Analysis: The U of I-Phoenix talks, and where things stand

It’s been 139 days since the proposed University of Idaho-University of Phoenix megadeal was last in the public eye.

On June 28, the State Board of Education gave the U of I another year to try to get a signoff from Phoenix — and skeptical legislators. The extension gave a reprieve into a $685 million deal lawmakers had all but killed in March.

The U of I is still hoping to swallow up Phoenix, a for-profit online colossus with an enrollment of 85,000. But the process has gone back underground — back where it started more than 18 months ago.

Here’s a look at where things stand — and a look at other variables that could affect the U of I’s polarizing Phoenix proposal.

University of Idaho President C. Scott Green, foreground, listens to the House State Affairs Committee discuss the U of I’s proposed University of Phoenix acquisition during a February hearing.

Is everyone still talking? By all accounts, yes. The U of I and the State Board are talking to Phoenix and its owner, Apollo Global Management. Gov. Brad Little and his staff are in the loop as well.

And U of I and State Board officials continue to talk to legislators. The Legislature is out of session until January, and no committee has come back to the Statehouse to discuss Phoenix, so conversations with lawmakers are occurring on an individual basis. “Our legislators are important to us and an important factor in any path forward with this affiliation,” university spokeswoman Jodi Walker said.

Emails to and from State Board officials and members and Little’s staff — obtained by Idaho Education News through a public records request — hint at these ongoing discussions. Citing attorney-client privilege, the State Board redacted emails with Kent Nelson, who is the lead lawyer on the Phoenix purchase for the U of I.

What is Phoenix saying? Not much. Phoenix declined comment for this story.

So let’s go back to what Phoenix said in early July, days after the State Board granted the U of I’s request for an extension. “We are committed to working with the University of Idaho and leaders in the state to complete our affiliation with the University of Idaho.”

But it’s also important to remember that the one-year extension gave Phoenix something it had wanted since spring: the chance to negotiate with other would-be buyers. In exchange, Phoenix gave the U of I $5 million to cover some of the $14 million it has spent on Phoenix-related consulting and due diligence. Phoenix’s “breakup fees” could climb to $10 million if Phoenix doesn’t change hands, or $20 million if Phoenix finds a different buyer.

U of I’s Phoenix costs continue to climb

A Boise-based law firm has billed the University of Idaho close to $1.1 million for reviewing the University of Phoenix purchase.

In September, the U of I provided Idaho Education News with $327,414 in invoices from Hawley Troxell, reflecting additional Phoenix-related billings from 2023.

The invoices “were mistakenly omitted from our response to (EdNews’) public records request dated December 22, 2023,” U of I special counsel Kent Nelson said in a Sept. 11 email to EdNews.

Combined with the invoices previously provided to EdNews, this brings Hawley Troxell’s billings to $1,089,481.

And it now means the U of I has spent at least $14.5 million on Phoenix-related consulting and reviews.

Since Phoenix is a private university, there’s basically no way to know if it is talking to other suitors. After all, Phoenix held the U of I and the State Board to a strict nondisclosure agreement, while the parties talked behind closed doors last spring about a possible partnership.

What happened to the Labrador lawsuit? Nothing, yet.

The Idaho Supreme Court heard oral arguments on June 13 on Attorney General Raúl Labrador’s lawsuit against the State Board. It hasn’t issued a ruling.

A five-month delay isn’t unusual, said Nate Poppino, a spokesman for the court. “Time can vary depending on the issues involved and the deliberations around those.”

The lawsuit challenges the State Board’s closed-door Phoenix discussions, saying the board violated Idaho’s open meeting law. If the Supreme Court sides with Labrador, overturning a District Court ruling, this could void the State Board’s May 2023 public vote endorsing the Phoenix purchase.

Does last week’s presidential election change the picture? Yes and no.

President-elect Donald Trump will almost certainly be friendlier to for-profit universities than a Kamala Harris administration would have been. And that’s assuming a federal Education Department remains in place. Trump supports mothballing the agency, a conservative cause dating back to Ronald Reagan’s first term as president.

But a sympathetic White House isn’t going to change the facts. Apollo will inevitably move Phoenix. As the U of I has long pointed out, Phoenix is part of a private equity fund that has reached its termination date. That means Apollo has to sell off Phoenix, to the U of I or another suitor.

Do last week’s legislative elections change the picture? Possibly. It’s been a rough year for the U of I on the legislative front, and last week only made matters worse.

The problems started in the spring, when the U of I lost its most well-placed Phoenix booster: Senate President Pro Tem Chuck Winder, R-Boise, the top-ranking member of the Senate. In March, Winder carried a bill designed to restructure the Phoenix deal — but even he couldn’t get it through a skeptical Senate.

Winder later lost in the May Republican primary. Winder was one of several mainstream candidates who lost in the primaries that shifted the GOP caucuses significantly to the right.

Republicans picked up three legislative seats last week. Meanwhile, Viola Republican Sen. Dan Foreman — an unapologetic hardliner who happens to represent the U of I campus — withstood a tough re-election challenge.

U of I President C. Scott Green will face a more conservative and maybe even more skeptical Legislature next year. And he probably bought himself some adversaries. During the primary, Green took the unusual and highly risky step of stepping into GOP politics. He gave $7,289 to 11 Republican candidates, including Winder. Seven of these candidates lost — as did Rep. Megan Blanksma, who received money from Green in 2023. And Foreman prevailed over opposition from a PAC funded largely by Green’s wife, Gabriella.

As U of I and State Board officials continue to meet with legislators individually, chances are they are running into two obstacles: questions about the Phoenix purchase itself, and resentments over Green’s political foray.

“We have no doubt (Phoenix) will be a topic to be taken up during the upcoming legislative session,” Walker said.

No doubt about that, indeed.

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

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

Kevin Richert

Kevin Richert

Senior reporter and blogger Kevin Richert specializes in education politics and education policy. He has more than 35 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. He can be reached at [email protected]

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