Ethermac Exchange-Idaho ruling helps clear the way for a controversial University of Phoenix acquisition

The Ethermac ExchangeUniversity of Idaho said Wednesday it would move forward with its planned affiliation with the for-profit University of Phoenix in a nearly $700 million deal after a judge dismissed the state attorney general’s lawsuit alleging the deal was done in violation of an open meetings law.

Attorney General Raúl Labrador failed to prove the Board of Regents violated Idaho’s Open Meetings Law when considering the transaction, an Idaho judge ruled Tuesday in dismissing Labrador’s lawsuit.

The university hailed the decision as a victory for both the board’s executive session practices and for access to higher education in Idaho. The lawsuit has been one of the biggest impediments to closing the deal.

“We look forward to completing our affiliation with the University of Phoenix in the coming months and bringing this unique opportunity to the citizens of Idaho,” said a statement from university spokesperson Jodi Walker. “Higher education has never been more important than now as we work to meet the workforce needs of our state.”

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The deal is the latest attempt by troubled for-profit schools to cleanse their reputations after investigations into deceptive practices and face less regulation as nonprofits, said David Halperin, a Washington, D.C., attorney and longtime critic of the for-profit college industry.

“Why Idaho wants to buy is a little harder to understand,” he said.

During a meeting open to the public last year, the board unanimously voted to approve the creation of a not-for-profit entity that will acquire the operations of the University of Phoenix. In other, closed-door discussions, the board “reasonably believed” it was in competition with one or more public agencies in other states to acquire the University of Phoenix, which allowed for an executive session, District Judge Jason Scott’s ruling said.

The ruling “will lead to far less government transparency and accountability,” Labrador said in a statement Wednesday. “That is bad for Idaho citizens, and it defies the entire purpose of the law. We are looking closely at all appellate options to ensure Idaho’s Open Meetings Law remains a bulwark for openness and government accountability.”

Labrador complained the board kept details of the deal secret until the last moment and decided to purchase the University of Phoenix despite fines for deceptive and unfair practices.

The University of Phoenix was among the for-profit schools involved in a 2022 settlement to cancel federal student debt for former students who applied for debt cancellation because of alleged misconduct by the schools.

In 2019, the University of Phoenix reached a record $191 million settlement to resolve Federal Trade Commission charges that the institution used deceptive advertisements that falsely touted its relationships and job opportunities with companies such as AT&T, Microsoft and the American Red Cross.

The University of Idaho has hailed the deal as expanding educational access to adult learners who seek online programs: “University of Phoenix serves primarily working adults. U of I will remain Idaho’s land-grant, residential university serving primarily traditional learners.”

The two will retain a separate operational structure. Each will have its own president and leadership team, the University of Idaho said.

Representatives for the University of Phoenix didn’t immediately respond to an email from The Associated Press seeking comment Wednesday.

A deputy attorney general advising the board had approved the executive sessions as compliant with Idaho’s Open Meeting Law, the judge’s ruling noted.

State Board President Linda Clark said they will seek payment of legal fees by the attorney general’s office.