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Josue Valencia
Deep Dive
U of Arizona and Ashford are the latest case study in online expansion
Faculty are pushing back on officials' plan to buy the for-profit
university as a way to quickly scale online, while regents are
promising oversight.
Hallie Busta
Aug. 25 2020
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.
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.
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.
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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