1. State Authorization: past, present and future Presentation at The UMassOnline Symposium 7 March 2012 Online Higher Education Learning Collaborative

2. © 2012 Eduventures, Inc. 2 How we got here… –“Program Integrity” Rules. The final version of the federal Department of Education’s “Program Integrity” rules (October 2010) require all Title IV eligible schools to obtain approval to operate in every state where they in some sense “operate”, and where the state requires said authorization –State Authority. This development is aligned with DoE concern to enhance the state role in admitting schools to Title IV funding, and points to longstanding state authority over the operation of postsecondary institutions –Widespread Concern. The Department’s (DoE) rules caused widespread concern given the contemporary scale of online delivery and other cross- border activity, inconsistent/ambiguous state rules, and very limited historical compliance by schools –Timeline Shifted. From July 1, 2011, DoE requires “good faith effort” towards full compliance, to be enforced from July 1, 2014 –Court Ruling. Federal court threw out the rule on a technicality, but state authority unaffected, and DoE appealing. Congressional action –Today. Schools and states working out individual and some collective (e.g. SHEEO survey, proposed interstate compact) strategies

3. © 2012 Eduventures, Inc. Only 7 states (14%) regulate out-of-state online; but 18 (35%) regulate other non-standard presence, and most regulate conventional presence 3 States where regulation diverges by school control 8?

4. © 2012 Eduventures, Inc. Climate moving from confusion to strategy, but school progress uneven. Minimal compliance burden for most, but extensive for some SHEEO Survey. SHEEO survey has removed considerable ambiguity from many state’s rules/interpretation –Little evidence of additional appetite to regulate wholly online delivery, but complex patchwork of regulations over various kinds of physical presence; but largely clarification/interpretation, not new rules –No sign yet of magnitude considerations, which reflects statutory language and difficulty of quick reform. In reality, magnitude drives strategy and enforcement State Forbearance. No evidence of significant “cease and desist” activity, but likely to increase medium-term School Strategy. Flurry of letters, many unnecessary, but likely advanced state thinking on rule application specifics. Many schools still only getting started. “Extreme” strategies receding, but growing number of schools barring enrollment from certain states. For many schools, compliance burden is minimal (with ongoing monitoring). Schools with complex, extensive presence incurring significant costs Short Term v. Long-Term. Value-add of state-by-state regulation for out- of-state schools questionable, so situation likely to resolve in favor of some kind of inter-state compact; but in the meantime schools must factor in state regulation when formulating out-of-state activity 4

5. © 2012 Eduventures, Inc. Other considerations… One-Time v. Ongoing Effort- if a school needs to be authorized once, authorization likely must be renewed routinely Beyond the Higher Education Agency 1- questions of business registration, and even taxation of unrelated business income (if state regards school presence as operational trigger) Beyond the Higher Education Agency 2- concern about professional boards (e.g. nursing, education). Emphasis appears to be on regulation of individuals wishing to practice in-state, and less out-of-state schools Long-Term Role of SHEEO? Will state agencies continue to report all and every changes or clarifications to SHEEO, or will SHEEO survey start to become an historical document? 5

6. © 2012 Eduventures, Inc. Thank You! Richard Garrett Managing Director Online Higher Education Learning Collaborative (OHE-LC) Eduventures, Inc. 101 Federal Street Boston, MA 02110 617-532-6081 rgarrett@eduventures.com rgarrett@eduventures.com www.eduventures.com

7. © 2012 Eduventures, Inc. UMassOnline Speaker Series Upcoming Events April 4, 2012 - The Power of Partnering Together - Creating Synergy Between Enrollment and Technology Departments That Transforms Performance Featuring Embry-Riddle’s Bill Hampton, Becky Vasquez and John Watret April 26, 2012 – NIFTI Showcase (Needs Identification Framework for Technology Innovation) Featuring Kristine Shannon and Stefanie Henderson from UMassOnline