Board of Ed broke the law to approve University of Idaho-Phoenix deal, Idaho AG alleges

Idaho Attorney General Raul Labrador has filed a lawsuit alleging that the Idaho State Board of Education violated the state’s open meetings law when it discussed the University of Idaho’s plans to acquire the University of Phoenix in secret proceedings.

Idaho’s land grant university revealed its intent to buy the school through a not-for-profit of its creation, now called Four Three Education, in a $550 million bid disclosed to the public on May 17.

The State Board unanimously voted to approve the deal at a special meeting a day later, with nearly no public input or debate.

The lawsuit, filed Tuesday in District Court in Ada County by Labrador and Idaho Solicitor General Theodore Wold, said the State Board “considered the acquisition in closed executive sessions, shielding the transaction from public scrutiny until the day it was approved.”

U of I was first approached by the University of Phoenix about the potential acquisition in March, according to U of I President Scott Green. The State Board subsequently held three meetings in executive session — on March 22, April 25 and May 15 — to talk about the purchase, meaning the discussions were not open to the public.

Green said a “very strict” nondisclosure agreement prevented university leadership from publicly disclosing the bid.

In the lawsuit, Labrador alleges that the university and State Board broke the law by finalizing the half-billion-dollar purchase agreement in those closed sessions.

Idaho’s open meetings law requires, with some exceptions, that “all meetings of a governing body of a public agency shall be open to the public.” The State Board had cited an exemption “to consider preliminary negotiations involving matters of trade or commerce in which the governing body is in competition with governing bodies in other states or nations.”

But in the lawsuit, Labrador noted that U of I’s decision to buy the University of Phoenix came months after the University of Arkansas System board of trustees voted to reject a similar measure to acquire the online school, as Inside Higher Ed reported in April.

“The May 18, 2023, vote was an illegal pro forma meeting to ratify a half-billion-dollar agreement whose terms were discussed and established outside of public view in direct contravention of Idaho’s Open Meeting Law,” the lawsuit states.

The State Board said in an email to the Idaho Statesman on Friday morning that it had not seen the legal complaint and had not been served. The board also said it does not comment on pending legal matters.

A spokesperson for U of I told the Statesman the university does not comment on pending litigation.

The Idaho Attorney General’s Office said in an emailed statement that Labrador will do whatever is necessary to ensure the State Board and U of I comply with state laws around transparency. It said in its review of the closed sessions, it does not believe the parties satisfied the requirements of Idaho’s open meetings law.

“A number of people have raised concerns about the legality and transparency of the University of Idaho’s purchase of the University of Phoenix,” the statement read. “If a violation occurred, our office will work with (the State Board) to ensure any breach is cured. An open and honest government is fundamental to a free society.”

The University of Phoenix has about 85,000 students, according to an FAQ page about the acquisition on U of I’s website. More than 600 students in Idaho are enrolled in the school.

Green has said the sale will diversify revenue streams and improve access to higher education for working adults in the state.

But he’s also acknowledged the deal poses reputational issues. At the State Board meeting where the bid was approved, Green tried to rebuff worries about damage the deal could cause to U of I’s standing. He said the university did its due diligence.

The University of Phoenix is a for-profit online school with a tainted history. In 2019, the school had a lawsuit settlement over deceptive advertising that totaled $191 million.

The college once enrolled over 450,000 students and had physical locations across the country, including in Meridian, but those have mostly shuttered as the school faced sharp declines in enrollment. According to a U.S. Department of Education scorecard, the University of Phoenix has a graduation rate of just 27%, roughly half the national average.

The lawsuit filed by Labrador was first reported Thursday by the Idaho Press.

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