The University of Akron’s hope to burst onto the national education scene through a partnership with troubled ITT Technical Institute was on track to be announced in early January, according to documents recently released by the university.
Some of the state’s most powerful leaders, the U.S. Department of Education, a gaggle of lawyers and a group of private out-of-state companies appeared to be lined up behind it even though few outside those circles knew what was in the works.
And now, nearly two weeks after UA declared the deal dead, most of what the extraordinary partnership would have meant for the university, its students, faculty, staff and the city of Akron remains secret, tied up in legal non-disclosure agreements signed by the parties involved.
There are clues, however, buried in 205 pages of emails and memos released by the university, including how UA President Scott Scarborough relied on Ohio Board of Regents Chair Vinod “Vinny” Gupta to trip the necessary political levers to make it happen.
Gupta leads charge
Gupta, who leads the nine-member board advising the chancellor overseeing Ohio’s higher education, described himself in the documents as “quarterbacking” the ITT deal.
The Ohio Board of Regents chair sent some of his earliest advice to Scarborough in an email July 8, 2015, at 5:49 a.m.: To get the deal done, he wrote, they needed to get Batchelder Co. “on board immediately.”
Batchelder Co. was a fledgling Columbus-based lobbying and campaign consulting company founded months before by two former Ohio House aides and William G. Batchelder, a Medina Republican and power broker who served 38 years in the Ohio House, including his last three as speaker, before term limits forced him to retire in 2014.
“They have the muscle to get it done,” Gupta, who also lives in Medina County, told Scarborough in the email. “I can work with Batchelder behind the scenes. We will need their help on the 30th floor,” a reference to the offices of Gov. John Kasich.
The key questions, as Gupta saw them at the time, were legal.
He didn’t specify the legal concerns in the email and recently declined to answer questions from a reporter until he could consult with lawyers and a spokesperson from the Board of Regents.
But there are many possibilities, including the way the deal was structured or ITT Tech’s court issues.
Among other things, the Security and Exchange Commission in 2015 sued ITT Tech for fraud, claiming the Carmel, Ind.,-based school misled investors about huge losses in its student loan programs, allegations ITT Tech officials have since denied. The school — with more than 120 campuses in 38 state — also faces lawsuits and investigations from state attorneys general and the U.S. Consumer Financial Protection Bureau.
Whatever legal questions Gupta may have seen, he nevertheless encouraged Scarborough to move forward with ITT Tech. “Your case will be strong,” Gupta wrote.
At the time, Gupta said he was traveling in Mumbai, but he offered to reach out to Chancellor of the Ohio Department of Higher Education John Carey on Scarborough’s behalf.
“The Chancellor is also a personal friend of Speaker Batchelder,” Gupta said, ending his email with a quote he attributed to Dr. Toby Cosgrove, president and CEO of the Cleveland Clinic: “The future belongs to those that seize the opportunity through innovation when they see it.”
High-level support
Scarborough, meanwhile, had other trouble.
His brief honeymoon with the university community had ended, following budget cuts, rebranding efforts and layoffs.
And that was before whispers of a deal with ITT Tech even began.
On Oct 29, 2015, Chad Hawley — a founder of Batchelder Co. and director of policy for five years in the Ohio House of Representatives — sent an email to Gupta and others.
In Hawley’s email, he said Chancellor Carey called the day before asking that they meet with the state’s accreditation people and a specialist in the governor’s office “to start discussing in more detail some of the wrinkles that would need worked out with for this deal to be successful.”
As weeks passed and the secret plan inched forward, the equally secretive JobsOhio became involved, documents show.
The non-profit entity was created in 2011 for economic development and funded by a lease on state liquor profits. Kasich has exempted JobsOhio from public records law.
It’s unclear what interest JobsOhio had in the UA-ITT Tech deal.
University officials this week said they also relied on guidance from the state attorney general’s office on signing non-disclosure agreements, which are “almost invariably involved” in public-private partnerships involving publicly traded companies like ITT Tech.
Records show Scarborough and a half-dozen others — including Gupta and representatives from both JobsOhio and the attorney general’s office — planned to travel to Washington D.C. with ITT Tech officials and private companies involved in the collaboration to pitch the deal to the U.S. Department of Education.
The documents released by the university include drafts of the talking points for the meeting. Attorneys who vetted the documents redacted swaths of information, including the first two things Scarborough was supposed to say.
But Scarborough’s fourth proposed talking point began like this:
“The university and the political leadership of Ohio are also very aware of the challenges affecting the for-profit sector at present and welcome the opportunity to become part of the solution.”
The talking points draft lists the support of the following: Gov. Kasich’s office, Ohio House Speaker Cliff Rosenberger, President of the State Senate Keith Faber, Attorney General Mike DeWine and John Minor, president of JobsOhio. The draft also said supporters of the partnership had consulted with U.S. Senators Sherrod Brown and Rob Portman, along with U.S. Congressman Tim Ryan, although it’s unclear whether the three lawmakers backed the plan.
“We believe that our involvement in this transaction ... will act as a catalyst to, first and foremost protect the 50,000 students currently enrolled in ITT,” Scarborough was to say.
Scarborough thought didn’t end there, but the rest of his talking point is blacked out.
Deal nearly clinched
By Thanksgiving, they had met with federal officials and the deal appeared on the verge of success.
On Nov. 30 at 6:41 a.m., Michael Perik, the CEO of Higher Education Partners and other education-related ventures, send Scarborough an email. Higher Education Partners, which works with colleges to provide startup capital and financing for new facilities, initiatives and online solutions, had been instrumental in the ITT Tech deal from the start.
“If I was a betting man I would predict we could be ready to announce the first week of the new year,” Perik wrote
Two weeks later, on Dec. 16, Perik sent another email with a document attached from another one of his companies, U.S. Skills. Lawyers have heavily redacted the document, including five important steps that were reportedly needed to happen in sequence for UA and ITT Tech to join forces.
“We have successfully navigated our way through steps one through three and are very close to wrapping up number four,” the document said. The next line, presumably about step 5, is blacked out.
The memo said, after meeting with federal education officials, the group pushing for the deal had “clearance to begin dealing with the regulatory and legal hurdles of the deal.”
“We have made great progress with the (Consumer Financial Protection Bureau) and the state Attorneys General and expect to meet with the (Security and Exchange Commission) as a final step before Christmas.”
Whether the meeting with the SEC every happened is unclear. The public documents UA provided end in early January.
UA’s student newspaper, the Buchtelite, made the initial request for the documents about the deal in January. The Beacon Journal is waiting for the university to fulfill its request filed this week for the rest of the documents for 2016.
Three months later, the board that governs private, for-profit colleges demanded ITT Tech officials justify their continued accreditation amid the legal action against them.
On April 28, Scarborough and Jonathan Pavloff, chair of the UA board of trustees, sent out an email saying the potential deal between UA and ITT Tech was dead.
What happened? In response to questions submitted to the university by the Beacon Journal this week, officials said, “Negotiations surrounding a potential transaction took longer than originally estimated.”
Officials said UA routinely reviews potential collaborations, but added, “No potential partnerships or transactions similar to this situation are under consideration.”
Yet as enrollment shrinks, UA must find ways to balance its budget.
This week, the credit rating agencies Moody’s and Fitch Ratings downgraded UA’s financial outlook from stable to negative.
“The university needs to diversify its enrollment to include more adult students and extend its enrollment reach to reverse persistent enrollment declines,” Scarborough said in an email Tuesday. “That vision remains unchanged.”
Amanda Garrett can be reached at 330-996-3725 or agarrett@thebeaconjournal.com.