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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
private secondary education; nondomiciled institutions
Purpose
Establishes a separate out-of-state registration process for private postsecondary education institutions (institutions) that are domiciled outside of Arizona. Outlines information that an institution must submit to the Arizona State Board for Private Postsecondary Education (Board) when applying for out-of-state registration, including information relating to accreditation and financial statements, and administrative requirements on the Board and institutions relating to out-of-state registration.
Background
Statute requires the Board to: 1) establish minimum standards for private vocational programs; 2) review and consider applications for private vocational program licenses and licenses to grant degrees; and 3) maintain a list of licensed institutions. A person may not operate a private vocational program unless the person holds a private vocational license issued by the Board. Each program offered by a private vocational program licensee must be authorized on a private vocational program license. A supplementary application for the approval of additional vocational program licenses and licenses to grant degrees are not transferrable to another location in Arizona except as specified on the licensure (A.R.S. §§ 32-3003; 32-3021; and 32-3025).
The Board issues regular licenses for accredited vocational or degree-granting institutions and conditional or provisional licenses for non-accredited vocational or degree-granting institutions. An applicant for a regular license must submit an application to the Board that contains specified materials and information, including: 1) a filing fee of $800; 2) the name of each accrediting agency that accredits the applicant or the applicant's programs and confirmation the current accreditation status; 3) a copy of the applicant's current catalog and enrollment agreement that meets the accreditation standards established by each accrediting agency previously listed; and 4) a surety bond, cash deposit or equivalent security. An application for a conditional or provisional license must contain additional information, including: 1) outlined staffing information; 2) financial statements and evidence of insurance; 3) the content, length, delivery, prerequisites and textbooks associated with each program offered; 4) a business plan that includes specified information; and 5) a copy of the applicant's student enrollment agreement. Each license issued by the Board is valid for a period of one year (A.A.C. R4-39-101 – R4-39-104).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Deems that the out-of-state registration requirements apply to any institution:
a) regardless of accreditation status;
b) whether or not the institution offers vocational or degree programs;
c) that is not domiciled in Arizona;
d) that enrolls an Arizona resident in a fully online program; and
e) that is not an active participant in the National Council for State Authorization Reciprocity Agreement (NCSARA).
2. Determines that an out-of-state registration for an institution is valid for one year.
3. Requires an institution that is not domiciled in Arizona to submit an application for out-of-state registration to the Board that includes:
a) evidence that the institution is legally authorized to operate in the state in which it is domiciled by the home state's postsecondary education regulatory agency;
b) evidence that the institution is accredited;
c) evidence that the institution is providing financial protection for students in Arizona by providing:
i. if the institution is accredited, proof of financial viability that includes the institution's federal financial composite score, which must be greater than 1.5 for the current year; or
ii. if the institution is not accredited or does not meet the proof of viability requirements, a surety bond, cash deposit or irrevocable letter of credit, as determined by the Board;
d) the most recent year-to-date parent company financial statements and the most recently completed fiscal year financial statements in accordance with generally accepted accounting principles; and
e) an example of the institution's official student transcript.
4. Specifies that the amount of the surety bond, cash deposit or irrevocable letter of credit from the institution must be based on the institution's prior year gross tuition revenue from residents of Arizona.
5. Specifies that the most recent year-to-date parent company financial statements and the most recently completed fiscal year financial statements must include:
a) a balance sheet;
b) cash flows;
c) profit; and
d) loss.
6. Stipulates that, if an institution is not accredited, the institution must submit the following additional information for review and approval by the Board:
a) program information that is approved by the institution's home state's postsecondary education regulatory agency and that is offered by the institution to Arizona residents, including the catalog, curricula, course descriptions and program objectives;
b) a list of all faculty teaching Arizona residents and evidence of the faculty's qualifications to teach in the faculty's assigned subject area;
c) evidence that all vocational or degree programs offered meet the minimum credit hour and program length standards established by the institution's home state; and
d) a signed attestation from a responsible officer of the institution.
7. Specifies that a responsible officer's signed attestation must affirm that the institution will:
a) comply with the Board's pro rata refund policy rule for all students of Arizona, and
b) provide prescribed notifications to students who are Arizona residents.
8. Determines that the notification that a non-accredited institution must provide to students who are Arizona residents must include:
a) notice that the institution is registered to operate by the Board;
b) an outline of the procedures students may follow to file a complaint against the institution, including a statement that if a complaint is not resolved to the student's satisfaction, the student may contact the Board;
c) notice that the transferability of credits earned at the institution is at the sole discretion of the receiving institution; and
d) for institutions offering programs or courses leading to or advertised as leading to professional licensure, a statement of whether the completion of the program is sufficient to meet licensure requirements in Arizona.
9. Specifies that, if an institution is unable to determine whether a program will meet the professional licensure requirements of Arizona, the prescribed notification must state the program does not satisfy the licensure requirements of Arizona.
10. Requires an institution to provide the Board's contact information and ensure that students will not be retaliated against for filing a complaint.
11. Requires an institution to pay a fee in an amount set by the Board for both an initial out-of-state registration and a renewal of registration.
12. Requires an out-of-state registration to be renewed annually through an application approved by the Board.
13. Requires an institution that is subject to out-of-state registration to report in writing to the Board within 30 days after the occurrence of any:
a) change in accreditation status, including any adverse action, probation or show-cause order by the institution's accrediting agency;
b) suspension or revocation of the institution's authorization by the private postsecondary education institution's home state or any other state;
c) material change in the institution's financial status or a filing for bankruptcy;
d) new education, consumer protection or fraud-related enforcement action or lawsuit filed against the institution by a state or federal agency; or
e) change in ownership of the institution following the approval by the institution's home state.
14. Requires each institution with out-of-state registration to maintain, in digital form:
a) a student's official transcript in perpetuity; and
b) a student's enrollment and financing agreements for a period of at least 10 years after the student is no longer enrolled.
15. Requires all student transcripts for Arizona residents to be submitted to the Board within 30 days after closure of an institution.
16. Prohibits a person from operating a private vocational program through online distance education to Arizona residents if the institution is not a participant in the NCSARA, unless the person holds an out-of-state registration issued by the Board.
17. Prohibits a person from operating a private vocational program with a physical presence in Arizona unless the person holds a private vocational program license issued by the Board.
18. Removes the exemption on institutions from paying Student Tuition Recovery Fund assessments for students who are enrolled in distance learning instruction.
19. Removes the prohibition on students who are enrolled in distance learning instruction from submitting a claim to the Student Tuition Recovery Fund.
20. Redefines operate as:
a) establishing and maintaining a physical presence in Arizona, including a facility, location or mailing address, and an in-state director; or
b) providing postsecondary education through online distance education to a person who resides in Arizona if the institution is not a participant in the NCSARA.
21. Defines out-of-state registration as an authorization issued by the Board to an institution domiciled outside of Arizona that enrolls a resident of Arizona in an online program when the institution is not a participant in the NCSARA.
22. Removes the definition for distance learning instruction.
23. Makes technical and conforming changes.
24. Becomes effective on the general effective date.
Prepared by Senate Research
February 2, 2026
MH/KP/hk