House lawmakers questioned state education officials over the pending $685 million acquisition of the University of Phoenix Thursday morning while considering legal action against the deal.
A resolution before the House State Affairs Committee urging the University of Idaho to reverse its transaction. It would also authorize the House Speaker and Senate Pro Tem to sue to block the acquisition in court.
Under the deal, a non-profit corporation created by the State Board of Education called Four Three Education would control all of University of Phoenix’s assets. The state board is listed as the only member of Four Three Education.
Elizabeth Bowen, a lawyer for the legislature, wrote a letter on Feb. 22 alleging the state board has no constitutional or statutory authority to execute such a transaction.
“If the [state board of education’s] conduct is allowed to stand, an incredibly dangerous precedent would be set, perhaps inspiring other state agencies impatient with their constitutional and statutory restrictions to follow suit,” Bowen wrote.
Still, she said Thursday morning that collaboration with the legislature could still happen.
“Since the transaction hasn’t been finalized yet, I think there’s still an opportunity to do this if everyone approaches this with the spirit of cooperation,” Bowen said.
Hawley Troxell, a law firm representing U of I in the acquisition, sent a letter to the university’s board of regents on Feb. 28 refuting Bowen’s legal analysis. The firm said she misapplied “numerous legal theories and citations” to the deal.
UI President Scott Green apologized to lawmakers, saying he and the state board of education should’ve notified them of the negotiations sooner.
But, Green said, state law allows the university to bond without legislative authorization, which is how UI intends to pay for the deal to acquire the for-profit, online school.
“You deserve transparency into everything that we’re doing financially, but we weren’t looking for an appropriation and there was no other approval [needed from the legislature],” he said.
“I kind of wish there would’ve been because that would’ve solved a lot of our problems here today.
Kurt Liebich, a state board of education member, also apologized.
Liebich said the legislature is within its rights to pass this resolution and to sue to block the deal. But, he said, the missed opportunity would come at a price.
“What you’re going to see across the country are hundreds and hundreds of higher ed institutions going out of business here in the next 10 years because of the change in demographics and just the uncompetitive cost of only delivering in-person education,” Liebich said.
Committee members will continue their deliberation Friday morning.
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