University of Idaho sought second bond issuer after one declined funding Phoenix purchase

The University of Idaho says an Arizona agency’s refusal to issue the bond for the University of Phoenix purchase does not affect plans for the deal.

The Arizona Industrial Development Authority was selected as the conduit issuer for a $685 million bond to finance Four Three Education’s purchase of the online school. Four Three Education is the nonprofit created by the Idaho State Board of Education to handle the acquisition. The nonprofit’s sole member is the U of I Board of Regents.

Four Three Education submitted an application for bond financing to the Arizona Industrial Development Authority (AzIDA) in 2023. Dirk Swift, executive director of AzIDA, said Wednesday that it “passed on the opportunity to participate in the financing.”

University of Idaho spokesperson Jodi Walker wrote in an email that the school approached other national conduits to issue a bond.

“National Finance Authority (NFA) in New Hampshire is also a conduit issuer,” she wrote. “While AzIDA declined to participate, NFA agreed to participate in the financing. The AzIDA decision has no impact on our transaction.”

Idaho Education News reported in February that Moody’s Investors Service, a firm that issues credit ratings on public entities and private corporations, is reviewing U of I’s bond rating. Moody’s cautioned that the Phoenix purchase could cause a downgrade in that rating that could affect $130 million in existing debt U of I has. The school is guaranteeing $10 million annually to cover bond payments.

There are also questions about whether the Idaho State Board of Education had the authority to create Four Three Education. According to a report Wednesday, letters from the law firm Givens Pursley and the Idaho Attorney General’s Office to legislative leadership say the State Board, acting in its role as the governing Board of Trustees for U of I, acted outside its scope when it created a new entity to purchase the online, for-profit school.

U of I President C. Scott Green has said he sought legal input from constitutional experts at outside law firms and they determined all the actions taken were legal and within the authority of the board and university.