Considerations for Early Implementation of State Authorization Federal Regulations

To early implement or not to early implement, that is the question…

Ok, so maybe Hamlet had a bit more weighing on his mind when he posed the question, “to be or not to be,” but I do think institutions need to take the question of whether to early implement new 2019 State Authorization Federal Regulations for state authorization very seriously.

A Not So Simple Choice

Let’s review. Final Federal Regulations for State Authorization and Accreditation were announced in the Federal Register on November 1, 2019.  For purposes of this article we will call the new regulations the 2019 Federal Regulations. Van Davis recently provided a post about the new Accreditation rules. A few weeks ago we also provided a post about the new State Authorization rules. In that post, we shared the implications of the state authorization related regulations:

• 34 CFR 600.2 – Definition: state authorization reciprocity agreement.
• 34 CFR 600.9(c) – State Authorization.
• 34 CFR 668.43 – Institutional Information (requirements for professional licensure disclosures are described in this regulation).
• 34 CFR 668.50 – Institutional Disclosures for distance or correspondence programs – REMOVED.

The effective date of the new 2019 Federal Regulations is July 1, 2020. However, the Higher Education Act (HEA) not only indicates the timeline for effective dates for published regulations affecting programs under Title IV, but also the HEA permits the Secretary of the Department of Education to designate any regulations for early implementation at the discretion of the entity subject to the regulation. The Secretary may determine the conditions for implementation and has chosen the state authorization related regulations listed above as available for early implementation, as of November 1, 2019, at the discretion of the institution.

As a result, institutions have a Federal compliance choice:

• The first option is to continue abiding by the 2016 Federal Regulations for state authorization, which are currently effective and then shift to complying with the new 2019 Federal Regulations by July 1, 2020.
• The second option is to immediately comply with the four newly released 2019 Federal Regulations related to state authorization.

The accreditation related regulations are not subject to early implementation and are not effective until July 1, 2020.

Please note that there is not a choice to do nothing until July 1, 2020. Failure to comply with one or the other of the sets of Federal Regulations for state authorization could have an impact on the institution’s participation in Title IV HEA programs. Additionally, requirements related to state compliance through state by state approval or through reciprocity must be maintained regardless of the Federal compliance option that is chosen.

At first blush, it may seem like a simple choice. However, we caution the institutions from taking this choice lightly. The following sections describe factors to be considered in making your choice. Just remember, though “this be madness, yet there is method in’t.”

Institution Decision

The decision whether to early implement should be an institution choice with the senior leadership participating in the decision. We urge institutions to make a formal, documented decision so that it is deemed an institution policy, which would, therefore ensure that the entire institution would be subject to this policy and should follow it.

Some institutions have asked if it is possible to pick and choose regulations for which they comply between the 2016 and 2019 regulations, as though it is an “a la carte” compliance management process. Our recommendation is that the institution choose one or the other as we believe that the requirements would conflict if there was a “picking and choosing” plan for compliance. Speaking at the WCET Annual Meeting, Diane Auer Jones, Principal Deputy Under Secretary at the Department of Education, urged institutions to pick one or the other option. If an institution is insistent upon choosing an “a la carte” method, we strongly urge the institution to have their legal counsel review this plan and approve it before moving forward.

If the institution considers not to early implement, they should be acutely aware that the institution will still have to develop a compliance strategy that meets the 2019 Federal Regulations by July 1, 2020.

Regardless of the ultimate decision to early implement or not, the decision process with senior leadership will serve to inform key stakeholders of the compliance obligations placed upon the institution.

Document the Decision

The institution decision, for which the senior leadership participates, should then be formally documented. In a recent similar situation that provides us with some insight, the Department released Gainful Employment regulations that were subject to early implementation. In that situation, the Department provided guidance that the institutions “must” document the decision to early implement. Related to that direction to document, our colleagues at Thompson Coburn, LLP wrote about Gainful Employment early implementation and shared a model early implementation document that institutions could use as a starting place for discussions and a to develop their own early implementation document with guidance from the institution’s legal counsel.

The Department has not given specific guidance to document, as of this date. However, when speaking at the recent WCET Annual Meeting, Diane Auer Jones shared that institutions should document the decision to early implement state authorization regulations. We not only agree with this suggestion, but we think it would be prudent to also maintain evidence of how the decision to implement has been followed to show consistency and observance of the process institution wide.

Compliance Considerations

The institution will want to make its decision by considering the current status of compliance at the institution and its ability to build compliance strategies to meet requirements of the 2019 Federal Regulations not later than July 1, 2020. The institution should note that the 2016 Federal Regulations will replace the 2019 Federal Regulations, which will require a different compliance strategy based upon different requirements designated in the new regulations.

There are several challenging Federal regulation compliance issues that institutions will wish to review, including:

• Document that states have a complaint process. The 2016 Federal Regulations direct that for an institution to be legally authorized to offer distance education in a State for which it is not physically located, the institution must document that there is a State process for review and act upon complaints in the state where the student “resides”.
  • This is the worrisome issue that was raised last summer in regard to the Department guidance about state complaint processes. California responded quickly with a process for which the Department states is not fully compliant, but assumes that California will make the necessary changes.
  • This part of the state authorization regulation has been removed for the 2019 Federal Regulations.

 TIP: In its letter regarding the state of California’s lack of complaint process, the Department leaned heavily on institutions using the “early implementation” option as the best remedy for this problem. That is one argument for choosing to early implement, especially if you have a large number of distance students in California.

• Location vs. Residence of a Student.
  • Compliance for the 2016 Federal Regulations requires that the institution demonstrates approval in a state based upon the “residence” of a student. General and Individualized Disclosures for Distance and Correspondence Education are based upon the “residence” of the student.
  • 2019 Federal Regulations are based upon “location” of the student. The federal state authorization rule is meant to lean on the approval processes used by the states. State laws have jurisdiction over students who are located within their borders. The change alleviated the use of a federal (residence) and state (location) status in determining which laws apply to which students.

TIP:  This is probably not the factor that will impact the choice to be made, but institutions not using location should start moving toward using it.

• General notifications for students in a program leading to professional licensure, whether at a distance or on-campus.
  • Professional Licensure general disclosures for the 2016 Federal Regulations requires not only a determination of whether the institution’s curriculum meets education prerequisites for professional licensure or certification, but the institution must also provide the actual list of educational prerequisites for professional licensure or certification for the occupation for which the program is to prepare students. The listings of education prerequisites must be for each state where the program’s enrolled students reside and any other state for which the institution has made a determination regarding the prerequisites.
  • The 2019 Federal Regulations for general disclosures for professional licensure do not require the listing of prerequisites.
  • The 2019 Federal Regulations requires general disclosures for professional licensure regardless of modality. For the first time, notifications will be required for both face to face and distance education programs.
  • The general disclosures for professional licensure required by the 2019 Federal Regulations directs the institution to make a determination, for programs leading to professional licensure or certification, whether the program curriculum meets educational requirements for licensure or certification. The institution must list states for which the program curriculum meets educational requirements, a list of states for which the program curriculum does not meet education requirements, and a list of states for which the institution has not made a determination.

TIP:  Each regulation has a difficult part to fully comply. The 2016 regulations require that you actually list the educational prerequisites of each state where the program prepares students. The 2019 regulation expands the notifications to face-to-face programs. At least for the 2019 regulations, there is the Federal compliance option of listing that the institution has not yet determined if it the program curriculum meets the educational requirements of a particular state. That is a good option as program staff make the state-by-state determinations….and, yes, they should do the research to make those affirmative or negative determinations, but it does not have to be fully completed by July 1, 2020.  Also note that the determination is made about the program curriculum NOT the ability to transfer a license to another state after the student obtains a license in the home state of the institution.

• Direct notifications for students in a program leading to professional licensure, whether at a distance or on-campus.
  • The 2016 Federal Regulations requires the institution to disclose directly and individually, prior to the prospective student’s enrollment if the institution has determined that the program does not meet licensure or certification prerequisites in the state the student “resides”. An acknowledgement that the student received the disclosure is required.
  • The 2019 Federal Regulations disclosures are based upon the “location” of the student prior to enrollment in the program. These direct notifications are to be made to the prospective student if you determined that your institution does not meet a state’s education requirements and if the institution has yet to make a determination.
  • The 2019 Federal Regulations direct that if the student is already enrolled in the program and the institution makes a determination that the program’s curriculum does not meet state educational requirements in a state for which an enrolled student is located, the institution must provide a direct disclosure within 14 calendar days of making that determination.
  • The 2019 Federal Regulations apply to both face-to-face and distance students.
  • The Department indicates that the institution must develop the process for determining the location of the student, including time of initial enrollment in a program and any change of location due to formal receipt of information from the student.

 TIP: The 2016 regulations apply only to distance students.

So… What’s Your Answer (to the question?)

It is important that the institution not sit on its hands and wait until July 1, 2020 to implement Federal compliance strategies. We have seen an unpredictable landscape for Federal regulations for state authorization leading up to this point. It is natural to wonder whether we are now in an era of stability.  The 2019 Federal Regulations came out of consensus, meaning there was full agreement of the negotiators during the 2019 Negotiated Rulemaking Process. The consensus of the negotiators lends an air of viability to these regulations that we have not previously seen.

The issues shared are by no means the complete list of regulation topics. However, these topic areas are among the most complicated to develop strategies for compliance management. Given the nuances of these regulations, institutions will see the possible impact among many departments as well as the direct relationship to the institution’s ability to provide Title IV Federal Financial Aid. It is imperative that the stakeholders at the institution have representation along with legal guidance to make the decision for compliance processes.

Ultimately, the best steps forward for institutions are to make an institution decision with senior leadership regarding early implementation, document if the institution decides to early implement, and to consider maintaining evidence of process implementation to show institution recognition and consistency of practices to follow the determined institution policy. Diane Auer Jones shared that the Department will host webcasts about the new 2019 Federal Regulations. We look forward to this Department guidance and will be sharing that guidance with you as it becomes available.

-Cheryl and Dan

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

 

Dan Silverman
Assistant Director, WCET State Authorization Network
dsilverman@wiche.edu

 

 

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