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Idaho lawmakers question University of Idaho deal to affiliate with University of Phoenix

In a special meeting, lawmakers on the state's budgeting committee requested details of the deal, potential risk of public dollar expenditures and transparency.

MOSCOW, Idaho — The target is on the table for the University of Idaho, as they hope to make a deal to affiliate with the University of Phoenix to improve access to education around Idaho. 

The University of Idaho said the purchase would be financed through non-taxable and taxable bonds through a new non-profit organization setup to manage assets of the University of Phoenix.

Idaho lawmakers have major questions about the deal.

“We see that this transaction has potential, but we also see that it has risk. And as elected representatives, we on this committee specifically have the duty of fiscal oversight of the taxpayer's money,” said lawmaker, Rep. Wendy Horman.

Rep. Wendy Horman is one of the leaders on Idaho’s budgeting committee, JFAC. The committee met Friday to ask questions to U of I and State Board leaders.

“We want to trust, but we must verify. And if we can't verify, we can't trust," Horman said. "So, we want to ensure that this deal is constitutional, legal, financially sound and that Idaho taxpayers will not pay the price if the deal does go awry.”

If the deal does go awry, University of Idaho President Scott Green said U of I is agreeing to guarantee up to $10 million annually to cover payments if the non-profit they setup to manage the project cannot cover funds. However, advocates for the U of I deal said they aren’t concerned, due to the University of Phoenix’s documented ability to generate substantial cash flow.

A hang up for lawmakers centers around the non-disclosure agreements, or NDAs, that U of I and State Board leaders signed preventing them from sharing details of the deal and projections of the operations.

“I fully recognize that the way this transaction was conducted was not ideal and probably was not my preference. But as those of you who work in business know, sometimes we have to play the cards that were dealt and make compromises to reach agreements to get done," Green said. "This transaction came to us very recently. We quickly identified the transaction and we put together a team of the best and brightest experts out there.” 

Lawmakers expressed that they understood the principal of the NDAs; however, they still questioned how they and the public are supposed to understand the deal and the risks associated with it without access to more information. President Green explained that the NDA benefits University of Idaho as the buyer as well.

“On the buyer's side. What it enables us to do is go in and take a look at the books and records at a detailed level as detailed questions assess for ourselves the risk involved, and get our experts, which we have world class experts here, the best in the business to take a look at that and determine, okay, what are the risks,” Green said.  

Lawmakers asked questions about the deal and the risks surrounding it for roughly two hours. U of I and State Board leaders essentially explained that public money was only at risk in a worst-case scenario - something leaders concede is highly unlikely but still a risk. Some lawmakers are hoping and asking if the NDA can be dropped ahead of the deal closure.

“This transaction is not done until it's closed. And in the meantime, that competitive information could get out into the marketplace and to their competitors," Green said. "So, I'm just saying, I just don't see them doing that. You know, it's unfortunate, but it's kind of, where it is. And that's kind of the way business is done.”

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