OPM Watch: How Minnesota Became the First State to Restrict Tuition-Share Deals

By

Jeremy Bauer-Wolf

This is the second installment in New America's weekly, four-part series on online program managers, or OPMs, predatory companies that generally help colleges market and develop virtual curricula and courses in exchange for a piece of tuition revenue.

Read the first part of the series here.

Nathan Coulter, a Minnesota House lawmaker, remembers when he learned about the business practices of online program managers, companies that help colleges set up virtual programs in exchange for a large slice of tuition revenue.

Coulter first read about online program managers, or OPMs, in the press, and the problems associated with such companies. OPMs, which have increasingly cropped up over the last decade or so, are in charge of recruiting students into online programs - and often they're only paid if those students actually enroll.

And so OPMs pressure and badger students into signing up, sometimes deceitfully. They've represented themselves as college, not company, officials, for instance, leaving students unaware an outside party is recruiting them into what's potentially a shoddy program.

To Coulter, the model did seem to invite "pernicious, deeply deceptive approaches" to college enrollment. He only grew more concerned when he discovered one of the state's public colleges, St. Cloud State University, had in 2021 begun contracting with an OPM called Risepoint, previously known as Academic Partnerships.

Risepoint initially devised master's degrees, then undergraduate offerings, for St. Cloud State - and is receiving half of tuition revenue from those programs in return. St. Cloud State administrators sought out the programs to help try to fix a budget deficit.

Coulter was aghast that a for-profit company - based in Texas, not even his home state - was siphoning off so many tuition dollars. He didn't want the tuition-sharing trend further embedded in the higher education system. So early this year, Coulter and other lawmakers worked with representatives from faculty unions to draft legislation prohibiting such deals.

In May, Minnesota became the first state to ban its public colleges from striking tuition-share contracts with OPMs, effective January 2025.

However, the road from bill writing to Governor Tim Walz's signature on the law wasn't always smooth. Policymakers and faculty members struggled to even define an OPM in early legislation drafts. Risepoint also campaigned heavily against the measure, setting up meetings between Walz and lobbyists it hired, as well as a call to the governor from former U.S. Education Secretary Arne Duncan.

Lessons learned from constructing the law can serve as a policy roadmap for other states keen on pursuing legislation restricting tuition-sharing arrangements - which they should consider, given the federal government does not have firm guidance for overseeing OPMs. And colleges considering whether to work with an OPM should take note of how St. Cloud State's deal with Risepoint did not fix any budget problems, only eroded trust with its faculty.

Writing a law

The bill came together after officials from faculty unions - such as the Inter Faculty Organization, or IFO, which represents educators at the state's four-year public colleges - put together a policy wish list for legislature staff members.

Chief on that list was banishing OPM tuition sharing. Faculty representatives had other ideas, too, which eventually became provisions in the law. The legislation also bars OPMs from the rights to faculty members' intellectual property and bans them from having governance power at colleges.

The law also requires institution governing boards to review OPM contracts.

Advocates for the bill stumbled initially, though, when developing a definition for OPM - too broad and it would apply to other contractors that colleges work with, like Anthology, an ed tech company that offers online platforms where students can access course materials, submit assignments and receive grades.

"We didn't want to cast a net so widely that it would capture fairly innocuous, standard vendor relationships," said Mark Grant, director of governmental relations for Minnesota State College Faculty, the union representing the state's technical and community colleges.

After developing several iterations of the bill, officials landed on defining an OPM as a "for-profit, third-party entity that enters into a contract with an institution of higher education to provide bundled products and services to develop, deliver, or provide managed programs, when the services provided include recruitment and marketing."

That language is phrased intentionally. Under federal law, OPMs can only make tuition-share agreements when they provide other services, such as marketing.

As the bill came together, it attracted support from state lawmakers across the political spectrum. Many were horrified by the union's story: That St. Cloud State, already a financially struggling regional public college, needed to give up half of tuition money the programs generated.

The legislature last year had also passed a tuition-free college program benefiting students whose families earn under $80,000 a year. Lawmakers balked at the prospect of scholarship money flowing to Risepoint, said Jenna Chernega, IFO president.

Support for the bill was sweeping and bipartisan. The first full House of Representatives vote on the bill, in April, was 100-32.

"We told them that by all appearances, this is the same as for-profit companies that packed up and left the state a few years ago, and left a bunch of students in the lurch," Chernega said. "It's for-profit colleges 2.0."

Heavy lobbying

Risepoint appeared to learn about the bill "late in the game" said Jonathan Bohn, IFO's director of public affairs. By the time the company started mounting lobbying efforts against it, many lawmakers' minds seemed made up, he said.

Still, Risepoint tried hard to kill the proposal, specifically the provision banning tuition sharing.

It registered seven lobbyists for the legislative session, according to public records. Many are high-level corporate executives and include Adam Arguelles, Risepoint's senior vice president of government affairs, as well as Sarah Erickson and Amber Backhaus, two high-ranking representatives at the lobbying firm United Strategies LLC.

The number of lobbyists Risepoint brought in was highly unusual, according to a staff member in the Minnesota Senate who requested anonymity to protect from professional repercussions.

"Other areas of lawmaking - health care or industry regulation and commerce - obviously you have a lot of national stakeholders and expensive lobbying contracts," the staff member said. "It's unusual in the higher education sphere."

Risepoint enlisted Kumara Jayasuriya, the president of Southwest Minnesota State University, another of the state's public colleges, to champion the OPM to lawmakers, according to several individuals with knowledge of the legislative process.

Southwest Minnesota State also contracts with Risepoint, but only for marketing certain programs. Risepoint in this case does not develop the university's curricula. No other Minnesota public college works with the company.

Nathan Polfliet, Southwest Minnesota State's associate vice president for advancement, responded to written questions on Jayasuriya's behalf.

The university's partnership with Risepoint enables it to market to "students who have been historically out of our reach," Polfliet wrote in an email.

"Previous marketing and recruiting efforts targeted traditional students for on-campus programs," Polfliet wrote. "By partnering with Risepoint, we can now diversify our approach to recruiting prospective students who are place bound and seeking fully online degree programs."

He added that while the contract with Risepoint was "relatively new for us, early indications for the partnership are very positive."

Asked why Jayasuriya worked with Risepoint on its lobbying, Polfliet said "there are concerns" because the legislation does not restrict OPM deals at in-state private colleges or out-of-state institutions that may try to recruit Minnesota students.

"This could have a negative impact on students in Minnesota by limiting awareness of the fully online academic programs provided by public universities like SMSU," Polfliet said.

Risepoint also orchestrated meetings between their advocates and Walz, the governor, as well as chairs of legislative committees that oversee education. Duncan, former education secretary in the Obama administration, also called Walz to talk up the OPM model.

A representative for Walz did not respond to a request for comment. Duncan did not provide comment by publication time Wednesday.

Coulter recalled one meeting that included him and Risepoint's surrogates. He described it as contentious. Three or four "fairly highly paid lobbyists" attended and at that point the bill looked likely to pass - they "were feeling the heat," Coulter said.

Risepoint's representatives attempted to convince Coulter that another method of paying the OPM, often called fee for service, wasn't viable. Under that kind of arrangement, colleges pay OPMs a set amount of money for their work. An OPM also doesn't put up the startup costs for programs under this model, unlike tuition sharing.

Coulter said the fee-for-service model is a much more transparent and financially sound route for colleges. With tuition sharing, colleges don't know how much they'll end up paying an OPM because they don't know how many students will enroll.

"There was nothing I heard from Risepoint as to why they needed to use tuition sharing," Coulter said. "It was concerning to me that they wanted to keep how much colleges would have to pay an unknown number."

Risepoint did not respond to a request for comment.

Evolution of OPMs in Minnesota

Far before the law passed, though, Risepoint's deal with St. Cloud State proved unpopular among its faculty.

The university signed a seven-year agreement with Risepoint in 2021. "Covid-19 pandemic weirdness" had distracted faculty and staff at St. Cloud State and beyond, enabling university administrators to approve the contract with minimal resistance, said Chernega, the union president.

At the time, many colleges nationwide were reworking their online options, as the coronavirus' continued proliferation curbed in-person lessons and, pressingly, dragged down student enrollment.

St. Cloud State had already suffered major enrollment losses, dropping from more than 18,000 students in fall 2009 to 10,400 or so for fall 2022, according to federal data. In 2019, the university also laid off eight tenured faculty members to stave off budget challenges.

In the throes of the budget turmoil, the university's former president, Robbyn Wacker, in desperation, had turned to Risepoint. Under Wacker, the OPM established several master's programs, mostly in education. These were intended to help remedy the university's financial problems.

Yet instructors quickly grew suspicious that the tuition-share model would not prove sustainable or profitable, Chernega said.

Faculty concerns reached fever pitch when Wacker's administration, in 2022, decided unilaterally to take advantage of a contract addendum that would have Risepoint create virtual undergraduate programs.

Wacker's critics have since questioned the legality of her signing the addendum without any governing board's approval. And Risepoint's foray into St. Cloud State's undergraduate education portfolio drew broader scrutiny, including from the Minnesota State Colleges and Universities system.

System-level officials chafed at Wacker moving forward with the addendum without consulting them, according to the IFO.

"You're implicating your entire general education system, as well as transfer credits," Bohn said. "Undergraduate education is a much different beast."

While at first St. Cloud State wanted to establish nearly one dozen new Risepoint-led programs, the Minnesota public college system last year forced the university to pare that number down to three - in business, software engineering and nursing. It mandated, too, that St. Cloud State report to the the college system metrics including enrollment and the amount of revenue the programs generated.

Ultimately, the OPM-run programs didn't fix the university's budget problems whatsoever.

Last year, Wacker announced heavy cuts to faculty positions and the university's academic array, brought on by a multimillion dollar budget deficit. In June, the university said it would slash 42 degrees, down to 94 total, as well as 55 faculty jobs.

Amid the consolidation, Wacker is no longer St. Cloud State's president. She said late last year she would leave her position when her contract expired at the end of June - then departed about two months early, at the beginning of May. St. Cloud State's acting president also left for another institution recently.

Wacker's bet on OPMs - what some St. Cloud State officials believed to be a path to financial salvation - ultimately helped doom her presidency.

Chernega said before St. Cloud State signed the agreement with Risepoint, faculty members "had already designed some excellent online programs that were successfully enrolling students."

"I firmly believe that the success of the MBA program was due to the ingenuity of the faculty in working around Academic Partnerships' requirements and 'help,'" Chernega said. "They have succeeded in spite of Academic Partnerships, not because of it."

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