanced in a merger? UNTHSC a. US News & World Report Rankings i. 12th for Rural Medicine ii. 15th in Geriatric Medicine iii. 16th in Family Medicine iv. 35th for Primary Care v. 38th for Physician Assistant Studies b. Top 20 Medical Schools for Hispanics i. Hispanic Business magazine c. Best in Texas for Social Mission i. Annals of Internal Medicine d. The Health Institutes of Texas (HIT): i. Cardiovascular Research Institute (CRI) ii. Center for Commercialization of Fluorescence Technologies (CCFT) iii. Focused on Resources for her Health Education and Research (FOR HER) iv. Institute for Aging and Alzheimer s Disease Research (IAADR) v. Institute for Cancer Research (ICR) vi. Institute of Applied Genetics (IAG) vii. North Texas Eye Research Institute (NTERI) viii. Osteopathic Research Center (ORC) ix. Texas Prevention Institute (TPI) Center For Community Health (CCH) Primary Care Research Center (PCRC) The Texas Center for Health Disparities (TCHD) e. Programs supporting law enforcement and assisting families of victims: i. Texas Missing Persons DNA Database ii. UNT Center for Human Identification (UNTCHI) iii. UNT Center for Human Identification Laboratory f. 5-Year Trend Highlights: (2008-2012) i. Student Enrollment Increased by 725 (or 59.1%) to 1949 ii. Underrepresented Minorities Increased by 154 (or 66.1%) to 387 iii. Full-Time Faculty Increased by 37 (or 9.8%) to 415 iv. Research and grant activity Annual grant awards increased by $6M (or 24%) to $36M Annual research expenditures increased by $10M (or 30%) to $42M

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Across UNTHSC, the annual research expenditures per faculty member exceeds $100K In the Graduate School of Biomedical Sciences, the annual research expenditures per faculty member exceeds $300K v. Patient Encounters Increased by 36,869 (or 12.2%) to 553,820 UNT a. Rising Research Funding i. 40%: Federally reported research expenditures are estimated to rise 40% from FY 2010 to $44 million. ii. 27%: Restricted research expenditures are estimated to rise 27% from FY 2010 to $16.9 million. iii. $35 million: As of FY 2012, UNT researchers have been awarded more than $35 million in research funding across all disciplines. b. Growth in High-Quality Faculty i. 23: To date, UNT's collaborative research clusters have attracted nearly two dozen new faculty members (18 senior hires), many of whom are at the top of their field. ii. 3: UNTs faculty now includes two National Academy members and a third will start in February. c. Collaborative Research Clusters i. 21 collaborative research clusters and strategic research areas that are dedicated to cross-disciplinary research generating breakthroughs in health, agriculture, renewable products and other area e.g., Signaling Mechanisms In Plants research cluster new faculty have submitted $15.2M in new grant proposals. d. Discovery Park, a 300-acre research park is home to a technology incubator and the federally funded Center for Advanced Research and Technology. e. The Life Sciences Complex, a "living lab" where the study of plants and fish yield clues to solving human maladies. f. The new Zero Energy Research Laboratory, where students and faculty get firsthand experience with whole-building integration of sustainable energy technologies. g. An NSF-supported Nanofabrication Analysis and Research Facility which includes a 3,000-square-foot cleanroom that will come online in early 2013. h. A high-performance computing facility that provides a tenfold increase in computational power and has helped UNT expand our reach in computation-based research. i. Multiple computer visualization facilities. j. 68 research centers and institutes, including an NSF Industry/University Cooperative Research Center and two I/UCRC sites. k. Growth in Academically Talented Freshman Class i. 4,444 students and second year for record enrollment 2012 Freshman Class. ii. UNT's freshman class average SAT scores have increased from 1092 in 2007 to 1105 in fall 2012. l. UNT's Honors College has risen to the top, becoming the largest in the Dallas-Fort Worth area with nearly 1,650 students. m. UNT continues to be one of the nation's most diverse universities with 6,100+ Hispanic students and 4,600+ African American students. n. In fall 2012, UNT saw an 11% increase in Hispanic students and a 3% increase in African American students. o. Stronger Graduate Education and More Ph.D.s Awarded

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$6.9 million: UNT increased graduate student support and scholarships by $6.9 million in three years. ii. 1,780: Fall 2012 enrollment includes 1,780+ doctoral students a record high. iii. FY 2012: 225 doctoral degrees (174 Ph.D.s) p. Endowment i. FY 2012 $112.6 (estimated) q. Texas Research Incentive Program (TRIP) Distribution i. FY 2012 Funds Received - $925,382 ii. FY 2013 Funds Received - $375,000 (expected) D. What are the constraints facing each institution that must be taken into consideration in planning the attainment of the vision? a. Constraints facing each institution would likely fall under the following areas: i. Administrative/Logistical (e.g., Accreditation) ii. Academic (e.g., Student Affairs) iii. Research (e.g., Research compliance) iv. Financial (e.g., Merging of finances) v. Cultural (e.g., Policies) ACADEMIC AFFAIRS: 1. What accreditation issues are presented by the merger and how will they be addressed? A. Benefits: UNT is accredited by the Southern Association of Schools Commission on Colleges (SACS); UNTHSC is also accredited by SACS to award masters and doctoral degrees. B. Disadvantages: It may be that both institutions, on technicalities, may have to start over with the accreditation process, as is the case with new institutions. C. Challenges: Disciplinary units in both institutions are accredited by various oversight organizations. Self-study reports prepared for these organizations will need to reflect disciplinary compliance, while promoting the advantages of multi/crossdisciplinarity in possible joint programs. Notify SACS of merger that would result in having one SACS accreditation for the single entity. Accreditation would primarily be determined by UNT as it is the larger entity. Would require new QEP for entire institution unless SACS would consider current QEPs at both UNT and UNTHSC. Would require significant time and resources to develop a single accreditation application. Each institution has professional accreditation bodies that would need to be notified and could result in many site visits. 2. What opportunities will the unified university present for new degree program development and cross-campus collaboration? A. Benefits: The current health care reform calls for moving toward interdisciplinary health teams that include behavioral and social sciences. Enhanced competitiveness for faculty recruitment and grants.

i.

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Greater potential for eventual membership in AAU. Medical care training has already become increasingly multidisciplinary over the years. Some faculty disciplines in both institutions already overlap, providing opportunity for strengthening this curriculum and research through joint programming and collaboration. These overlaps currently include social and behavioral sciences, biology, chemistry, biochemistry, statistics, and environmental concerns. Academic programs from UNTs Department of Kinesiology, Health Promotion, and Recreation could easily be better linked to UNTHSC School of Health Professions (SHP). Graduate level programs in these areas could be shared with the SHP and common research areas developed. UNTs Department of Speech and Hearing Sciences could also develop association with UNTHSC developing professional programs that link undergraduate and professional training. The presence of the UNTHSC School of Public Health (SPH) could provide joint degree programs for many of the health-related programs at UNT. The UNT College of Business could develop MBA programs with UNTHSC professional schools, TCOM, College of Pharmacy, as well as those in the SPH and Graduate School of Biomedical Sciences (GSBS). Graduate School programs at each institution can be reviewed to determine where some of these may best be positioned or shared. For instance the Biomedical Engineering program could have an undergraduate component at UNT and a graduate component at UNTHSC. Such joined forces would assist the combined institution to reach the requirements for the National Research Fund with additional doctoral graduates (200+ graduates per year needed to qualify). B. Challenges: Developing a culture of cross disciplinary research and grant writing; changing culture of silos. Challenges include differences in tuition, fees, etc. on each campus. 3. What differences in academic policies and procedures must be addressed in merging the two campuses? A. Benefits Existing similar general topics and policies, e.g., faculty development leave. B. Challenges Procedural documents may need to be aligned and merged. Different academic calendars across the two campuses may be a challenge, but may also present opportunities for courses that start and end at periods of time; UNTHSC already manages different academic calendars across its colleges. 4. What shared governance processes and faculty issues on each campus (such as promotion and tenure, evaluation, post-tenure review, hiring and recruiting, compensation, incentive compensation, workload, employment contracts, etc.) must be addressed in merging the two campuses? A. Benefits Both have similar tenure and promotion policies, though UNTHSC requires evidence of extramural grant funding for promotion to some ranks, and UNT does not; Both expressly value academic freedom; Both have annual and post tenure review polices;

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Both have non tenure track appointment and promotion policies, e.g., Instructor, Adjunct, and/or Lecturer positions; Both practice shared governance, in part, through a Faculty Senate. B. Challenges: Ideally, we would combine the Faculty Senates that exist on each campus. This could limit UNTHSC faculty from having a major voice because of differences in faculty sizes. A benefit of such combination, however, could be increased faculty collaboration. Differences in Promotion and Tenure criteria. UNTHSC has a nine year tenure period for Assistant Professors to achieve tenure, whereas UNTs tenure period is six years. Differences in faculty workload, promotion and tenure criteria, and merits would need to be mitigated in order for these two different cultures to see themselves as one university. There are also differences in the typical faculty contracts UNT uses mostly 9 month contracts UNTHSC has 12 month contracts Incentive programs exist at UNTHSC for research, teaching and clinical care No such campus-wide incentive programs exist at UNT UNTHSC requires 30% of salary for faculty conducting research to come from extramural support. 5. What is the competitive impact and value added on the academic programs by merging the two institutions? A. Benefits: The Texas Model is one in which health-related institutions are not part of comprehensive general academic institutions (from UTSA/UTHSCSA merger study). As such, the UNT/UNTHSC would provide unique educational opportunities for students and research opportunities for faculty. These opportunities would afford unique access to members of historically underrepresented and first generation groups in North Texas. May have a stronger faculty in the life sciences that could be utilized to attract high quality graduate students. Greater opportunity for developing seamless programs from undergraduate to professional that will be an attraction for students to attend UNT. B. Challenges: Not clear if there would be positive or negative immediate effects on academic reputation. 6. How would consolidation of the university potentially affect the institutional and program-specific rankings by state and national agencies? A. Benefits Could rise in ranking about 40 places on the national scale, as measured by NSF (chancellor memo) B. Disadvantages Not sure rankings associated with the medical school program would change as long as the medical school is recognized within the UNT organization structure.

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RESEARCH AND CLINICAL SERVICES: How would research priorities be set, facilities planned and supported, and programs funded under an ideal model of a unified single institution? The success of the research enterprise will hinge, in part, on the type of leadership structure chosen for the merged institution. Many universities that include health science/medical campuses have parallel leadership structures because of widely differing missions and profiles. The large, mostly undergraduate campus in Denton differs significantly from the health science center in Fort Worth, which is focused on graduate student training, clinical care delivery, and research programs in biomedicine and population health. Because of this divergence in mission and campus culture, it is likely that Chief Research Officers would need to be maintained at each campus. Although research priorities and facilities planning would be tailored to the goals and targets of the individual campuses, there could nonetheless be coordination between the two so that university-wide initiatives are considered and prioritized in a concerted way. This will require visionary leadership and exquisite care so that new cross-cutting efforts do not undermine the existing research strengths of each campus. The mechanism for the allocation of funds to support research programs (including researchintensive academic programs) will be one of the greatest challenges facing the merged university. The integration of two largely different campus cultures will lead to lively debates over how to prioritize funding allocations and research investments across UNT. Most significantly, a change in the state funding model from health sciences to general academics could have an undesirable financial impact on operations at UNTHSC. How would research funds be administered and grants allocated under a unified model? Given the geographical distance between the campuses, as well as the differing types of research activities, Grants & Contracts offices would likely be needed in both Fort Worth and Denton. These offices assist faculty in submitting grant proposals, negotiating awards and contracts, and administering external funds in ways that are compliant with applicable regulations, laws, and standards of practice. However, significant synergies in operational strategies and economies of scale can be achieved, especially in the purchase and implementation of university- or system-wide electronic research administration tools and in the shared use of research support infrastructure. For example, the Department of Laboratory Animal Medicine on the Fort Worth campus currently provides the attending veterinarian support, staffing, and supervision for the animal research activities in Denton. Currently, there is no need to duplicate this infrastructure in Denton. Likewise, some research compliance functions involving clinical trials are particularly specialized on medical campuses, necessitating a kind of oversight that would be largely irrelevant on the comprehensive university campus. Intramural funding for research (seed grants, start-up packages, matching, incentive programs, special programs, etc.) would likely be formula-driven based upon the campus responsible for generating the source of the revenue stream. Examples of such revenues are Facilities & Administration funds generated by external grants, state Research Development Fund allocations, HEAF funding, etc.). However, a combined institution would allow a more robust framework within which inter-campus seed grants and incentive programs could be devised to catalyze university-wide research initiatives. These broader initiatives would rely on the infusion of new funds, such as new state allocations from the National Research

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University Fund once UNT qualifies. If no new funds are available, the current research investments on each campus could be undermined by a redistribution of existing funds. How would consolidation affect the rankings of the unified institution by state and national agencies and private media? Regarding the horse-race toward Tier 1 National Research University status, as defined by the Texas legislature and the THECB, a consolidated institution would offer some advantages. The combined assets and research resources of the two campuses could elevate UNT above some state competitors, possibly UT Dallas, UT Arlington, UT El Paso, and Texas State University. However, Texas Tech University and University of Houston are in a position of strength relative to UNT regardless of whether or not the campuses merge. Regarding public and media perception, a combined institution could further reinforce the notion that UNT is a major educational institution. However, in some contexts (e.g., certain groupings in US News and World Report rankings), it is at least possible that a merger could push UNT into different categories that are more competitive and thus could result in a decrease in national rankings. Would the unified institution be in a position to meet the states requirement for the National Research University Fund and how would participation benefit the two campuses of the unified institution? Although it would put UNT in a more competitive position, combining the institutions would not lead to UNT becoming immediately qualified to petition for access to the NRUF. The earliest possible timeframe would be the 2015 legislative session, but eligibility would necessitate continued research growth on both campuses and significant increases in endowment. Are there areas of future research potential in which research faculty of the two institutions will be better positioned to compete for external funding due to the depth of resources available in a unified institution? In a dream scenario, strong biomedical, clinical, and population research in Fort Worth would be complemented by robust STEM-related and social-behavioral science research in Denton. Such complementary research strengths would offer the best platform for teams of faculty members across a merged university to compete for large funding initiatives. One example is the area of pharmaceuticals research, in which basic discoveries in plant science, chemical modeling, and cellular biology would be translated by pharmacists and physicians into clinical trials of new treatments for diverse diseases. In a combined university, large grants of this kind could be developed without the need for subcontracting. However, substantial investments in the recruitment and retention of top faculty research talent would be required for the merged university to achieve this type of synergy and success. The best research universities got to where they are only after decades of strategic investments in top faculty research talent. One area of low-hanging fruit is in the expansion of research experiences for undergraduatesparticularly those in the biosciences, in pre-medical preparation, and in bioengineering fields. The NIH is eager to fund such opportunities, and medical and graduate school faculty members are often eager to include undergraduates in their research programs,

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but lack direct access to undergraduates. Comprehensive universities like UNT have a plethora of undergraduates eager for such experiences. How would the unified university continue and expand hospital and clinical partnerships and support the growth of the UNT Health clinical practice? Would UNT Health have additional opportunities in Denton County? Currently, the clinical practice of UNT Health is entirely in Tarrant County. As a strategy for growth is developed, one obvious focus of opportunity is along the I35 corridor north to Denton County where significant population growth continues. Whether this strategic growth would involve the development of a network of primary care providers who refer back to specialist physicians in Tarrant County, or instead the expansion of specialty practices into additional hospitals, is a decision that would need to be made. The matter of a unified university versus its current configuration would not seem to, in itself, have a significant impact on these strategic decisions. A unified university does not appear to alter the available options or their respective pros and cons, except perhaps for the public perceptions of UNT as an institution. It must be borne in mind that the clinical practice must be competitive. Currently, being part of a large organization makes certain business practices more difficult for the UNTHSC clinical practice when compared to the business practices of a similar sized clinical practice in the private sector. If a merger scenario were to compromise the ability of the clinical practice to do business in an efficient manner, it would have very negative impacts. Over-Arching Recommendation from the Perspective of Research and Clinical Practice: If UNT and UNTHSC are to merge, the future success of the research enterprise will hinge on the choice of leadership structure for the new institution, the formulas and mechanisms used for allocating research resources, and the availability of new funding streams needed to invest in top faculty research talent. The combined institution would have to grow considerably in endowment funding and recruit more high-profile research faculty members before it would become eligible for Tier 1 funding in Texas. Although some economies of scale may result from a combined structure, significant savings associated with research infrastructure are not at all apparent. In fact, any immediate fiscal savings will be off-set by the complications related to the merger. But over the long run, the benefits of joining UNT and UNTHSC students, faculty, and staff, to the communities of Denton, Fort Worth, north Texas and the state are potentially compelling. If the merger is pursued, it should be done in order to enhance our shared goals to provide students with a first-rate education and to serve Texans by advancing knowledge and offering solutions for healthier, more stable communities. STUDENT EXPERIENCE: As we evaluate the potential merger between UNT and UNTHSC, maintaining a positive student experience for all students on both campuses is vital to determining implementation. This work group suggests that the current positive student experiences on both campuses need to be maintained. Additionally, merger should provide more opportunities for growth and development to each of our campuses, not fewer. In evaluating the comments from the work group, it was determined to propose options, with associated benefits, disadvantages, and challenges for UNT and UNTHSC students. Primary among our institutional responsibilities and obligations is to enhance the value of our alumnis degrees. Toward that end, a merger of UNT and UNTHSC would increase the status and prestige of both institutions by:

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1. Affording greater potential to become members of AAU, which would benefit UNT and UNTHSC students. 2. Increasing rankingsUNT could rise in ranking about 40 places on the national scale, as measured by NSF. 3. Achieving NRUF statusas UNT reaches the requirements of the National Research Fund with additional doctoral graduates, students from both institutions will benefit from the added resources. 4. Increased visibilityHealth Science Centers that are part of comprehensive universities seem to have greater opportunities for visibility and status than do those that stand-alone. Outlined are three possible avenues by which to merge the institutions with regard to the most pressing concerns being student fees, student governance, and student services/programs. Regardless of which option is pursued, the benefits listed above remain static throughout each. For each option, the specific challenges or benefits that each would present will be listed for further exploration. Option 1: Institutions merge with student fees, student governance, and student services/programs remaining distinct for each location. Given that our campuses serve very different populations and needs, it makes sense that the campuses offer programs and services that are best tailored to their students. With these services available to students come fees that students must pay to secure their access to these services. If these fees were to stay separate with each campus left to determine their own fees and allocations, students would not feel any impact of the merger in a negative way, nor would they be imposed fees for services to which they would have little or no access. At this beginning juncture, this option seems the most viable in order for all students to gain optimal benefit overall, while causing the least amount of disruption to the students at either campus. Option 2: Institutions merge with a hybrid of student fees, student governance, and student services/programs merged as appropriate. Although students will feel little to no negative impact under Option 1 above, it may make sense over time to critically analyze all fees, services, and programs to ensure the most effective means of utilizing student services fees. While there are several key differences in the student populations which dictate the need for different services, there may be areas in which sharing resources for programs and services that both campuses students find helpful. o This may vary in tangible form from commuter students being able to access campus resources that are closer to home even though their home campus is the further of the two, and/or; o Services that are available through digital means or by phone could be shared by both campuses to benefit both sets of students. (e.g., 24-Hour Nurse Hotline, Workshop materials offered by the Student Money Management Center, Counseling Phone Line through third-party vendor, LifeSynch.) Option 3: Institutions merge with all associated student fees, student governance, and student services/programs all merged. Option 3 will potentially cause more of a noticeable change for the students of both campuses as all student fees, student governance, and student services/programs will have to be re-evaluated. The available list below includes the most pressing concerns, but is certainly not comprehensive, due to the extent of minor effects or changes the merger could potentially create. Combining student service fees (SSF) and the allocation of these fees to support campus initiatives is the most challenging to merge. The current fee structures are very different (UNT

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Denton Student Service Fee is $13.10 per SCH; the UNTHSC the Student Service Fee starts at $120 for the first SCH and goes up to a maximum of $250 at 8 SCH). The annual maximum at each campus can be vastly different. At UNT the maximum is based upon number of semester credit hours taken throughout the year (not to exceed 15 hours per semester), while the annual maximum is $750 per student at UNTHSC. The difference in total cost per student is directly related to the population volume on each campus. If by combining campuses, the UNTHSC received reduced SSF, many programs and services offered to students could be in jeopardy of losing funds necessary to support current operations. The combination of the two institutions could lead to the formation of a single Student Fee Advisory Committee (Section 54.5031, Texas Education Code). Currently the student fees collected for both campuses are directly allocated to programs and activities by the students of each campus per their respective SSF Advisory Committee. Under a single SSF Advisory Committee for a joint UNT institution, the make-up of the students serving on the committee would need to be reflective of their campus population, which could place the UNTHSC campus at a disadvantage based upon the larger student population on the Denton campus. The current student government structures on the two campuses are designed to fulfill two distinctly different purposes. The UNT model is a traditional model which involves a single leadership group with representation of the various groups that make up the campus population. The UNTHSC model is a professional school leadership development model with separate student governments for each graduate/professional program on campus. All of these student government bodies (except the Graduate School of Biomedical Sciences) are directly aligned with state, regional, and/or national professional associations. The students as a result of their leadership involvement within the student government in their program are eligible to take on leadership roles within the aligned professional associations. This structure could be at risk as a result of a merger. While this merger would probably not significantly affect the involvement of students in extracurricular activity due to distance and time constraints, the possibility for them to explore a new organization that could be useful and meaningful to their personal development or professional growth does exist. Currently, each campus satisfies student counseling needs in very different ways. UNT has a fully staffed counseling center on campus while the UNTHSC utilizes a third party vendor, LifeSynch, although there are a couple of licensed counselors that do serve UNTHSC students on-campus through the Center for Academic Performance. The on-campus model serves the Denton campus well in its traditional structure and LifeSynch allows for services for students who are in clinical training in facilities across the US. Further exploration would need to occur as to best fit the needs of both campuses with regard to counseling services and appropriate measures for accreditation. Retention on both campuses is absolutely essential. However the modeling structure for cohort acceptance at the UNTHSC is vastly different than the rolling acceptance of students at UNT. Retention efforts and services, if merged, would still need to address the specific needs of the two campuses either by supporting the current retention model at each campus or by restructuring a dual model. Currently housing is not available on the UNTHSC campus. Due to the distance between the two campuses, it is unexpected that UNTHSC students would utilize housing on the Denton campus, though it is possible. If merged and rebranded into one entity, the removal of Health Science Center from the institutional brand could detract from the perceived value of the degree students at the HSC will be obtaining upon graduation. The term Health Science Center in the name of the institution adds a perception of value. Additionally, there would be a perception by some members of the community that the Fort Worth campus had somehow lost its Health Science Center

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designation. This may impact the perceptions of prospective students as well. These perceptions of loss of credibility would be difficult to mitigate. If the two institutions are merged, the current across-the-board requirement at UNTHSC for a hard-waiver health insurance plan for students at a Health Related Institution (HRI) could no longer apply. This could eliminate the requirement for students in the health professions to carry health insurance. This would need to be carefully evaluated due to the potential for exposure during clinical practice (example: needle sticks). The financial burden of particular treatments could potentially result in increased attrition. It would need to be possible to have a hard waiver program for sub-populations of the campus, rather than requiring all or none to carry this plan. There are fees charged at each campus that are unique to that campus and it is important that students not pay for services for which they do not have access. It is possible now at UNT, for example, for online students not to pay the Rec Center fee or Medical fee, and this option will need to be available with a merger. Each campus has a separate Code of Conduct and issues related to each will need to be further explored. However, it is assumed that either a merged Code that meets the needs of both campuses can be created or that each campus could maintain its own. UNTHSC has a three year federal loan default rate of .4% (the best among all health related institutions in Texas which range from .4% to 2.9%). However, UNT currently has a three year default rate of 10.3% which is above the national average of 9.1%. If the UNT default rate continues to rise (penalties imposed at 15%), this could jeopardize the institutions opportunity to process single financial aid award disbursements within 10 days of the beginning of a term. Due to the nature of medical education (large up-front cost; equipment, etc.), it is imperative that a full disbursement is provided prior to the onset of each term. This is not as significant a priority for the other programs at UNTHSC.

ADMINISTRATION: An important element in the feasibility evaluation of a merger is the administration of the new University of North Texas, during and subsequent to the merger. There are many specific aspects of university administration that need to be evaluated, such as: Research, Academic, Student Affairs, Facilities, Finance, Foundations, etc. Each of these components can be evaluated by the subcommittees aligned around these themes. This report, however, focuses on aspects of central administration. Unimportant to this preliminary evaluation of a mergers feasibility is the who. However, the what and, to a lesser extent, the where deserve initial attention in this report. However, it is important to recognize that there are two over-arching issues that certainly include administration, but are larger in scope than that single topic: formula funding and accreditation. Formula Funding All comments on cost savings are predicated on the basis of retaining the formula funding classification of medical rather than reverting to institutional. If formula funding to the new university is reduced, the cost to that institution could be in the millions, if not tens of millions, and would hugely overshadow any other cost-savings that might be achieved through administrative or other consolidations. The University of Texas System and Texas A&M System are seeking special dispensation with the State Legislature to allow merger of a health science unit without losing the associated medical formula funding. However, for planning purposes, UNT should be careful not to assume that legislation specifically mentioning UT and A&M is broadly applicable to all public state universities (consider PUFF vs. HEAF funds).

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Accreditation Unclear without further extensive consultation with SACS is the status of the institutional SACS accreditation, and the numerous program accreditations at UNT and UNTHSC. One highly placed SACS representative stated in unequivocal terms that the new university, formed as a result of the merger of UNT and UNTHSC, would have to seek NEW accreditation as a NEW educational institution. Moreover, uncertain at this time would be the status of the dozens of programs, departments, and colleges that have individual accreditations with a number of accrediting bodies. One scenario that could overcome the untenable situation of either or both existing institutions operating for any period of time without accreditation is that the planning for a merger would occur in parallel with preparation of the accreditation case, but that the merger would not occur unless accreditation could be gained concurrent with, rather than subsequent to, the merger. In any event, the costs both financial and in terms of lost opportunities - of seeking even partial reaccreditation will be significant, and perhaps offset the advantages of a merger for many years.

A. What effective organizational structures in other universities have successfully incorporated medical schools and health-related colleges into the larger university? Two general patterns have emerged in US higher education. In the first, the medical school/health science center originated as part of flagship campus. In the second pattern, health-related institutions have merged from stand-alone colleges/campus to flagship. Examples of this latter pattern include: University of Toledo and Medical University of Ohio as well as Augusta State College and Georgia Health Sciences University; New Jersey plans to restructure their public medical schools into general academic institutions. At a more detailed level, the most typical arrangement is that a medical school (sometimes with or without the health-related colleges) has a Dean or Executive Dean. Indeed, there are national associations of medical school deans (e.g. the Association of American Medical Colleges Council of Deans). More variable is the reporting line for that dean. In some universities with medical schools and health-related colleges, the dean reports directly to the President in others, the dean reports to the Provost. Often, this dean is viewed (formally or informally) as a super dean with a greater deal of autonomy than deans of traditional academic liberal arts colleges, likely deriving from the size of a medical campus budget. Accreditation issues with the School of Public Health, for example, could argue for retention of the health science center designation.

B. What autonomy or separation should be considered for some administrative functions of the five colleges at the UNT Health Science Center in Fort Worth in a consolidated university model? Assuming accreditation issues can be overcome without jeopardizing the operation of either institution during the transition, the most parsimonious approach is to have each function performed on both campuses brought under one administrative office. For example, all academic programs would be brought under one academic administration which could, nonetheless, have divisions that are focused on specific issues. An example here is the special nature of the academic programs at the UNTHSC that must for accreditation purposes must continue to be located within a health science center. Similarly, other administrative related aspects of the merger revolve around the retention of the ability to separately manage research F&A funds. C. What are the administrative policies and procedures which may need to be amended, aligned, or unified in merging the campuses? The specifics of policy revision are difficult to assess without laying out the two sets of administrative functions side by side. Issues are manifold, and range from institutional calendar to compliance to

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human resource policies (that remain institutionally embedded). Issues to consider include, but are not limited to: Continuation of moving from consolidated, parallel processes at the BSC for Purchasing, Payroll, Travel, Payment Services, and some HR functions to a System-wide approach that considers the needs of each campus. Review and revision of all campus HR policies as part of new UNT System HR. Consideration should be given to Human Resources or other administrative functions that may be consolidated into single offices such as Immigration Services, Workers Compensation, and Occupational Health & Safety Program. Coordination and management of two, largely different faculty bodies, including consideration of: 12 month vs. 9 month contracts, UNTHSC Faculty Compensation Plan and corresponding school/college workload guidelines, Faculty Senate, Faculty Bylaws and Policies. D. Are there opportunities for administrative cost savings in the process of creating a single institution of higher education? Some modest savings can be realized, but not overly so. One presumes that there is one less president, one less provost after the merger, but then further redundancies (and attendant cost savings) become murkier. It is unlikely that the merger could work effectively (or politically), by eliminating all upper level administration at the UNTHSC and merging them with the existing functions at UNT (or vice versa). There would not necessarily need to be two vice presidents for research, as just one example, but likely a highly placed individual would still be necessary to oversee the distinctly different nature of medical research, with all attendant compliance issues, etc. (see the Research and Clinical Practice section for full consideration of these possibilities). Thus, the savings would be marginal at best in terms of the salary difference between an existing vice president and the administrator tapped to carry out that function at UNTHSC. This scenario could be flipped, and the argument stays the same. Such arguments could apply to many of the VP level functions (student affairs, finance, administration, etc.). More significant administrative cost savings could possibly be realized if administrative cost savings at the campus and System levels may be realized if the merger also folds in UNT Dallas, UNT System College of Law together with UNT and UNTHSC. This approach is most likely to provide true economies of scale across business and support functions and also prevents a very lopsided main campus.

E. If determined to be advantageous, what would the best implementation schedule of a merger be and how should the transition be planned to minimize disruption? Conceptually, we envisage two phases. In the first phase, Campus Presidents from both UNT Denton and UNTHSC reporting to the University President. Each Campus President could retain current reporting structure of Provost, Deans, etc. to allow transition time for working through accreditation issues, finance/budget organization, etc. (Functionally, this is not much different than retaining the current structure on both campuses while working behind the scenes towards a merger.) Secondary phase: Streamline administration to reduce redundancies and have a lower level of leadership/management at each campus location reporting up to the University. As mentioned above, accreditation is a driving factor, as the merger cannot jeopardize the accreditation of any of our programs or of the merged institution. Since the prevailing opinion at this early point is that the new institution would have to reapply for new accreditation, this could result in a delay of up to two years while the accreditation process is carried forward. This also assumes that we can each retain our accreditation(s) post-merger while the new institution becomes recognized (see discussion above).

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Assuming accreditation issues can be resolved, the scheduling of actual merger could follow the following schedule: 2013 legislative session seeking clarity on financing and formula funding issues, based on legislative and THECB board actions involving other systems 2015 legislative session finalize statutory requirements and financing to support merger/consolidation June 2015-August 2016 develop SACS and other accreditation plans, resolve policy issues, develop/finalize organizational and leadership structure and placements, seek THECB approval, etc. (Note: the optimal time for seeking accreditation may be immediately after reaccreditation of UNT and/or UNTHSC, rather than in mid-cycle for either institution.) September 1, 2016 Implement consolidated university.

Actual implementation, regardless of year, is best done on the fiscal year/academic year basis, with events leading up to a merger at the transition from one fiscal year to another. Depending upon when Legislative/THECB/gubernatorial approvals came through, the key scheduling issue would then be to choose the minimally disruptive period for implementation that also provided the most aggressive schedule (i.e. if we are going to do it, lets do it!). However, if the final approvals came through 8 weeks before the new fiscal year, then either we would forgo formal merger for 60 weeks, or we would have a plan fully developed an in place, ready to implement. The disadvantage of the latter approach is that there would be a huge upfront investment of time, energy and money that essentially bets on approval occurring. Conclusions/Recommendations: 1) Prior Resolution of Two Key Items. Two key items formula funding and accreditation loom large in the contemplated merger. The Administration sub-committee recommends that due diligence be done to resolve to the extent possible these issues prior to additional extensive planning. Note: Of these two issues, formal inquiries (hopefully generating formal answers) are probably most readily acquired on the issue of accreditation by discussing the issue with directly SACS, the primary institutional accrediting body for both UNT and UNTHSC. 2) Administrative Structure. The Administration work group recommends an eventual administrative structure that recognizes that the unique, specialized features of the UNT-HSC will continue to demand on-site administrative functions. In this preliminary analysis, the recommendation is for there to be one president, one provost (though an alternative proposed model has a provost on each campus) and single vice presidents for divisions such as Research, Student Affairs, Administrative Affairs, Finance, Equity and Diversity, etc. 3) Implementation Process. Continuing on from the theme of 2) above, implementation is recommended to consist of the continuation of the current administrative structures while more intensive planning occurs, and that the administrative restructuring occur concurrent with legislative and accreditation approvals. 4) Schedule. Notwithstanding the unknowns of legislative, gubernatorial, and THECB approvals as well as accreditation issues, the recommended schedule includes statutory requirements and financing arrangements as a result of the 2015 legislative session, 2015 through mid-2016 for developing accreditation plans, developing policy, etc., with a goal of September 1, 2016 for full implementation of the merger.

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FINANCIAL ISSUES: A. What current differences exist in the distribution of revenues and expenses and budget procedures on the two campuses and within the units of each campus? The UNTHSC has a very precise mechanism to allocate earned revenue by school as well as nonearned investment dollars by school. Funding is based on a formula, all schools receive 100% of their revenue from the State, and then an overhead-rate is applied to the administrative support areas of the institutions to cover any remaining dollars needed to operate that are not supported from a direct appropriation from the State or other revenue stream. UNTHSC utilizes a Strategic Investment Fund 4% from various revenue streams (i.e., State, Local, Indirects) are allocated based on strategic priority to the schools and department to support the mission of the institution. UNT operates a multitiered annual budget process via departments chairs, deans, and the central administration by way of the Presidents Finance Council.

B. What are the various revenue streams (e.g. fees, housing, facilities leases, etc.) on each of the two campuses and what are the related issues? Revenue Streams: 1. General Revenue UNTHSC, UNT 2. Statutory Tuition UNTHSC, UNT 3. Designated Tuition UNTHSC, UNT 4. Board Authorized Tuition UNTHSC, UNT 5. Student Fees* UNTHSC, UNT 6. Housing UNT 7. Athletics UNT 8. Clinical Revenues UNTHSC 9. Research UNTHSC, UNT 10. HEAF UNTHSC, UNT * Student Fees please see below in section C a more comprehensive listing of the student fees, in addition to the Student Experience Section of the Report. The impact on the financial infrastructure of both campuses requires detailed review. The merger must maintain the business oriented practices at the UNTHSC or it must be expected that external, competitive, revenue streams will be jeopardized and drop. The UNTHSC competes with nonacademic business which requires a more traditionally business entrepreneurial approach than found in a traditional academic setting. Formula Funding please refer to the State and Regulatory Issues section of the report.

C. What issues exist for student revenues and fees, including those in which students make recommendations for the allocation of funds? Varying student fee structures and uses on the UNT and UNTHSC also represents a challenge in merging the two institutions. Accessibility to participate in and benefit from various programs funded in part by student fees would vary dramatically, as the UNTHSC campus and UNT campus are approximately 40 miles

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apart. For example, it is unlikely that UNTHSC students would be supportive of athletic fees for programs such as the new stadium at UNT due to low utilization. See the Student Experience section for a full consideration of options for deciding upon student fee structures. If the current fee structure for UNT were applied across-the-board to UNTHSC students, it would require the graduate and professional students currently on the UNTHSC campus (40 miles away) to pay fees such as: 1) the intercollegiate athletics fee $10 per SCH (a total of $2,270 in additional debt per medical student program is 227 SCH); 2) a Technology Fee of $13 per SCH instead of $2.50 per SCH (a total of $2,383.50 in additional debt per medical student); 3) a library use fee of $16.50 per SCH instead of the $7.50 per SCH at UNTHSC (a total of $2,043 in additional debt per medical student); 4) a transportation fee of $3.50 per SCH (a total of $794.50 in additional debt per medical student); 5) International education fee; 6) Publication Fee; 7) student union fee; 8) Recreation Center Fee; and 9) other instructional fees. This will lead to an additional debt burden of about $7,718 per medical student. UNTHSC off-sets some of these costs with a higher Student Service Fee per full time student of $750 annually verses $450 annually at UNT. This is an additional cost of $1,200 over a four year degree period for UNTHSC students. Therefore, the total additional fee costs per medical student would be in the range of $5,500 under the UNT fee structure over the course of their degree program. This could be mitigated by maintaining separate fee structures on the two campuses.

D. What impact will the merger have on the use of revenues from ancillary services? Revenues used to support existing ancillary services should continue to support those functions on each campus.

E. Will the merger affect the financial ratings of the unified institution? No, the merger will not affect the financial ratings of the unified institution. Currently, the financial ratings are based on a consolidation of all UNT System components.

F. Will the merger affect existing and potential financial partnerships and contracts? UNTHealth is an $80M clinical enterprise that has numerous service and purchase contracts with affiliated hospital partners, subcontracted community providers, third party commercial payors, federal payors, the federal department of corrections and numerous vendors. UNTHealth also has numerous equipment and facilities leases with affiliated hospital partners and vendors. Most contracts are not assignable or assumable by other parties. Hence, there are several potential issues that could emerge as a result of the proposed merger that could present significant challenges to continuity of business and serious disruption of cash-flow. UNTHealth has contracts with Medicare and Medicaid as well as Medicare Advantage and Medicaid MCOs. Medicare begins the credentialing and enrollment process and a provider number must be obtained before Medicaid or 3rd party commercial payors will credential and enroll providers under their contracts. Medicare contracts are with the institution and are tied to the IRS tax identification number (FEIN) and group NPI (national provider identification). Medicaid is contracted basically the same way, but after Medicare.

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1. Best case scenario is that Medicare and Medicaid would allow a contract amendment for a revised FEIN number tied to existing institutional contracts for services and would continue to honor existing individual provider credentialing. 2. Worst case scenario is that Medicare would require a new institutional application and contract to provide Medicare services, invalidating all current UNTHealth provider Medicare numbers, requiring a re-application and re-credentialing process for providers under the new institutional FEIN. UNTHealth has approximately $60M in annual clinical revenue and has 162 contracts with commercial third party payor insurance companies. Most of these agreements have been in place for many years and all are tied to the UNTHSC tax identification number (FEIN). The IRS requires payors to issue Form 1099s each year evidencing payments to contracted providers. 1. The best case scenario is that all commercial payors would require an executed amendment to existing contracts in order to continuing paying for services after the merger and would continue to recognize existing credentialed and enrolled providers. Depending on the timing of the merger, amount of advance notice and the volume of required amendments there could be cash-flow interruptions. 2. The worst case scenario is that UNTHealth and its providers would be treated as if UNTHealth were a newly contracting entity and/or as if providers had moved to a different entity which would require a new institutional contract (possible re-negotiation of terms including fee schedules) and re-application for credentialing and enrollment in commercial 3rd party payor contracts for each provider. This would cause significant disruption in care delivery to patients, and significant negative impact to clinical revenues. UNTHealth has approximately $20M annually in revenue from comprehensive medical center contracts with the federal department of corrections. These primary contracts are also supported by a series of subcontracts with hospitals and long-term care facilities for inpatient services and outpatient subspecialty services not immediately available through UNTHealth employed providers for which UNTHealth is responsible for coordination and payment under the primary contract. The primary contracts are bid out every 5 years and total more than $60M in revenue over the contract term. 1. Best case scenario, all contracts would require an amendment for the change in FEIN. 2. Worst case scenario, contracts could require lengthy renegotiation or revision. UNTHealth has numerous contract with vendors 1. These would likely need revision or amendments Dunn and Bradstreet DUNs number and rating for credit worthiness could impact leasing related to equipment and facilities leases. UNTHealth has numerous facilities leases which would require amendments. UNTHealth has extensive professional service contracts with the Tarrant County hospital District, Texas Health Resources and Plaza Medical Center which would require amendments and/or revision. UNTHealth banking transactions, electronic lockbox and other electronic commerce contracts would require amendments/revision.

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G. Will the rating of endowments, their management, or uses of funds be impacted through the proposed merger? Endowments which have a specific purpose are not necessarily an issue (affiliated entities) so long as they continue to be targeted towards the donors intent; however operating endowments with less specificity will need to be reviewed.

H. Will the distribution of research indirect funding or clinical revenues be affected? As a merged institution the distribution of research indirect funding could be affected. The impacted would depend on managements approach on how all funds are distributed and budgeted within a new organization. As a merged institution there will be little to no impact on the distribution of clinical revenues. UNTHealth, the clinical enterprise for the UNTHSC is a self-supporting operation that generates revenues to support its operations. That funding will and should remain encapsulated within UNTHealth.

I. Are there financial implications in merging the different nine-month and year round schedules of activity and revenue on the two campuses? The group felt there would be minimal to no financial impact in merging the different nine-month and year round schedules of activity and revenue on the two campuses. Mainly because each campus shares the same fiscal year start and end dates (September 1, 20XX August 31, 20XX). Revenue cycles for various areas such as UNTHealth for the UNTHSC, and Athletics for UNT would remain the same.

STATE AND REGULATORY ISSUES: A. What changes to state formula funding would be needed to assure continued adequate funding of current programs and future growth? TAMUS has indicated their merger cannot go forward if it has any negative implications for funding of any institution/operation It is imperative that we identify every change, tweak or nudge needed to insure funding will remain the same 1. Preliminary calculation made by UNTHSC staff indicate the negative impact to the GR appropriations for the Instruction & Operations (I&O) formula could be as much as $8.2 million biennially a. Current HAI formulas predicated on weighted headcount, at per headcount rate; b. Current GAI formulas predicated on weighted SCH using a per SCH rate c. UNTHSC calculation converted annual course requirements of UNTHSC students to SCH d. UNTHSC calculation assumed SCH weight applicable to UNTHSC programs

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2. Preliminary calculation made by UNTHSC staff indicate the negative impact to the GR appropriations for the Infrastructure formula could be as much as $200k biennially a. Current GAI and HRI space models used to determine average rate per gross square foot (gsf) b. GAI rate is $5.25 per gsf c. HRI rate is $6.25 per gsf 3. Will HEAF appropriations be impacted? 4. Will tobacco appropriations be impacted? 5. Will merger potentially limit TRBs or special item funding? UNT and UNTHSC should track closely with TAMUS and work with the THECB

B. What other state reporting and regulatory procedures would need to be considered in planning a merger? CBM Reporting CBM Program Approval 1. The combined institution would have to seek re-approval from THECB for UNTHSC programs Accreditation (and certifications) 1. Substantive change request from SACS to authorize merger a. Adjust practices b. Rewrite policies c. Compliance reporting 2. Federal financial aid not likely impacted by merger (per UNT EM/FAO) Some (or most?) other state reporting and regulatory procedures assumed to remain the same

C. Which issues would need to be addressed by legislation and which could be addressed by the THECB? Legislation 1. Chapter 105 Texas Education Code-several sections would require re-write 2. References to institutions as separate legal entities in Education Code (e.g. 61.003) and other Codes would be reviewed 3. Possible legislation prescribing specifics or directing THECB to develop specifics for formula funding (e.g. H.B.9, 82nd Legislature Higher Education Outcomes Based Funding Act) THECB 1. Recommendation of formula to Legislature (formula adopted in appropriations) 2. Response to Legislative directives for formula development

Notes: Several transactional or one-time costs were discussed including establishment of new tax ID numbers, rewriting legislation for a new university, review of approach to faculty tenure under the new university, extensive policy revisions, etc. Additional analysis is needed to understand the scope and associated costs associated with these types of costs to a potential merger.

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COMMUNICATIONS AND COMMUNITY SUPPORT:

Over-Arching Recommendation: The potential consolidation of UNT Systems flagship university in Denton and its health science center in Fort Worth needs to be clearly understood by the institutions diverse internal and external constituencies throughout its exploration discussions. Given the amount of public communication, internal speculation and discussion of the proposed consolidation, and the need to control the messaging going forward, there is a compelling case for a flexible, strategic and unified communications plan. The plan should be created, executed and carefully coordinated among the system and the institutions involved, as well as any consultants, to ensure accuracy, alignment and clarity at each step in the process. The System has a reservoir of experienced communications professionals at both of the institutions, and this in-house talent is fully capable of developing and executing this communications plan. A. If a positive long-term vision as described above is presented, how would this be communicated on our campuses and [to] our broader communities of support? Leaders should anticipate that all stakeholders will be interested in the vision, justification and personal implications of a consolidated institution and the programmatic and financial drivers for change. All stakeholders will want to know in detail the potential new institutional structure, the impacts on their academic or administrative units, and the anticipated improvements to the learning and research environments. Students will want to learn about the impact on their tuition and fees, degree programs, services and educational experience and should understand what a consolidation would mean for the value of their degree. The communities served by each institution will want assurance that critical economic, cultural and specialized service benefits wont be threatened. Administrative units in the newly consolidated institution will need to have a detailed understanding of the new operating structure and its implications. The development and execution of a plan to manage communications must be done with considerable thought and discipline, both prior to the exploration, through the formal review, and throughout implementation phases should the proposed consolidation be approved. In fact, with multiple work groups currently studying various aspects of a consolidation, a communications plan should be developed without further delay. A well-constructed and choreographed plan will ensure that students, faculty and staff members, alumni, donors, civic leaders, elected officials, patients and other stakeholders are properly informed of the progress of the consolidation and receive consistent information. To avoid messaging disintegration, customized and targeted messages using appropriate communication channels will ensure the right messages are disseminated to the right audiences at the right times. A feedback mechanism both to gauge the effectiveness of communications and to identify new topics for future communications should be developed. The plan should include identification of key milestones as crucial points of communication execution. Administrators should be provided with coordinated talking points at each key milestone.

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 A consolidated System web page with links from the institutions home pages (or other appropriate pages) should be created both to share information (including FAQs) and to solicit feedback. Focus groups of internal and external constituents hosted by UNT and UNTHSC should be held early in the consolidation exploration process and/or at key milestones to discern specific audience perspectives and concerns, and thereby help in developing and refining messages. Key spokespeople should be identified for each entity, and a message review process should be established. Careful consideration should be given to possible image and reputation issues for both institutions that may result from public discussion of a proposed consolidation and the consolidation, should it be implemented. B. What are the specific community issues in Denton and Fort Worth that need to be addressed during the discussion of the merger idea? Both UNT and UNTHSC are part of the fabric of their larger communities and work closely with community leaders to enhance a broad array of relationships including economic development, culture, health care delivery and other shared interests. The communities of both Denton and Fort Worth will be eager for assurances that these reciprocal relationships will continue. During the consolidation exploration phase, institutional supporters and civic leaders of Denton and Fort Worth are likely to be concerned about the future leadership of the proposed consolidated institution and the future location of administrative operations. They also may be concerned about whether a single headquarters location will signal or result in a lack of institutional commitment to one city or the other. Civic and business leaders may seek to ensure that a consolidated institution wont threaten the current economic and reputational status of their cities through a reduction in force or transfer of employees or key leadership. They may be concerned that the strategic investment in top faculty, research, and technology transfer continue to contribute to the public good through high-quality job growth and economic enhancement in both locations. Civic and business leaders also may seek to ensure that key academic programs and centers of excellence currently located at the two institutions continue to be supported and grow in stature and size in the consolidated institution without dilution of either existing campus. In addition, they may seek assurances that student experiences are enhanced as a result of the consolidation. There is some risk that civic and business leaders who are not in agreement with a consolidation would withdraw support. C. How would consolidation into a single institution affect the alumni associations, foundations, advisory boards, donors, and other groups who support the existing campuses and their programs? In the UNT Alumni Association, the university has a singular umbrella alumni association, which is a 501(c)(3) organization. At UNTHSC, the Texas College of Osteopathic Medicine Alumni Association is a 501(c)(3) organization. Additionally, the UNTHSC also has other affiliated alumni organizations, 23 | P a g e

including the Graduate School of Biomedical Sciences Alumni Association, School of Public Health Alumni Society and the Physician Assistant Alumni Association. While the operations of both institutions associations may be physically colocated with or otherwise supported by their affiliated institutions, they are not under direct institutional control. Their governing boards may want to explore how consolidation into a single institution may impact them and how they may continue to serve their respective alumni. While the UNT Foundation and the UNTHSC Foundation are both physically colocated within their affiliated institutions, they are independent 501 (c)(3) corporations and not under direct institutional control. The foundations governing boards may want to explore how consolidation into a single institution would impact them. Many of the institutions advisory boards, with the exception of a Board of Visitors, are providing counsel at the division, college and school levels. UNTHSCs Board of Visitors advises and consults with the president and his administration. A consolidation of UNT and UNTHSC wouldnt necessitate a change in most of the advisory boards, as divisions, colleges and schools would continue to exist in the consolidated institution. However, a single Board of Visitors representative of the diverse needs and interests of the newly consolidated institution may be warranted. The combined university would need to grow considerably in endowment funding and new private funding streams would be needed to invest in top students and faculty research talent. Both institutions have made progress over the last several years in the development of their fundraising operations and broadening and deepening institutional engagement. Yet, the fundraising operations are still underperforming relative to the overall needs of their institutions. A consolidation may necessitate more investment in fundraising infrastructure and operations. The recent acquisition and implementation of a shared software platform is a step in this direction. Donors largely give to the higher education programs and initiatives that align with their personal values, special interests and goals. A consolidated institution would continue to provide robust opportunities for donor investment. However, it should be noted that increased stewardship may be needed to address the concerns of existing donors, especially those needing reassurance that the intent of their gift would be carried out. During the consolidation exploration, increased communications with prospective donors may be necessary to keep them engaged and comfortable. There is some risk that current and prospective donors, including those from the communities we serve, who are not in agreement with a consolidation would withdraw support. Disciplined and transparent communications will be necessary.

D. How will we notify our students, faculty, staff, alumni, donors and partners of our commitments to protect and enhance our progress throughout this review process, and through further discussions with our Board, and through any legislative review which may occur in 2013? 24 | P a g e

 UNT and the UNTHSC would continue to create and disseminate information about advancements, through their many print and online publications and news operations. The creation and implementation of a flexible, strategic and unified communications plan (See 8A) must be carefully coordinated among the system, its involved institutions and consultants. It is important that unified messages flow through the proper communication channels to deliver the right messages to the right target audiences at the right times.

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APPENDIX Work Group Assignments Regarding a proposed merger of UNT and UNTHSC into a single institution of higher learning General Work Plan: 1. Work groups will develop a document that outlines the benefits, disadvantages, challenges, and other issues by Wednesday, October 17, 2012. The document will be no more than three pages of 12 point font type with normal margins. Each Work Group report will be sent to both Overall Work Group Leaders listed below. 2. The Overall Work Group Leaders will compile and edit for format all specific reports into a single document and forward to all members of the UNT/UNTHSC Work Group listed below by 12 noon on Friday, October 19, 2012. 3. A combined UNT/UNTHSC Summit, with an invitation to all members of the Work Group listed below, will occur on Saturday, October 20, 2012 from 8:00 am to 12:00 noon to discuss the Work Groups findings and assure that all key issues are identified. 4. A final report will be created by October 31, 2012 that outlines all key issues and answers all questions outlined in the attached document. The final report will be developed by the Overall Work Group leaders listed below. The Work Groups will include the following individuals to address each of the major topics outlined in the attached document. The individual listed as CONVENER/CHAIR is responsible to convene the group, assure optimal discussion to highlight all key issues, and assure that a proper document is produced and delivered on time. Overall Work Group Leaders: Jennifer Trevino and Kenneth Sewell/Geoff Gamble a. Merger Purpose and Goals i. Thomas Fairchild, Vice President of Strategy & Measurement, UNTHSC(CONVENER/CHAIR) ii. Warren Burggren, Provost & Vice President for Academic Affairs, UNT iii. Rosemary Haggett, Vice Chancellor for Academic Affairs & Student Success iv. Scott Ransom, President of UNTHSC v. Lane Rawlins, President of UNT vi. Thomas Yorio, Provost & Executive Vice President of Academic Affairs, UNTHSC b. Administration i. Warren Burggren, Provost & Vice President for Academic Affairs, UNT ii. (CONVENER/CHAIR) iii. Geoff Gamble, Vice President for Research & Economic Development, UNT iv. Terry Pankratz, Vice Chancellor for Finance v. Scott Ransom, President of UNTHSC vi. Lane Rawlins, President of UNT vii. Jennifer Trevino, Vice President of Administration & Chief of Staff, UNTHSC viii. Elizabeth With, Vice President of Student Affairs, UNT ix. Thomas Yorio, Provost & Executive Vice President of Academic Affairs, UNTHSC c. Financial Issues i. Michael Mueller, Vice President for Finance/CFO, UNTHSC (CONVENER/CHAIR) ii. Jean Bush, Senior Associate Vice President for Finance & Administration, UNT iii. John Harman, VP for Finance/CFO, UNT Health

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d.

e.

f.

g.

h.

iv. Andrew Harris, Vice President for Finance & Administration, UNT v. Terry Pankratz, Vice Chancellor for Finance State and Regulatory Issues i. Jean Bush, Senior Associate Vice President for Finance & Administration, UNT (CONVENER/CHAIR) ii. Andrew Harris, Vice President for Finance & Administration, UNT iii. Danny Jensen, Associate Vice Chancellor for Governmental Affairs/Vice President for Governmental Affairs, UNTHSC iv. Jack Morton, Vice Chancellor for Governmental Relations v. Michael Mueller, Vice President for Finance/CFO, UNTHSC Academic Affairs i. Thomas Yorio, Provost & Executive Vice President of Academic Affairs, UNTHSC (CONVENER/CHAIR) ii. Warren Burggren, Provost & Vice President for Academic Affairs, UNT iii. Yolanda Flores-Niemann, Senior Vice Provost, UNT iv. Rosemary Haggett, Vice Chancellor for Academic Affairs & Student Success Research and Clinical Service i. Geoff Gamble, Vice President for Research & Economic Development, UNT (CONVENER/CHAIR; covered by Kenneth Sewell, Associate Vice President for Research, UNT) ii. Robert Adams, Interim Executive Vice President of Clinical Affairs & Business Development, UNTHSC and Vice President & Chief Medical Officer of UNT Health iii. Warren Burggren, Provost & Vice President for Academic Affairs, UNT iv. David Cistola, Vice President for Research, UNTHSC v. Rosemary Haggett, Vice Chancellor for Academic Affairs & Student Success vi. Thomas Yorio, Provost & Executive Vice President of Academic Affairs, UNTHSC Student Experience i. Elizabeth With, Vice President of Student Affairs, UNT (CONVENER/CHAIR) ii. Yolanda Flores-Niemann, Senior Vice Provost, UNT iii. Rosemary Haggett, Vice Chancellor for Academic Affairs & Student Success iv. Thomas Moorman, Vice President of Student Affairs, UNTHSC v. Trisha VanDuser, Executive Director of Student Services, UNTHSC Communications and Community Support i. Deborah Leliaert, Vice President for University Relations, Communications & Marketing, UNT (CONVENER/CHAIR) ii. Tim Doke, Senior Vice President for Community Engagement, UNTHSC iii. Scott Ransom, President of UNTHSC iv. Lane Rawlins, President of UNT v. Kelley Reese, Assistant Vice President for University Relations, Communications & Marketing, UNT vi. Jean Tips, Vice President of Marketing & Communications, UNTHSC vii. Greg Upp, Special Advisor to the President, UNTHSC

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