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The deeply divided Board of Trustees of the University of Arkansas system on Monday rejected a proposal by the system’s chancellor to affiliate the university with a nonprofit entity that has been seeking to buy the for-profit behemoth University of Phoenix.
By a vote of 5 to 4, with one abstention, the Arkansas system’s board rejected a resolution (courtesy of The Arkansas Times) supporting an affiliation with Transformative Education Services.
Under the proposed arrangement, the services company would buy Phoenix (at a price that estimates have placed at about $500 million) and then enter into an agreement with the Arkansas system that would have provided the university up to $20 million a year, according to published reports.
The one trustee who abstained, Kelly Eichler, expressed support for the partnership at a board meeting last week, The Arkansas Democrat-Gazette reported. She did not speak at Monday’s emergency meeting, where her abstention was the difference between a 5-to-5 tie and the narrow loss for the proposal.
System president Don Bobbitt, who has led the push to purchase Phoenix, opened Monday’s meeting by asserting that he was seeking the board’s approval even though the arrangement was merely a licensing agreement that he had the authority to carry out.
Although Bobbitt did not offer a public statement after the board’s vote, a spokesman, Nathan Hinkel, offered the following: “Dr. Bobbitt has previously said it would be difficult to move forward without support from the Board for this project. That statement remains true, and he is certainly disappointed in the outcome of the meeting.”
Reports that Phoenix might find a home in Arkansas first arose in January, when The Arkansas Times reported on discussions involving the Arkansas system.
Phoenix was once the biggest university in the United States, and it was also the flag bearer of a for-profit higher education sector that burgeoned during the 2000s and early 2010s but has shrunk significantly in the last decade. Though Phoenix is far from its peak of nearly 470,000 students in 2010, it still enrolled 78,600 according to its 2021 annual academic report, the most recent available.
Economic trends and aggressive regulatory scrutiny from the Obama administration battered the university’s reputation and drove enrollment down. In 2019, the institution and the Federal Trade Commission agreed to a multimillion-dollar settlement following a five-year investigation into whether the university engaged in deceptive advertising by falsely touting its relationships with big employers; the agreement did not include an admission of wrongdoing.
Phoenix had reportedly been on the market for several years, and its name had cropped up in recent years as numerous public universities sought to absorb major online players, often for-profit ones, to jump-start or expand their own online operations, often in controversial arrangements.
In 2017, Purdue University acquired Kaplan University and its roughly 32,000 students, producing the nonprofit Purdue University Global. In 2020, the University of Arizona purchased for-profit Ashford University in a deal that included roughly 35,000 students—all online. The acquisition, which became the nonprofit University of Arizona Global Campus, raised concerns among Arizona faculty members about reputational risks in associating with a for-profit university that had been accused of predatory recruitment practices.
Opinions about a possible arrangement between Arkansas and Phoenix had ranged widely.
At a board meeting last week, one trustee who favored the affiliation (and voted for it on Monday), Ted Dickey, said that passing on the arrangement would be like Blockbuster failing to buy Netflix. “If we’re not willing to disrupt our own business, someone else will,” he said, as reported by KNWA.
But at Monday’s meeting, other trustees complained about Phoenix’s “terrible reputation” and said affiliating with it would create a “mess” that Arkansas would be wise to avoid.
That point of view ultimately, if narrowly, held the day, seemingly sending both Phoenix and Arkansas back to the drawing board.
