Statehouse roundup, 2.29.24: Lawsuit could torpedo Phoenix purchase, State Board member says

If the Legislature follows through on a lawsuit, the University of Idaho’s $685 million University of Phoenix purchase would be at “grave risk,” a State Board of Education member said.

“It would be very difficult for us to place bonds with that legal threat out there,” State Board member Kurt Liebich told lawmakers, who spent two hours Thursday morning mulling just that possibility.

After a lengthy hearing, the House State Affairs Committee took no vote on House Concurrent Resolution 26 — which urges the State Board to reconsider its May 18 vote approving the Phoenix purchase. The resolution also opens the door to a legislative lawsuit. House State Affairs will resume its hearing Friday morning, and possibly vote at that time.

Thursday’s hearing centered on the law — and a closed-door process that left lawmakers blindsided.

The U of I and the State Board again maintained that the purchase is legal and constitutional. Phoenix, a for-profit online giant serving some 85,000 students, would fall under the umbrella of Four Three Education, a U of I-affiliated nonprofit.

A legal opinion, distributed to House State Affairs members Thursday morning, asserts that the State Board “has simply followed the rules set forth by the Legislature” by creating a nonprofit to operate Phoenix. The 10-page letter came from Hawley Troxell, a Boise-based law firm and one of the U of I’s high-priced consultants on the Phoenix purchase. The U of I has paid Hawley Troxell more than $568,000 on Phoenix consulting, according to a spreadsheet sent to legislative budget-writers Wednesday and obtained by Idaho Education News Thursday.

But at the start of Thursday’s hearing, the Legislature’s lawyer walked the committee through her legal argument — contending that the State Board has no legal or constitutional authority to operate a private university. Legislative legal counsel Elizabeth Bowen also said the U of I and the State Board had deliberately cut elected lawmakers out of the loop.

Legislative legal council Elizabeth Bowen testified at the House State Affairs Committee Thursday. She discussed the pitfalls of the University of Idaho’s proposed purchase of the University of Phoenix and the state’s potential liability. (Photo: Darren Svan/EdNews)

“I do not think an unelected board should be making decisions of this magnitude,” Bowen said. “I think you are the ones who should be making this decision.”

On Thursday, committee members still chafed over the process. Lawmakers were never briefed on the potential Phoenix deal until May 17 — one day before the State Board approved the purchase.

“I have been left in the dark on this,” said Rep. Bruce Skaug, R-Nampa.

The U of I maintains that it needed only the State Board’s approval for the purchase. While recognizing legislators’ “discontent” over the process, U of I President C. Scott Green said there was no mechanism to bring lawmakers into the conversation.

“If we had been asking for an appropriation, you would have been on our checklist,” he said.

While State Board members had only three months to vet the deal — to meet a deadline from Phoenix and its accrediting body — Liebich conceded the board should have reached out to lawmakers. “It was a mistake on our part.”

Thursday’s hearing was the Legislature’s second in-depth discussion of Phoenix in as many days; on Wednesday, Joint Finance-Appropriations Committee members grilled Green on financial details. On Thursday, lawmakers tried to get a handle on the mechanics of an affiliation, and Green and Liebich tried their best to sell its merits.

Committee chairman Brent Crane, R-Nampa, expressed concern that Phoenix would become a “shiny object” that would distract attention from the U of I’s mission and its campus community.

“The University of Phoenix is going to continue to operate as the University of Phoenix,” Green said. “My time will be spent on the University of Idaho.”

Rep. Heather Scott, R-Blanchard, suggested the Phoenix affiliation would turn the U of I into Idaho’s “Wal-Mart” of online higher education, cutting other in-state schools out of the sector.

“We’re not looking to corner the market on anybody,” Green said. “We’re trying to reach out to the people of Idaho and provide choice.”

Risk was another recurring theme.

Green and Liebich said the state’s biggest risk is standing still, at a time when all colleges will be competing for a dwindling share of traditional students. The U of I also said the state would have limited financial risk — backstopping no more than $9.9 million a year in bond payments, or $50 million total.

But Bowen said the overall risks, from student loan writeoffs or other factors, remain largely unknown. “I don’t think we can know until the Legislature is able to review the financial documents for the University of Phoenix.”

Click here for our exclusive, in-depth coverage of the Phoenix proposal.

Bill creating new early childhood office advances

A proposal to create a new state office of early childhood is heading to the House floor. 

The House Education Committee narrowly voted to advance the bill after debating whether the state should be funding early childhood services in the first place. 

Reps. Britt Raybould and Megan Blanksma’s bill would consolidate existing state programs, which are scattered across multiple agencies, under one office. 

“The office is going to help families get access to these services that are oftentimes placed behind different barriers of entry,” Raybould said.  “This helps reduce the regulatory burden on Idaho’s families.”

Early childhood services include child care, special education, head start, home visiting and other similar services to support children 5 and younger, according to the bill. 

Setting up the office would cost up to $750,000, according to the legislation’s fiscal note. 

The committee voted 8-6 to advance the proposal. Rep. Soñia Galaviz, D-Boise, who supported the bill, said navigating early childhood services sometimes seems “deliberately complex.”

“The families that are going to access this are the most vulnerable in our communities,” she said. “I appreciate that this is going to create a framework for, potentially, a one-stop shop.” 

Representatives from the League of Women Voters and Voices for Children testified in support of the bill. 

Ron Nate, president of the Idaho Freedom Foundation, opposed it. Nate, a former lawmaker who lost his reelection bid to Raybould in 2022, said the Idaho Constitution directs the Legislature to maintain public schools for 6 to 18-year-olds. 

“It says nothing about early childhood education,” he said. Early childhood education “falls outside the Constitution, outside the proper role of government, and it dips us into the ‘Communist Manifesto.’” 

Rep. Dale Hawkins agreed that early childhood services aren’t “the proper role” of the state. “I do not think this is good government,” said Hawkins, R-Fernwood.

New bill would bring telehealth services to schools 

A new bill, introduced Thursday, seeks to make telehealth services accessible on public school campuses. 

Rep. Dori Healey’s bill says a public school may provide telehealth services for students in private rooms on school grounds. Often, students must leave school for a counseling appointment, but the legislation would allow students “to simply step out of class, access that behavioral health service and go back to class,” said Healey, R-Boise. 

Offering telehealth would be optional for schools. But if they choose to offer it, the bill would set some parameters, including that private rooms and technology for web meetings are accessible. Also, schools must provide parents access to the telehealth sessions. 

“It gives (school districts) the ability to do this if they have the capability,” Healey said. 

The House Education Committee voted unanimously to introduce the proposal, meaning it could return for a public hearing.

IDLA funding formula change heads to governor

The Idaho Digital Learning Academy could soon have a new funding formula. 

On Thursday, the Senate passed a bill to “modernize” the formula by giving the online state school $430 per enrollee. That’s consistent with how IDLA pays its part-time teachers — on a per-enrollee basis.

“These two things are tied together,” said Senate sponsor Lori Den Hartog, R-Meridian. “So this funding structure makes sense.” 

House Bill 452 also would allow the Legislature to tie IDLA teacher pay to other state salaries, so they’d be included in statewide employee raises. 

The changes would save the state $1.3 million, Den Hartog said. 

The House already approved the bill. It now heads to the governor’s desk.

Senate makes short work of three minor bills

It took the Senate Education Committee only a few minutes to plow through three relatively minor bills.

House Bill 454 would allow high school students to pay up to $1,000 of advanced opportunities money on a career-technical class. The current cap is $500 per course.

House Bill 580 would set a minimum of 10 paid leave days for school employees who are military reserve members.

House Bill 529 gives the state treasurer the authority to withdraw and distribute money from a state charter school revolving loan fund.

The committee’s quick and unanimous votes are not surprising; all three bills passed the House without a single no vote.

The bills now go to the full Senate.


Kevin Richert and Ryan Suppe

Kevin Richert and Ryan Suppe

Senior reporter and blogger Kevin Richert specializes in education politics and education policy. He has more than 30 years of experience in Idaho journalism. Senior reporter Ryan Suppe covers education policy, focusing on K-12 schools. He previously reported on state politics, local government and business.

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