BOISE — Two legal opinions released Tuesday argue that the University of Idaho and the State Board of Education lacked the authority to create a nonprofit entity and operate a separate institution in UI's effort to purchase the University of Phoenix.

Letters from the law firm Givens Pursley and the Idaho Attorney General’s Office to legislative leadership say that the State Board of Education, acting in its role as the governing Board of Trustees for UI, had acted outside its scope when it created a new entity in order to purchase the online school.

“Existing caselaw establishes that the Board’s authority, when exercised within its proper scope, is broad and cannot be interfered with by other branches of government,” Preston Carter and Morgan Goodin of Givens Pursley wrote. “However, this caselaw addresses the Board’s direct supervision of the University.”

House Speaker Mike Moyle and Senate Pro Tempore Chuck Winder said last week that they had sought an outside legal opinion on the issue.

Legislative Legal Counsel Elizabeth Bowen had issued a letter Feb. 23 outlining her concerns over the actions taken; she recommended that the Legislature seek legal action against the State Board if it doesn’t reconsider its action or get legislative permission to continue. The House previously passed HCR 26, which would direct Moyle and Winder to seek a lawsuit if the State Board and UI don’t change course.

UI President C. Scott Green has said he sought legal input from constitutional experts at outside law firms and they determined all the actions taken were legal with within the authority of the board and university. Attorneys from Hawley Troxel provided a letter to legislators refuting the concerns Bowen outlined in her opinion.

Attorney General Raúl Labrador wrote in another letter that the State Board's actions could be challenged by his office under Idaho law regulating “actions for usurpation,” which allows a challenge of the state against “any person who usurps, intrudes into, holds or exercises any office or franchise, real or pretended, within this state, without authority of law.”

Labrador’s office had previously unsuccessfully sought to nullify the State Board's actions through an Open Meetings Law challenge, which was later dismissed in court.

On May 18, the State Board voted unanimously to approve the creation of a nonprofit entity, which would later be named Four Three Education, for the purpose of going out for a $685 million bond to finance the purchase of the University of Phoenix. The plan was to operate the university separately, largely in the same way it's currently running except it would be a nonprofit school rather than a for-profit entity.

Up until the day before the public vote, the negotiations had been done in closed-door executive sessions and negotiators were under strict non-disclosure agreements. Many lawmakers this session have said they feel like they should have been involved in such a large transaction from the state's land grant university.

Green has since spoken to legislators in meetings, hearings, and one-on-one, outlining the potential benefits of the deal. During the hearing on HCR 26, Green told the committee that it wasn’t the intention to leave out the Legislature, but because there was no ask for public funds and no state money was going to be used, he didn’t see a mechanism for going to them.

The 14-page Givens Pursley opinion outlines case law and statute related to UI’s authorities. It acknowledges that the university has authority to purchase other entities and operate them without legislative input, such as purchasing land, building an infirmary and constructing buildings.

“This transaction is different in both nature and degree. As to nature: the Board is not acquiring the assets of the University of Phoenix to operate those assets as part of the University of Idaho,” the letter says. “... As to degree: the University of Idaho enrolls around 10,000 students. The University of Phoenix enrolls around 85,000 students. The bond proceeds are expected to be approximately $685 million. Existing caselaw cannot reasonably be read as addressing a transaction of this nature and degree.”

Green has said the deal is structured in a way to try and mitigate risk to the state, both for obligations to pay bonds and potential liability related to borrow defense claims against the University of Phoenix.

The Givens Pursley opinion indicates that the potential lack of authority to create Four Three Education could "open the door" to liability on UI or the Board of Regents, which would be the sole board membership overseeing Four Three Education.

"At a minimum, the Board’s lack of express legal authority to create Four Three casts doubt upon the assertion that the University and the Board’s liability is definitively capped at $50 million," the letter states.

The letter indicates that there may be another avenue to make the purchase. Many of the concerns stem from the University of Phoenix being overseen by a private nonprofit entity, which wouldn't be subject to the same public records, open meetings and auditing laws as public entities.

The Legislature could choose to create an "independent body politic," such as the Idaho Housing and Finance Association, which operates as a state-created, self-supporting organization, with certain requirements around its authorities and audits.

Winder had told reporters that the Senate would take up HCR 26 once the opinions come in.

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, formerly Twitter, @EyeOnBoiseGuido.