Trustees for the University of Arkansas System on Wednesday approved a $1 deal to acquire a for profit, online-only university described in board documents as having about 4,000 students.
Grantham University will become a part of the UA System pending approval of the Lenexa, Kan., university's board. The university's owner, The Level Playing Field Corp., also has a board that must approve the transaction.
The deal involves the UA System getting "substantially all the assets" of Grantham University while agreeing to shoulder "certain discrete liabilities," according to board documents.
Asked the amount of those liabilities, "the estimate as of June would be approximately $4.5 million," Gina Terry, chief financial officer for the UA System, told the 10-person trustees board. She described the liabilities as consisting of existing contracts.
The 10-member board met at the Winthrop Rockefeller Institute on Petit Jean Mountain near Morrilton, with one board member, Little Rock attorney Sheffield Nelson, participating remotely.
University of Arkansas System President Donald Bobbitt described the deal as a "winning proposal" before the board approved it by a voice vote without any opposition.
Thomas Macon, board chairman and chief executive officer for Grantham University's ownership group, said the university's focus for decades has been enrolling students who are in the military. But he said federal regulations have made it difficult for the university.
"Most troubling today is an updated regulation called the 90/10 rule, which requires that 10% of Grantham's revenue come from outside the military learner communities," Macon said.
Unmentioned by Macon, some educational advocacy groups applauded the recent change, including The Institute for College Access and Success. In a statement from March, the advocacy group described the previous version of the rule as having "unwittingly enabled the exploitation of veterans by risky for-profit colleges." The group's statement did not mention any colleges by name.
Macon said Wednesday that the updated rule would force the university "to try to enter markets it doesn't know." Macon said the ultimate result is that the university would be "at compliance risk, and thus existence risk."
"Level Playing Field recognizes that Grantham University, with this new regulation, as a standalone is in a position where it's very unlikely Grantham University can be successful anymore, and certainly not successful at the level that we expect," Macon told trustees. He said Grantham began talks with the UA System about 20 months ago.
The "90/10" rule does not apply to public institutions, and board documents described a plan to establish University of Arkansas - Grantham as a campus of the UA System.
Documents prepared for the board state that the new campus would "eventually" integrate with the UA System's online-only eVersity to form a single online university.
Trustees in 2014 approved the creation of the eVersity as a way to try to recruit working adults and enroll them in programs to finish their degrees, but the effort has stalled. Budget documents show eVersity being unable to make scheduled payments on a $5 million loan from other UA System campuses. Materials prepared for the board state that eVersity has about 700 students per semester.
"We've been challenged with enrollment, in the reach and the ability to try to attract new students," Michael Moore, the UA System's vice president for academic affairs, told the board.
Moore said there is a declining number of students in the traditional college-going age range of 18 to 22.
"We need to find additional markets in order to be successful, and the adult learner market is the most attractive market," Moore said.
As part of the deal, the UA System would "initially" employ about 240 current Grantham faculty members and pay for the services of about 170 Grantham staff employees, according to board documents.