Back in 2003, while happily ensconced in my studies at the Monterey Institute of International Studies, I was stunned by the news that I might suddenly be transferred back to my undergraduate alma mater, the University of California system.

Why? Because MIIS was in a financial riptide and negotiating a partnership with UC Santa Cruz to pull it free. At the last minute the deal fell through.

By the time I graduated in 2004, MIIS was facing its fourth deficit year in a row; I left wondering whether anyone would be around to answer reference calls from my prospective employers.

On July 1, MIIS permanently secured its future by merging with Vermont’s Middlebury College. It marked the formal handover, but the schools have been gradually integrating over the past five years.

The Vermontian bow appeared on the horizon back in 2005. At that point, an “affiliation” was signed in which most of MIIS’s authority was transferred to Middlebury, and in exchange, over $10 million rushed into MIIS.

When I first heard about the merger, I cringed, thinking: Sprint meets Nextel, Benz meets Chrysler. But the more I look at it, the less I see it in purely monetary terms. To be sure, MIIS can now dispense with financial dogpaddling, but it’s ended up on board a venerable, even posh vessel.

The 210-year-old Middlebury is ranked fourth among liberal arts undergraduate schools by U.S. News and World Report. It’s the first U.S. institution of higher education to graduate an African-American, costs $42,000 per year to attend, and has more than a billion dollars in assets. Not bad.

In an e-mail, MIIS President Sunder Ramaswamy, away in India for the summer, pinpoints the merger’s three central gains for MIIS.

“First, the financial stability that comes from partnering with a larger institution with a substantial endowment. Second, a highly compatible partner with a vested interest in MIIS’s future success… And third, exciting opportunities for cross-fertilization between our faculties and students.”

That said, there’s still uncertainty about how the union will play out. As MIIS communications director Jason Warburg says: “Mergers in higher education are rare, and successful ones even rarer.”

So far, MIIS and Middlebury have had smooth sailing. So smooth, in fact, that they plan to publish a Harvard case study on the five-year integration, believing their experience could serve as an example for other partnering colleges and universities.

“It’s true that many mergers go bad, but that is why this affiliation was tested over the course of five years, unlike mergers in the private sector that sometimes happen in a matter of weeks,” Ramaswamy says.

Scott Jaschik, cofounder of the online publication Inside Higher Ed, has seen a lot of academic acquisitions come down the pikes, many of them disasters. The most common complaints are loss of control and identity by the institution being absorbed, and doubts about the need and cost of the merger by the acquiring institution. But he’s heard no such beefs about this deal, so far.

If Middlebury is worried about money – and it has been – then it can rest easy. MIIS has been back in the black since 2005, and is now actually sending a profit back to Middlebury.

“Generally, how you make mergers work is, you give autonomy to people,” Jaschik said. “And Middlebury seems to be taking steps so Monterey maintains a separate identity.”

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Founded in 1955 as The Monterey Institute of Foreign Studies, MIIS seeks to rapidly prepare its roughly 750 graduate students for careers in government, development NGOs, the United Nations and language services. California Assemblyman Bill Monning, who taught negotiation and conflict resolution at MIIS from 1994 to 2008, calls the merger a “perfect match.”

“The synergy between these two academic communities willcreate an institutional capacity greater than the sum of the individual programs,” Monning writes by e-mail.

MIIS offers masters programs on everything from nonproliferation and counter-terrorism to conflict resolution and conference interpretation, and it was the world’s first graduate school to offer a degree in international environmental policy.

Middlebury, founded in 1800, provides its undergraduate students with a liberal arts education.

White-bearded MIIS Professor Ed Laurence, who was academic dean around the time the merger process began, describes MIIS’s faculty members as world-savvy, using their contacts at key international organizations to provide students with professional ins – in his case, with United Nation agencies and NGOs tracking the proliferation of small arms. By contrast, he says Middlebury’s faculty members are laden with academic laurels and train their scholarly eyes on teaching and publishing.

The students are a different breed, too, he says. MIIS’s graduate scholars typically come with two to three years of job experience and arrive with clear career goals. Middlebury students graduate with a broader schooling in the “Western intellectual tradition,” according to the college’s handbook.

Laurence does not think the contrast between these wildly different characters – think Kofi Annan meets Ralph Waldo Emerson – will affect the institute’s core.

“We’re two different schools, two different cultures, two different missions,” he says. “We are a two-year professional graduate school. So by definition we have autonomy because that’s not what they do; that’s what we do.”

Although different, the schools share key similarities. Both are known for language training and fostering an international perspective, achieved in part by their high percentage of foreign students – 36 percent at MIIS, and 10 percent at Middlebury. Middlebury runs 33 language schools in 13 countries, while MIIS offers a master’s degree in translation and interpretation. Both schools pioneered environmental programs and due to its sustainability work, Middlebury recently won a spot on Princeton Review’s list of “Schools with a Conscience.”

Jan Black, a left-leaning scholar with an expertise in human rights and Latin American politics who has been at MIIS since 1991, calls the pairing “logical,” but says she hopes the East Coast college will keep MIIS’s global ethos intact.

“[MIIS] was a school that from beginning had a global focus, not a national-interest focus,” Black said. “That is what I’d like to see continue – that we train people to serve humanity, not just the U.S.”

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Institute staff shy away from speculating how the merger will change MIIS in 10 or 20 years, perhaps because they are reluctant to suggest MIIS might be drastically altered. But there’s one immediate change everyone agrees on: an expanding environmental emphasis, which could have far-reaching consequences for the school, and for the Peninsula.

“The first thing you’re going to see is growth of existing [environmental] programs,” says MIIS planning director Amy McGill, the merger’s unofficial guru. “You’ll also see us moving towards building a business emphasis on sustainability, and probably some synergies will develop between what we’re doing in the business and environmental policy areas.”

A few years ago, MIIS’s business school joined with the policy school (at the same time the translation and interpretation, and language and educational linguistics schools were combined into the Graduate School of Translation, Interpretation, and Language Education), leading to a tighter bond between business and environmental programs. Since the Middlebury affiliation began, MIIS has added courses on sustainable business, corporate responsibility, and last spring, the nation’s first full-length graduate course on the nascent cap-and-trade market. New courses on energy and California’s first master’s program in marine policy are also in the works.

Jason Scorse, chair of the International Environmental Policy program, says the merger has increased IEP’s prominence, and that enrollment is now at a record level. Environmental faculty have been added to the school, including energy policy expert Jim Williams, a senior scientist for E3, Energy and Environmental Economics, a think tank working on California’s new energy policies.

Conservation expert Jeff Langholz, a gangly, much-loved IEP professor known for kicking off his shoes and pacing barefoot during animated lectures, is thrilled for his department.

“In 1965, Middlebury broke new ground by creating the nation’s first undergraduate major in environmental studies. In 1997, the Monterey Institute did something similar by establishing the world’s first graduate program in international environmental policy. Now these two innovators have joined forces. The sky is the limit,” he said.

The merger may also help MIIS reach eco-goals such as becoming a carbon-neutral campus by 2016, says Noah Lichtenstein, a young-faced, second-year environmental policy student at MIIS and student representative on the Sustainability Council.

“Middlebury has a whole office for sustainability. We do a good job here with what we’ve got, but the number of people devoted to that will help us,” Lichtenstein said.

Leading MIIS’s environmental efforts is a student organization called Our Green Thumb, which started an organic garden on campus in August 2008. Compost made from food scraps is used to enrich the soil, and the group recently added a rainwater catchment on top of the school’s Morse building.

Middlebury, nestled between the Green Mountains to the east and the snow-capped Adirondacks to the west, also has an aggressive recycling program, a biomass plant, and a number of sustainability awards.

The school’s eco-all-star, best-selling environmental author Bill McKibben, has visited MIIS several times to rally student support for his 350.org movement (350 parts per million is the maximum level of carbon dioxide scientists say the atmosphere can handle to support life as we know it – a limit we’ve long passed), which spawned an event last year, that CNN called “the most widespread day of political action in the planet’s history,” pulling off 5,200 actions in 181 countries with just seven core staff, using the globally networked MIIS community for help.

“[The team] found some of their best allies in students and faculty at the Monterey Institute of International Studies. (350.org is a poster child for why this merger makes so much sense),” McKibben wrote in Middlebury’s student newspaper. “If you look at the pictures on 350.org, you’ll see women in burkas with 350 signs, slumdwellers from Mombasa, soldiers in Afghanistan.” Participants dug community gardens, put up solar panels and marched in the streets.

Scorse hopes the environmental emphasis draws more Middlebury students to MIIS. They will also be attracted by a deluxe-degree program set to launch this fall, in which they can get their bachelor’s degree from Middlebury in four years and their master’s degree from Monterey in one.

The 750-student institute hopes to boost its enrollment to 800 or 900 over the next few years, although Provost Amy Sands is quick to add that she does not predict a huge rush of Middlebury students. (Fifteen to 20 are currently enrolled at MIIS.) The ratio of foreign students may increase, and annual tuition, now at $32,000, will continue to rise at an average of 5 percent per year, according to Burke.

For MIIS, and to a lesser degree Middlebury, financial considerations were the merger’s driving force. Starting in 2000, the tuition-reliant MIIS spent four straight years in the red, leading to salary and benefit freezes. The largest deficit came in 2002, when the school overspent by $8 million. By December 2005, the two schools had signed an “affiliation” agreement, or phase-in period for the merger.

“Monterey was in dire financial shape, which is why they were looking for partners, acquirers really,” says Middlebury president Ronald Liebowitz. The roughly $10 million in Middlebury-related donations secured MIIS’ future.

“We knew from the beginning that this affiliation was going to be a key advantage,” Laurence says. “It’s given us a renewed life. Everything gets better when you’re bigger: You have more money, you have more alumni.”

In recent years, MIIS not only made a profit, but contributed to Middlebury’s bottom line. The Vermont college needed the money, too. Following the 2007 economic crash, Middlebury’s endowment shrunk by $350 million – a staggering amount for a school whose endowment stood at $931 million in 2007. During roughly the same period, from 2005 to 2009, MIIS’s endowment grew from $4.5 million to $10.3 million.

This helped MIIS administer life support to the much wealthier school. MIIS provided roughly 10 to 12 percent of Middlebury’s total revenue from fiscal years 2007-2009, according to MIIS controller Steve Marino. Since 2005, MIIS has pumped $10.4 million into Middlebury – roughly the same amount it received from the college just a few years prior.

Middlebury wants to draw on Monterey’s strengths, particularly its career-focused graduate program and access to MIIS’ Rolodex of international contacts for study abroad and internship programs.

Clearly, independence is no longer an option for MIIS. But the school could have fared far worse.

Despite its recent financial problems, Middlebury has refused to let go of core values, such as its student-teacher ratio (nine to one) and beefy financial aid budget – in stark contrast not only to Middlebury’s peers, but also to the cost-cutting actions taken by the University of California and Cal State systems. Most recently, Middlebury astonished scholastic communities by promising to limit annual tuition hikes to 1 percent above inflation, well below the national average for liberal arts schools.

MIIS benefits from the affiliation with a prestigious undergraduate school, access to Middlebury’s global schools, a fount of elite students and the potential for exchanges with decorated faculty.

The worst outcome Middlebury president Leibowitz could imagine the merger taking would be if MIIS became unprofitable.

“If demand for these types of professional degrees goes south and Monterey can’t complete with other places, that would be a huge blow. But of course, the direction of globalization points to greater need for what Monterey does. To me, it looks like a winner.”