A new report from the Arizona Board of Regents shows officials knew buying an online college was financially and ethically risky for the University of Arizona, but they rushed ahead with the purchase anyway.
The report published Tuesday was the board’s response to a demand for information from Gov. Katie Hobbs after she learned of the UA’s recent financial problems.
Hobbs requested the report in a Jan. 25 letter addressed to John Arnold, the board’s executive director and interim UA chief financial officer, and Fred DuVal, the board’s chair. In her letter, she criticized the regent’s “lack of accountability, transparency” and “leadership” in their response to the UA’s financial crisis.
Hobbs asked for “a report that details the rationale and process that were used to assess the purchase of Ashford University and its subsequent rebranding as the University of Arizona Global Campus by February 20, 2024, and how it was vetted by university and ABOR officials.”
Hobbs demanded further transparency and accountability for the public university.
“In addition to the financial concerns raised during the process, significant ethical problems with Ashford University’s business model appear to have been brushed aside by university leadership during the acquisition,” she wrote. “In light of these concerns, I request the report include academic performance metrics for the Global Campus and information detailing the steps taken to ensure the Global Campus provides the same high-quality education given to students in the university’s other divisions.”
The purchase was contentious from the start. In 2020 the UA’s own business school spoke out against the purchase of Ashford University, an online for-profit school and subsidiary of Zovio Inc., in a letter to the board of regents and UA President Robert Robbins.
The business-school letter, signed by six professors, referred to the Ashford purchase as a “lemon” for various reasons, including low graduation rates and declining enrollment, and called for the university to abandon the project immediately.
Despite this and ongoing objections from faculty senate representatives, Robbins and then-Vice President of Global Affairs Brent White signed the purchase agreement on Dec. 1, 2020 — only 9 months after the report states the university “became aware of a potential opportunity to acquire [Ashford University]” in March 2020.
Ashford University had also faced extensive outside scrutiny, including losing a lawsuit in California resulting in $72 million of loan forgiveness for 2,300 students.
Here’s a breakdown of some of the new report’s key findings. The full board of regents report and cover letter can be found here.
The board of regents and UA officials were aware of the controversy surrounding Ashford university.
- UA officials were aware of the various problems with Ashford, including scrutiny from federal and state regulators and faculty groups, and investigations of Ashford by federal and state agencies
- University officials say they addressed these issues by speaking with Ashford and its stakeholders about changes that were implemented both through an internal team and through an external independent firm. Additionally, UA officials assumed that the U.S. Department of Education would not look to the UA to recoup the $72 million in student loan relief for students deceived by Ashford University. However the federal agency’s senior department official stated in August that they’ll “seek to recoup the funds from the current owner, as well as anything we can get out of Zovio,” according to an article by Inside Higher Ed.
- Hobbs states that “significant ethical problems with Ashford University’s business model appear to have been brushed aside by university leadership” in the Jan. 25 letter. The board rejected that notion stating, “the UArizona team undertook further diligence on these matters and obtained repeated assurances from Zovio leadership that these practices had been corrected. Nonetheless, UArizona pursued a number of risk mitigation strategies, including the negotiation of provisions in the definitive agreements aimed at protecting the interests of both UArizona and UAGC from the lingering consequences of the bad acts of Ashford and Zovio.”
- The board of regents said it was informed throughout the acquisition process and even “voiced hesitation about the pace and compressed timeline of the transaction” so the UA team included a series of provisions in the purchase agreement “to protect the interests of UArizona and UAGC, along with additional diligence measures.”
A series of teams and outside consultants were involved in the acquisition.
- UA officials created a “core” group including then-Chief Financial Officer Lisa Rulney, General Counsel Laura Todd Johnson, then-Vice Provost for Global Affairs Brent White and formed working groups for “for academic, operational, financial, and legal diligence” which operated from April 2020 to July 2020 and consulted with “200 internal leaders.” Rulney resigned from her position as CFO in Dec. 2023 but will continue working under a different title with the same salary through June 30. White left the university in March of 2022.
- A nonprofit corporation called UAGC Corporation was formed to acquire the operations and assets of Ashford and run it separately from the UA. Two of its board members were UA-appointed and Robbins helped choose the global campus’ president. The UA provided administrative support services and their affiliation agreement allowed UA to acquire the global campus after three years of the agreement’s effective date. Senior leaders of UAGC Corporation were UA employees and reported to both Paul Pastorek —then senior vice president for UAGC — and UA senior leaders.
- The UA vetted the 909 Zovio employees involved in online program management services and hired 791 of them. The UA officially acquired the global campus, including its cash reserves, on June 30, 2023 but it is still considered a separately accredited, federally recognized institution within the UA. However, that will end once UA leaders fully integrate the global campus into the UA.
UA officials purchased Ashford to expand their online presence and were attracted by its student and faculty profile, according to the report.
- UA officials wanted to expand their educational reach and online presence.
- They wanted to create a pipeline for global campus students to join the UA’s existing online platform and main campus programs.
- Ashford students were mostly older than 25 and a “majority of Ashford students were non-white, with 71% female and 25% associated with the military.”
- Ashford had low student to faculty ratio with over 50% of the 2,300 faculty holding a Ph.D. or other doctoral degrees.
UA officials are preparing for a full integration of the global campus, according to the report.
- The global campus is evaluated by the same metrics as the state’s other two public universities, according to the report — the Enterprise-Wide Online Metrics which includes factors such as online course completion rates and US News & World Report Online Program Rankings.
- The global campus will no longer be a separate entity as it pertains to federal student aid. The integration could also combine the teachers and student bodies under UA-approved curriculum.
- Currently the global campus is under review by a team — which includes Karthik Kannan, Dean of UA’s Eller College of Management, and Gary Packard, UA’s Interim Senior Vice Provost for Online Initiatives — “to determine which UAGC programs add net value and should be continued and incorporated into UArizona, which UAGC programs do not offer sufficient educational value and should be reduced or eliminated.”
- The board of regents has hired an outside accounting firm, Ernst & Young, for an operational and financial assessment of the global campus from Feb. 15 to June 30, 2024.
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