Analysis: As the session winds down (we hope), lawmakers wrestle big questions about Phoenix

Legislative leaders — Senate Minority Leader Melissa Wintrow, Senate President Pro Tem Chuck Winder, House Minority Leader Ilana Rubel and House Speaker Mike Moyle — speak to Statehouse reporters Thursday. (Kevin Richert/IdahoEdNews)

(UPDATED, 4:49 p.m., to correct the name of Apollo Global Management.)

Legislative leaders say they want to shut down the 2024 session, perhaps by the end of the month.

Before that happens, lawmakers are going to do something with the University of Idaho’s $685 million plan to acquire the University of Phoenix. What that is — and what that means for the deal — is harder to predict.

The outcome goes beyond the typical end-of-session dramatics that play out at the Statehouse every March. It could affect a purchase that could provide a windfall of millions of dollars of new revenue, or open the floodgates to millions of dollars of risk. The Legislature could slow the Phoenix purchase, reshape the contours of the purchase, or kill it in its entirety.

It’s all rapidly unfolding — or, if you happen to be a supporter of the deal, unraveling — in the heart of the legislative endgame.

On Tuesday, the House passed a resolution calling on the State Board of Education to reconsider its vote supporting the Phoenix purchase. House Concurrent Resolution 26 also opens the possibility of a legislative lawsuit blocking the deal. Since Tuesday, that 49-21 House vote has reverberated through the Statehouse.

A flotilla from Team Acquisition — including U of I President C. Scott Green, Phoenix President Chris Lynne, and officials from Phoenix’s owners, Apollo Global Management — have been meeting privately with lawmakers. Senate President Pro Tem Chuck Winder confirmed the closed-door conservations to Idaho Education News, after legislative leaders held a roundtable question-and-answer session with Statehouse reporters Thursday morning.

“We’re now hearing more than we’ve heard in the past, which is helpful,” House Speaker Mike Moyle, R-Star, said during Thursday’s Q&A. “Information alleviates concerns.”

But that doesn’t necessarily mean the resolution, and the threat of legal action, is fading away.

The Senate won’t take up the resolution for the next few days, Winder, R-Boise, told reporters. That’s because legislative leadership is waiting on an outside legal opinion on the purchase. Lawmakers hired outside the Statehouse, after in-house legislative attorney Elizabeth Bowen opined that the State Board has no legal or constitutional authority to purchase a private university, and operate it under the umbrella of a U of I-affiliated nonprofit. Bowen’s opinion furnished the underpinning for the House-passed resolution.

In a sign of how heavily lawyered the Phoenix issue is, the Legislature had to shop around for outside counsel. Lawmakers went to a well-known Boise firm, Givens Pursley, since go-to Boise law firms Hawley Troxell and Holland and Hart have conflicts on the matter, Winder said. Hawley Troxell has been the U of I’s go-to outside counsel on a lot of legal matters — including the Phoenix purchase, to the tune of more than $568,000.

Winder hopes the legal opinion will clarify two questions: the ultimate ownership of Phoenix, and the bottom-line financial exposure. U of I officials have maintained that the university’s risk would be no more than $10 million a year, or $50 million total, and only if its nonprofit fails to make bond payments. U of I officials also insist that the state faces no financial risk.

Others around the Statehouse are less sure.

Armed with a new report from Moody’s Investors Service, a firm that analyzes public and private entities’ credit ratings, Republican state Treasurer Julie Ellsworth sent out a news release Thursday saying the Phoenix purchase could threaten Idaho’s AAA credit rating.  This, she said, would carry a cost to taxpayers. The new Moody’s report doesn’t directly say the Phoenix purchase threatens the state’s credit rating (although Moody’s has already said the purchase could cause a “multi-notch” credit downgrade for the U of I).

The question of exposure — and whether there’s any real difference in a risk to the U of I and a risk to the state — is central to the Statehouse’s rising Phoenix debate. On Thursday, Senate Minority Leader Melissa Wintrow said it makes sense for a court to sort things out, and make sure the state isn’t at risk. “If something goes wrong, who’s on the hook?” said Wintrow, D-Boise.

Legal issues aside, there is a more fundamental question, said House Minority Leader Ilana Rubel. If lawmakers insert themselves into purchasing decisions, and nix any deal they don’t like, state agencies will never be able to cut a good deal on the taxpayers’ behalf.

“Agencies and entities need to be able to negotiate quickly, nimbly and with authority, and need to be able to do things without 105 people at the table for every transaction,” said Rubel, D-Boise.

As the Legislature has asserted a bigger role in the Phoenix debate —  almost 10 months after the State Board bullishly and publicly endorsed it — it’s still not clear where rank-and-file lawmakers actually stand on the deal itself. Even in Tuesday’s House debate, there wasn’t much discussion about the pros and cons of acquiring Phoenix, its online education infrastructure and its well-documented reputational baggage.

On Thursday, Moyle said he isn’t sure about the merits of the purchase. But he did say he is upset with the closed-door “garbage” that preceded the State Board vote.

Only Winder offered a critique of the deal itself. If there’s a way to minimize the risk, he said, Phoenix could put Idaho on the leading edge of where education is going. He explained his support with a nod to hockey legend Wayne Gretzky. “You skate to where the puck is going to be.”

These questions — the merits, the legality and the risks of unparalleled Idaho higher ed megadeal — are a lot to address in the waning weeks of the 2024 legislative session.

Legislative leaders say they hope to wrap up by March 29, only three weeks away. They say they are making progress toward adjournment, but the evidence is unconvincing. On Wednesday, the House voted on only one bill, prompting Rep, Stephanie Mickelsen, R-Idaho Falls, to float a motion proposing an afternoon session to plow through more of the docket. The House resoundingly voted her down.

“We want to shut this thing down,” said Moyle Thursday, responding to a question about the spate of bills hanging in limbo on the House calendar.

No one will object to shutting this thing down. But what the Legislature does with Phoenix, on its way out the door, could be one of this session’s most important decisions.

Kevin Richert writes a weekly analysis on education policy and education politics. Look for his stories each Thursday.

More coverage: Click here for our exclusive, 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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