When the University of Arizona acquired Ashford University, a for-profit online college with a history of fraudulent marketing practices and questionable degrees, administrators promised to increase student diversity and provide a guaranteed source of revenue.
Less than four years later, the public institution faces a multimillion-dollar budget shortage, highlighting the merger as a major factor to its financial instability.
The online university, renamed as the University of Arizona Global Campus, or UAGC, has failed to generate a profit for UA. The closure of Zovio, the educational technology business that handled UAGC’s operations, has resulted in significant cost increases for the university.
Since the acquisition, the online university’s enrollment has decreased by one-third in just four years. Nonetheless, UA and UAGC officials both predict an increase in enrollment.
A trove of public records obtained by The Arizona Republic surrounding the initial merger in 2020 show that UA President Robert Robbins and top university officials were aware of the online school’s concerning trajectory, which included a downward enrollment spiral that began years ago as well as dismal graduation and retention rates.
Instead, they created a public relations campaign to minimize the hazards of the merger and appeal to faculty members. Months before the announcement, Robbins was planning a meal at his house to negotiate the deal with executives from the online university’s operating firm, one of multiple overtures between the leaders.
Those advocating for the deal were aware that it would face difficult issues from the start.
“Do you know the current retention and graduation rate at Ashford?” Brent White, one of the university executives in charge of the merger, wrote to another official via email on May 29, 2020. At that time, the six-year graduation rate was 9%.
“The Wikipedia entry about Ashford reads like a hit job… We urgently need a public relations firm right away.”
The acquisition, which was finally completed last year, added $265.5 million in operating costs to the university’s budget in 2023, putting the school’s acceptable level of working capital squarely in the red, according to the UA’s November presentation to the Arizona Board of Regents, the governing body that oversees the state’s public university system.
However, school officials and members of the Arizona Board of Regents — the public entity tasked with vetting the deal — defend it as a financial boon for the University of Arizona, even questioning the relevance of the metric the board itself designated to determine a public university’s financial health.
John Arnold is the executive director of the Arizona Board of Regents and the interim CFO of the University of Arizona. He was appointed in December after the university’s financial health fell below an acceptable threshold.
But in an interview with The Arizona Republic, he appeared to doubt the basis for his appointment.
“What’s more important — days cash on hand or total cash and the direction of your cash balance?” Arnold stated.
He stated that the cash infusion supplied by UAGC when it was acquired offset the pressure the transaction put on the university’s overall financial condition. When the agreement was finalized in June of last year, UA received a one-time payment of $47 million. Previously, the university received $20 million from the deal during fiscal year 2021.
“To date, UAGC has been nothing but a positive financial impact on the university,” Arnold went on to say.
UAGC forecasted an operating deficit of $18.3 million in November, based on the most recent statistics available. According to Arnold, the online school is projected to run a $2.5 million deficit in the 2024 budget year. University authorities promise to return the operation to profitability by 2025, citing considerable cost-cutting initiatives that UAGC must adopt immediately.
The university addressed the online school in December, proposing a plan to instantly remedy its financial gap, stating that administrators were removing administrative and program redundancies at UAGC by integrating it into the university’s operations.
However, the 2024 state enrollment report shows a decrease in student numbers, calling into question school authorities’ promises of a speedy recovery. The school’s enrollment has plummeted to 24,300 pupils from over 35,000 in 2020, when the acquisition was announced.
University officials are unsure how UAGC will increase enrollment while making significant operating changes, including a hiring freeze.
Gary Packard, interim senior vice provost of online initiatives for UAGC and Arizona Online, stated that enrollment was falling at the time of the acquisition in 2020. “It was unrealistic to think that to change a brand, to change ownership would stem that.”
When asked why university authorities would acquire an entity with dropping enrollment figures while promising financial revitalization, Packard commended the question before responding.
“It was purchased for its future potential,” that’s what he claimed.
