Lawmakers eye revised deal for UI-Phoenix

BOISE — After hearings and heated debates over the University of Idaho’s bid to buy the University of Phoenix, there is a new proposal in an effort to make the deal more palatable to the Legislature.

The Senate State Affairs Committee on Tuesday passed SB 1450 to restructure the entity that would go out for a bond in order to make the $685 million total purchase and oversee the online school.

Senate President Pro-Tem Chuck Winder, as well as representatives for UI and the University of Phoenix presented the bill, which would change the not-for-profit corporation, called Four Three Education, into an independent body politic and corporate.

In a previous hearing on a House concurrent resolution that would have authorized legislative leaders to seek legal action against the deal, many lawmakers expressed concern over the potential lack of oversight and transparency if the UoPX was run as an independent, nonprofit corporation, as the deal was originally structured.

Winder noted the outside legal opinion he and House Speaker Mike Moyle sought, which found that the State Board of Education may have lacked the statutory authority to create the nonprofit.

“It appeared that the way forward is with a body politic and not a not-for-profit 501©(3),” Winder said. “And this would enable the transaction to move forward.”

An independent body politic and corporate is an entity created by the state that operates independently, such as the Idaho Housing and Finance Association.

Notably, many of the concerns about the use of a nonprofit revolved around the fact that the entity wouldn’t be subject to Idaho’s public records or open meetings laws. SB 1450 exempts the new independent body politic from the Open Meetings Law. The entity also wouldn’t be subject to the same rules for purchasing that state agencies are.

The Idaho Public Records law specifically names the Idaho Housing and Finance Association as having to comply with its requirements, but it is unclear if the new entity would.

Caroline Nilsson Troy, the UI government relations liaison, said the bill was the result of many conversations with lawmakers since the State Board of Education took action last May 18 to create Four Three Education.

Kate Haas, a lobbyist for the University of Phoenix, said the bill was meant to structure the entity in a way that creates more oversight from lawmakers but shields the state and UI from financial liability from UoPX’s outstanding settlements for former students who took out loans.

Certain students who attended the for-profit university are eligible for borrower defense claims if they were deceived by misleading marketing from the University of Phoenix.

Haas said the bill was also designed to protect the state from debt collections if the entity isn’t able to make its bond payments.

The university would agree to take up $9.9 million of annual payments as a “last resort” for up to $50 million total.

“Beyond that, that’s it, that’s the only liability they’re able to take on,” Haas said.

There would be a provision that the entity is not able to ask the state budget writers for funds and must be financially self-sustaining.

Four Three Education would be governed by an 11-member board, which would comprise one member of the House, one member of the Senate, the president of the State Board of Education or the president’s designee, the UI president, the president of Four Three Education and six members appointed by the State Board who do not have any familial or financial connects to UoPX.

The bill would also create a fund from money earned through licensing fees, surplus money from Phoenix and funds received with closing the sale. The funds could be used by the state for “Idaho-specific postsecondary education initiatives for the benefit of all Idahoans.”

Senate Minority Leader Melissa Wintrow, D-Boise, said she wasn’t convinced the bill adequately shielded the state.

She was worried the connections to the Legislature, the State Board of Education and the state treasury would still expose the state or UI to financial risk.

“I just don’t feel confident enough to vote in favor of it at this point,” Wintrow said. “There’s just too many question marks on these.”

Sen. Abby Lee, R-Fruitland, said the bill was a “good path forward” for the deal and saw the benefits of going through with the transaction.

“I think it’s exceptionally innovative,” Lee said.

UI President C. Scott Green has repeatedly touted the benefits he sees in the deal, especially in regard to bringing in another source of income and obtaining a robust online platform that serves adult learners.

Sen. Treg Bernt, R-Meridian, also highlighted the potential benefits of the deal but said he hoped that the money brought in would primarily “take care of Idaho students.”

The committee sent the bill to the floor with only Wintrow voting against it.

Guido covers Idaho politics for the Lewiston Tribune, Moscow-Pullman Daily News and Idaho Press of Nampa. She may be contacted at lguido@idahopress.com and can be found on X @EyeOnBoiseGuido.