Dive Brief:
- Idaho lawmakers are pushing back on the University of Idaho’s planned purchase of the University of Phoenix, including by threatening potential legal action.
- A resolution introduced last week seeks to have the Idaho State Board of Education reconsider its vote greenlighting the deal. Last May, board members approved the University of Idaho’s plans to create a nonprofit corporation to acquire the University of Phoenix’s assets for $550 million — a move that would affiliate the two institutions.
- If passed, the resolution would declare that Idaho’s education board infringed on the Legislature’s power. It would further call on lawmakers to review the deal and authorize the state’s legislative leaders to take “appropriate legal action.”
Dive Insight:
Champions of the marriage between the University of Idaho and the University of Phoenix contend it would help the state expand access to higher education and grapple with an expected drop off in the number of traditional-age college students. However, critics have said the University of Idaho risks taking on unknown liabilities from University of Phoenix, a for-profit college with a checkered past.
As part of the deal, the University of Idaho hopes to convert the University of Phoenix from a for-profit to a nonprofit institution. However, this requires the U.S. Department of Education’s approval — and can often be a complicated and protracted process.
The resolution comes as University of Idaho officials are attempting to close the deal. They previously said they wanted to complete the acquisition in early 2024, but they’ve faced rampant criticism and legal hurdles along the way.
A spokesperson for the University of Idaho did not immediately answer questions about the proposed measure Tuesday.
Idaho Attorney General Raúl Labrador filed a lawsuit last year accusing Idaho’s education board of violating state sunshine laws by holding a closed meeting in May to discuss the deal. Others have also taken issue with the board's closed-door discussions, pointing out that news of the acquisition made headlines only a day before board members gave their approval.
However, Idaho District Judge Jason Scott dismissed the lawsuit late last month, ruling that board members were permitted to privately meet about the deal because they reasonably believed they were competing with others to acquire the for-profit college.
Scott Green, president of the University of Idaho, celebrated the decision in a letter last week to the institution’s employees, arguing that the ruling helps bring the deal closer to fruition. Labrador has since filed notice of appeal, however, Idaho Education News reported.
And lawmakers are adding a new wrinkle. Idaho state Rep. Brent Crane, a Republican who co-sponsored the bipartisan measure, argued Thursday that legislators haven’t been sufficiently involved in assessing the deal.
“This process primarily was done behind closed doors,” Crane said during a legislative committee meeting. “Legislative leaders can be dealt in when you’re dealing with an acquisition of this magnitude — and should have been dealt in — and they were not.”
Rep. John Gannon, a Democrat who co-sponsored the resolution, echoed those arguments.
“This seems like it’s a purchase by ambush,” Gannon said. “There was no discussion about buying an online university prior to the time it suddenly happened.”
The House State Affairs Committee voted to introduce the measure, teeing up a hearing over the deal.
The resolution isn’t the only recent blow the deal has taken. Moody’s Investors Service, a credit rating agency, recently said acquiring the University of Phoenix could result in a “multi-notch downgrade” in the University of Idaho’s bond rating, The Spokesman-Review reported.
The Moody’s report noted that the deal would substantially increase the University of Idaho’s “total debt and leverage profile” and could result in potential litigation from the Education Department.
