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Is the University of Antelope Valley Running Out of Time?

It’s the ultimate nightmare scenario: The one letter that all college and university presidents dread is a letter jeopardizing their institution’s accreditation. Because only accredited colleges are eligible to fund their operations through America’s federal student loan programs, losing accreditation generally means a college’s financial ruin—and potentially the end of the managerial careers of that institution’s leadership.

Yet that’s precisely the kind of letter just received by the president of the University of Antelope Valley—a for-profit school next to the Mojave Desert in Lancaster, California, about 65 miles northeast of downtown Los Angeles.

But what’s curious is that a newly public Singaporean educational technology company that bought UAV in June 2022 had provided cash infusions that should have prevented the kinds of accreditation challenges now faced by this university.

UAV’s Clock is Ticking

On August 22, 2023, the WASC Senior College and University Commission (WSCUC), UAV’s accreditor, sent a pointed letter to President Tracy West warning that the board had decided to place the college on probation. (Please note that the letter had been removed from UAV’s website as of October 13, but had been accessible at the time of this writing in September.)

The letter reported that WSCUC had previously expressed concerns to UAV that the college didn’t adhere to the Commission’s accreditation standards for key performance aspects, such as financial stability and student outcomes, based on “serious issues reflected in the information submitted by the institution.”

WSCUC then explains that the Commission took the action only after reviewing a report by a team of investigators dispatched by the board to visit the campus and meet with its leadership following the school’s sale.

This letter means the clock is now ticking for the University of Antelope Valley. U.S. Department of Education regulations require accreditors like WSCUC to notify colleges that don’t meet accreditation standards of the deficiencies found by their investigations, and then establish deadlines for the schools to correct those problems. The university can appeal the probationary status decision, but there’s no guarantee that such an appeal will succeed.

WSCUC says it will allow the college two years to remedy the shortcomings described in its letter, with a “good cause” extension possible at the accreditor’s discretion if the school makes sufficient progress during the probationary period. During this interval, the college cannot take certain steps without approval from WSCUC, such as launching new degree programs. But what’s especially troubling is that the number and magnitude of the challenges faced by UAV suggest that two years might never give this school enough time to cure all the deficiencies specified in the letter.

Reversing UAV’s Declining Enrollment

The Commission sounds especially concerned that UAV may not be able to rapidly reverse a slide in admissions that’s been worsening since 2018. Detailed data from the U.S. Department of Education’s Institute of Education Sciences (IES) shows that UAV enrolled only 602 full-time undergraduates in fall 2021; that’s down from about 900 undergrads during fall 2018, a 33 percent decline.

Even though the university also offers graduate and certificate programs, and despite a rosy near-term forecast submitted to the commissioners by the college, WSCUC writes that it can find “no evidence” that the school can reverse this declining enrollment trend anytime soon.

What’s more, the Commission questions whether UAV will be able to demonstrate student recruiting and marketing plans that will grow enrollment to levels that will stabilize the college’s shaky financial position, a predicament characterized by its expenses exceeding revenues for at least the last two years. An interesting line in the letter admonishes that UAV must demonstrate “intentional connections between enrollment, both current and planned, and budget development and implementation.” That’s a tactful and diplomatic way of telling UAV that it needs to stop excessively spending out of proportion to its enrollment if it wants to ensure it will recapture and maintain the accreditation which is so critical to its survival.

That excessive short-term spending wouldn’t be so much of a concern if UAV could depend upon its new parent company, the Singapore-based Genius Group, to continue providing “substantial” cash infusions so UAV could meet its financial obligations. But recent unexpected challenges encountered by Genius make that scenario unlikely.

Why the Genius Group Can’t Likely Rescue UAV

According to the Genius Group’s website, Cambridge-educated author Roger Hamilton founded Genius during the early 2000s after inventing a personality assessment for entrepreneurs and training them on the instrument’s use during seminars at a Bali resort. In 2015 Hamilton expanded his operations into offering innovative entrepreneurial and leadership training worldwide—in multiple languages virtually and at scale—through an online ed-tech platform subsidiary known as GeniusU. In September 2023, Genius claimed more than 4.3 million students in 200 nations.

In April 2022, the firm went public on the New York Stock Exchange. By pursuing an aggressive roll-up merger strategy, Genius then rapidly acquired five subsidiaries—including the University of Antelope Valley—the following June. In announcing these acquisitions, Genius said it bought these organizations because they all share the firm’s entrepreneur-education mission. But that’s hard to understand for most of them and especially challenging in the case of UAV.

After all, UAV was originally founded in 1997 to provide first aid and CPR training to members of the Lancaster Valley community by Marco Johnson—a Los Angeles firefighter and EMT—and his wife Sandra. Originally called Antelope Valley Medical College, the school later expanded to offer degrees in fields like education, psychology, sports management, and business.

It’s also not immediately apparent how the other four Genius acquisitions during 2022 relate to entrepreneurship training. The closest fit seems to be Property Investors Network, a group of real estate financiers that provides investment courses within the United Kingdom. But Genius also bought the documentary filmmaker Revealed Films along with E-Square, a South African elementary and high school education provider, plus Education Angels, an in-home nursery school company for children below six years of age in New Zealand.

Although the purchase price of UAV’s sale was not disclosed, all five companies combined reportedly cost Genius approximately $50 million. Perhaps that spending spree was unwise. The WSCUC letter emphasizes that Genius now appears to be facing “serious financial problems,” and Genius admits as much in their Form 20-F/A Annual Report for the fiscal year ended December 31, 2022 that the firm filed with the U.S. Securities and Exchange Commission.

Actually, “serious” amounts to quite an understatement. The audited income statement in that filing shows that in 2022 Genius posted a net loss of $55.2 million—losing about $5 million more than the five acquisitions cost the firm that year. “Management has determined that without additional capital raised, in the next twelve months, there is substantial doubt about the Company’s ability to continue as a going concern,” says the report.

In other words, the auditors are warning that Genius needs to raise much more capital within the next year or it’s going out of business. Clearly that analysis means that UAV cannot possibly depend upon Genius to keep supplying the school with “substantial” short-term cash infusions.

But that language also raises questions about the ownership of UAV. The possibility now exists that if Genius fails to secure sufficient infusions of additional capital for itself, it may need to search for a buyer for UAV—and probably buyers for some of its other acquisitions as well.

Additional Regulatory Challenges for UAV

It’s also worth noting that UAV’s conflict with WSCUC is far from the only regulatory challenge that the college has faced in recent years.

For example, WSCUC’s letter emphasizes that in 2023 the U.S. Department of Education audited UAV’s financial aid programs authorized by the amended Title IV of the Higher Education Act of 1965. That review yielded twenty findings of noncompliance. The inadequacies relate to consumer information requirements, procedures and policies, and disbursements of Title IV financial aid.

Even more alarming, the Education Department has also required UAV to post an irrevocable letter of credit. That’s money that the college must set aside because the Department became concerned UAV won’t be able to pay back the money provided by ED for federal aid. In other words, the school had to put up collateral as an assurance that if UAV shuts down, funding will be available to cover the costs of the college’s obligations to the Department.

Moreover, in 2016 UAV switched to WSCUC from the Accrediting Council for Independent Colleges and Schools, its previous accreditor since 2009. According to reporting by Higher Ed Dive’s Jeremy Bauer-Wolf:

ACICS—a notorious accreditor largely of for-profits, such as the failed ITT Technical Institute—has also faced troubles and is winding down operations by March 2024 after losing U.S. Department of Education approval. It had not met Education Department standards for years, the agency said.

More Areas of UAV’s Noncompliance

But wait—there’s more. WSCUC is also concerned about “significant disruption, turnover, and ongoing unfilled positions” among the college’s senior leadership and board of directors. Paramount among these vacancies is the absence of a chief financial officer—a role unfilled since October 2022—but the college is also operating without a board chair and vice chair. “UAV has not provided evidence that it has the leadership, organizational structures, and decision-making processes that can sustain institutional capacity and educational effectiveness,” says the letter.

WSCUC also faults UAV for declines in the graduation rates of students enrolled in its associate and bachelor’s degree programs, along with declines in retention rates of lower division students. Meanwhile, undergraduate earnings fall far below both WSCUC and national averages, the accreditors write.

What’s Next for UAV?

In an email message to Inside Higher Ed, President West said that UAV has already started taking steps to address the board’s concerns, but did not describe any specifics.

“We hold a strong dedication to resolving and rectifying each concern raised by WASC,” she said. “Given the complexity of the matters involved, our diligent efforts are aimed at addressing this, recognizing that it’s not a challenge that can be swiftly resolved. We consider our responsibility to offer top-tier education to our students as a matter of great importance.”
WSCUC has required UAV’s top management to meet with officials from the accreditation board within 90 days. Presumably one of the first items on that meeting’s agenda will be the college’s appeal of the probationary status decision.
However, the Commission also ordered the college to promptly file a teach-out plan in compliance with U.S. Department of Education regulations governing all institutions placed on probation by accrediting boards. These plans typically outline the options students would find available to them if an institution were to shut down, including details of the colleges offering similar programs likely to accept them as transfer students.

Along with the Education Department’s requirement of an irrevocable letter of credit, this teach-out plan provides another regulatory hedge against the unfortunate but now very real likelihood that UAV may be forced to shut down. It’s also significant that the letter specifically describes how WSCUC had already required the teach-out plan almost one month prior to its announcement of the decision to place UAV on probation.

In closing, here’s how WSCUC describes this procedure’s requirements:

As a result of federal regulations effective July 1, 2020, an institution placed on Probation by the Commission must submit to WSCUC a plan that would be implemented if the institution were to close. A teach-out plan identifies opportunities for the students of a closing institution to complete their program at other institutions offering the same or similar degree programs, certificates or curricula leading to professional licensure, regardless of students’ academic progress at the time of closure.

The WSCUC Teach-Out Plans and Agreements Policy and associated Guide provide information on what to include in a teach-out plan. The requirement for a teach-out plan, to be submitted to WSCUC by October 1, 2023, was already established in a July 28, 2023 memorandum from WSCUC to UAV.

Douglas Mark

While a partner in a San Francisco marketing and design firm, for over 20 years Douglas Mark wrote online and print content for the world’s biggest brands, including United Airlines, Union Bank, Ziff Davis, Sebastiani and AT&T.

Since his first magazine article appeared in MacUser in 1995, he’s also written on finance and graduate business education in addition to mobile online devices, apps, and technology. He graduated in the top 1 percent of his class with a business administration degree from the University of Illinois and studied computer science at Stanford University.