State rejects altered UI-Phoenix proposal

BOISE — The Idaho Senate on Wednesday narrowly killed a bill that would have restructured University of Idaho’s proposed deal with the University of Phoenix.

SB 1450 was an attempt to address many of the concerns expressed by lawmakers this session, such as a lack of legislative input and a potential lack of authority for the Idaho State Board of Education to have created a nonprofit to bond the purchase and oversee the University of Phoenix.

A letter from the Idaho Attorney General’s Office released Tuesday cast doubts as to whether the bill would adequately address legality and transparency concerns.

Senators voted 19-14 to reject the bill, which was introduced this week and passed out of committee Tuesday.

The State Board of Education, which also acts as the Board of Regents for the University of Idaho, had created a nonprofit that would go out for a bond to make the estimated $685 million purchase.

The bill would have restructured the nonprofit entity into an independent body politic, added members of the Legislature to its board, created restrictions meant to shield the state from financial liability, and created a fund from some potential University of Phoenix profits to be used across the state.

“This bill provides a solution,” Senate Pro-Tem Chuck Winder said. “It provides the way forward to create a path, and it’s a path, it’s not the end of the journey, obviously, for the University of Idaho and the University of Phoenix.”

There were still questions regarding how effectively the bill would address some of the concerns lawmakers had about the deal.

Chief Deputy Attorney General Phillip Broadbent wrote a letter to Sen. Lori Den Hartog, R-Meridian, in response to her request for an opinion. Broadbent said there wasn’t time for an in-depth legal analysis, but the office had concerns.

One of the concerns Broadbent outlined was that if it was true that the State Board had lacked the authority to create the nonprofit, called Four Three Education, there wouldn’t be a legal entity to change into an independent body politic. He also argued the bill would authorize the State Board to expand the scope of its constitutional authority.

Attorney General Raúl Labrador had already litigated in the Phoenix deal when he challenged the State Board’s May 18, 2023, decision to create the nonprofit, alleging an Open Meetings Law violation in the closed-door meetings preceding the vote. A judge dismissed the case with prejudice and on Tuesday ordered Labrador to pay more than $240,000 in attorney fees to the state board. Labrador has appealed the case to the State Supreme Court.

Legal opinions sought by lawmakers found that the State Board may have lacked statutory and constitutional authority to create the nonprofit; these opinions contradicted those of the University of Idaho’s attorneys.

Lawmakers also had concerns that if Four Three Education were to operate as a nonprofit, there wouldn’t be especially high standards for transparency for public records or open meetings, as there are for government entities.

SB 1450 would have exempted Four Three Education from the state’s Open Meetings Law, except in regards to providing reports to the Legislature.

There was no debate Wednesday, but several senators took 60 seconds to explain their vote during the roll call.

Sen. Kevin Cook, R-Idaho Falls, said the online technology that the University of Idaho could acquire from Phoenix is “amazing” and would be a benefit to Idaho.

“I just think this cannot go wrong,” Cook said.

Den Hartog argued that other states that have purchased for-profit universities have not benefited from the deals. She questioned why Idaho appeared to be “the only state clamoring to make this purchase happen.”

It’s unclear where the deal goes. Previously, UI President C. Scott Green has said he hoped to go out to bid in May. He has previously maintained that he sought solid legal advice from experts and the university and State Board acted within their authority.

UI spokesperson Jodi Walker said in an emailed response to a request for comment, “We are disappointed this bill did not pass and are reviewing our options.”

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.