Idaho Legislature Puts Brakes on University of Idaho's Acquisition of University of Phoenix


Idaho legislators are ramping up scrutiny of the University of Idaho's bid to acquire the University of Phoenix, raising concerns about the secretive process and legal liabilities.

(Photo : WIKIMEDIA COMMONS / Davidharlan)

Legislative Backlash and Financial Risks

Recent developments have cast a shadow over the University of Idaho's efforts to finalize the purchase of the University of Phoenix. Lawmakers voted to impede the sale, expressing apprehensions about potential financial hazards and the lack of transparency surrounding the deal.

State Attorney General Raúl Labrador's legal challenge against the Idaho Board of Education, alleging violations of open meeting laws during the acquisition process, adds complexity to the situation. Although the state's initial legal action was unsuccessful, Labrador's appeal to the Idaho Supreme Court sets the stage for further legal battles.

The acquisition, valued at $685 million, faces mounting opposition from legislators who question the propriety of the Board of Education's decision-making authority and the prudence of proceeding with the deal amidst lingering uncertainties. Moody’s Investors Service's cautionary note regarding the potential impact on the University of Idaho's bond rating further amplifies concerns among stakeholders.

READ ALSO: Idaho Lawmakers Pose Threat to University of Idaho's Controversial Acquisition of University of Phoenix

Controversies and Challenges

The University of Idaho's pursuit of the University of Phoenix encountered early competition from the University of Arkansas System, which ultimately opted out of the deal due to reservations about the for-profit institution's reputation and other issues. Despite the University of Idaho's persistence in negotiations, challenges persist, with legislative intervention and legal disputes threatening to derail the acquisition.

University of Idaho President Scott Green launched exploratory conversations with Tyton Partners, an investment banking and consulting firm, about the purchase in February 2023. Green's decision to move quickly was influenced by the presence of multiple suitors, compelling him to expedite negotiations and minimize public scrutiny.

Expediency is crucial for the purchase, as failure to finalize the deal by May 31 could lead to significant financial losses for the University of Idaho. However, the allocation of substantial legal fees, including a $7.3 million payment to Hogan Lovells, a law firm where Green previously held a prominent position, has drawn criticism and raised ethical concerns.

Navigating Legal and Reputational Risks

University officials face the daunting task of addressing legislative scrutiny while maintaining confidence in the acquisition's feasibility. Although they remain resolute in their commitment to the purchase, concerns about legal liabilities and reputational damage loom large.

As the University of Idaho braces for potential legal showdowns and navigates the intricacies of the acquisition process, the path forward remains fraught with uncertainties. The outcome of pending legal proceedings and legislative deliberations will shape the fate of the Idaho-Phoenix deal and its implications for higher education in the state.

Despite the challenges, university officials express optimism about the acquisition's potential to enhance educational opportunities and address emerging needs in the state's higher education landscape. However, achieving consensus and addressing lingering concerns will require transparent communication and proactive engagement with stakeholders.

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