Arizona Republic from Phoenix, Arizona • Page 4

The Arizona Republic A4 MONDAY, NO "EMBER 22, 2(K)4 Grand Canyon University $14,500 2004-05 tuition and fees FROM THE FRONT PAGE 1,713 2,846 352 1,225 47 67 6.3 77.3 Under- Graduate Bachelor's Master's Six-year grad- Students who 2004 fresh- 2004 78.2 2004 with high 70.3 Percentage of students freshmen school grade-point averages above 3.0 who applied who were admitted, 2004 fresh-graduates and profes- awarded, awarded, uation rate for were fresh- men in top men in top sional 2003-04 2003-04 students who men in 2003 10 percent half of high started in who came of high school class 1997 back in 2004 school class sum University seeing changes 7 i I rW' II mWA mh 1 i -j 3 J- 1 i Cheryl EvansThe Arizona Republic Grand Canyon University outreach student Scott Martin, 21 (center), restocks a shelf with food that will be delivered to the community. The private Christian school In Phoenix has been under new management since February and is seeing changes. panies that for every corporate student the company sends to Grand Canyon's online programs, a scholarship in the company's name will be created at a Dream Center. Faculty concerns But what about educational quality? "If we don't have a quality product and great customer service, then we don't have customers," Clifford said. In late October, Richardson, Clifford and several others went before the Higher Learning Commission, the accrediting body for online institutions, to ensure compliance in their courses.

But relations between faculty and administration occasionally have been rough and there is worry that faculty discontent -could cause a bloodletting of longtime professors. A sign of that: None of the faculty members interviewed for this story would allow their names to be used. All cited fear of retribution. The university recently laid off 59 people, mostly in support staff. And while the faculty positions are safe, faculty were told that administrators would be looking at departments in the next few months.

On Oct. 29, in the same memo that announced the layoff, Richardson announced the university would no longer match 401(k) donations, and that health insurance costs were going to go up significantly in some cases, upwards of 60 percent. "We recognize that cultures clash and the result may not be for everyone but this is the only way for GCU to survive," Richardson wrote. There are other issues, such as the dissolution of the tenure system. New faculty won't be offered the traditional tenure track that can result in lifelong jobs.

It's been replaced by a system in which new faculty will be offered contracts of one year, three years or five years. Administrators told the faculty two weeks ago that tenure of current faculty will be honored, but when faculty members asked for that promise in writing, administrators refused. A university committee is working on alternatives to tenure, such as stock options or extended sabbaticals, but there has been no resolution yet. While shocked and uncomfortable about the way things are going at Grand Canyon, many faculty members say they're going to try and stick it out and see what happens. But then there's the story that's passed from faculty member to faculty member about a meeting a month ago.

The faculty were supposed to be meeting with Barnett, but other senior managers were there as well. An administrator was talking to some of the faculty and referred to them as "MLs." When someone asked what "ML" was, the line between the old nonprofit ways and the new for-profit ways was drawn. MLs, the administrator said, meant money losers. Reach the reporter at judd.slivkagarizonarepublic.com or (602) 444-8097. From Pajje Al the president putting "faith-based" into the vernacular and surveys showing Americans moving back to religion.

The question now: Can Christian capitalism work in a higher education setting? These things have happened since the investors bought the private university at 33rd Avenue and Camelback Road in February: The new chancellor is Tommy Barnett, pastor of the Phoenix First Assembly of God Church, one of the Valley's largest and most evangelical churches. He has no experience as a university administrator and describes his role as a spokesman for the university. The new owners say they are getting resumes from "closet Christian" faculty members at prestigious universities who want the chance to teach and profess their faith. The owners have signed prominent authors to marketing deals, using their names to promote the university. Ken Blan-chard, author of The One-Minute Manager, has licensed his name to the business school; Kevin Leman, a psychologist featured on The Oprah Winfrey Show, has been paid for his name to be placed on a school of applied psychology and to develop curriculum.

Faculty members are being referred to internally as "subject matter experts," a buzzword in online-course design. The new owners sold the university's land and buildings for $33 million and used the money to help pay off debts from the previous ownership. The new ownership is a group of venture capitalists who bought the school last February from the troubled college's trustees. The new management has taken over all of the school's affairs, while giving the university's former board of trustees approval over faculty hiring and firing. Cutting tuition by a third at a time of rising college costs is a move towards affordability, but it also lets the university capitalize on volume.

The new owners have started building their online business by 600 students per month in an effort to compete with the University of Phoenix Online and other online universities. "Every student who wants to in this nation should have the opportunity to go to college," said Michael Clifford, the public face of the new ownership group. But the business approach is turning traditional notions of university life, such as faculty tenure, on its head. The new owners proposed that faculty members sign a contract that would bar any of them who left the university from teaching anywhere for two years. It remains to be seen whether such changes will affect the school's accreditation; it's doubtful they will, however, as pieces of what they're doing are being done at different universities around the country.

Despite the faith-based emphasis, there are questions about Wig a make them cheaper. "What we're doing, we're taking the dollars that in these situations at a for-profit go back to shareholders or into the company, and we're taking that capital and distributing it to the other programs," said Brent Richardson, the university's vice chairman and chief executive officer. Also in the university's strategy are three other ways to drive students to campus. The university has already signed an agreement with Rio Salado College to allow its two-year associate degree graduates to get their four-year degrees from Grand Canyon in computer information systems, nursing, business and substance-abuse counseling; the university is negotiating with Mesa Community College, the largest college in the Maricopa system, as well. And then there are the deals that the university has signed with Masters Commission USA and Teen Mania Ministries, groups that train young adults to be Christian leaders.

If those leaders will go work at Dream Centers essentially outreach ministries for Barnett's Phoenix First Assembly of God Church run by his son Grand Canyon will give them their first two years of college via online courses for free, or close to it. "That's 20,000 potential students right there," Richardson said. "We want to create a place where, when they're done (with the two-year service), they can come here and complete their degree." As with everything else at Grand Canyon, the Dream Center scholarships blend Christ and capitalism. Owners have started telling Fortune 500 com university's chancellor, and one of his top lieutenants, Lloyd Ziegler, as the campus outreach pastor. The university has also signed a contract to provide the first two years of education free with Masters Commission, a Phoenix First Assembly of God Christian leadership group.

As a check against the university becoming totally secular, the purchase contract stipulates that the university's former board of trustees has final say on faculty hiring and firing. "Osama bin Laden could run the university," Clifford said, "and it would still stay -Christian." WHO OWNS THE SCHOOL? A for-profit limited liability company named Significant Education now owns the university's assets. That group comprises: 220 Partners owns 13.5 percent of Significant Education and is run by Charles M. Preston III of Austin, Texas. A self-proclaimed "committed Christian," Preston was once one of the University of Texas' investment managers.

He 4J the following: In 2002-03, the federal Education Department estimated that it had distributed $55.4 billion in Title IV college aid to students. For-profit universities received about $7.5 billion of that. And there is belief that "values-based" education could be profitable. The Diocese of Phoenix is toying with starting a college in the West Valley; a group of investors and academics has been nosing around Pinal County for land to start a Christian college of their own. Cutting tuition The tuition cut and the two years free are the big news, of course, and the school's new owners Significant Education, LLC planned it that way.

GCU's current tuition and fees are $14,500 a year. Beginning in September, tuition for an in-state student will be $9,750 a year, a 33 percent cut. For out-of-state students, it will be $12,000. In three years, the new owners hope to have cut tuition a full 50 percent for in-state students. That, too, is part of the new ownership group's strategy.

Discounting tuition has the effect of driving students to campus. Everything is about driving students to campus. "We've got to have the students," Clifford said. "I can remember sitting in a meeting with (University of Phoenix founder) John Sperling and Sperling says 'I can buy faculty, I can buy buildings, I can buy curriculum, but at the end of the day, the person with the students We need to have students." At 2,500 students, Richardson said, the campus becomes self- HOW DOES THE NEW TUITION PROPOSAL WORK? Tuition for all in-state students on Grand Canyon University's Phoenix campus will go down from $14,500 to $9,700 for the 2005-06 school year. Details on the "two years free" tuition plan available to some students are still being worked out, but it will work like this: If a student is willing to serve two years doing church outreach in one of the Dream Centers that Phoenix First Assembly of God Pastor Tommy Barnett has established around the country, GCU will provide the first two years of general education classes for free or a nominal charge online.

The rub? The student must commit to finishing the last two years of his or her degree at GCU in Phoenix. whether the university is drifting from its Christian mission. It's a charge the new ownership denies, even while designing the online courses to be "values-based," but without any explicit Christian content. At the same time, the self -proclaimed "Judeo-Christian university" is strengthening its ties to what is perhaps the most evangelic church in the Valley, the Phoenix First Assembly of God. Untapped markets Grand Canyon's business plan is not modest.

Between on-campus and online students, the university has about 4,500 students right now. Projections have them finishing the year with about 5,000. But there are untapped markets. Classes in China and in Dubai. Classes in Valley churches.

And 20 "Dream Centers" in inner-cities around the country that will serve as outreach ministries, but also locations where students can complete their first two years of coliege education for free. And to accomplish that plan, they're spending money. Lots of money. This year alone, the university will spend $6 million on national and international advertising and marketing, a number expected to double every year for the next five years. The new model is supposed to be faster and more responsive to student concerns, while moving toward being "the largest Judeo-Christian university in the nation." But why do it? Why sink tens of millions into a floundering school that nearly closed its doors in January? In a note Clifford sent to his investors in June, he pointed out Grand Canyon was an NAIA member for decades, before switching to NCAA Division II several years ago when Division II seemed like a better competitive fit for the school.

The school was planning on coming back to the NAIA this year, though. But then the purchase happened. "It's been a nightmare for me," said Keith Baker, the university's athletic director. "We were preparing to make the switch back to the NAIA, we were on track to make the but when everything washed out, we couldn't do it." The NAIA doesn't allow for-profit institutions, it turns out, except those that have been grandfathered in. But Grand Canyon had already left.

That left GCU as an independent, unable to schedule NAIA opponents and having a hard time scheduling NCAA Division II opponents. Michael Clifford Brent Richardson sustaining. Current enrollment on the physical campus is around 1,300. Under the deal Significant Education signed with the trustees of the Grand Canyon University, the trustees get 5 percent of the proceeds from all online classes. Eventually, the trustees will have enough of an endowment to create their own scholarship fund.

But the new owners pay no royalties on students going to the ground campus. So driving people to that campus just makes business sense. The online component is critical, though, because it's where the university is making its money, enrolling about 600 students a month. Next year, one hour of online graduate education will cost $340; one hour of undergraduate online education will cost $320. And online courses don't cost much after they've been developed.

One of Significant Education's principal investors, Phoenix-based 21st Century Learning, has been doing master's classes for teachers for years. Grand Canyon already awards far more master's degrees than bachelor's degrees, most of them online. And it will be online courses that will subsidize the on-campus courses to WHY IS THE NEW ADMINISTRATION DOING THIS? Michael Clifford, the self-described "educational entrepreneur" who helped put together the ownership group that purchased the university, believes that everyone should have access to college. "I'm just a fat man trying to get to heaven," Clifford likes to say, and this is his way of showing faith through works. Of course, making college more affordable will also drive more students to campus, and more students means more money.

IS GRAND CANYON STILL A CHRISTIAN SCHOOL? The new ownership calls it a "Judeo-Christian" school, -though the school's shield still displays only a cross and not a Star of David. Though originally founded in 1949 in Prescott as a Baptist university, Grand Canyon has gradually drifted to a non-denominational Christian space. The new ownership, however, has strengthened ties to the Phoenix First Assembly of God Church, bringing in its pastor, Tommy Barnett, as the Sports program dealt blow by GCU buyout became interested in the for-profit education market after Clifford set up a meeting between him and the leadership of the University of Phoenix Online. Significant Ventures, LLC owns 31.5 percent of Significant Education. Its principals are Clifford, who once did a stint as Pat Robertson's campaign manager; Silicon Valley investor Wallace Hawley; Bill Turner, CEO of the Phoenix-based Argyle Atlantic Corp; and Gerald Cramer, the New York-based chairman of institutional investment firm Cramer Rosenthal McGlynn.

MRich Crow Enterprises, LLC owns 55 percent of Significant Education. Its principals are Brent Richardson, the university's chief executive officer and vice chairman, and John Crowley, the university's chief operating officer. Richardson is also the president of Phoenix-based Masters Online, a company that provides online education packages to universities and colleges. ByJuddSlivka The Arizona Republic Every merger and buyout has consequences down the road layoffs, cutbacks, offices moving from city to city. But there is one consequence of the Grand Canyon University buyout that no one foresaw: In becoming a for-profit institution, the university lost its chance to compete in the National Association for Intercollegiate Athletics, the NAIA, where GCU's athletic teams had their greatest success.

For years, GCU has been one of the hidden gems of intercollegiate athletics. Anaheim Angels outfielder Tim Salmon went there, as did his teammate, former Texas Rangers outfielder Chad Curtis. Former Phoenix Suns coach Paul West-phal coached there. The university also has sent two players to the NBA (Bayard Forrest and Horacio Llamas)..