University of Arkansas

Still angry over the University of Phoenix debacle, board Vice Chairman Sheffield Nelson has accused University of Arkansas System President Donald Bobbitt of deceiving the board of trustees and urged fellow trustees to start looking for a new president.

In an email sent Wednesday to trustees and obtained by the Arkansas Times under the Arkansas Freedom of Information Act, Nelson said the board should not extend Bobbitt’s contract, which expires Dec. 31.

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UA System Board of Trustees Vice-Chair Sheffield Nelson (file photo)

“We have a U of A Board meeting scheduled for June 26th to discuss a few matters, including a possible contract extension for Bobbitt,” Nelson wrote. “Now that his Phoenix dream is dead, he is interested in a contract extension. It is my hope that you will consider the subterfuge, deception, and the general conduct of Bobbitt before casting your vote.”

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Nelson added: “This will decide whether you want to endorse his actions and reward him with a contract extension or want to take the positive action of beginning the search for a new president. The latter choice is the one that is best for the future of the University of Arkansas and for Arkansans who want our university to excel.”

On Thursday, Bobbitt responded with his own letter to trustees.

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“I understand that reasonable people can disagree about the merits of the proposed affiliation with TES, but I take personally any allegation that I misled the Board regarding this project or any revision to Board Policy,” Bobbitt wrote. “The system administration, our campuses and especially the Board of Trustees have very important work ahead of us to serve our constituencies, and I regret that extraneous and, at times, frivolous issues such as these continue to occupy the Board’s time.”

You can read the email exchange here.

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Transformative Education Services Inc., or TES, is a nonprofit established in August with Bobbitt’s hope that it would affiliate with the UA System and, using private funds, buy the University of Phoenix, one of the nation’s largest online colleges but one also with a troubled financial and regulatory history. The effort ultimately failed.

Bobbitt had quietly worked on the proposed deal for almost two years before the  Times first reported on it in January. Some board members have since said they had little or no knowledge of the effort until then, but trustee Ed Fryar has defended Bobbitt, saying Bobbitt had given the board monthly updates. Fryar was an appointee to the TES board.

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In April, a divided board rejected a resolution to endorse the effort on a 4-5 vote with one abstention.

Bobbitt has said the deal — estimated to cost $500 million to $700 million — would have benefitted both the UA System and Phoenix through a licensing agreement that would have paid the system an estimated $20 million annually.

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Nelson argued that Bobbitt had tricked the board into revising Board Policy No. 340.1 in March 2022 so that Bobbitt could proceed with the Phoenix effort without seeking trustees’ approval but didn’t mention Phoenix to the board at the time. You can read that section of the policy manual here.

“By sheer deception, this was run through, and Bobbitt was off to the races,” Nelson contended.

Bobbitt countered that this policy had “nothing to do with the project involving TES and its potential acquisition of the University of Phoenix.”

He added: “Notably, the changes to Board Policy 340.1 address only related entities that are ‘owned or controlled, in whole or in part, by the University, and any other entity that may otherwise be reflected in financial statements of the University under applicable accounting rules.’ An example of a related entity is the University of Arkansas Foundation, Inc., which appears on the financial statements of the UA System as a component unit. TES was never owned or controlled by the university, nor was it reflected in the financial statements of the university.”

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Indeed, the lack of control that the UA System would have had over Phoenix under the proposed affiliation was one of the factors that led to the board’s defeat of the resolution endorsing the effort.

Bobbitt noted, however, that Board Policy 300.1 would have allowed him to proceed with the Phoenix effort without board approval because the proposal would have included a proposed affiliation and licensing agreements — or contracts — though he sought approval anyway. According to UA System online records, this policy was last revised in March 2017.

“Because of this, the General Counsel concluded that these agreements did not require Board of Trustees approval since contracting authority is delegated to the President in policy,” Bobbitt wrote. “However, as I stated numerous times publicly, it was always my intent to have the Board consider a resolution of support for the project.”

UA System spokesman Nate Hinkel said today that the 11 a.m. June 26 meeting is a specially called one to deal largely with some campus projects.

“As far as discussions by the Board regarding employment of public officers or employees, those are conducted at the discretion of the Board in executive session, and I am not privy to the Board’s timeline on this,” Hinkel said in an email.

Hinkel said Bobbitt “has expressed to the board chairman that he is willing and eager to continue leading the UA System, and that he’d especially like to see through some of the major projects that have begun under his leadership.”

Bobbitt, president since November 2011, makes an annual salary of $510,000 plus $150,000 in deferred compensation. His contract was last extended for four years in 2019.