Illinois College

Trying to transfer the function to IBHE State regulation of private higher education

WHAT state agency determines whether a private institution of higher education should be allowed to operate in Illinois? Most people would respond, "that's obvious, the Board of Higher Education (BHE)." They would, in fact, be wrong. It is true that the BHE administers programs that concern the private institutions, particularly financial assistance programs. But under two little known laws, the agency that has the responsibility for actually regulating private higher education is the Illinois Office of Education (IOE), the state's office for elementary and secondary school relations. Why the IOE? The answer is largely an historical one, but it also relates to agency functions and the attitudes of those regulated. All this may change. Since 1973 both the BHE and IOE have supported a transfer of the regulatory function to the BHE, and legislation is pending in the General Assembly to accomplish this. However, there are various complications and concerns about such a transfer that have stymied action.

Illinois has an impressive higher education private sector. Not only does it contain prestigious institutions like the University of Chicago and Northwestern University and a significant array of graduate level professional schools, but it also includes a large number and variety of "work horse" colleges and universities that attract nearly three out of every ten students in the state. The percentage of students that attend private institutions in Illinois is the 11th highest in the nation. One-third of all bachelors degrees, two-fifths fifths of all masters degrees, one-half of all doctorates and three-fourths of all professional degrees awarded annually in Illinois are from the state's private institutions.

The purpose is not only to protect the consumer but to insure minimum quality standards that protect the reputation of higher education itself

Given such a significant contribution, why do we need to regulate private higher education at all? Clearly if this sphere were limited to only the well known or long-established schools, there would be little necessity for regulation. But in fact there exists an incredible diversity of institutions, ranging from two-room "bible colleges" to highly specialized graduate institutes, from proprietary schools offering degree programs as a business to century-old liberal arts colleges. The state has the obligation to protect consumers of education from fraud in the form of demonstrably inferior institutions or worthless degrees and diplomas. It also has an interest in discouraging the proliferation of degree programs that are exceptionally weak or duplicative. The purpose, of course, is not only to protect the consumer but to insure minimum quality standards that protect the reputation of higher education itself.

The two statutes that relate to this area are the Privately-operated Colleges, Junior Colleges and Universities Act, approved in 1945, and the Degree Granting Institutions Act, approved in 1961 and amended in 1975. Prior to 1945 new institutions either received authorization to operate directly from the legislature or by incorporating through the standard procedures provided by the state. The 1945 act designated the Office of Superintendent of Public Instruction (subsequently changed to Illinois Office of Education as the agency that henceforth would screen and approve all applications to establish a private college, junior college, or university. Coverage was limited to institutions coming into existence after the date of the act; all others were "grandfathered in." The act stipulated a very simple, one-step procedure for gaining approval with no provision for interim authorization or for periodic reviews after authorization had been granted. The criteria that were established were very few, but they were stated in rather restrictive detail.

The 1961 act came at a time of considerable legislative activity on higher education. After years of intense inter-university competition and political infighting, the General Assembly in 1961 passed a bill authorizing the establishment of the Board of Higher Education. While some persons argue that private higher education ought to fall under the purview of the new board, in fact the BHE enabling legislation scrupulously avoided any reference to the regulation of private higher education. One can surmise that the political challenge of pushing all of the public institutions under one umbrella board was so formidable that few legislators seriously contemplated complicating the struggle by engaging the private sector. The only action the legislature took with regard to the private sector was to pass the Degree-Granting Institutions Act, one of the more confusing pieces of legislation to come out of the General Assembly.

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The stated purpose of the act was a rather broad commitment "to regulate the granting of academic degrees, diplomas and certificates," but it was the culmination of a legislative investigation narrowly focused on "degree mills" offering worthless degrees to anyone for a price. The act was patterned after model legislation recommended by the Council of State Governments, but the legislature limited the act's application with a clause exempting any institution that was or would become approved under the 1945 law, or virtually every institution. On the other hand, the terms and procedures spelled out in the new legislation strongly suggested they applied to all institutions that were approved to operate after 1961, the date of the act. This appearance was further strengthened by a provision of the act creating an Advisory Council on Degree Granting Institutions with members to be appointed by the governor from various types of private and public colleges and universities. Why would such a body be established, if its only purpose was to investigate fly-by-night operators offering degrees for sale? On the surface the new legislation seemed to expand and strengthen the state's regulatory system, but taken literally it was so compromised by its exemptions that it only duplicated the 1945 law and complicated and weakened the entire regulatory concept.

Regulation under Bakalis
Handicapped with this cumbersome statutory base, the Office of the Superintendent of Public Instruction (OSPI) did relatively little in the way of regulation for the next decade. Then, under a new superintendent with a background in higher education, Michael J. Bakalis, the OSPI sought to build up the regulatory function. A higher education section was established, and in 1972 a new set of rules and regulations was drafted that basically ignored the exemption clause. At about this time, Lincoln Open University, a new, nontraditional institution with powerful backing, secured an operating permit, and its sponsors attempted to exploit the exemption loophole to avoid returning for degree-granting approval. The OSPI contested this interpretation successfully, and before Lincoln Open returned for degree granting authority, one of its officers was indicted and the institution collapsed in one of the major scandals to hit higher education in recent times.

Development of the regulatory function in the OSPI was short-lived because in 1973 Bakalis had a change of heart. Faced with an uphill battle to retain his position when it would become appointive in 1974 and having witnessed the failure of his concept of a Board of Education with authority over both higher education and elementary and secondary education, he decided that the regulation of private higher education ought to be transferred to the BHE. An agreement was reached with James Holderman, executive director of the Board of Higher Education, and the higher education section of the OSPI was reorganized out of existence.

Since its inception in 1961 the BHE had steadily expanded its relationship with the private institutions. Initially this was gradual, but in 1967 the legislature changed things dramatically by authorizing the establishment of a blue ribbon commission "to study the role and needs of non-public higher education in the State of Illinois" and "to advise the State Board of Higher Education, the General Assembly and the Governor. . .." This commission, headed by T. R. McConnell of the University of California, came up with a recommendation for a program of direct grants to the private colleges and universities to be administered by the Board of Higher Education. The formation of a Non-public Institution Advisory Committee to the BHE composed of college and university presidents was suggested by the commission and subsequently adopted, thereby strengthening the growing relationship between BHE and private institutions. At about the same time another study sponsored by the BHE recommended a major expansion in health professions training and a massive grant program administered by the BHE to provide the needed stimulus. A significant portion of these funds would go to private institutions. It as not surprising, given this pattern, that the executive director of the BHE willingly embraced the idea in 1973 of taking over the regulation of private higher education.

Such a transfer proved easier to agree to than accomplish, however. The election of 1972 brought a new governor, and by the summer of 1973 the BHE had a new chairman and new executive director, both of them unfamiliar with the transfer question. Under these circumstances no legislative initiative was taken in the spring of 1973, and negotiations soon bogged down over the scope of the transfer. The major point of contention was OSPI regulation of private business and vocational schools, commonly called proprietary institutions. The BHE felt that regulation of these schools should be transferred in addition to the regulation of higher education; the OSPI resisted this position. In the end a second year went by without action, and in the following year a new State Board of Education and a new superintendent were appointed.

Attempt by new board
Personnel turnover in state government frequently dooms prior commitments and plans, but in this instance it renewed backing for the transfer concept due to an unusual set of circumstances. The legislation establishing the State Board of Education authorized the formation of a Joint Education Committee to be composed of an equal number of representatives of the Board of Higher Education and the State Board of Education. Both boards promptly complied with this directive, and at its first session in October 1975 the new commission identified the transfer issue as one that needed attention. At the next meeting a report was presented by the BHE staff, and the committee approved a resolution supporting transfer of regulation of the higher education institutions but not the proprietary schools. This resolution was subsequently presented to both parent boards, and by early 1976 both boards

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had given their approval.

But once more the implementation process bogged down. The BHE staff in early 1976 was totally preoccupied with completing work on its fdurth master plan and compiling its budget recommendations. Again a legislative session passed without consideration of legislation implementing the transfer. During the summer and fall, however, a working committee from the two education boards hammered out a piece of legislation, and when the 1977 session of the General Assembly convened. Sen. Vivian Hickey(D., Rockford) sponsored the bill.

At this point another major problem materialized. The transfer bill did more than merely substitute the BHE for the IOE in the existing statutes; it completely rewrote the authorizing legislation in order to provide a coherent system of regulation, patterned substantially after model legislation developed in 1973 by the Educational Commission of the States. The bill was drafted without significant input from the private institutions, and when they were informed of the legislation, somewhat late in the process, they reacted. Pushed by several irate presidents, the Federation of Independent Illinois Colleges and Universities launched a telegram and letter writing campaign of protest, and a federation bill was hastily drafted as a substitute. Meanwhile, some college presidents publicly blasted the Hickey bill, and pressure was exerted on the members of the Board of Higher Education. Confronted with these rumblings of discontent, Sen. Hickey placed the bill in the Interim Study Committee, thereby tabling it for the session. The BHE then began the arduous task of making peace with the private sector.

While all manner of objections had been raised to the bill, most could be handled with explanations, verbal assurances and minor changes in the bill. However, several were more difficult. One serious concern was over which institutions would be"grand-fathered in" with the BHE holding out for a minimum number and the private institutions seeking the maximum. Another objection dealt with hearings to appeal administrative rulings. The proposed legislation left this to be substantially determined through rules and regulations, but the institutions wanted these provisions laid out in explicit detail in the statutes. The institutions also made a few arguments to limit regulations to granting permission to operate an institution without regulations on grantingdegrees, but they rather soon backed off from this position.

Awkwardness of transition
Following many discussions with representatives of the private sector, the BHE staff is today optimistic that reasonable compromises have been arrived at and that the few remaining dissidents will be persuaded by their colleagues to believe that it is in everybody's interest to transfer the regulation of private higher education to the BHE. Yet given the vicissitudes of the legislative process and the tangled history of legislation and agency responsibilities in this area, no one is confidently predicting passage in the 1978 session of the General Assembly.

On the other hand, any responsible observer would conclude that something has to be done to clear up the confusion and inertia. Since 1973 the IOE has provided little more than token support for regulating private institutions because of the expectation of transferring this function to BHE. One person alone has handled all aspects of the regulatory process at IOE, and much of the work has been done by consultants. The rules and regulations adopted in 1973 need strengthening, and a backlog of requests for authority to operate an institution and authority to grant new degrees has developed. The Advisory Council on Degree Granting Institutions no longer exists since governors have not bothered to replace members whose terms have expired. In early 1977 the awkwardness of the transition period was graphically exposed when the executive director of the BHE and the state superintendent of education imposed a moratorium on further actions in this area until the transfer of the regulation function could be accomplished. No sooner was this declared, however, than it had to be lifted since the legislature did not pass the implementing legislation. As a substitute, an ad hoc committee of administrators from BHE and IOE was improvised to screen requests from private institutions and review staff recommendations.

That the regulatory function must eventually be shifted to the Board of Higher Education seems obvious. In the years since its inception the BHE has come to speak for all of higher education in the state, whether public or private. The IOE on the other hand has become largely associated in the public mind with elementary and secondary education, and this division of labor was cemented by approval of a State Board of Education in the same mold. This state needs a strong and well-respected system of regulation for private higher education in order to protect consumers and the reputation of higher education generally. This will be achieved only when the regulatory process is clearly placed in the mainstream of higher education administration. 

26/ January 1978/ Illinois Issues