A path forward? Lawmakers could seek to restructure Phoenix purchase

(UPDATED, 10:48 a.m. Wednesday, with comment from the University of Idaho.)

Armed with a pair of new legal opinions, lawmakers could make a late-session push to restructure the University of Phoenix deal.

A restructuring could depend on two variables. First, the University of Idaho would need to be willing to rework the deal, months after reaching an agreement with Phoenix. Second, lawmakers would need to be willing to endorse the U of I’s $685 million plan to acquire Phoenix, a for-profit online university with a checkered national brand.

“Whether the Legislature is ready to do that, I don’t know,” Senate President Pro Tem Chuck Winder said Tuesday.

The legal opinions could give lawmakers some added leverage, as they look to inject themselves into the Phoenix debate. But for lawmakers, time is tight, as legislative leaders hope to adjourn the 2024 session by late March.

The new legal opinions

Legislative leaders received two opinions Monday. One came from Givens Pursley, a prominent Boise law firm hired to provide outside review of the Phoenix purchase. The second came from Attorney General Raúl Labrador, who already has a Phoenix-related appeal pending before the Idaho Supreme Court.

At their heart, the two opinions reach the same conclusion: The State Board of Education had no authority to approve the U of I’s plan to acquire Phoenix, and operate a private university under the mantle of a U of I-aligned nonprofit, Four Three Education.

“The people did not empower the board to acquire, own or operate private enterprises — they entrusted the governance and supervision of their land-grant university to the board,” Labrador wrote.

Givens Pursley and Labrador essentially align with an opinion from the Legislature’s own in-house attorney. Legislative legal counsel Elizabeth Bowen also questioned the State Board’s legal authority.

The U of I has maintained its Phoenix acquisition plan is legal — citing legal work from its own outside counsel, Boise-based Hawley Troxell. But Bowen’s legal work became the basis for a legislative resolution that urges the State Board to reconsider its support of the Phoenix purchase. The resolution, which easily passed the House last week, also threatens a legislative lawsuit that could stall or kill the purchase.

A different path?

The Senate hasn’t yet taken up the House-passed resolution. Leadership put it on hold while awaiting Givens Pursley’s legal opinion.

In addition to challenging the Phoenix purchase plan, the opinion also suggests another option. The Legislature could create its own entity — an “independent body politic” — to oversee Phoenix.

There is precedent for such an entity. The Idaho Housing and Finance Association operates as independent body politic. So do the state’s four-year schools.

This approach wouldn’t put the state at any additional financial risk, Winder said; the independent body politic would still be financially liable if the Phoenix purchase goes awry. But the Legislature would have more control over an independent body politic, an entity of its own making.

This structure could also address transparency concerns that have surfaced during the Legislature’s deliberation over Phoenix. Lawmakers have said a Phoenix nonprofit would operate on its own, independent of state open meetings or open records laws.

But restructuring the deal would not be easy, Preston N. Carter and Morgan D. Goodin of Givens Pursley wrote in their analysis.

“Creation of an independent body politic for this purpose would require substantial revision to the existing transaction, which in turn would require the consent and extensive cooperation of all parties,” they wrote.

In a statement provided Wednesday morning, the U of I indicated it might be open to a new approach. “We understand that there are conflicting legal opinions, all from respected law firms and we believe there is a legal path forward and are working toward a solution.”

House Speaker Mike Moyle also did not respond to a request for comment Tuesday afternoon. But in an interview, Winder said a restructuring could provide a way to close the deal, if lawmakers and the U of I are willing.

“I would like to see the deal go forward under the right circumstances,” he said. “It would be something that we would have to move on fairly quickly.”

More reading: Click here for our in-depth Phoenix coverage.

Kevin Richert

Kevin Richert

Senior reporter and blogger Kevin Richert specializes in education politics and education policy. He has more than 30 years of experience in Idaho journalism. He is a frequent guest on "Idaho Reports" on Idaho Public Television and "Idaho Matters" on Boise State Public Radio. Follow Kevin on Twitter: @KevinRichert. He can be reached at [email protected]

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