Adds a new section 3.59 to the Rules of the Board of Regents to set for the requirements for an independent/not-for-profit higher education institution to offer programs leading to postsecondary degrees.

(a) Defines institution, provisional authorization, permanent authorization and satisfactory, sufficient, effective and reasonable likelihood.

(b) Commencing on April 1, 2018 and during periods in which the Department is accepting new applications for institutions seeking to offer degree programs in New York State, an applicant must apply and obtain provisional authorization to operate an institution in New York State from the Board of Regents for a period of up to five years. Sets forth the requirements for an application to operate as an institution in New York State.

(c) Sets forth the requirements for provisional authorization to offer degree program(s) and what evidence is sufficient to demonstrate progress toward permanent authorization.

(d) Sets forth the requirements for permanent authorization.

(e) Sets forth the fees for applicants who apply for provisional or permanent authorization, the fees for an in-person capacity interview and site reviews and the annual administrative fees.

Section 3.58(b) of the Rules of the Board of Regents is amended to set forth the requirements for a for-profit institution to be granted degree-conferring authority.

Section 3.58(c) of the Rules of the Board of Regents is repealed and a new subdivision (c) is added to set forth the requirements for provisional authorization and evidence to demonstrate progress toward permanent authorization.

Section 3.58(d) shall be repealed and a new subdivision (d) shall be added, to set forth the requirements for permanent authorization to confer degrees.

Section 3.58(j) shall be added to the Rules of the Board of Regents to establish the fees for provisional or permanent authorization, the fees for an in-person capacity interview and site reviews and the annual administrative fees.

1. STATUTORY AUTHORITY:

Education Law 207(not subdivided) grants general rule-making authority to the Regents to carry into effect State educational laws and policies.

Education Law 210 authorizes the Regents to register domestic and foreign institutions in terms of New York standards and to fix the value of degrees, diplomas, and certificates issued by institutions of other states and countries.

Education Law 215 authorizes the Regents or the Commissioner to visit, examine, and inspect any institution, require reports, and request information.

Education 216 authorizes the Board of Regents to incorporate educational institutions.

Education Law 218 authorizes the Board of Regents to determine whether an institution has adequate financial resources to carry out its educational programs prior to awarding the power to confer degrees.

Education Law 224 prohibits a for-profit institution from transferring or conveying degree-conferring authority without Board of Regents approval and prohibits operation by out-of-state higher education institutions in New York without permission from the Board of Regents.

State Finance Law 97-llll establishes an account wherein the Department may deposit funds, including an application and processing charge for those institutions seeking to establish a physical presence in New York State.

Chapter 82 of the Laws of 1995 establishes the requirements for a master plan amendment for higher education institutions that seek to offer degree programs.

2. LEGISLATIVE OBJECTIVES:

The purpose of the proposed amendment to section 3.58 of the Rules of the Board of Regents is to update the procedures and establish fees for proprietary/for-profit institutions seeking degree-conferring authority and to make the application process and standards for review and approval clear and transparent to applicant entities. The purpose of the proposed new section 3.59 of the Rules of the Board of Regents is to establish fees and procedures for the review of applications to establish new independent/not-for-profit institutions.

3. NEEDS AND BENEFITS:

Over the past several years, there has been a dramatic increase in the number of entities seeking to establish new degree-granting institutions in New York State. In addition, the reviews and analyses necessary to make decision concerning these entities have become increasingly complex and time consuming for the Department. Resources available to the Department do not meet the current need and render the Department unable to conduct the quality review necessary to accurately inform the Board of Regents in its decision to authorize new colleges and universities.

In addition to these challenges, the current processes for the review of independent/not-for-profit organizations seeking to establish new degree-granting institutions have been largely guided by past practice and are not clearly defined in regulation. The application process and standards for review and approval are not clear or transparent to applicant entities.

In 2006, the board of Regents adopted section 3.58 of the Rules of the board of Regens which establishes requirements and processes for proprietary/for-profit organizations seeking initial degree-conferring authority, but similar provisions related to organizations seeking to become a new independent/not-for-profit institution have not been enacted.

Proposed Amendment:

The Department is proposing the addition of a new section 3.59 of the Rules of the Board of Regents to establish procedures and fees for the review of applications to establish new independent/not-for-profit institutions. In addition, since proprietary/for-profit institutions are held to the same quality standards as independent institutions, the Department proposes amendments to section 3.58 so that the same procedures and fees apply equally to both not-for-profit and proprietary/for-profit institutions.

The proposed fees will provide resources to support evaluation of prospective institutions in a manner that does not diminish resources otherwise available to support New York State’s existing degree-granting institutions. The establishment of procedures for review will provide clarity and transparency in the steps and standards that must be met to be recommended for authorization by the Board of Regents. The annual administrative fee for institutions that are approved by the Board of Regents will support additional oversight by the Department during the period that the institution has provisional authorization. The proposed fee structure is as follows:

This fee structure is reasonable in relation to the type and nature of the work required of the Department to review these proposed programs and is comparable to fees currently charged by other states. Currently, 44 other states charge fees for applications to establish a new institution.

4. COSTS:

a. Costs to State government: The amendments do not impose any costs on State government, including the State Education Department. In fact, the proposed fees will provide resources for the continuation of reviewing prospective applicants by the Department.

b. Costs to local government: The amendment does not impose any costs on private regulated parties.

c. Costs to private regulated parties: The amendment imposes only the fees described above for those applicants seeking degree-conferring authority in New York State.

d. Costs to regulating agency for implementation and continued administration: See above.

5. LOCAL GOVERNMENT MANDATES:

The proposed amendment does not impose any additional program, service, duty or responsibility upon any local government.

6. PAPERWORK:

The proposed amendment does not impose any additional paperwork requirements.

7. DUPLICATION:

The proposed amendment does not duplicate existing State or Federal requirements.

8. ALTERNATIVES:

No alternatives were considered. The proposed amendment will make the procedures for all applicants more clear and transparent, and will provide resources for the continuation of reviewing prospective applicants seeking degree-conferring authority by the Department.

9. FEDERAL STANDARDS:

There are no applicable Federal standards.

10. COMPLIANCE SCHEDULE:

It is anticipated that the proposed amendment will come before the Board of Regents for permanent adoption at its February meeting. If adopted at the February 2018 meeting, the proposed amendments will become effective on February 28, 2018.

(a) Local governments:

The purpose of the proposed amendment to section 3.58 of the Rules of the Board of Regents is to update the procedures and establish fees for proprietary/for-profit institutions seeking degree-conferring authority and to make the application process and standards for review and approval clear and transparent to applicant entities. The purpose of the proposed new section 3.59 of the Rules of the Board of Regents is to establish fees and procedures for the review of applications to establish new independent/not-for-profit institutions. Because it is evident that there is no impact on local governments, a Regulatory Flexibility Analysis for local governments has not been prepared.

(b) Small businesses:

The purpose of the proposed amendment to section 3.58 of the Rules of the Board of Regents is to update the procedures and establish fees for proprietary/for-profit institutions seeking degree-conferring authority and to make the application process and standards for review and approval clear and transparent to applicant entities. The purpose of the proposed new section 3.59 of the Rules of the Board of Regents is to establish fees and procedures for the review of applications to establish new independent/not-for-profit institutions.

1. EFFECT OF RULE:

The purpose of the proposed amendment to section 3.58 of the Rules of the Board of Regents is to update the procedures and establish fees for proprietary/for-profit institutions and independent institutions seeking degree-conferring authority and to make the application process and standards for review and approval clear and transparent to applicant entities. Some of these proprietary/for-profit institutions may be small businesses with fewer than 100 employees.

2. COMPLIANCE REQUIREMENTS:

Over the past several years, there has been a dramatic increase in the number of entities seeking to establish new degree-granting institutions in New York State. In addition, the reviews and analyses necessary to make decisions concerning these entities have become increasingly complex and time consuming; sometimes involving the review of multi-state or international corporations, organizations with opaque financial conditions, mergers of more than one corporate entity, and/or the conversion of a for-profit corporation to a proposed not-for-profit college. Resources (professional staff and funds to secure external expert peer reviewers) available to the Department do not meet the need and render the Department unable to conduct the quality review necessary to accurately inform the Board of Regents in its decision to authorize new colleges and universities.

In addition to the challenge of insufficient resources to support quality review, the current processes for the review of independent/not-for-profit organizations seeking to establish new degree-granting institutions have been largely guided by past practice and are not clearly defined in regulation. The application process and standards for review and approval are not clear or transparent to applicant entities.

In 2006, the Board of Regents adopted § 3.58 of the Rules of the Board of Regents which established requirements and processes for proprietary/for-profit organizations seeking initial degree-conferring authority (establishing a new college). Similar provisions related to organizations seeking to become a new independent/not-for-profit institution have not been enacted. The Department is proposing the addition of a new § 3.59 of the Rules of the Board of Regents to establish procedures and fees for the review of applications to establish new independent/not-for-profit institutions. In addition, since proprietary/for-profit institutions are held to the same quality standards as independent institutions, the Department proposes amendments to § 3.58 so that that the same procedures and fees apply equally to both not-for-profit and proprietary/for-profit institutions.

New Section 3.59 and amended Section 3.58 Compliance Procedures:

Beginning April 1, 2018, entities seeking to establish a new institution of higher education in New York must:

• Apply for provisional authorization to operate an institution for a period of up to five years, before obtaining permanent authorization.

• Submit a nonrefundable and nontransferable fee of $7,000 with the application, plus $2,500 for each additional degree program if more than one is requested.

• If an in-person capacity review is needed, institutions must submit a nonrefundable, nontransferable fee of $1,500 upon notice from the Department.

• If a site-review is needed, institutions must submit a nonrefundable and nontransferable fee of $5,000 upon notification from the Department.

• Institutions granted provisional authorization shall be subject to an annual non-refundable fee of $5,000 commencing in the first annual period that the institution obtains provisional authorization, and for each annual period through the term of its provisional authorization.

4. COMPLIANCE COSTS:

The proposed fees will provide resources to support evaluation of prospective institutions in a manner that does not diminish resources otherwise available to support New York State’s existing degree-granting institutions. The establishment of procedures for review will provide clarity and transparency in the steps and standards that must be met to be recommended for authorization by the Board of Regents. The annual administrative fee for institutions that are approved by the Board of Regents will support additional oversight by the Department during the period that the institution has provisional authorization. The proposed fee structure is as follows:

This fee structure is reasonable in relation to the type and nature of the work required of the Department to review these proposed programs and is comparable to fees currently charged by other states. Currently, 44 other states charge fees for applications to establish a new institution. The fee structures in other states vary greatly. Some states charge flat fees, others charge per program proposed, and several states require additional costs such as securing surety bonds, and other report review fees. The chart below provides select examples of fees other states charge to establish a new degree-granting institution.

Select Examples of State Approval Fees for IHEs to Establish a Physical Presence

Source: State Higher Education Executive Officers Association (SHEEO), State Authorization Surveys. Accessed on November 30, 2016, at http://sheeo.org/sheeo_surveys

As one comparative example, the chart below compares the proposed New York fees to those currently in place in Massachusetts, which may be considered comparable to New York in terms of the level of rigor and review:

Example of Institution Seeking Two Programs with a Five-Year Term

5. ECONOMIC AND TECHNOLOGICAL FEASIBILITY:

The proposed amendment does not impose any additional technological requirements on applicants applying for degree conferring authority.

6. MINIMIZING ADVERSE IMPACT:

No alternatives were considered. The same standards and procedures apply to for-profit/proprietary and not-for-profit institutions.

7. SMALL BUSINESS PARTICIPATION:

The Department solicited comment on the proposed regulations from the Association of Proprietary Colleges, who represents proprietary institutions with less than 100 employees.

1. TYPES AND ESTIMATED NUMBER OF RURAL AREAS:

This proposed amendment applies to all proprietary/for-profit institutions and independent/not-for-profit institutions seeking initial degree-conferring authority in New York state, including those in the 44 rural counties with fewer than 200,000 inhabitants and the 71 towns and urban counties with a population density of 150 square miles or less.

2. REPORTING, RECORDKEEPING, AND OTHER COMPLIANCE REQUIREMENTS; AND PROFESSIONAL SERVICES:

Over the past several years, there has been a dramatic increase in the number of entities seeking to establish new degree-granting institutions in New York State. In addition, the reviews and analyses necessary to make decision concerning these entities have become increasingly complex and time consuming for the Department. Resources available to the Department do not meet the current need and render the Department unable to conduct the quality review necessary to accurately inform the Board of Regents in its decision to authorize new colleges and universities.

In addition to these challenges, the current processes for the review of independent/not-for-profit organizations seeking to establish new degree-granting institutions have been largely guided by past practice and are not clearly defined in regulation. The application process and standards for review and approval are not clear or transparent to applicant entities.

In 2006, the board of Regents adopted section 3.58 of the Rules of the board of Regens which establishes requirements and processes for proprietary/for-profit organizations seeking initial degree-conferring authority, but similar provisions related to organizations seeking to become a new independent/not-for-profit institution have not been enacted.

Proposed Amendment:

The Department is proposing the addition of a new section 3.59 of the Rules of the Board of Regents to establish procedures and fees for the review of applications to establish new independent/not-for-profit institutions. In addition, since proprietary/for-profit institutions are held to the same quality standards as independent institutions, the Department proposes amendments to section 3.58 so that the same procedures and fees apply equally to both not-for-profit and proprietary/for-profit institutions.

The proposed fees will provide resources to support evaluation of prospective institutions in a manner that does not diminish resources otherwise available to support New York State’s existing degree-granting institutions. The establishment of procedures for review will provide clarity and transparency in the steps and standards that must be met to be recommended for authorization by the Board of Regents. The annual administrative fee for institutions that are approved by the Board of Regents will support additional oversight by the Department during the period that the institution has provisional authorization. The proposed fee structure is as follows:

This fee structure is reasonable in relation to the type and nature of the work required of the Department to review these proposed programs and is comparable to fees currently charged by other states. Currently, 44 other states charge fees for applications to establish a new institution.

3. COSTS:

The proposed amendment imposes the fees listed above for those applicants seeking degree-conferring authority in New York State.

4. MINIMIZING ADVERSE IMPACT:

No alternatives were considered. The proposed amendment will make the procedures for all applicants more clear and transparent, and will provide resources for the continuation of reviewing prospective applicants seeking degree-conferring authority by the Department.

5. RURAL AREA PARTICIPATION:

Copies of the proposed amendments have been provided to Rural Advisory Committee for review and comment.

The purpose of the proposed amendment to section 3.58 of the Rules of the Board of Regents is to update the procedures and establish fees for proprietary/for-profit institutions seeking degree-conferring authority and to make the application process and standards for review and approval clear and transparent to applicant entities. The purpose of the proposed new section 3.59 of the Rules of the Board of Regents is to establish fees and procedures for the review of applications to establish new independent/not-for-profit institutions.

Because it is evident from the nature of the proposed amendment that it will have no impact on the number of jobs or employment opportunities in New York State, and no further steps were needed to ascertain that fact and none were taken. Accordingly, a job impact statement is not required and one has not been prepared.