State Authorization Regulations & Updates

Presented at ASAHP Annual ConferenceOctober 26, 2012

Nancy S. WilliamsonVice President and General Counsel

James KoebelAssistant General Counsel

Information about UMUC

UMUC is one of the 11 degree granting institutions in the University System of Maryland

UMUC is an open admissions institution which provides education around the world for military students and other adult learners

75% of our students (undergraduate and graduate) hold full-time jobs

In Fall 2011, UMUC had 46,637 students worldwide, with 28,119 students enrolled in stateside classes

The median age for our students is 29 for full-time students and 32 for part-time students

In Fall 2011, UMUC had 745 online courses; 3,654 online sections; and 91,156 online enrollments

Background – State Authorization Regulations

Part of the Program Integrity Issues regulations that came out from the Department of Education on October 29, 2010

The State Authorization regulation provided that: Institutions must be authorized to conduct business in a

state and may not be exempt from this requirement on the basis of accreditation or years in operation.

Institutions that offer education through distance education to students in a state in which they are not physically located, must meet that state’s requirements.

Therefore, all institutions must be licensed in any state where they do business, as defined by that state’s specific licensing regulations.

34 CFR §600.9(c) (http://www.law.cornell.edu/cfr/text/34/600.9).

Under the regulations, the burden was on the institution to seek state authorization and to have its efforts documented in case the Secretary made a request.

Originally, this needed to be completed by July 1, 2011.

Under the April 20, 2011 Dear Colleague Letter, amended on May 6, 2011, the Department delayed enforcement of repayment liabilities or limits on student eligibility for distance education activities undertaken before July 1, 2014, so long as the institution was making good faith efforts to identify and obtain necessary state authorizations before that date. The Department indicated it would review instances where an institution knew about state requirements but willfully refused to follow them. http://www.ifap.ed.gov/dpcletters/attachments/GEN1111.pdf

Background – State Authorization Regulations

Institutions were required to demonstrate that they had made a good faith effort to comply with the regulations by doing one or more of the following:

Documenting that it was developing a distance education management process for tracking students’ place of residence when engaged in distance education.

Documenting that an institution had contacted a State directly to discuss programs the institution is providing to students in that State to determine whether authorization is needed.

Filing an application with a State, even if not yet approved.

Documenting that a State application is pending.

Background – State Authorization Regulations

The Dear Colleague Letter also stated that:

The Department would review instances where an institution may be acting in bad faith, such as where documents show an institution knew of a state requirement and willfully refused to comply with it.

The Department has committed to working to develop a comprehensive directory of state requirements.

The Department supports the coordination of state laws and among the higher education community.

Background – State Authorization Regulations

On January 21, 2011, the Association of Private Sector Colleges and Universities (APSCU) filed a lawsuit challenging several of the new regulations that were scheduled to take effect on July 1, 2011.

In July 2011, the U.S. District Court for the District of Columbia vacated the state authorization rule on procedural grounds, because the Department of Education failed to give adequate notice and time for commenting on the regulations that were published in the Federal Register on October 29, 2010. https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2011cv0138-28

On June 5, 2012, the U.S. Court of Appeals for the District of Columbia Circuit upheld the District Court’s ruling. The Court held that the state authorization rule may not be enforced on the same procedural grounds. http://www.cadc.uscourts.gov/internet/opinions.nsf/969CEC5FCB92F81685257A14004F3131/$file/11-5174-1377087.pdf

Background – State Authorization Regulations

On July 27, 2012, the Department of Education issued a Dear Colleague letter indicating the following:

Although the Department of Education would not enforce the requirements of § 600.9(c), the requirements of § 600.9(a) still apply. This requires institutions to be authorized to operate by a State that has a process to review and act upon student complaints.

Under State law, institutions have been, and still are, responsible for complying with all applicable laws as they relate to distance education.

Institutions may now provide information regarding complaint processes in states by linking to a non-institutional website.

http://www.ifap.ed.gov/dpcletters/attachments/GEN1213Attach.pdf

Background – State Authorization Regulations

All of this means that, as of now, the Department of Education will not explicitly require institutions that teach online to comply with state authorization rules in other states based upon those distance ed courses.

However . . .

The Department of Education could choose to take this on in future negotiated rulemaking sessions;

States are now monitoring the actions of institutions offering DE within their borders or to their residents, and either drafting new rules or actively enforcing rules already on the books; and

The Department of Education could monitor compliance with state authorization regulations as part of its institutional program reviews.

Background – State Authorization Regulations

State Authorization Going Forward

Complying with these regulations can be very challenging. It requires:

Extensive and ongoing research of State laws, as States are constantly changing their laws, regulations, and authorizing agencies, although there are publicly available lists now:

State Approval Regulations for Distance Education: A ‘Starter’ List Final Revised April 22, 2011, by the WICHE Cooperative for Educational Technologies (WCET), Southern Regional Education Board (SREB), American Distance Education Consortium (ADEC), and the University of Wyoming (http://wcet.wiche.edu/wcet/docs/state-approval/FinalStateApprovalRegulationsforDistanceEducationAStarterListwithAddendum2.pdf).

State Authorization Going Forward

Additional publicly available lists:

State Higher Education Executive Officers: Compendium of State Laws and Regulations, updated June 2012 (http://www.sheeo.org/stateauth/AgencyResponses/SHEEO%20State%20Authorizaton%20Survey_All%20Agencies-Jun2012.pdf)

State University System of Florida, June 2011 http://www.flbog.edu/_doc/State-Authorization-Requirements_2011_06.pdf

Eduventures, Inc.: Online Learning Across State Borders, updated July 2011.

State Authorization Going Forward

Complying with these regulations can be very challenging. It requires:

High costs of compliance. We estimate that it can cost around $500,000 to register in all of the states that require registration (highly variable depending on institutional needs). Compliance includes:

Filing applications and renewal applications in accordance with individual state rules, which can include burdensome documentation requirements;Filing applications for licenses to transact business in a state;Securing surety bonds in amounts up to $25,000;Paying for site visits (including agency staff travel, meals, lodging, and honoraria);Ensuring your institution’s catalogs and website are up to date;Responding to data requests that vary from state to state; andEnsuring that students are aware of all complaint procedures for their respective states of residence.

State Authorization Going Forward

Some of the challenges we have seen in our research of State regulations include the following documentation that must be provided with applications:

Arkansas: Arkansas will approve up to 5 programs per quarter, and requires a separate application each quarter. Compliance could literally take years.

Georgia: The Georgia application requires SSNs for faculty and administration.

Kentucky: Vitae form for each faculty member.

State Authorization Going Forward

Some of the challenges we have seen in our research of State regulations include the following documentation that must be provided with applications:

Minnesota: Copies of all media advertising currently in use or to be used in the near future, including national advertising. Also, requires a catalog disclosure that licensure in MN does not signify an endorsement by MN officials. Finally, requires that students be advised of separate MN general education requirements.

North Carolina: Requires an in-person, preliminary meeting at UNC-Chapel Hill, followed by the submission of an application in narrative form that addresses the institution’s compliance with 17 pages of NC-specific rules and standards. Finally, requires a site visit at institutional headquarters and a presentation, paid for entirely by the institution.

Tennessee: Faculty SSNs.

State Authorization Going Forward

Other challenges we have encountered include: South Carolina policy: If the SC Commission on Higher Education finds that

an institution or program is operating without authorization, the Commission will (i) notify the institution; (ii) provide the licensing packet; (iii) issue a cease and desist; and (iv) include the institution, by name, on its “Illegally Operating” list on the Commission website.

Minnesota has sent cease and desist letters to institutions found in violation of its rules.

Various States require that all institutions secure a license to transact business from their State.

Louisiana requires programmatic accreditation for education degree programs.

A State at first required a $20,000 bond, but then eliminated that requirement and did not inform UMUC until after we had secured the bond (a 6 month process).

A State informed UMUC that it currently had no staff or official process for handling applications.

A State to which UMUC applied provided the wrong address to its own offices twice, in addition to providing contact information for an agency employee who had quit months before.

State Authorization Going Forward

States are adding and/or amending their laws and regulations all the time. For example, Maryland has proven to be a challenge for other institutions:

A new law, enacted in Spring 2012, requires institutions that enroll MD residents in fully online programs in the State to register with the Maryland Higher Education Commission (MHEC) before commencing or continuing to operate, within 6 months of enrolling the first MD student. Previously, MD had maintained a “physical presence” standard that determined an out-of-state institution’s need to register.

MHEC proposed emergency regulations on June 27, 2012, which went into effect 4 days later, on July 1, 2012. Only some institutions were aware of their implementation, and many were uncertain of their requirements. http://www.mhec.state.md.us/higherEd/COMAR/COMAR_CH_05_Web.pdf

MHEC proposed new regulations on September 27, 2012, which will be given emergency effect when approved. These pending regulations clarify some provisions, but otherwise the requirements remain the same. http://www.mhec.state.md.us/higherEd/acadAff/OOS_Online/Out-of-State_Online_Registration_Pending_Sep_27_2012.pdf

Individual States regulate a variety of activities that they believe demonstrate that an institution has a physical presence in their State. These include: Employing faculty (full-time or adjunct) who reside

in the State; Classroom instruction or any face-to-face meetings

between faculty and students; Requiring or allowing a clinical component of a

program that may be completed in the State, such as with student teaching;

Direct or local advertising in the State; and/or Maintaining a computer server, telephone number,

or P.O. box in the State.

State Authorization Going Forward

State Authorization Going Forward

Clinical Experiences and Physical Presence

Clinical experiences are unique among physical presence triggers- they often are the only triggering activity of an institution and alone require state authorization. In other words, institutions that otherwise provide 100% distance education but allow a clinical experience as part of a program often need to gain State authorization.

Commonly includes “Field Experiences,” “Clinical Practica,” and “Student Teaching.”

Commonly defined as involving supervision and evaluation of the student, by either an agent of the institution or someone who agrees to report the information to the institution.

Commonly excludes “mere” undergraduate internships and externships.

State Authorization Going Forward

Clinical Experiences and Physical Presence

Whether a clinical experience is a trigger may depend on whether it: Is arranged by the institution, or by the student independently; Is a required or optional program component; Relies on on-site staff or institutional staff for

supervision/evaluation; and/or Involves the compensation of any person evaluating the student.

The authorization required by a State may be programmatic or institutional.

State Authorization Going Forward

• Clinical Experiences and Physical Presence• Many States’ regulations include clinical experiences among their licensing

triggers:• AK, CO, FL, GA, IL, IA, KS, KY, LA, MA, MO, NV, NH, NM, NY, NC, OH, OK,

OR, RI, TN, VT, WA, WV• Florida: Institutions offering medical clerkships must be licensed• Illinois: Institutions offering clinical experiences, but that otherwise have a

“Limited Physical Presence” need only register if the clinical constitutes more than 10% of the credit hours for the program

• Kansas: Institutions offering clinical experiences must register every program (i.e., not limited to the program that requires the clinical experience)

• North Carolina: Only requires registration of the applicable program, but registration requires an in-person, preliminary meeting at UNC-Chapel Hill, followed by the submission of a $10,000 bond, a $5,000 initial fee, and an application in narrative form that addresses the institution’s compliance with 17 pages of NC-specific rules and standards, followed by a site visit at institutional headquarters and a presentation, paid for entirely by the institution.

• Oklahoma: Does not require registration if assessment is conducted over the internet

National Efforts

There are several efforts on a national scale: Model for State Authorization Reciprocity Agreement

(SARA) WICHE SARA APLU/AASCU Commission on Distance Education Congressional E-Learning Caucus

National Efforts

Model for State Authorization Reciprocity Agreement (SARA) Lumina Foundation grant to Presidents’ Forum/Council of State Governments

to create an interstate “model state reciprocity agreement,” which States may adopt.

Background information available online at http://presidentsforum.excelsior.edu/projects/multi-state-reciprocity.html

Drafting Team – Alan Contreras, Consultant Marshall Hill, Coordinating Comm’n for Postsecondary Education Bruce Chaloux, Sloan Consortium, Inc. Russell Poulin, WICHE George Roedler, MN Office of Higher Education Shane DeGarmo, Ohio Board of Regents Rep. James Roebuck, PA House of Representatives Sharyl Thompson, American College of Education Leroy Wade, MO Dept. of Higher Education

Advisory Council and members of the public have an opportunity to provide comments and there was a hearing held in February 2012 at Lumina to discuss the first draft.

National Efforts

Model for State Authorization Reciprocity Agreement (SARA)

Most recent draft was issued in August 2012 (http://presidentsforum.excelsior.edu/meetings/12-10-3_docs/SARA_August_2012_Draft.pdf).

Characteristics of SARA: Leaves in tact the traditional roles of the federal government, states,

and accrediting bodies Establishes a national body to oversee implementation Requires participating states to approve accredited, financially stable,

in-state institutions for participating in SARA (i.e., institutions located in non-participating states may not themselves participate)

Establishes a uniform set of physical presence triggers Shifts the burden of distance education regulation to the institution’s

“home state,” rather than the state(s) in which distance education is being offered

Funded through uniform institutional fees

National Efforts

WICHE SARA draft Separate reciprocal agreement drafted by the Western

Interstate Commission for Higher Education (WICHE) – also called SARA (http://presidentsforum.excelsior.edu/meetings/12-10-3_docs/WSARA_July_31_2012_Draft.pdf).

Relies upon a set of voluntary reciprocal agreements based on regional compacts

Rather than establishing a national overseer, relies upon existing regional groups (e.g., SREB and WICHE) to administer the agreement(s)

Also shifts the burden of distance education regulation to the institution’s “home state,” rather than the state(s) in which distance education is being offered

Also establishes a uniform set of physical presence triggers

National EffortsRegional Groups’ Reciprocity Efforts

Southern Regional Education Board’s Electronic Campus (SREB E-Campus) Launched in 1998 to provide a “free trade zone” of online courses and

programs among accredited institutions in its 16 member States Courses and programs must be approved by the home SREB agency Member States must agree to “Principles of Good Practice” However, since the issue of state authorization has been reinvigorated,

some member States have chosen to opt out of the compact and enforce their authorization laws and regulations

WICHE’s Internet Course Exchange (ICE) Program used by institutions in member States that offers seats in home

institution classes to distance learners The distance learners remain enrolled in their home institution and do not

enroll in the distance education institution The home institution effectively endorses a partner institution’s course as

its own, but must approve individual courses and programs before allowing their students to enroll

National Efforts

APLU/AASCU Commission on Regulation of Postsecondary Distance Education

Mission: Develop and provide recommendations on appropriate government oversight and consumer protection for distance education. The Commission's primary aim is to address the costs and inefficiencies faced by postsecondary institutions that must comply with multiple (often inconsistent) state laws and regulations because they provide educational opportunities to students in multiple state jurisdictions. http://www.aascu.org/policy/DistanceEducation/

Members include representatives from government agencies, institutions, state higher education groups, and associations

Advisory Group chaired by: Bobby Moser, Vice President, Ohio State University George Ross, President, Central Michigan University Craig Weidemann, Vice President, Penn State University

National Efforts

Congressional E-Learning Caucus

Goal: Educate House members and their staff about important online learning issues, particularly raising awareness about policy implications

Caucus Chaired by Jared Polis (D-CO) – Scott Groginsky, Legislative Assistant Kristi Noem (R-SD) – Andrew Christianson, Legislative Director

Meetings January 6, 2012 – planning meeting to discuss the caucus, its goals

and potential activities July 11, 2012 – kick-off meeting with panel of online learning programs

at Fairfax County Public Schools, Western Governors University, Colorado State University Global Campus, and Career Education Corporation

October 12, 2012 – meeting with panel of representatives and proponents for online learning programs at K-12 schools.

Other Resources

Instructional Technology Council: http://www.itcnetwork.org/elearning-conference/352-state-authorization-for-institutions-that-offer-distance-education-to-out-of-state-students.html

WCET Frontiers Blog: http://wcetblog.wordpress.com/

Department of Education’s Program Integrity Q&A: http://www2.ed.gov/policy/highered/reg/hearulemaking/2009/sa.html

EDUCAUSE Blog: http://www.educause.edu/blogs/jcummings/distance-ed-state-authorization-reg-done-now

What Are Institutions Doing?

Some have been actively working to comply, even publicly documenting their efforts:

UMassOnline is working with other University of Massachusetts campuses to maintain a public website with state authorization resources. Includes summaries of its own state-by-state compliance efforts, a form letter sent to every State, and State responses. https://confluence.umassonline.net/display/OBS/Higher+Education+Act+%28HEA%29+-+State+Authorization

University System of Georgia maintains a resource page containing State contacts, links to articles and blogs, and documents received from State agencies. http://www.usg.edu/academics/distance_education_regulations/

Oregon State University’s Extended Campus has created a 50-state resource page, compiling compliance information from different resources and posting their own correspondence with State agencies. http://ecampus.oregonstate.edu/doe/

Ohio Board of Regents’ State Authorization Network – information clearinghouse that is specific to the needs of Ohio institutions. https://sites.google.com/site/stateauthorizationnetworkohio/

What Are Institutions Doing?

Other institutions have not applied for lack of resources or lack of knowledge, or have chosen to ignore the requirements.

July 2011 survey conducted by the University Professional & Continuing Education Association (UPCEA) and WICHE Cooperative for Educational Technologies:

69% of responding institutions had yet to apply in any state: 29% had not done so due to lack of staff 15% believed the costs were too high

19% believed that repeal of the federal regulation would eliminate the need to seek State authorizations

59% identified States from which they would no longer accept students

http://wcet.wiche.edu/advance/upcea-wcet-sa-survey

UMUC’s Efforts to Date

UMUC continues to comply with relevant State laws.

This includes: On-going research of all State laws and regulations,

including contacting every applicable State agency for information;

Opening channels of communication within the University to coordinate operations in States and create licensing priorities;

Applying (or asking!) for exemptions when possible; and Collecting information and documentation needed for

applications.

Looking Forward

We are hopeful that one of the national efforts will take hold and institutions will be able to seek reciprocity

In the meantime, the state regulations still exist and institutions should do their best to comply Accreditors are watching and requiring institutions

to certify that they comply with all federal and state laws

The Department of Education does have the ability to go back and reissue the regulations