Published on 2012/08/08

State Authorization: Seeing the Forest and the Trees of Regulatory Compliance

—Co-written with Diane Johnson | Academic Dean, New Charter University

Complying with state regulations can be a tax for distance education institutions, but it is important to look past the inconvenient measures those regulations can force institutions to take and understand the reasons those regulations were put in place. Photo by Alex.

For many of us in distance and continuing education, there was a time when it was possible to be blissfully unaware of the regulatory efforts of federal and state policymakers.  But that time has surely passed.  Institutions were awakened to the existence of state statutes governing distance education with the October 2010 release of the United State Department of Education (USDOE) administrative regulation.  The USDOE mandate would compel educational providers to be authorized to operate in the states where they had students.

The “state authorizations” regulation [also known as USC 600.9] has surely been challenged, in whole and in part, as well as a matter of policy and a matter of law.  What has unquestionably remained is that despite the July 27, 2012 “Dear Colleague” letter wherein the USDOE announced that it will not enforce this regulation, states still expect institutions to comply with their laws.  Further, the consequences for not seeking the relevant state authorizations will continue to be quite serious, ranging from a state “cease and desist” decree to sanctions from regional and special accreditation agencies.  Most importantly, failure to seek appropriate authorization in states where students are served can render the professional recognition of an institution’s courses, certificates, and degrees null and void.  The potential for detrimental consequences to educational providers and individual students is significant.

State authorization is, therefore, an inescapable reality for university leadership and administrators in distance and continuing education.  Given this reality, many institutions have already marshaled resources to gain authorization; others have not yet organized their efforts. The realization of the gravity and scope of state authorization regulatory compliance can instill shock, frustration, and confusion in most of us.  As a result, we alternately cannot see the larger organizational picture or develop the devices and tactics necessary to make regulatory compliance a reality. How might we all, whether we are on the leading or the trailing edge of this reality, think constructively about our organizational response to the state authorization regulatory requirements?  A few thoughts describing how compliance can be accomplished and lead to greater institutional efficiencies, awareness and student-centeredness are outlined below.

INVITING PARTICIPATION

For most institutions with a broad geographic reach, gaining state authorization requires a coalition of academic administration, staff, and faculty.  It is important to note that state authorization regulation is not only a concern for an institution’s continuing and distance education unit; rather, it is a concern for the institution as a whole.  After all, the entire institution will be impacted if regulatory penalties are imposed.  It is also important to understand that state regulations vary from state to state, but often are applied due to similar “triggering” activities on the part of the institution.  Only some of the triggering activities are readily associated with distance education.  Examples of state authorization regulatory triggers range from out-of-state internships in non-distance delivered programs, athletic recruiting, some forms of marketing, and even long-term research activities.  Sometimes, institutions have faculty residing in another state, and this can trigger regulatory coverage under some state regulations.

It is important to make sure that institutional leadership include, in the state authorization efforts, people beyond its continuing and distance education unit.  Included should be persons from the athletic department, institutional marketing, research/sponsored projects, and perhaps someone from the institution’s risk management office (sometimes these offices track out-of-state faculty).  Of course, administration from academic programs with strong clinical components, such as medicine, nursing and speech pathology departments might also need to be informed and involved.  This would not mean that an institution approaching state authorization must convene a committee of fifty people, but it would be wise to find ways to involve and inform as many people across the institution as possible.  This is particularly important when addressing the triggers associated with clinical placements for which many states have secondary licensing bodies that require programs to attain authorization in addition to state requirements.  Examples include boards of nursing, teacher education, and dietetics.

Broad involvement that includes an institution’s chief academic officer is important for another reason. Many institutions with extensive out-of-state and distance education activities will need to undergo strategic cost/benefit analyses to determine in which states it will seek authorization and which ones it will not.  Depending on the benefits and costs of selecting particular states in which to seek authorization, there will be some constituencies satisfied and others dissatisfied.  Gaining institution-wide acceptance or “buy-in” for an overall state authorization strategy is undoubtedly more likely if that strategy was developed by a coalition of key administrators, faculty, and staff, with approval of the top academic leadership.

COMMUNICATIONS ARE KEY

Any communications strategy on this regulation should involve the people who can provide help in gaining authorizations, as well as the people who can help maintain state authorization compliance.  Also beneficial, is empowering with information people throughout the university who simply want or need to know what is happening organizationally and administratively, such as, faculty, staff, and students.  Optimally, an institutional communications strategy on state authorizations should include several dimensions: top academic leadership, faculty and staff, functional and student services administration, and students.

The communications from the provost or chief academic officer is unquestionably a critical first step. Strong statements by the provost on the serious nature of regulatory compliance can get the attention of a maximum number of institutional constituencies.  Messaging from the Provost can have great potential to assure that those working on state authorization can ask for and receive assistance from individuals whose expertise is critically needed.  Available information regarding state authorization and associated requirements can be inaccurate and easily misconstrued.  Faculty and staff who haven’t had the occasion to become fully aware of regulation and its consequences are at a disadvantage.  A provost’s message on regulatory compliance, featuring the institution’s state authorizations strategy in short bullet points, can be helpful in combating confusion, alarm, and misinformation.  Functional and administrative staff, as well as faculty, may be in the best position to know where “triggering” activities normally not associated with distance education are occurring.  For instance, research and risk management offices may be tracking the location of faculty who are conducting research activities out-of-state. They need to be aware of the implications of state authorization requirements on those faculty activities.  Similarly student services staff, in departments such as registration/records, admissions, and advising, need to be aware of state authorizations and the means to help potential distance students avoid taking programs not authorized for delivery in their states. Admissions and records/registration officials, for example, are critical in setting up systems for blocking admissions to students in states where their target distance programs are not authorized to be delivered.  Finally, students are sometimes the last to be informed, and other times, the first to seek information on state authorization regulatory compliance.  Communications to students about the status of individual state authorizations is necessary.  There are a number of ways to do this including through email, institutional websites, and sometimes even through mailings.  As requirements for state authorization function as a form of consumer protection, institutions have a duty to share with students, the compliance status and help them understand the implications of participation in an institution’s programs.

FINANCING OF STATE AUTHORIZATION REGULATORY EFFORTS

Compliance with state authorization regulations can be costly.  Some institutions delivering multiple programs with numerous trigger conditions to many states may find that the financial cost of authorization exorbitantly high, often well into the six figures or higher.  Complicating the matter is that many states require yearly re-authorization which creates a continuous cycle of state authorization activities.  As this work of gaining authorizations requires careful and detailed work, compliance will require at least one central staffer to initiate, coordinate, and monitor these efforts.  The applications, and the staffing needed to complete them cost money.  Consequently, there will be a need to account for authorization costs in the normal budget cycle as part of the typical “cost of doing business”.  Even more important than accepting that the costs must be budgeted is deciding how the funding for those costs will be raised.  Funding could come from the budgets of central administration (as noted previously, authorization is an institutional issue), but it could also come from the units which have the most obvious interests in gaining authorization.  This could include the continuing and distance education unit, but might also include academic units with a heavy programmatic reliance on out-of-state clinical experiences, as well as the athletic department and departments with researchers residing beyond the home state’s borders.

There are strategic considerations in deciding whether to have central administration shoulder costs of regulatory compliance, having heavily implicated units pay their “fair share”, or some budgeting that strikes a balance between centralized or decentralized budgeting.  On one hand, it can be administratively expedient for provosts or academic vice-presidents to tap their own budgets for the costs; on the other, by having most heavily implicated units budget for these costs can foster a long-term, broad-based awareness that regulation is an institution-wide responsibility.

SEEING REGULATION HOLISTICALLY

It is important to understand that the federal requirement that institutions seek state authorization is part of a broader package of “program integrity” regulations intended to protect students from slipshod distance programs.  In addition to state authorization regulations, federal regulations require institutions to maintain adequate complaint processes for students in their home state, account for withdrawing students on financial aid through determinations of their last date of attendance in a particular course, and certify non-degree certificate programs as “gainful employment” programs.  In one perspective, the aims of these regulations could, taken together, lead to the promotion of more effective learning environments; for there seems to be some parallel between the regulatory aims and what we know are the means for developing good learning experiences for students.  Consider, for example, the idea that most great educators embrace as a first step towards good teaching and learning, the idea of knowing and understanding the student.

Few would argue that it is a bad thing for institutions to know more about distance students and their needs, know where they reside, pay attention to their complaints, know when they withdraw and determine and how their educational experience is preparing them for future gainful employment Indeed, knowing these things, and checking on them regularly and systematically, could well lead to more effective teaching and learning environments.  To achieve this it takes institutional leadership looking beyond the frustrations of the moment and addressing the broader issue of possible connections between the regulations and the promotion of these learning environments.

This holistic approach may in some ways seem as little more than looking for the silver lining in a cloud of regulation.  In another sense, the holistic point of view that sees state authorization and other regulatory requirements leading to something more than the sum of its parts may help an institution struggling with regulation using the struggles to move beyond an institutional culture of mere compliance to one of continuous improvement. The latter institutional culture no doubt better positions an institution to promote, and be accountable for, effective learning environments.  And it is those effective learning environments that most educators seek to create in the first place.

CONCLUSION

State authorization regulatory compliance is a reality for institutions with comprehensive distance education programs with considerable reach throughout many states.  This is also true for institutions with less comprehensive distance programs but with more extensive out-of-state activities.  The work of compliance requires a concerted, broad-based effort to develop detailed strategies and tactics to gain authorization and reauthorization.  To do this work well, it is important that we consider broader issues such as the ones below, some of which have been mentioned previously, and bear repeating, and some which require a bit more effort to keep in mind.

One, proactively contribute to conversations on state authorization.  Become more aware of the public policymaking process, and take advantage of professional associations to collect and coordinate your professional voice on regulation of distance learning.  A few of the organizations who are leading out on this issue are the WICHE Cooperative on Educational Telecommunications (WCET), the University Professional and Continuing Education Association (UPCEA), and the United States Distance Learning Association (USDLA) are examples of places where your voice might combine with others to speak effectively for the broader profession.

Two, Given the numerous years of regulatory state statute and current federal pressure it appears that regulatory compliance is a long-term reality. Contemplate how our institutions factor compliance in to the normal “cost of doing business”.  This might involve budgeting, capturing new revenue streams (e.g., should funds come from student fees or administrative budgets?).

Three, acknowledge, not only for yourself, but for your colleagues beyond your continuing and distance education units, that as we see the more overwhelming prospects of gaining compliance, there are also possibilities to renew our commitments to work that we have always set ourselves out to do, work that revolves around providing great learning opportunities to non-traditional learners on accessible and meaningful terms.

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Readers Comments

WA Anderson 2012/08/08 at 9:29 am

Usually I am a supporter of following regulatory guidelines, but I’m so glad the feds will no longer be upholding their support for this ridiculous hurdle to online accessibility.

Frankly, I see the state regulations as protectionist measures to keep out-of-state schools from “poaching” students, which is absurd. Students should have access to the best programs which best meet their needs, especially those seeking education online.

These state-by-state regulations are barriers to entry and ways of keeping expenses and labor high for schools looking to expand their offerings. What we need is a set of national standards for online education that apply across the board.

Reed Scull 2012/08/17 at 2:20 pm

I should say that even though the USDOE has recently announced that it will no longer enforce its regulation related to state authorizations, the states will continue to enforce their own regulations. States are enforcing the regulations with tools such as “cease and desist” letters. The WCET website is an excellent resource for expert discussion on the federal regulations changes and their impact on state regulations. My advice would therefore be to continue to be aware of state authorization regulatory compliance. Best wishes to you.

Kathryn Dodge, Ph.D., Dodge Advisory Group 2012/08/27 at 9:28 am

Some institutions have found value in leveraging state authorization and accreditation processes to improve the academy. Therefore, I want to reinforce the importance of the following excerpt: “gaining state authorization requires a coalition of academic administration, staff, and faculty. It is important to note that state authorization regulation is not only a concern for an institution’s continuing and distance education unit; rather, it is a concern for the institution as a whole.” I am a former state regulator, I appreciate the article and its clarity.

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