As Purdue University’s 2018 purchase of Kaplan University indicated, a public institution buying a for-profit college can be controversial. Add in a pandemic and related budget cuts, and the stakes are even higher.

That’s the situation in Arizona, where scores of faculty at the state’s flagship institution are pressing administrators for more details on a deal they say they were left out of.

Earlier this month, the University of Arizona announced plans to blow out its online offerings and reach nontraditional students, including those outside the state, by acquiring Ashford University. 

For $1, a nonprofit entity set up by U of Arizona, called the University of Arizona Global Campus, would get the online for-profit institution’s students, curriculum, faculty and certain staff, plus some cash. In exchange, the new organization would pay Ashford’s parent company, Zovio, to provide it with a suite of educational services for the next 15 years.

Last week, the U of Arizona’s Faculty Senate presented to the state’s board of regents a survey of 2,253 faculty, staff and graduate students, the majority of whom said they do not endorse the deal. 

U of Arizona faculty members have stressed through formal letters and other pushback that the acquisition stands to erode U of Arizona’s reputation and prey on Ashford students. And they’ve argued that faculty should have been more involved in the decision-making process, particularly given recent austerity measures across the institution. Board members have been encouraging of the deal, though they’ve promised oversight.

Robert Kelchen, a higher education professor at Seton Hall University, said in an interview before the survey was taken that he’s “not surprised” by the resistance. Most faculty weren’t aware of the plan before it was announced on Aug. 3. And many of those who were had to sign nondisclosure agreements.

As compounding factors, general skepticism in higher ed has followed the for-profit business model, and the state university had been making extensive pandemic-related job cuts and planning furloughs as it prepared to launch the new initiative. In their missive to the regent board, faculty members noted other recent instances in which they felt shared governance standards were lacking, including with furlough plans and the institution’s process for reopening campus. 

Faculty members have also increased oversight, forming a committee this summer pressing for more shared governance and proposing other ways to cover COVID-19 losses while avoiding extensive furloughs. Another group within the institution that came together earlier this year solicited an independent financial review of the university to determine whether the cuts are necessary. And now, they’re attempting to form a union for all university employees. 

The Ashford deal, while not the only instigator of unionization, is “a threat to … the core mission of the university,” said Leerom Medovoi, an English professor at U of Arizona who led the effort to research the higher ed union landscape to make recommendations about how to unionize.

“We will definitely have a union within a matter of months,” he said.

‘They’re not here to play games’

Administrators have emphasized that the Ashford deal will help the university keep up with changes in higher ed. 

During a more than two-and-a-half-hour faculty senate meeting on Aug. 17, Provost Liesl Folks pointed to several reasons for the deal, including state disinvestment in higher ed and the resulting importance of tuition revenue, as well as nationwide declines in traditional-age students and a desire to reach adult learners.

“Many institutions, ours among them, have had to … think about broadening our scope of operations in order to make sure that we are sustainable for the long run,” Folks said. “And I think that this acquisition really folds neatly into that framing.”

Craig Wilson, the university’s vice provost of online and distance education, was more explicit.

Pointing to the online enrollment at Arizona State, Grand Canyon and the University of Phoenix, all in Arizona, Wilson told faculty senators, “the thing that’s missing here is that we as a flagship don’t really have a big stake in the ground in terms of our ability to reach out.”

He homed in on Southern New Hampshire University, which enrolls some 135,000 people online and recently opened an operations center in Tucson. “They’re not here to play games,” Wilson said.

A slide from University of Arizona administrators’ presentation to the faculty senate on Aug. 17, showing the online enrollment of nearby institutions.

Hallie Busta/Education Dive, data from Screenshot of U of Arizona officials’ presentation at the Faculty Senate meeting on Aug. 17, 2020

 

Brent White, U of Arizona’s vice provost for global affairs who will lead the transition through the deal’s anticipated closing in December, doesn’t think the university can compete online without something like Global Campus. U of Arizona currently enrolls about 5,000 students online. “We have been too elitist,” White told the faculty senate. “Too concerned that our reputation may suffer if we define ourselves by who we include and not by who we exclude.”

The university accepted 84% of applicants in fall 2018, according to U.S. News & World Report. 

Many faculty members, however, say the acquisition defies the U of Arizona’s land-grant mission — extracting revenue from Ashford and its students while it’s unclear how the university will invest in the new entity. They also point to lawsuits against Ashford and poor student outcomes that they say could tarnish U of Arizona’s brand. Top university officials addressed the latter issue at a meeting with the state’s board of regents Thursday, saying they were confident Ashford had improved its practices.

During the Aug. 17 meeting, though, faculty senators pressed administrators for more insight into the deal, including whether the university can still back out (not without breach of contract, White said) and plans for oversight of the new entity. They also asked to see the contract documents. To that end, faculty senators voted in favor of calling on U of Arizona’s president to immediately release to them “all documentation of the Ashford acquisition” as well as related documents showing the institution’s due diligence.

Faculty senators aren’t the only ones asking those questions.

“We want to see the details, we want to understand what are the ways in which we claim we are going to improve the education at Ashford, and a fuller consideration (of) … what are the implications for our own programs?” Gary Rhoades, a higher education professor at U of Arizona, told Education Dive in an interview. Rhoades, who is not a senator, is the lead author of a 20-page letter from the College of Education outlining concerns with the deal. The senate included that letter in the materials it sent to the regent board expressing concern with the deal.

The merger of the University of the Rockies into Ashford University, both owned by Zovio, then called Bridgepoint Education, was finalized in November 2018.

Zovio SEC filings

 

Global Campus will face at least some outside oversight. 

The board, which doesn’t need to sign off on the deal, approved a motion Thursday to have its general counsel review the affiliation agreement before it is executed, according to a meeting transcript shared with Education Dive. 

Regents pointed out another concern: Global Campus is a private entity not subject to public records laws, so the board needs a way to keep tabs on its progress. As such the university will also have to update the board as it moves toward finalizing the agreement. And it will be required to provide other information as requested, along with an annual report on the new entity.

The other institutions under the board’s purview, including Arizona State, along with their affiliates, could also soon be subject to new scrutiny. The board approved a motion for them to work with the regents to develop success metrics specific to online education.

“This has been something that has been on our agenda to move forward with as our online programs have become larger and more successful, and certainly COVID has pushed us into that arena more heavily,” said Lyndel Manson, chair elect of the board and an appointee of Republican Gov. Doug Ducey, according to the transcript.

An IOU or an investment?

Faculty aren’t the Ashford deal’s only detractors. Phil Hill, a consultant specializing in education technology, questioned whether buying Ashford is a boon for the university if cuts elsewhere could be making it harder to serve current students. 

He also argued that the university is “being creative in their accounting assumptions,” particularly concerning the part of the deal in which Zovio gives Global Campus a $37.5 million upfront payment. 

That sum is the first year-and-a-half’s worth of the $25 million in annual revenue Global Campus is guaranteed for the first five years of the relationship. It drops to $10 million per year for the next 10 years. Zovio gets its 19.5% cut of annual tuition revenue after those amounts are paid. The university has said it plans to use the income from closing the deal to help “alleviate the financial burden” it is facing, according to an FAQ on the deal. 

But Hill is skeptical. 

“It’s an IOU back to Zovio,” Hill said. And it’s unclear what happens if the new entity doesn’t make enough money to cover its operating costs or if Zovio has to spend extra on marketing, Hill wrote in a blog post on Aug. 10.

A U of Arizona spokesperson shared the transcript of the board of regents meeting and a set of informational documents in response to Education Dive’s emailed questions about the institution’s response to faculty pushback and how the new entity will be financially supported.

U of Arizona officials took questions from faculty members during a senate meeting on Aug. 17.

Hallie Busta/Education Dive, data from Screenshot of the U of Arizona officials’ presentation at the Faculty Senate meeting, Aug. 17, 2020

 

Like several other public institutions nationwide, U of Arizona is grappling with the issue of how to expand online while reaching the expansive market of U.S. adults with some college but no degree. 

One option is to follow the lead of institutions like Purdue and now the U of Arizona and acquire the capacity. Others, such as the University of Florida, have sought to grow their online presence over time, albeit more slowly.

The former option, to “buy-slash-rent another company,” is the easiest way to expand, Kelchen said. Supporters of that approach say it gives a university access to the capital needed to scale quickly. And during a recession, it can be hard to get support within an institution for spending money on a new initiative. 

Hill said one could argue that in addition to 35,000 new students, U of Arizona is also buying some degree of innovation, including Ashford’s historical investment in multiple start times per year and more aggressive uses of technology to personalize education. But that only works if they integrate Ashford, Hill said. 

U of Arizona’s online arm and Global Campus will be separate entities at the start and Zovio won’t provide services to the former. But officials aren’t ruling it out. “The University of Arizona will have the option to eventually incorporate Global Campus into Arizona Online at its discretion in the future,” the FAQ states

Since acquiring Kaplan, Purdue has taken steps to make its parent company an online program manager across Purdue, and Hill could see something similar happening in Arizona. 

Defining shared governance

That U of Arizona bought assets from a public company adds an extra wrinkle. 

Faculty have taken issue with the requirement that those who were read in on the deal had to sign NDAs. 

University officials said the NDAs — which around 200 people from across the university signed  and the limited consultation process were required because the deal involved a publicly traded company. 

But NDAs could have the effect of limiting the scope of decision-making, said Lorenzo Baber, a higher education professor at Loyola University Chicago. “Who’s going to sign nondisclosure agreements and who’s not may have influence on whose perspectives are in the room and the degree to which that is really a consensus decision,” Baber said.

It’s one example in the debate over the interpretation of shared governance as it plays out in this deal, which sees a public flagship seeking a new revenue stream while cutting elsewhere.

“I think we have to understand that shared governance doesn’t promise shared decision-making, it promises consultation, and that we consulted to the extent that we were able to,” Folks said during the Aug. 17 meeting.

But Rhoades and other faculty say they feel the university isn’t listening.

Part of shared governance, Rhoades said, is “meaningful participation with full information of shared governance bodies — not just of a few individuals, but of bodies, like the faculty senate, consulted as a body.”

Just because administrators were limited in how much information they could share upfront doesn’t mean they can’t be more transparent after the acquisition. However, “it’s an open question how much faculty would actually know about the new product,” Kelchen said, citing limits around using public records to learn about it.

Baber acknowledged that consensus-building is getting harder for administrators as tenures shorten and pressure from state legislatures and governing boards ramps up. While faculty resistance may not stop the deal, it puts their opposition on the record and could open the door to more talks.

“Hopefully what it does is slow the deal enough … so that again, these issues of tension are … identified, discussed and resolved to the point where there’s at least some consensus,” Baber said.

 

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