A proposed deal for the University of Arkansas System to acquire a for-profit online college will be considered Wednesday by the system’s trustees board.
A deal for Grantham University would potentially jump start efforts that have stalled for the UA System’s eVersity, an online-only venture created with board approval in 2014 to recruit working adults and enroll them in programs to finish their degrees.
The board will consider a resolution for University of Arkansas System President Donald Bobbitt “to take such additional steps as are necessary to establish University of Arkansas — Grantham as a campus of the University of Arkansas System.”
An acquisition proposal states that “the new campus will eventually integrate with eVersity, resulting in a single online university.”
“This potential acquisition represents a game-changer for our efforts to reach those adults who are underserved by public higher education because of their need to attend fully-online, flexible institutions,” Bobbitt said in a statement.
The proposed deal calls for the UA System’s board to take on “certain discrete liabilities” while acquiring — for $1 — “substantially all the assets” of a school that, according to federal data, enrolls about 5,600 students and has one out of every four go on to graduate within eight years.
Financial details about the liabilities the UA System would take on were not disclosed in agenda documents made public ahead of Wednesday’s meeting, despite a 44-page proposed asset purchase agreement referencing an “Exhibit D” listing assets and liabilities that would transfer as part of the deal.
The UA System declined to provide the “Exhibit D” document after reviewing a request for public records submitted by the Democrat-Gazette. The “Exhibit D” documents were exempt from public disclosure Monday “because they involve proprietary data of a private, for-profit entity and doing so would provide a competitive advantage,” UA System spokesman Nate Hinkel said in an email, citing Ark. Code Ann. § 25-19-105(b)(9)(A).
An acquisition proposal states, however, that “there would be no long-term service agreement, revenue sharing, or ongoing relationship with the current owners of the university after the transaction is complete.” As part of the deal, the UA System would “initially” employ about 240 faculty members and pay for the services of about 170 Grantham University staff employees.
Grantham University, based in Lenexa, Kan., offers associate, bachelor’s and master’s degrees, as well as undergraduate and graduate certificates, in more than 60 academic programs, according to the proposal. A deal also would require approval from the Grantham University’s board. The university’s owner, The Level Playing Field Corp., also has a board that would have to approve the transaction.
Bobbitt in a letter addressed to trustees described the UA System’s eVersity as having “achieved success.” But budget documents show that finances have not met expectations.
UA System’s eVersity did not make a “debt payment” on a $5 million loan provided by other UA System campuses, according to its budget proposal earlier this year.
“For FY 21, we had expected that eVersity would generate sufficient cash flow to pay the first debt payment to the campuses for the loans with them, but that did not occur. We will seek to restructure the debt over a longer repayment period so that operations can stabilize,” the eVersity budget proposal stated.
UA trustees in 2018 approved an extension on the timeline for eVersity to begin repaying the principal on the loan. Federal data lists eVersity as enrolling about 800 students.
Bobbitt, in his statement, referred to eVersity helping Arkansans who had finished some college earlier in their lives but not earned a degree.
“Their success in earning a credential is imperative to their future and to the future of our state and region,” Bobbitt said. “By acquiring the assets of Grantham University, we will be able to scale up this effort to reach beyond the borders of Arkansas and diversify the educational offerings and revenue profile of our system.”
In recent years, some other large public universities have acquired or entered into agreements with for-profit institutions or institutions that began as for-profit entities.
For-profit schools operate with different goals than public universities, said Robert Shireman, a senior fellow with The Century Foundation, a think tank with offices in New York and Washington, D.C. that advocates for “economic, racial, and gender equity in education, health care, and work,” according to its website.
The University of Arkansas System, in considering the acquisition of the for-profit college, would be “buying an asset that has been in the hands of people whose primary incentive has been making money off of it,” Shireman said.
“What that has tended to encourage in the for-profit colleges has been low spending on instruction, actually educating students,” Shireman said, with money instead spent on recruiting and advertising.
Shireman said it’s important in deals such as these for a public university to have “full control” over decisions about student recruitment and what’s best for students, rather than “investors who are trying to extract money out of the institution.”
“The University of Arkansas has some work to do to transform Grantham into an online university deserving of a state university affiliation,” Shireman said.