State Authorization Going Forward

State Authorization
Regulations & Updates
Presented at ASAHP Annual Conference
October 26, 2012
Nancy S. Williamson
Vice President and General Counsel
James Koebel
Assistant General Counsel
Information about UMUC
UMUC is one of the 11 degree granting institutions in the University System of
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
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
 Institutions that offer education through distance education to students in a
state in which they are not physically located, must meet that state’s
 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) (
Background –
State Authorization Regulations
 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
 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.
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
 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.
 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.
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
 Institutions may now provide information regarding complaint
processes in states by linking to a non-institutional website.
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.
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
State Authorization Going Forward
 Additional publicly available lists:
 State Higher Education Executive Officers: Compendium of State
Laws and Regulations, updated June 2012
 State University System of Florida, June 2011
 Eduventures, Inc.: Online Learning Across State Borders, updated July
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
 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
 Ensuring your institution’s catalogs and website are up to date;
 Responding to data requests that vary from state to state; and
 Ensuring 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
 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
 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
 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.
 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.
State Authorization Going Forward
 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
 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,
• 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)
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
 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
 Characteristics of SARA:
 Leaves in tact the traditional roles of the federal government, states, and accrediting
 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
 Separate reciprocal agreement drafted by the Western Interstate Commission for
Higher Education (WICHE) – also called SARA
 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
 Also establishes a uniform set of physical presence triggers
National Efforts
Regional 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
 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
 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.
 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
 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:
 WCET Frontiers Blog:
 Department of Education’s Program Integrity Q&A:
What Are Institutions Doing?
 Some have been actively working to comply, even publicly documenting their
 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.
 University System of Georgia maintains a resource page containing State contacts,
links to articles and blogs, and documents received from State agencies.
 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.
 Ohio Board of Regents’ State Authorization Network – information clearinghouse
that is specific to the needs of Ohio institutions.
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
 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
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
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