Gov. Chris Christies determined and sometimes angry push to remake New Jersey higher education has collided with financial realities that include Rutgers Universitys reluctance to take over nearly a half-billion in debt incurred by the states medical school.

Bruce Fehn, Rutgers chief financial officer, said the University of Medicine and Dentistry of New Jersey owes $450 million to bond holders for loans used to build campus facilities. If, as Christie has demanded, Rutgers immediately takes over the medical school and other facilities in Central Jersey, the university could be on the hook for the money.

Worse, the university must deal with conditions, or "covenants," in the loans that could trigger an acceleration repayment clause if UMDNJ loses 15 percent of its assets assets it would lose by transferring them to Rutgers. The long-term loans could become due and payable immediately.

"There has been no analysis of this problem by the state," Fehn said in a meeting of the universitys trustee board on Thursday. Many of the members angrily criticized the Christie plan including one financial expert who compared dealing with the governors office to working with "fourth-graders.

Fehn added that UMDNJs assets were "highly leveraged" so, while it may appear Rutgers was getting more than $400 million in assets, only $50 million was free of debt.

Under the Christie plan, Rutgers would take over UMDNJ facilities in New Brunswick and Piscataway but would lose the Rutgers-Camden campus, with its law and business schools, to Rowan University, a former state teachers college in Glassboro.

Fehn said he was not receiving adequate information from the state to make any judgment about the financial consequences of trying to take over the medical school, especially within the three months demanded by Christie.

The universitys senior vice president for finance and administration also said the university itself doesnt have staff and expertise to make the judgments necessary to assure the trustees they can carry out their "fiduciary" responsibilities. It hired Cain Brothers, an investment firm, to assist the university.

Michael Drewniak, Christies spokesman, issued this statement:

"Rutgers and UMDNJ have both hired independent financial consultants and attorneys to look at the issue, and those experts, along with the Governors Office, have been working collaboratively to ensure that post-integration, debt is appropriately apportioned between UMDNJ and Rutgers and that UMDNJ is stronger financially than it was prior to the higher education restructuring."

Link:
Braun: UMDNJ's debt looms over proposed Rutgers takeover