Nonpublic Postsecondary Education Commission

Follow-Up Review Report No. 14-29

June 2015

Georgia Department of Audits and Accounts
Performance Audit Division
Greg S. Griffin, State Auditor Leslie McGuire, Director

Why we did this review
This report is a follow-up review of a performance audit published in March 2013 (Report #12-16).
The audit concluded that the Nonpublic Postsecondary Education Commission (NPEC) lacked adequate policies and procedures to guide decisions to allow institutions to operate in Georgia. In addition, NPEC's complaint handling practices did not provide adequate protections for students. We recommended that written policies and procedures be developed to ensure these processes are handled properly and consistently.
This report provides a status update on the recommendations from the original audit and whether NPEC has implemented the recommendations.
About NPEC
NPEC was created in 1990 to ensure that private (and out-of-state public) postsecondary institutions operating in Georgia are educationally sound and financially stable. NPEC regulates more than 300 degree-granting and certificate-granting institutions.
NPEC also provides services to both current and former students of regulated institutions, such as handling complaints, maintaining academic records, and providing transcripts in the event of school closure.
Primarily state funded, NPEC expended approximately $1 million in fiscal year 2014 to conduct its activities.

Follow-Up Review
Nonpublic Postsecondary Education
Commission
Actions have been taken to improve
authorization processes and consumer
protection
What we found NPEC has taken action to address all the concerns identified in our original audit. These actions have resulted in policies and procedures designed to ensure institutions meet minimum requirements to operate in Georgia. In addition, NPEC has revised its complaint processing to better protect students.
Policies and procedures that existed at the time of our original audit were not comprehensive and led NPEC standards administrators to use their discretion when determining institutions' compliance with minimum standards. Since that time, NPEC has implemented a number of new and revised processes to ensure staff decisions are made appropriately and consistently.
Policies and procedures manual. NPEC staff created an Internal Procedures Manual that provides staff guidance on actions to be taken during the authorization process (through which institutions are approved to operate in Georgia).
Revisions to minimum standards. NPEC revised the minimum standards and created supplemental documents to provide better guidance to standards administrators and improve consistency in authorization decisions.
Review of authorization decisions. NPEC implemented a process to improve oversight of authorization decisions made by

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standards administrators. Now, authorization decisions are subject to periodic review by the Deputy Director.
In our original audit, we recommended NPEC pursue methods to improve the efficiency and effectiveness of the authorization process. In response, NPEC developed a method of prioritizing financial viability assessments and participates in a statewide effort to join an inter-state reciprocity agreement relating to out-of-state distance education programs. In addition, NPEC reports that it has gained some efficiencies by automating the authorization application process.
NPEC has improved its management of student complaints and has made significant progress toward improving the usefulness of its website to consumers. Revisions to the complaint process cover complaint receipt through resolution and provide assurance that complaints are managed consistently by staff. Enhancements to the website make it easier for students to file complaints, as well as access information about the agency's activities. NPEC is still working toward making additional information about authorized institutions available on its website, including relevant outcome information.
It should be noted that these actions are in various stages of completion, but NPEC expects many of its new and revised processes to be fully implemented by October 2015.
NPEC's Response: "The Commission is in agreement with the content of this Review and offers no additional comments or concerns."

The following table summarizes the findings and recommendations from the March 2013 report and actions taken to address them. A copy of the 2013 performance audit report 12-16 may be accessed at http://www.audits.ga.gov/rsaAudits/download/15791.

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Nonpublic Postsecondary Education Commission Follow-Up Review, June 2015

Original Findings/Recommendations

Current Status

Without clear procedures for reviewing institutions seeking authorization, NPEC cannot ensure the consistency and appropriateness of its assessments.
We recommended that NPEC develop comprehensive policies and procedures that provide clear guidance for how standards administrators should review authorization applications, including how authorization decisions should be documented. We also recommended that NPEC develop a process to periodically review authorization decisions.

Fully Addressed NPEC has improved guidance to staff on how authorization applications should be reviewed, including how application documentation should be evaluated. This information is contained in a new procedures manual and the minimum standards.
Procedures Manual. Since our original audit, NPEC has compiled its written procedures into a comprehensive Internal Procedures Manual. It provides instructions on reviewing authorization applications (including initial/firsttime and renewal authorizations) and standard forms to document various steps in the process, such as reviews conducted by evaluation committees and site visits. While they have identified factors they consider when determining the need for evaluation committees and site visits, these factors are not yet included in the manual.
Minimum Standards. NPEC revised the minimum standards document to clarify or expand criteria relating to some of the standards. They also created additional guidance to identify acceptable methods for evaluating institutions against the standards and, where applicable, the types of documentation required to make decisions about institutions' compliance. Evaluation methods staff can rely upon may include institutions' attestations, reviews by evaluation committees and standards administrators, and/or documentation. In addition, the guidance also specifies instances in which staff discretion (along with a written explanation) may be used to determine compliance. According to NPEC officials, the Commission and NPEC staff intend to fully implement the revised standards in October 2015.

NPEC has also implemented a process to review standards administrators' authorization decisions. The review process began in July 2014. Reviews are currently conducted every other month by the Deputy Director.

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Nonpublic Postsecondary Education Commission Follow-Up Review, June 2015

Original Findings/Recommendations

Current Status

NPEC's approach to assessing institutions' financial viability lacks the rigor required to determine if institutions are financially sound and capable of fulfilling their commitment to students.
We recommended that NPEC develop comprehensive procedures for use in assessing institutions' financial viability. This included requiring institutions to provide audited financial statements and clarifying the role of standards administrators in financial evaluations.

Fully Addressed With the help of a consultant, NPEC has developed a process that provides for a more comprehensive assessment of institutions' financial viability and compliance with the financial resources standard.
In 2014, NPEC officials consulted with an external auditor to recommend improvements to its process for determining institutions' compliance with the financial viability standard. The auditor's recommendations specified the types of documents institutions should provide to demonstrate their financial status (such as a Consolidated Financial Report and historical enrollment and complaint data) and how the documents should be reviewed by NPEC staff. Based on these recommendations, NPEC proposed a change in the way financial reviews are conducted. In addition, to improve and standardize the reviews, NPEC is planning to shift part of the responsibility for financial viability assessments from NPEC staff to the external auditor. According to NPEC officials, it began reviewing institutions under the revised process in April 2015.

A lack of emphasis on student outcomes limits NPEC's ability to assess the effectiveness of authorized institutions and the public's ability to make informed choices.
We recommended that NPEC develop procedures for evaluating institutions' effectiveness in meeting their educational objectives. In addition, we recommended that NPEC improve collection and communication of relevant outcome data (e.g., graduation rates, retention rates, job placement data, and student loan default rates) as well as consider how this information can be used in authorization decisions.

Partially Addressed NPEC has taken steps to make student outcome data available for some institutions and has developed a plan for collecting such data for all other regulated institutions. NPEC anticipates this process being fully implemented in October 2015, at which point it can begin to consider the information in all of its authorization decisions.
NPEC has made some student outcome data available to consumers by providing a link on their website to the National Center for Education Statistics (NCES) Integrated Postsecondary Education Data System (IPEDS) database1. Data include retention and graduation rates. However, this data is only available for institutions that participate in federal financial aid programs (known as Title IV Schools). Student loan default rates for institutions are also available via links on NPEC's website.

According to NPEC officials, they are still developing a process whereby the remaining institutions will report outcome information. Over the next several months, NPEC officials report that staff will work with the institutions to educate them on the outcome measures to be reported. During this period, NPEC staff will create a form on which the outcome information is to be reported.

1 The Integrated Postsecondary Education Data System (IPEDS) is a system of interrelated surveys conducted annually by NCES.

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Nonpublic Postsecondary Education Commission Follow-Up Review, June 2015

Original Findings/Recommendations

Current Status

Opportunities exist for NPEC to improve the efficiency and the effectiveness of the authorization process.
We recommended that NPEC assess the feasibility of establishing reciprocity agreements with similar institutions in other states and implement a risk-based approach for renewal authorizations to make better use of agency resources.

Fully Addressed Along with the Board of Regents (BOR) of the University System of Georgia and others, NPEC has taken steps to participate in reciprocity agreements relating to distance education programs. In addition, NPEC established a process for reviewing financial viability as a way of focusing its resources on institutions posing the highest risk.
According to NPEC officials, they are active participants in the state's efforts to become members of the State Authorization Reciprocity Agreement (SARA), which is a collaboration among states nationwide to establish comparable national standards for postsecondary distance education programs. If approved by the Southern Regional Education Board (SREB) to join SARA, NPEC will no longer be required to independently authorize institutions operating distance education programs in other SARA member states.

For financial viability assessments, NPEC recently implemented a four-tiered structure to classify institutions according to their risk level. While certain one-time events trigger an assessment (e.g., new institutions, change in ownership), the timing of any subsequent assessments vary depending on an institution's classification. In addition, any time an institution appears on the U.S. Department of Education's (U.S. DOE) heightened cash monitoring restrictions listing (which happens when the U.S. DOE is concerned about an institution's finances or compliance with federal requirements), NPEC will conduct an assessment.

It should also be noted that at the time of our original review, NPEC was securing an IT vendor to develop web-based authorization applications in an effort to streamline its application processes and make the review process more efficient. A review of NPEC's website indicates that application processes for certain exempt institutions are fully automated and operational. According to NPEC staff, online applications for non-exempt institutions are in the testing phase, after which they are also expected to be fully operational. NPEC officials also noted that the date in which online applications for non-exempt institutions will become available for use depends on the pace of the vendor.

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Nonpublic Postsecondary Education Commission Follow-Up Review, June 2015

Original Findings/Recommendations

Current Status

Without standard procedures for handling complaints, NPEC cannot ensure its process provides adequate protection to students. In addition, an incomplete complaints management database limits NPEC's ability to use complaint data as part of its authorization process.
We recommended several actions NPEC could take to improve its complaint handling process, from complaint receipt to resolution. We also recommended that NPEC improve its complaints management database to facilitate the use of complaint information as part of the authorization process.

Fully Addressed NPEC has made significant changes to its complaints management process. These changes impact key aspects of the complaint process from receipt to resolution. In addition, NPEC has improved its mechanism for managing complaint-related information.
The recently developed Internal Procedures Manual includes detailed procedures related to the processing of complaints, including how staff should seek to resolve complaints and how complaint investigations and resolutions should be documented and communicated to complainants. Significant changes to the complaint process (as noted in the manual) are summarized below.
NPEC now uses a standardized, web-based complaint form that captures comprehensive information about complainants, institutions involved, and circumstances giving rise to complaints. Also, in consultation with the Office of the Attorney General, the requirement that complaints be notarized prior to submission has been suspended.
Standards administrators are required to 1) document contact with complainants and institutions using a standard form and 2) collect and preserve all documentation related to their investigations. Any findings and recommendations resulting from complaint investigations must also be recorded on the form, including a determination as to whether the institution's actions impacted other students.
NPEC staff are required to contact complainants upon receipt of their complaints to inform them of the next steps in the complaint process, request additional information (if needed), and inform them of the expected timeline for completing the investigations. While investigations are ongoing, standards administrators must contact complainants every 30 days until a resolution is met.
In the event NPEC staff determine a matter to be ineligible to be investigated as a complaint, they must notify complainants and, if applicable, provide information about other regulatory agencies that potentially could help to resolve their issue.
Once standards administrators decide how a complaint is to be resolved, they must notify complainants and (if applicable) the institutions in writing via certified mail. This notification should also include procedures for appealing complaint decisions.

Although still under development, NPEC has started using a new automated case management system to log and manage complaints. To ensure its completeness, procedures dictate various points in the process when NPEC staff must add complaint information to the database. While complaint data is not yet factored into authorization decisions, the database should be useful for that purpose.

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Nonpublic Postsecondary Education Commission Follow-Up Review, June 2015

Original Findings/Recommendations

Current Status

The usefulness of NPEC's website to consumers and the general public is reduced due to its lack of basic information about authorized institutions and its own activities.
We recommended that NPEC improve its website to provide more useful information about NPEC activities and authorized institutions.

Partially Addressed NPEC staff have taken steps to improve availability of information concerning its activities on their website. However, they are still working toward including more comprehensive information on authorized institutions.
As mentioned previously, NPEC contracted with an IT vendor to redesign its website. As a result, NPEC's website has undergone significant revision and is now more user-friendly. NPEC staff now post Commission meeting agendas and minutes, as well as annual reports to the website.
As previously noted, NPEC provides a general link to performance indicators reported by some institutions to NCES. However, NPEC plans to fully utilize the capabilities of its webbased software to include outcome data, complaint history, and disciplinary actions (such as cease and desist orders) as part of each authorized institution's profile on its website.

6 Findings

4 Fully Addressed 2 Partially Addressed 0 Not Addressed

The Performance Audit Division was established in 1971 to conduct in-depth reviews of state-funded programs. Our reviews determine if programs are meeting goals and objectives; measure program results and effectiveness; identify alternate methods to meet goals; evaluate efficiency of resource allocation; assess compliance with laws and regulations; and provide credible management information to decision-makers. For more information, contact
us at (404)657-5220 or visit our website at www.audits.ga.gov.