The $685 million University of Phoenix purchase is unlikely to affect the state’s credit rating, a financial adviser for the University of Idaho said Monday.

But state Treasurer Julie Ellsworth is skeptical. She isn’t sure the purchase is constitutional — or even necessary, if the U of I merely wants to work with an online partner.

And the unusual nature of the transaction — creating a U of I-affiliated nonprofit to purchase and manage what is now a for-profit university — also gives Ellsworth heartburn. “I’m very concerned with the fact that this vehicle does not exist elsewhere.”

On Monday, Ellsworth convened a meeting of the state’s Credit Rating Enhancement Committee — which is charged with making sure the state can secure low-cost financing in the bond market.

The hour-long meeting focused somewhat on risk — and whether Idaho’s lofty AAA credit rating could be in jeopardy.

No state has experienced a credit downgrade due to the acquisition of a for-profit university, the U of I said in its presentation. And there’s a degree of separation, said Ryan Conway, the  managing director of PFM Financial Advisors, which is working with the U of I on the Phoenix purchase. In reviewing the state’s rating, analysts are unlikely to drill into the U of I’s credit posture — or the status of Four Three Education, the nonprofit that would take over operations of Phoenix, on the U of I’s behalf.

But there isn’t as much separation between Four Three and the U of I, and credit analysts reviewing the university could wind up lumping the two entities together, Conway said. That’s why university officials have said the purchase could result in a downgrade of the U of I’s credit rating, from its current A2 rating to an A1 rating. University President C. Scott Green has said the U of I would still retain an “investment grade” bond rating, but a downgrade could increase financing costs.

Through much of Monday’s meeting, Ellsworth and state Rep. Josh Tanner, R-Eagle, peppered Conway and university officials with pointed questions.

Ellsworth cast doubt about the U of I’s due diligence process, since some of its advisers, including PFM, would benefit financially if the purchase goes through. “I just see conflicts there.”

Tanner, a member of the Legislature’s Joint Finance-Appropriations Committee, again said lawmakers had been cut out of the discussion. He asked if lawmakers would have more time at the beginning of the 2024 session to review the purchase.

U of I and Phoenix officials have hoped to complete the purchase early next year, and university legal counsel Kent Nelson didn’t promise any flexibility in the timetable.

“The timing of this transaction is the timing of this transaction,” he said.

Ellsworth said her committee is planning a Nov. 17 meeting with Green and Gov. Brad Little’s office to further discuss the purchase. The committee will also prepare a report to the Legislature.