Unprecedented Times Surprised Some Institution Staff with State Regulatory Compliance Requirements

These unprecedented times raised regulatory compliance challenges that may have surprised some institution personnel. However, some of these regulatory compliance challenges were not actually unprecedented. The COVID-19 pandemic induced institutions to shift from in-person to remote instruction. As a result, institutions closed campuses and served students who were, in some cases, located in a state other than the state where the institution is located. Institution personnel that routinely worked in distance education were not surprised by the idea of state authorization for the out-of-state activities of the institution. However, some faculty and academic administrators new to teaching online were taken aback by the notion of state authorization (meaning compliance with state requirements where their students are located).

This is the third installment of our multi-part series written by WCET and WCET State Authorization Network staff with financial and production support from Every Learner Everywhere regarding the recently published Pursuing Regulatory Compliance for Digital Instruction in Response to COVID-19: Policy Playbook. As we previously shared, this Playbook provides administrators and faculty with a concise and easy to use guide to the most significant regulatory issues impacting digital learning. Each section of the Playbook provides links to regulations and Department of Education guidance where available. Used in conjunction with Delivering High-Quality Instruction Online in Response to COVID-19: Faculty Playbook, instructors and administrators have an overview of the most critical pedagogical and regulatory concerns surrounding online and digital education quality and student success. Today, we review another part of the appendix that dives more deeply into the issue of state authorization.

–Cheryl Dowd, WCET SAN

Fundamentals of State Authorization

States hold the primary role in providing oversight of all educational activities that occur within their state. States authorize the postsecondary institutions that are physically located in the state. Additionally, and surprising to some, is that the states may direct oversight requirements for out-of-state postsecondary institutions that offer activities such as online courses and experiential learning that occur in their state. State authority to provide oversight is rooted in the powers reserved to the states under the 10th Amendment of the U.S. Constitution. Federal Regulations for state authorization tie the ability to participate in Title IV HEA programs to compliance with states laws in the state where the institution’s students are located. Therefore, it is important for institutions to know where their students are located to determine what, if any, regulatory requirements are necessary for the institution to obtain state institutional approval in the states where the student is located.

State Authorization Reciprocity Agreements – SARA

For an institution to obtain institutional approval in each state where a student is located is a complicated endeavor. States vary as to the extent of the oversight, application process, fees, reporting requirements, and approval renewal process. This wide variation is not only a challenge for institutions, it is viewed as barrier to accessibility to online distance education and consistent consumer protection for students. For these reasons, an effort initiated by The Presidents’ Forum at Excelsior College, brought together state leaders, accrediting agencies, and higher education leaders to develop a plan to develop a uniform set of standards and responsibilities for institutions for oversight of distance education that occurs across state lines. This uniform structure ultimately became the State Authorization Reciprocity Agreements (SARA).

Because states are at the center of the oversight of institutions, reciprocity, as an option for state institutional approval for distance education, was presented directly to each state to make its own decision to voluntarily become a member of SARA. States voluntarily began joining SARA in early 2014. By June of 2018, 49 states, District of Columbia, U.S. Virgin Islands, and Puerto Rico had become members of SARA. Many states required state legislative action signed by the state governor in order to join SARA.

Photo by Morgan Lane on Unsplash

The basic principle of SARA is that the state where the institution is located provides oversight for institutions to offer distance education to students located in other states that are also members of SARA. Institutions must seek approval to participate in reciprocity in the state where the institution is located. Upon approval by the home state of the institution, the institution does not need to seek state by state institutional approval for interstate distance education in other SARA member states. California, Guam, and Northern Marianas Islands are not members of SARA, therefore the institutions in California, Guam and Northern Marianas Islands cannot participate in reciprocity through SARA.

Institutions located in a non-SARA member state or territory or an institution that chooses not to participate in SARA, must either be in compliance with legal requirements in the states where the students are located or prevent students from participating in activities in those states. Institutions that participate in SARA must comply with the uniform requirements as imposed by the SARA Manual for their out-of-state activities subject to SARA Policy. These requirements include the terms of the annual renewal application and annual data reporting.

Federal Regulations for State Authorization

The Federal Regulation for state authorization of distance education has had a sorted history and has been subject to political and court battles over the past ten years. The original Federal regulation for state authorization of distance education released in 2010 was ultimately vacated by the Federal courts due to a procedural error. However, this first version is credited with awakening the states and institutions to consider state authorization for activities of the postsecondary institution that occur in a state other than the location of the institution. Ultimately, a Federal regulation for state authorization of distance education, provided by the 2019 Negotiated Rulemaking Committee that came from consensus, released as a final regulation on November 1, 2019, became effective July 1, 2020.

What remained constant throughout the Federal process, and will continue into the future, is that States are at the center of state authorization and are the cornerstone of state oversight of educational activities.

States are at the center of state authorization and are the cornerstone of state oversight of educational activities.

The effective Federal regulation for State Authorization 34 CFR 600.9(c) includes the following key points for which the institutions should review the specific language:

  • Institutions must either participate in reciprocity or have institutional approval in states where students are located when participating in distance education or correspondence courses.
  • Institutions must document the state’s approval or reciprocity to share with the Secretary upon request.
  • Location is determined at time of enrollment and when applicable, upon formal receipt of a change.
  • Institutions must document the process for determination of location to share with the Secretary upon request.

Bonus Section: New Federal Regulations for Professional Licensure Notifications

The State Authorization appendix did not include professional licensure notifications, but we would be remiss not to include this related issue. In addition to institutional approval for activities that occur in a state other than the home state of the institution, institutions must comply with any required state program approval by the state licensing boards in the states where the activities of a program that lead to professional licensure or certification occur.

Institutions must not only determine any necessary state licensing board approvals, but also must comply with Federal regulations to supply public and direct notifications to prospective and enrolled students whether the curriculum of any program leading to professional licensure or certification meets state educational requirements in states and territories. On July 1, 2020, notification requirements became effective tying compliance with participation in Title IV HEA programs. It is important for the institution to review the language of 34 CFR 668.43 (a)(5)(v) and 34 CFR 668.43(c). We previously shared analysis of the regulations and compliance strategies to supply professional licensure notifications.

The four key elements regarding notifications, for which the institution should carefully review the nuances, include the following:

  1. Notifications are required regardless of modality (face-to-face and distance education programs).
  2. The regulation identifies with specificity what educational programs require notifications – read carefully to assess your institution’s programs.
  3. Public or General notifications must be made available regarding all states and territories whether the curriculum meets, does not meet, or no determination made regarding the state educational requirements.
  4. Direct or Specific notifications are required to prospective students if the student is located in a state where the curriculum does not meet or no determination made. For the enrolled student notifications are required within 14 calendar days of the institution making a determination that the curriculum does not meet the state educational requirements where the student is located.

Institutions should be aware that for courses and programs subject to SARA Policy, the institution must supply notifications as directed in Section 5.2 of the SARA Manual. These required notifications were recently revised to more closely align with the Federal regulations.

Bottom Line

Institutions must be aware of the location of their students.

Institutions must be aware of the location of their students.

The initial March 5, 2020 guidance, from the Department of Education in response to the pandemic, specifically addressed state authorization compliance flexibility during that spring semester for Federal compliance for purposes of Title IV. However, State compliance is separate from Federal compliance. Very few states publicly shared flexibilities for state institutional approval for the activities of the institution occurring in another state. More than 2000 institutions that participate in SARA did not need to seek additional state approvals, but institutions in California and other non-SARA participating institutions found and are continuing to find that they must seek state by state institutional approval if their students are located in another state.

No flexibilities were provided by the Department in regard to providing professional licensure notifications. There again, institutions must know where their students are located in order to send any required direct notifications.

Conclusion

Learn more about the complexities of out-of-state activity compliance from the resources available on the WCET | State Authorization Network (SAN) website.  Stay tuned for more highlights from the Playbook and the deep dive appendices associated with the Playbook. Future WCET Frontiers posts will address financial aid and accessibility. You can access the Playbook in its entirety on Every Learner Everywhere’s site and can access the appendices on Every Learner’s resource site, Solve.

Cheryl Dowd

Cheryl Dowd – Director,
WCET State Authorization Network
cdowd@wiche.edu  @dowdcm

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My name is Lindsey Rae Downs. I am the Assistant Director of Communications and Community for WCET, the WICHE Cooperative for Educational Technologies. I work remotely from beautiful Helena, MT.

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