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Montgolfier Aérostat Réveillon, 1783.The Montgolfier brothers could have lofted their Aérostat Réveillon on the sighs of relief issued by distance educators when the U.S. Court of Appeals agreed with a lower court ruling on June 5th, 2012 to vacate U.S. Department of Education §600.9c.

This program integrity regulation, originally issued in an October, 2010 “Final Rule” under 34 CFR Parts 600, 602, 603, 668, 682, 685, 686, 690 and 691, was written as an amendment to Title IV of the Higher Education Act of 1965. It took effect in July 2011 with the intent of federalizing an existing quilt of state regulations authorizing the delivery of distance education across state boundaries.

According to §600.9c, if an institution “is offering postsecondary education through distance or correspondence education to students in a State in which it is not physically located or in which it is otherwise subject to State jurisdiction as determined by the State, the institution must meet any State requirements for it to be legally offering postsecondary distance or correspondence education in that State. An institution must be able to document to the Secretary the State's approval upon request. (Authority: 20 U.S.C. 1001 and 1002)”

Program Integrity Issues; Final Rule

While the Secretary of Education developed this provision to improve the integrity of all programs supported by the Federal Family Education Loan (FFEL), its 2011 inception may well have been catalyzed by the rapid growth in fully-online for-profit institutions. This group joined a powerful lobby protesting the statute. Now, in the aftermath of §600.9c, state-by-state regulations remain.

Michael Goldstein of the Washington, D.C. Law firm Dow Lohnes writes that “the Administration could choose to reissue the rule, except this time do it right: that is, with appropriate notice and opportunity for the community to provide comments.” Deputy Director of the WICHE Cooperative for Educational Technologies (WCET) Russ Poulin has reason to believe the rule will be reinstated. He notes that until such time, institutions are expected to demonstrate a 'good faith' effort towards legal compliance.

Most states apply a “physical presence” litmus for regulation. This means that if an institution of higher education located in one state offers distance education in another, has an employee of the college or adjunct faculty residing in another state, uses a server located in another state, advertises via direct marketing in another state, proctors at a specific location in another state, offers internship or face-to-face labs in another state (or other triggers, as imposed on a state-by-state basis), the institution is deemed as having a physical presence in the state.

Let us assume for the time being that you can identify exactly where in the cloud your institution’s servers exist and further, you are certain that your institution does not engage in any of the practices noted above. Is your institution automatically exempt from state authorization? The answer is no. While it may have no de facto presence, the institution is still required to request permission in the 49 other states and seven territories in which it offers distance education. Thus, for the roughly 7,000 postsecondary Title IV institutions in the United States, approximately 392,000 individual applications are required! If you are wondering why states would burden themselves with so vast an industry of permits, consider that – in a time of massively online open courses (MOOCS) -- distance education is increasingly viewed as interstate commerce.

What could happen if your institution is found by one or more states to be operating without the requisite approval? Your president could receive a ‘cease and desist’ letter, which could be rather embarrassing if you are the administrator overseeing distance education. Worse, your institution could be subject to fines and even be served a lawsuit by one or more students residing in those states. Moreover, when and if the federal regulations return, lack of compliance could jeopardize your institution’s ability to offer federal financial aid. With this in mind, the remainder of this article will focus on basic steps your institution can take to minimize risk.

No Exit Poster by Kayla Shults (http://chaotictheatre.org/)When I first encountered this subject, I was incredulous. Surely a comprehensive set of state reciprocity agreements must already be in place. Not yet. What about the Chancellor’s Office? Shouldn’t they handle this task for a consortium of 112 California Community Colleges and 72 districts? Not really. Compliance with state regulations is generally required on a college-by-college basis. It’s a bit like that existential play by Jean-Paul Sartre: No Exit.

 

Perhaps an efficient way to manage this process might be by tailoring customer service relationship (CRM) software. Vendors have already customized software for lesser educational enterprises. Yet for the rest of us, working with limited resources and even less time, allow me to suggest a simpler alternative.

 

First, you will want to know whether your institution offers distance education to students in the other forty-nine…not to mention the additional seven territories. At Santa Barbara City College (SBCC), we established a practice whereby the Office of Institutional Research and Planning automatically e-mails me a report on a monthly basis, detailing the number of students served in each state and territory. This provides baseline data on institutional exposure.

 

Next, you will need to know who to contact in each state. Fortunately, the State Higher Education Executive Officers Association (SHEEO) serves as a clearinghouse for this information. In fact, you can find their most recent Directory of State Authorization Agencies and Lead Contacts right here:

Directory of State Authorization Agencies and Lead Contacts: SHEEO, June 2013

Although this list is fairly accurate, don’t be surprised if you have to do a bit of legwork yourself. The state of Hawaii is a good example.

With the information concerning the whereabouts of your distance education students and whom to contact at the relevant agencies, you are ready to begin the process of requesting authorization. At SBCC we developed a simple spreadsheet listing each state and territory outside of California. In the first column we detail the relevant agency. In the second column, we show the number of students in the current semester who are being served in that state via distance education. In the third column, we specify the date on which we initially contacted each agency by letter, and we link it to a copy of this letter as a .pdf document. In the fourth column, we note the date on which we received a response if any, and the action requested. The columns march to the right in this fashion, until authorization is granted. As a belt-and-suspenders plan, we also maintain a comprehensive physical file comprising all our state-by-state documentation.

Why do I begin by sending physical letters? It is all about making that “good faith effort.” In fact I send each initial request through Certified Mail, with Return Receipt Requested. This establishes clear documentation in the event of a challenge. Further, it is not unusual for a letter to go unanswered. This provides an opportunity to try again. If a second letter goes unanswered, one probably has a reasonable defense. But we don’t stop there!

You will note that most of the state contacts in the SHEEO list are accompanied by e-mail addresses. Call me old-fashioned, but while one can reasonably begin electronically and save the postage, I like to start with a good old physical letter and handwritten signature. Or two. I typically then follow up by e-mail. Phone calls work too, but consider how you will document these calls.

As you proceed down this often iterative, sometimes lengthy, and occasionally tedious path, bear in mind that not all states’ requirements are created equal. For example, a state authorization entity may exempt your institution once you have established that it maintains no physical presence there. However, it’s not always that easy.

Some states will ask you to describe each and every fully online program or even require you to provide a list of all the online classes offered by your institution. Other states may levy an application processing fee. In some cases, this fee is moderate and can be paid online through a standard e-commerce engine. In other cases, you will need to cut checks. Additionally, some states charge a set fee whereas others will nick you by program count. Yes, it all depends.

How do you handle states that require onerous processing fees? I keep Russ Poulin’s counsel in mind when he advises that “it’s all about risk management.” You may want to discuss the value of that $10,000 processing fee if your institution serves only a few students in that particular state.

Here’s another consideration. Some states require a signed, notarized letter from your college’s president. Mobile notaries come in very handy when you don’t have a notary on staff.

Bear in mind that some states will grant your college provisional authorization, pending completion of tasks such as posting student notification on your Website. While their language occasionally suggests that such notification must reside on your institution’s home page, a test of reasonableness may prudent. SBCC posts the following information on a State Authorization page, navigable directly from the college’s Distance Education site:

SBCC Distance Education State Authorization Website

GEN-12-13Consider reading the U.S. Department of Education's “Dear Colleague Letter” known as GEN-12-13, dated July 27th, 2012. It states in no uncertain terms that “The Court vacated on procedural grounds the requirement intended to clarify existing Department policy that State authorization extends to students receiving distance education in a State in which the institution is not physically located.”

I had the opportunity recently to speak with Sophia McCardle, Policy Analyst at the U.S. Department of Education Office of Postsecondary Education Policy Planning and Innovation. Although §600.9c. has been vacated, she reiterated that institutions are still expected to comply with existing state laws.

This article is merely a high-level view of the regulatory environment in this area. In it I have attempted to indicate what your institution may wish to do to demonstrate a good faith effort towards compliance with state regulations for distance education. Although this discussion is by no means comprehensive, consider developing documentation demonstrating 1) that your institution is creating a distance education management process for tracking students' place of residence when engaged in distance education, 2) that your institution has contacted a state directly to discuss programs the institution is providing to students in that state to determine whether authorization is needed, 3) that your institution has initiated an application to a state, even if it is not yet approved, and 4) that your institution has a pending application from a state. Additionally, you will want to provide disclosure to students on your Website, including information on the status of your institution’s authorizations by state, its accreditation status and the complaint process.

Allow me one final word about state authorization of distance education. A Mr. Johnny Allen Hendrix (a.k.a. Jimi Hendrix) had it right when he descanted:

Purple haze all in my eyes
Don't know if it's day or night
You've got me blowin, blowin my mind
Is it tomorrow or just the end of time?