State Approval: 7 Steps (and Words of Advice) in Applying to States

WCET: Many people have asked for advice on the steps to take in researching state regulations and applying to states for approval.  When WCET and our partners were creating the ‘Starter List’ of state regulatory agencies, Sharyl Thompson of Capella University was very generous in helping us. We asked her to share what she and her team have learned in their years of experience in working with states.

The new federal regulations for higher education have caused the subject of state authorization to explode across the country. Many institutions were unaware of state regulations that have been in place for years – unaware until recently. The federal regulations mandate that an institution must have authorization to operate in any state whose regulations say they must do so. Although there is still a lot of confusion among the many stakeholders, the fact remains that states have regulations for institutions to be aware of and comply with.

Knowing what to do and how to do it in each state can be overwhelming for any institution. However, it is possible to be successful and here are some tips for doing so.

1. Select the right person to lead

It is critically important that the individuals overseeing and/or preparing the state applications are very detail oriented, multi-taskers, and have good project management skills. Some states require that forms be submitted in a particular font style or size; others require that tabs in the 3-ring notebook be labeled in a particular manner. The devil is in the details – in all respects of state regulatory issues.

2.  Read the state regulations

Once you have your person in place, the first step any institution should take is to read the state regulations (and save them electronically for easier reference in the future). There is no ONE resource to go to for the all the information needed to be successful. Various organizations (like WCET and its partners) have provided resources and it is wise to look at several of them.

Once you find the regulations for a state, start with the introduction because sometimes that section will describe the kinds of institutions that are subject to approval. Next, go to the definitions. Individual states will have different definitions of a single term, like “operate”, “postsecondary institution”, “proprietary institution”, “physical presence”, “agent”, and “educational services” – just to name a few. Don’t assume you know the definition of a word.  For example, some states define out-of-state institutions as “private” institutions for the purpose of the regulation; even though it might be a publicly-funded college.  Keep in mind that each state is uniquely different.

The focus of the discussions regarding state authorization has been on distance education and in which states an institution has students.  For many states, there are multiple “triggers” (activities that you might be conducting in that states) that determine your need to seek approval to operate. Examples of these “triggers” include: local advertising, including direct marketing, recruiting (including trade shows), where faculty reside, practica and internships, and testing sites. That is why it is so important to read the regulations and know what kinds of activities trigger the need for an institution to be authorized by a state. Each state is different.

3. Develop relationships across your institution

A successful regulatory department will be aware of and in contact with numerous other functions within the institution, including the library, finance department (for audited financial statements), curriculum development, faculty hiring and qualifications, assessment, admissions, policies, catalog, recruiting and advertising (how and where), and enrollment agreement, just to name a few. Initially, you will need to determine if any of the activities of your institutional units are setting off a “trigger” in a state.  If you find you will need to apply in a state, individuals from all of these areas may need to provide information to include in the applications.

4  Develop a relationship with regulators based on knowledge of that state’s requirements

A successful regulatory function at any institution will first be based on the relationship built with the state regulators. Feel free to contact them – but do so after reading the regulations. Contact the regulators from a knowledge base of the regulations and triggers in that state.  Prepare specific questions. Approach the regulators with an attitude of wanting to be in compliance, not with an attitude of trying to get out of having to comply. State regulators will work with you, as everyone’s goal is to ensure that students and potential students are protected from fraud and that they receive a quality education to help prepare them for a successful future. Note: some states have more than one regulatory agency.  Also, if your institution offers programs leading to a professional license, you may be required to contact the state licensing boards in advance of submitting an application to a state regulatory office.

5.  Determine where you will apply  

The relationships that were created earlier with institutional leadership will be key.  Based upon the number of students served, the costs (and effort) to comply, and other factors, your leadership will need to make the final decision whether to seek authorization or cease the activity(ies) that trigger the need for approval to operate in a particular state.

The cost of state authorization can be high, depending on the state and depending on the institution. Often there is a fee for the initial application. There may be additional fees for licensing recruiters (“agents”) going into a state. A surety bond or student tuition recovery funds may be required. The fees are calculated in various ways, again, depending on the state. There are also fees for renewals, new program offerings, or other activities that require a notification be sent to a state.

6.  Apply!

The applications need to be well organized, provide direct responses to the questions (not marketing language), written with one “voice”, and include all of the required materials. It is important to follow the directions given by the states. Doing so will build your credibility, but also cut down on the length of time it takes to receive approval.

Be mindful of deadlines for state applications. Some state regulating boards meet quarterly, and applications for approvals to operate (or renewals) must be submitted by a certain deadline in order to be on the agenda for the next meeting. Missing deadlines will only delay receiving the approval to operate.

7. Determine post-approval steps and timelines

Once your institution has an approval to operate, the activity is not over. In many states there are annual renewals and/or annual reports. If your institution changes or adds a location, some states need to be notified. If your institution adds a new program offering, or retires an existing one, the states need to be notified. Tracking all of this activity is very important. It can be challenging to keep track of which states were notified of which activities when, and then when the state responded back to those notifications. Starting a tracking system early on will save an institution many hours of work in the future.

Conclusion

This is an over-simplification of a complex process, but I tried to give you some advice from my experience.  In conclusion, here are some things I have learned over the years of working in the state regulatory field.

1. The work is interesting, complicated, ever-changing, and the devil is in the details.
2. The work is sometimes frustrating and/or stressful, but also rewarding.
3. State regulations don’t always make sense.
4. Many types of schools fall under same set of state regulations. Career schools (like truck driving or massage therapy) may fall under the same state regulations as a degree-granting institution.

Be persistent.  Watch the details.  Good luck!

Sharyl Thompson
Senior Regulatory Specialist
Capella University
sharyl.thompson@capella.edu

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