A financially stressed state university in Jersey City is poised to merge with a larger New Jersey state school after persistent budget shortfalls made its future unsustainable.
The board of trustees for New Jersey City University voted to approve the pursuit of a merger with Kean University on Wednesday, laying the groundwork for the acquisition. The institution, across the Hudson River from New York City, has struggled to address a deteriorating fiscal situation.
In 2022, the public school declared fiscal exigency to help its finances. But even after reducing programming, cutting staff and selling real estate, a
The NJCU board said that multiple institutions were viewed as possible merger candidates and touted the efforts President Andrés Acebo made to put the school on firmer footing.
"We recognize and credit the efforts of President Acebo and his leadership team over the past two years to address challenges that some believed were insurmountable,"
Even state-backed schools are not immune to the
Moody's Ratings downgraded NJCU's bond rating to Ba2, two steps into junk, in late 2022, capping a series of negative actions. The school's rating was A3 in 2016. It has roughly $287.1 million of debt outstanding, according to a consulting report from 2024. NJCU has issued debt through the New Jersey Educational Facilities Authority.
After a turnaround plan gained traction, Moody's revised the outlook on the bonds to stable from negative last year.
The steps "allowed NJCU to significantly reduce operating losses and stabilize cash reserves," Moody's analysts said at the time. "Despite this momentum, challenges remain around stagnant net tuition revenue, high leverage, and thin reserves."
Fitch Ratings rates NJCU BB-plus, and revised its outlook to stable from negative in November, citing actions that "not only alleviate immediate liquidity concerns, but help rebuild the balance sheet."
The merger with Kean — a public school with its main campus in 12 miles away in Union — will strengthen finances, academic programs and student outcomes, according to a resolution from NJCU's board. NJCU was directed to find a partner by a state-appointed monitor after a new law was passed in 2023 to backstop the struggling institution and others in the future.
Kean's president, Lamont Repollet, said in a statement that NJCU's location close to New York City is a "tremendous asset" for his school.
"By leveraging this vibrant urban environment, we can continue to enrich students' educational experiences, equipping them for success in the competitive job market," he said. "We are confident that a Kean Jersey City campus will strengthen our ability to attract and support a broader range of services."
The two schools will work with state officials to negotiate a letter of intent before the end of March, according to the resolution.
New Jersey Governor Phil Murphy said his administration supports keeping a public four-year school in Jersey City, which is the state's second-largest city.
"Maintaining access to high-quality post-secondary education for students and the community, who have long benefited from NJCU's local presence, forms the basis of our shared commitment to the institution's future," Murphy said in a statement.
