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GCU's general counsel and the governor's staffer Dawn Wallace spoke regularly about subjects including an inquiry from the nursing board and the school's nonprofit conversion.EXPAND
GCU's general counsel and the governor's staffer Dawn Wallace spoke regularly about subjects including an inquiry from the nursing board and the school's nonprofit conversion.
Joseph Flaherty

Facing Scrutiny From the Nursing Board, GCU Looked to the Governor's Office

Email records show Grand Canyon University sought feedback from the office of Arizona Governor Doug Ducey while facing an inquiry from the Arizona State Board of Nursing in 2017.

In a letter shared with the governor's office, GCU President and CEO Brian Mueller threatened to sue the nursing board over negative media coverage and damage to the school's reputation stemming from the board's investigative actions.

According to emails between GCU and the governor's staff obtained under public records law, GCU's general counsel Brian Roberts was in touch with Ducey's education policy adviser Dawn Wallace during the 2017 nursing board inquiry. He asked to discuss the letter in which Mueller threatened to sue the board, and she agreed.

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Members of the nursing board are appointed by the governor. In the end, the nursing board unanimously dismissed the complaints against GCU that triggered the inquiry.

While it's unclear precisely what, if anything, GCU gained from these contacts with the governor's office, the university may have hoped to leverage a connection with Wallace to head off new disciplinary action from the nursing board, which Mueller criticized for a "pattern of unfair attacks."

The friendly relationship continued: Several months after GCU contacted Wallace regarding the nursing board, she reached out to GCU to discuss the effort to convert the school from a for-profit company to a nonprofit. Wallace raised the issue with the school's lawyer after Ducey and Mueller discussed the nonprofit conversion while attending a basketball game, she said.

The governor had asked her "to get educated 'fast' on this issue so I can be helpful where I can," Wallace emailed Roberts in November 2017.

GCU successfully converted from a for-profit education company back to a nonprofit institution in 2018.

Before these exchanges, GCU had already faced discipline from the nursing board and was forced to confront unflattering media coverage as a result.

Between 2015 and 2016, an investigation by the nursing board into GCU's registered nursing program found rule violations pertaining to faculty and student evaluations, plus a drop in the rate of students passing the national nursing license exam.

GCU's passing rate for students taking the nursing exam for the first time had fallen below the 80-percent state standard for two years in a row, the Arizona Republic reported in April 2017. GCU agreed to a reprimand known as a decree of censure from the nursing board, the lowest level of discipline.

Before that story published, Roberts emailed Wallace in late March to let her know of the forthcoming article in the Republic about the decree of censure.

He shared with Wallace two long and threateningly worded emails from Mueller to Republic reporter Anne Ryman, editor Nicole Carroll, and publisher Mi-Ai Parrish. Mueller implied to the Republic that GCU would take legal action for the upcoming article if, as he suggested, a "sensationalized and disingenuous story" distorted the facts and defamed GCU.

By sharing these emails with Wallace, GCU apparently wanted to keep the governor's office appraised of an as-yet-unpublished story. However, the email records don't indicate whether Wallace replied to GCU when presented with Mueller's foreboding emails to the Republic.

Ryman declined to comment. Parrish, who resigned in December 2017 to join ASU's journalism school, wrote in an email that Mueller's emails did not influence the reporting and publication process. She was unaware that the governor's office had also received the letters. [Disclosure: Deb Van Tassel, the spouse of Phoenix New Times editor Stuart Warner, was Ryman's editor on the story.]

Facing new complaints submitted to the nursing board, in summer 2017, GCU's general counsel Brian Roberts emailed Wallace again to ask for feedback on a threatening letter GCU had sent to the nursing board. In the letter, Mueller referred to the possibility that the nursing board might again seek to discipline GCU's nursing program as a result of an inquiry into the school's family nurse practitioner program.

Referring to the decree of censure to the RN program the year before, in his letter, Mueller criticized the nursing board for a “pattern of unfair attacks that have now become commonplace."

He suggested GCU would sue the nursing board if the board's staff recommended another letter of concern or decree of censure against GCU.

"[A]fter repeated attempts to work cooperatively with the Board, it unfortunately appears that the University may have no other means available to resolve these types of continued egregious attacks by the Board against the University," Mueller wrote in the letter.

Mueller claimed the board had overstepped its statutory authority to regulate the nursing program, arguing that the current complaints against GCU should have been handled between the university and the complainant without the board's involvement.

"As you know, in higher education, the customer is not always right," Mueller wrote in the letter. "The University's nursing programs are extremely difficult programs and students will struggle and some will even fail."

GCU would be forced to take legal action against the board, Mueller suggested, in order to obtain reimbursement for resources spent responding to the board and damage to the university’s reputation “incurred as a result of the Board’s illegal actions against the University."

He said the 2016 decree of censure led to a front-page article in the Sunday edition of the Arizona Republic.

"I can assure you, if the Board issues another Letter of Concern or Decree of Censure against the University, that The Arizona Republic will write another defamatory article about the University," Mueller wrote.

The nursing board's executive director wrote back to Mueller a week later. She said the board was required by law to investigate third-party complaints about GCU's nursing program.

"The Board has no control over media coverage or the article in the Arizona Republic," executive director Joey Ridenour told Mueller. "The argument that the Board took illegal action is misplaced."

Ultimately, the nursing board voted unanimously to dismiss the complaints against GCU at subsequent board meetings in July and September 2017.

GCU did not follow through with a lawsuit, according to the nursing board's attorney, Emma Lehner Mamaluy.

In a July 7, 2017 email, GCU's lawyer, Roberts, sent the letter to Wallace and asked to discuss it with her at her earliest convenience.

In an interview with Phoenix New Times last week, Wallace said she interpreted the correspondence from Roberts as a constituent institution raising a concern. After receiving the letter, she discussed the issue with the nursing board and Roberts independently, and then the two sides met without her in attendance, she said.

From her point of view, GCU was merely informing the governor's office that communication with the nursing board had broken down.

"I am the liaison from the governor's office to higher education," Wallace said in an interview. "So whatever their issues, it is normal and appropriate for it to come through me if they are trying to express a constituent issue."

But when asked if she could give another example of a university telling the governor's office that they intended to sue a state regulatory board, Wallace pivoted. She compared GCU's correspondence to school districts that have reached out to the governor's office in the past when they are unhappy with a school finance issue, or a decision of the State Board of Education or the Arizona Department of Education.

"Generally, what I do is I connect them with the right person at those departments," Wallace said.

Representatives for GCU did not respond to repeated requests for comment on Mueller's letter to the nursing board and the correspondence with the governor's office.

Brian Mueller, GCU president and CEO of Grand Canyon Education, Inc.EXPAND
Brian Mueller, GCU president and CEO of Grand Canyon Education, Inc.
Gage Skidmore/flickr

A few months after Mueller sent the letter to the nursing board threatening legal action, Wallace reached out to Roberts on behalf of Governor Ducey to talk about a different issue: GCU's effort to return to non-profit status.

Although GCU was founded as a nonprofit institution in 1949, by the early 2000s, the university was struggling financially. In 2004, investors bought the school and converted GCU to a for-profit company. University of Phoenix executives like Mueller left to join GCU, and in 2008, the company went public on the NASDAQ stock exchange.

During a highly unusual corporate transaction, GCU received approval from its accreditor in 2018 to split the university into a nonprofit institution (Grand Canyon University) and a for-profit education services company (Grand Canyon Education, Inc.). Mueller remains at the head of both entities.

Because nonprofit universities do not have to pay property taxes, the conversion reduced GCU's property tax bill by approximately $7.5 million annually. The state, city, and school districts will no longer receive that revenue.

GCU's accreditor, the Higher Learning Commission (HLC) had previously denied an attempt to execute the nonprofit conversion in 2016 for not meeting certain criteria necessary for the transaction.

On November 16, 2017, Wallace wrote to Roberts: "I haven't heard from you so I AM HOPING the nursing board issue is being resolved. If not, I'd like to know the status."

She said Ducey mentioned to her that he had talked to Mueller at a GCU basketball game "about what might be positive developments in the HLC front related to non-profit status."

"The Governor believes strongly that GCU is an incredible asset to our state and as such, has asked me to get educated 'fast' on this issue so I can be helpful where I can," Wallace wrote. She offered to visit GCU to discuss the nonprofit conversion with Mueller and Roberts.

Roberts replied, "Things seem much better with nursing these days," and added that he would love to meet with her on campus.

Wallace, who was promoted to special assistant to the governor in December, told New Times that after the email conversation, she met with Roberts at GCU, who explained the mechanics of the nonprofit conversion to her using a PowerPoint. She could not recall if Mueller also participated in the meeting.

Her email was not an offer on behalf of the governor to help GCU convert to a nonprofit, she said. Nor did she interpret Ducey's request for more information as a sign the governor wanted her to assist GCU with the HLC transaction, she argued.

Wallace added that she had no ability to assist GCU in the transaction because she had no connection to the HLC. 

"The governor asks me routinely, 'Hey, I heard about this, can you get some more information and let me know what's going on.' I get that request from him probably five times a day," Wallace said.

"I know when I'm asked to provide assistance," she added.

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