UI faculty, taxpayers respond to Phoenix acquisition

The University of Idaho says its faculty have had an overwhelmingly positive reaction to the news of its plans to acquire the University of Phoenix. But emails from UI professors in the days following the announcement paint a different picture.

In the 24 hours after the details became public, the Idaho State Board of Education received dozens of emails from UI professors, alumni and Idaho taxpayers urging the governing body to reject the $550 million deal. Only one person wrote in favor of buying the online school.

The board ultimately gave its approval for the proposal, but not before reviewing many of the messages, which were obtained by the Idaho Statesman under the Idaho Public Records Act.

Faculty, residents ask State Board to vote no

“UI wants to sacrifice its reputation for a scheme it thinks can make money,” UI climatologist and data scientist Erich Seamon said in an email to the board. “This has bad business deal written all over it. It is bad for Idaho and will end up costing more than it’s worth.”

Seamon said the University of Phoenix was looking for a buyout, and legitimacy to boot.

UI Provost and Executive Vice President Torrey Lawrence told the Statesman by phone that the university community, dubbed the “Vandal family,” is eager for the school to take a stake in the realm of online education.

“Actually, a lot of people are very excited; they see it as a unique opportunity,” Lawrence said. “Many of those that reacted negatively didn’t quite have all the facts at the beginning, because it’s a complicated, complex transaction.”

James Spearman, an Idaho resident, said in an email shortly after news of the deal began to spread that “the whole thing just smells bad.”

He cited the University of Phoenix’s poor completion rate and argued the purchase would tarnish the reputation of the state’s flagship university. Of the roughly 64,000 undergraduate students who attend the University of Phoenix, only 27% receive a degree, according to a U.S. Department of Education scorecard. UI’s graduate rate is 60%.

Many of the complaints assigned blame to UI President Scott Green — a Harvard business school graduate and former chief financial officer of a global law firm in New York — and accused him of brokering a bad business deal for the Moscow school, where he once studied accounting and served as student body president.

“Frankly, I’m concerned. This seems like more of a business venture than something an academic institution should be involved in,” UI alumnus Carey Edwards wrote in an email to the board. “The University of Idaho is not a business, and it shouldn’t be run like one.”

UI has acknowledged on its website that the deal poses “reputational issues,” noting that the University of Phoenix “has been criticized, and sued, for business decisions leading to millions of dollars in fines and punitive actions by regulators.”

In 2019, the school had a lawsuit settlement over deceptive advertising that totaled $191 million.

The college once enrolled over 450,000 students and had physical locations across the country, including in Meridian, but those have mostly shuttered as the school faced sharp declines in enrollment.

“We understand there’s been problems in the past, and people were rightly upset with them for past behaviors, but it is our opinion in dealing with them and going through our due diligence that they’re on a very different path now,” Green told the State Board in May before it voted. “We’re not afraid of it because we are comfortable with who they are, and we know we can help them.”

Faculty say NDA violates university policy

In addition to the comments from the public, remarks from faculty at UI emphasized their displeasure with the closed-door process by which the proposal was pushed through.

The State Board, along with UI leadership, held three meetings in closed session regarding the proposed acquisition — on March 22, April 25 and May 15.

Last week, Idaho Attorney General Raúl Labrador sued the State Board, alleging it violated the state’s open meetings law when it discussed the plans in secret proceedings.

Green previously said a “very strict” nondisclosure agreement prevented university leaders from publicly disclosing the bid.

Kristin Haltinner, vice chair of the UI’s Faculty Senate and an associate professor of sociology, said in an email May 17 that guidelines set forth in the university’s constitution promise a shared governance model between administrators and faculty.

She said those guidelines were ignored in the school’s quest to purchase the University of Phoenix.

‘This is deeply troubling’

UI’s Faculty Senate is structured so that each college at the school has at least one senator for every 50 full-time faculty members.

Section 12 of UI’s handbook, under “organization of the university,” states that faculty are to advise and assist the president and regents in “establishing, reorganizing, or discontinuing major academic and administrative units of the university, such as colleges, schools, intracollege divisions, departments, and similar functional organizations.”

The university’s proposal to buy the Arizona-based online school for half a billion dollars, she argued, constitutes a major academic unit as outlined in the handbook.

“This is deeply troubling from the standpoint of a shared governance model,” Haltinner said.

Only UI’s Faculty Senate chair and vice chair from the prior academic year, Kelly Quinett and Erin Chapman, respectively, were told of the acquisition in advance, about three weeks before the State Board held a vote on it.

Quinett is a professor and head of acting. Chapman is clinical associate professor in the university’s School of Family and Consumer Sciences.

The pair said in an email obtained by the Statesman that they were obliged to sign a nondisclosure agreement and brainstorm any questions faculty might have.

“We were not part of a decision-making team, and we were made aware of negotiations regarding this acquisition only three weeks ago,” the pair wrote in an email to faculty dated May 19. “We wholly understand that the secretive nature of this acquisition process and the timing of the announcement can be perceived as problematic.”

At the State Board meeting where the deal was up for approval, Green contended that it’s not unusual to have a nondisclosure agreement with a transaction like this. He said the seller required it.

One professor offers his support

Alistair Smith, a professor and chair of the Department of Earth and Spatial Sciences in the UI’s College of Science, was the only person to write to the State Board praising the transaction in the days after it was revealed, according to public records.

He told the Statesman in a phone interview that when he first saw the announcement, he thought “Wow, what a bold move.”

Smith has taught online courses since 2007 and said he sees the deal improving UI’s virtual capabilities.

He said the scramble to transition online during the COVID-19 pandemic revealed how ill-prepared Idaho’s higher education institutions were for providing quality education through a computer screen.

“For years, there has been a realization at many of our state institutions that Idaho is not keeping up with online education,” Smith said in his email to the State Board on May 18. “Through this proposal, UI and Idaho writ large has enormous potential to better meet the needs of Idahoans, especially those in rural areas where travel to institutions may not be financially desirable.”

Town hall provides few answers

A few professors criticized the way the university conducted a town hall about the acquisition with faculty and staff members. One called it “undemocratic.”

The meeting was run as a webinar, according to Haltinner, and the chat was disabled, so faculty weren’t able to comment or ask questions in real time.

“ … we were unable to see who provided the questions,” Haltinner said. “It was not transparent, and many faculty think the questions were prepared by the university ahead of time, instead of taken from faculty.”

Leontina Hormel, a professor of sociology, told the Statesman by phone that the Q&A portion of the town hall lasted less than 10 minutes. She said the university did not mention that negotiations with the board had been ongoing for months.

“The State Board was already privy to this (deal). We had no idea,” Hormel said. “We sent these letters to the State Board thinking that somehow they had not been informed, and now we’ve learned they had been and that this was basically going to be rubber-stamped.”

Smith said he thought the university did its best to provide information and get feedback at the town hall, considering it took place over the school’s summer break.

The Statesman requested a video copy of the hourlong town hall , but UI spokesperson Jodi Walker said it had not been recorded.

During the event, Lawrence explained why the nondisclosure agreement existed, saying it was a preventative measure to avoid the deal possibly falling apart.

Lawrence told the Statesman that UI is working with faculty members to answer their questions and concerns.

“We’ll probably have more robust campus-wide conversations when people have returned from summer,” Lawrence said. “We’ll address those concerns and hear their ideas and hear their thoughts and continue to work together.”

‘Complicated, complex transaction’

The university has said it plans to finance the deal through a nonprofit entity it created, now renamed Four Three Education, with nontaxable and taxable bonds, separate from the money used to fund the university’s budgets.

The name Four Three Education is a nod to Idaho’s status as the 43rd state in the union. The nonprofit was originally named NewU, but it turned out that name was already taken.

Idaho taxpayers would not be involved in paying for it.

However, UI agreed to fork over $10 million a year should Four Three Education miss payments on debt related to the transaction. The purchase price of the University of Phoenix is $550 million, but the seller would provide $200 million in cash that would transfer to the nonprofit once the transaction is complete, according to an FAQ page about the proposal, bringing the net cost to $350 million.

UI contends the acquisition will provide $10 million in annual supplemental education funding to the Moscow school, an amount it expects to grow over time. It said the University of Phoenix generates approximately $100 million of unrestricted cash flow annually.

The university’s administration has said the University of Phoenix will operate independently for the foreseeable future, with its own president and leadership team, but that may change later.

Idaho’s deal came less than a month after the University of Arkansas System’s board of trustees voted to reject a similar measure to acquire the University of Phoenix, Inside Higher Ed reported in April.

Notably, University of Arkansas System President Donald Bobbitt emailed Green on May 18 to offer congratulations.

“You and your board were able to accomplish what I could not,” Bobbitt said. “You absolutely made the right call … Our loss will be a significant gain for your institution and your state.”

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