An institution which is not accredited by a Board-recognized accreditor and which does not meet the definition of institution of higher education contained in Texas Education Code, §61.003, must follow the Certificate of Authority process in paragraphs (1) - (9) of this section in order to offer degrees or courses leading to degrees in the state of Texas. Institutions are encouraged to contact the Board staff before filing a formal application.
  (1) Certificate of Authority Eligibility.
    (A) The Board will accept applications for a Certificate of Authority only from those applicants:
      (i) proposing to offer a degree or credit courses leading to a degree; and
      (ii) which meet one of the following conditions:
        (I) has been legally operating, enrolling students, and conducting classes in Texas and has complied with state law as either a non-degree-granting institution or an exempt institution only offering degrees in religious disciplines for a minimum of two (2) years;
        (II) has been legally operating, enrolling students, and conducting classes in Texas and has complied with state law as a degree-granting institution and seeks to open a new campus;
        (III) has been legally operating as a degree-granting institution in another state for a minimum of four (4) years and can verify compliance with all applicable laws and rules in that state; or
        (IV) does not meet one of the three previous operational history conditions, but meets additional application and review requirements for its initial application, and agrees to meet additional conditions, restrictions, or reporting requirements during its first two years of operation under a Certificate of Authority. The Certificate of Authority will be issued with written, specific conditions, restrictions, or reporting requirements placed upon the institution.
    (B) To be considered by the Board as operating, means to have assembled a governing board, developed policies, materials, and resources sufficient to satisfy the requirements for a Certificate of Authority, and either have enrolled students and conducted classes or accumulated sufficient financing to do so for at least one year upon certification based on reasonable estimates of projected enrollment and costs. Sufficient financing may be demonstrated by proof of an adequate surety instrument meeting requirements as defined in §7.16 of this subchapter (relating to Financial Protections for Student Tuition and Fees), including but not limited to, a surety bond, an assignment of a savings or escrow account, certificate of deposit, irrevocable letter of credit, or a properly executed participation contract with a private association, partnership, corporation, or other entity whose membership is comprised of postsecondary institutions.
  (2) Certificate of Authority Restrictions for Professional Degrees.
    (A) The Board may not issue a Certificate of Authority for a private postsecondary institution to grant a professional degree, as defined in §7.3 of this title (relating to Definitions), or to represent that credits earned in this state are applicable toward a degree unless the Board determines there is evidence of program need and institutional ability, including but not limited to the following:
      (i) capacity and ability of similar professional degree programs at institutions of higher education and private or independent institutions of higher education are insufficient to meet the state's current market needs;
      (ii) the institution seeking the certificate of authority:
        (I) has the necessary faculty and other resources to ensure student success; and
        (II) is subject to and agrees to meet the same standards for approval and all academic criteria applicable to similar professional degree programs offered by institutions of higher education and private or independent institutions of higher education (as defined under Texas Education Code, §61.003).
      (iii) sufficient placements are available to students for required field-based experience, such as clinicals or clerkships, for the proposed professional degree.
    (B) The Board may not issue a Certificate of Authority for a private postsecondary institution to grant a professional degree or to represent that credits earned in this state are applicable toward a degree if the institution is chartered in a foreign country or has its principal office or primary educational program in a foreign country.
  (3) Certificate of Authority Application Submission and Requirements.
    (A) An applicant must submit an application to the Board to be considered for a Certificate of Authority to offer identified proposed degree(s), and courses which may be applicable toward a degree, in Texas.
      (i) Applications must be submitted as an original and a copy in an electronic format as specified by Board staff, and accompanied by the application fee described in paragraph (3) of this section.
      (ii) A single desk review of the application will be conducted to determine completeness and readiness for a site team visit.
      (iii) The desk review may be done, in consultation with Board staff, by a reviewer who will act as the site review team leader if the application is deemed complete and ready for a site team visit.
      (iv) The desk reviewer, in consultation with Board staff, may make three possible recommendations. Board staff will make a final determination on acceptability of the application based on one of the three recommendations:
        (I) The application is determined to be foundationally incomplete in one or more Standards for Operation of Institutions as described in §7.4 of this chapter and not ready for submission. A foundationally incomplete application is one where the Standards for Operation of Institutions have not been met to such a degree that the institution is unlikely to be sustainable or operational.
        (II) The application may be resubmitted after incorporating revisions or additions suggested by the reviewer. The revisions or additions must allow the application to meet all Standards for Operation of Institutions.
        (III) The application is acceptable and ready for a site review visit.
      (v) If the application is foundationally incomplete and not ready for submission, a portion of the application fee, if not expended during the desk review, may be returned and another application may not be submitted for one year from the date of rejection of the foundationally incomplete application.
    (B) The application form for the Certificate of Authority may be found on the Board's website.
    (C) The Certificate of Authority application must include:
      (i) The name and address of the institution;
      (ii) The purpose and mission of the institution;
      (iii) Documentary evidence of compliance with paragraph (1)(A)(i)-(ii) of this section;
      (iv) Documentary evidence of either a Letter of Exemption or Certificate of Approval from the Texas Workforce Commission pursuant to Texas Education Code, Chapter 132;
      (v) Documentary evidence of articles of incorporation or other Texas-authorized organizational documents, regulations, rules, constitutions, bylaws, or other regulations established for the governance and operation of the institution;
      (vi) Identification, by name and contact information, of:
        (I) The sponsors or owners of the institution;
        (II) The designated Single Point of Contact as defined in §7.3 of this chapter (relating to Definitions);
        (III) The chief administrative officer, the principal administrators, and each member of the board of trustees or other governing board;
        (IV) Identification of faculty who will, in fact, teach in each program of study, including identification of colleges attended and copies of transcripts for every degree held by each faculty member;
      (vii) Information regarding each degree or course leading to a degree which the applicant proposes to offer, including a full description of the proposed degree or degrees to be awarded and the course or courses of study prerequisite thereto;
      (viii) A description of the facilities and equipment utilized by the applicant, including, if applicable, all equipment, software, platforms and other resources used in the provision of education via online or other distance education;
      (ix) Detailed information describing the manner in which the applicant complies with each of the Standards of Operations of Institutions contained in §7.4 of this chapter (relating to Standards for Operations of Institutions);
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(x) If applicable, institutions accredited by entities which are not recognized by the Board must submit all accrediting agency reports and any findings and institutional responses to such reports and findings for ten years immediately preceding the application for a Certificate of Authority. Accreditation by entities which are not recognized by the Board does not allow an institution to offer a degree or courses leading to a degree without a Certificate of Authority to offer such degree or courses;
      (xi) A written accreditation plan, identifying:
        (I) The Board-recognized accrediting agency with which the applicant intends to apply for institutional accreditation;
        (II) The planned timeline for application with and approval by the Board-recognized accrediting agency;
        (III) Any contacts already made with the Board-recognized accrediting agency, including supporting documents.
      (xii) Any additional information which the board may request.
    (D) An applicant that does not meet the previous operational history conditions described by paragraph (1)(A)(ii)(I)-(III) of this section must be able to demonstrate it is able to meet all Standards for Operation of Institutions found in §7.4 of this chapter through documentation and/or possession of adequate resources. Such demonstration includes, but is not limited to:
      (i) Executed agreements with all administration and faculty identified in the application;
      (ii) Complete curriculum, assessment, and learning tools for each proposed degree;
      (iii) Possession of all listed facilities and resources.
    (E) An applicant that does not meet the previous operational history conditions described by paragraph (1)(A)(ii)(I)-(III) of this section may not apply for a graduate degree or for more than one area of study as part of its initial application for a Certificate of Authority.
  (4) Fees Related to Certificates of Authority.
    (A) Each biennium the Board shall set the fees for applications for Certificates of Authority, which shall not exceed the average cost, in the preceding two fiscal years, of staff time, review and consultation with applicants, and evaluation of the applications by necessary consultants, including the cost of such consultants.
    (B) Each biennium, the Board shall also set the fees for amendments to add additional degree programs to Certificates of Authority.
    (C) The Commissioner shall request changes in the fees at a Board quarterly meeting.
    (D) The current Board-approved Certificate of Authority fees are as follows:
      (i) Certificate of Authority application fee: $8,000.
      (ii) Certificate of Authority renewal fee: $8,000.
      (iii) Certificate of Authority amendment fee: $800.
  (5) Authorization Process.
    (A) Based upon the information contained in the application, the Commissioner or his/her designee shall determine whether a site review team is necessary. A site review team is always required for applications for an initial Certificate of Authority.
    (B) A site review team shall be composed of no fewer than three (3) members, all of whom have experience and knowledge in postsecondary education. The combined team experience and knowledge shall be sufficient to review all applicable standards of the agency.
    (C) An institution must demonstrate it is prepared to be fully operational as of the date of the on-site evaluation; i.e., it must have in-hand or under contract all the human, physical, administrative, and financial resources necessary to demonstrate its capability to meet the standards for nonexempt institutions.
    (D) The conditions found at the institution as of the date of the on-site evaluation review team's visit will provide the basis for the team's evaluation and report, the Certification Advisory Council's recommendation, the Commissioner's recommendation, and the Board's determination of the institution's qualifications for a Certificate of Authority.
    (E) The site review team shall conduct an on-site review of the institution and prepare a report regarding the institution's ability to meet the Standards of Operation.
    (F) The applicant shall have thirty (30) days in which to respond in writing to the report.
    (G) The Certification Advisory Council shall review the site review team's report and the applicant's response and make a recommendation regarding disposition to the Board and Commissioner.
      (i) If the applicant has no previous operational history as described by paragraph (1)(A)(ii)(I)-(III) of this section, the Council shall make recommendations for additional conditions, restrictions, or reporting requirements during the first two years of operation under a Certificate of Authority.
      (ii) If the applicant has previous operational history as described by paragraph (1)(A)(ii)(I)-(III) of this section, the Council may make recommendations for additional conditions, restrictions, or reporting requirements during the first two years of operation under a Certificate of Authority.
    (H) The Commissioner shall make his/her recommendation regarding the application to the Board. The Commissioner's recommendation shall be made independent of the Certification Advisory Council's recommendation. The Commissioner may make recommendations for additional conditions, restrictions, or reporting requirements for the time the institution is operating under a Certificate of Authority.
    (I) After review of the Commissioner's and Council's recommendations, if the Board approves the application, the Commissioner shall immediately have prepared a Certificate of Authority containing the issue date, a list of the approved degree(s) or courses leading to degrees, and the period for which the Certificate is valid. If applicable, the Certificate of Authority will be issued with any written, specific conditions, restrictions, or reporting requirements placed upon the institution and approved by the Board.
    (J) After review of the Commissioner's and Council's recommendations, if the Board does not approve the application, the Commissioner shall immediately notify the applicant of the denial and the reasons for the denial.
    (K) Upon denial, an applicant that has met the previous operational history conditions described by paragraph (1)(A)(ii)(I)-(III) of this section may not reapply for a period of one hundred eighty (180) days from date of denial.
    (L) Upon denial, an applicant that has not met the previous operational history conditions described by paragraph (1)(A)(ii)(I)-(III) of this section may not reapply for a period of one year from date of denial.
  (6) Terms and Limitations of a Certificate of Authority.
    (A) The Certificate of Authority to grant degrees is valid for a period of two (2) years from the date of issuance.
    (B) Certification by the state of Texas is not accreditation, but merely a protection of the public interest while the institution pursues accreditation from a recognized agency, within the time limitations expressed in subparagraph (A) of this paragraph. Therefore, the institution awarded a Certificate of Authority shall not use terms to interpret the significance of the certificate which specify, imply, or connote greater approval than simple permission to operate and grant certain specified degrees in Texas. Terms which may not be used include, but are not limited to, "accredited," "supervised," "endorsed," and "recommended" by the state of Texas or agency thereof. Specific language prescribed by the Commissioner which explains the significance of the Certificate of Authority shall be included in all publications, advertisements, and other documents where certification and the accreditation status of the institution are mentioned.
    (C) Institutions holding a Certificate of Authority will be required to:
      (i) furnish a list of their agents to the Board;
      (ii) maintain records of students enrolled, credits awarded, and degrees awarded, in a manner specified by the Board; and
      (iii) report any substantive change, including changes in administrative personnel, faculty, or facilities.
    (D) Institutions that, upon application, did not meet one of the three previous operational history conditions described by paragraph (1)(A)(ii)(I)-(III) of this section, in addition to the requirements of subparagraph (C) of this paragraph, are required to provide, at the end of the first year of the initial Certificate of Authority:
      (i) Documentary evidence of continued exemption or approval from the Texas Workforce Commission pursuant to Texas Education Code, Chapter 132;
      (ii) Current audited financial statements, including a balance sheet, income statement, statement of changes in net worth, and statement of cash flow, updated since issuance of the initial Certificate of Authority;
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(iii) Documentation of continued validity of any required financial surety instrument;
      (iv) Current enrollment, retention, and graduation numbers for students in all approved degree programs; and
      (v) An updated accreditation plan, including any progress made toward obtaining Board-recognized accreditation identified in the initial application or a change in plans to apply for accreditation with another Board-recognized accreditation agency.
    (E) Authority to Represent Transferability of Course Credit. Any institution as defined in §7.3 of this chapter, whether it offers degrees or not, may solicit students for and enroll them in courses on the basis that such courses will be credited to a degree program offered by another institution, provided that:
      (i) the other institution is named in such representation, and is accredited by a Board-recognized accrediting agency or has a Certificate of Authority;
      (ii) the courses are identified and documented for which credit is claimed to be applicable to the degree programs at the other institution; and
      (iii) the written agreement between the institution subject to these rules and the accredited institution is approved by both institutions' governing boards in writing, and is filed with the Board.
  (7) Amendments to a Certificate of Authority.
    (A) An institution seeking to amend its Certificate of Authority to award a new or different degree during the period of time covered by its current Certificate of Authority may file an application for amendment, on forms provided by the Board upon request, subject to the following exceptions:
      (i) An institution with no previous operational history described by paragraph (1)(A)(ii)(I)-(III) of this section which has been granted a Certificate of Authority may not apply for an amendment during the period of time covered by its initial Certificate of Authority.
      (ii) An institution with operational history described by paragraph (1)(A)(ii)(I)-(III) of this section which has been granted a Certificate of Authority may not apply for an amendment within the first one hundred eighty (180) days after the grant of its initial Certificate of Authority.
      (iii) An institution with operational history described by paragraph (1)(A)(ii)(I)-(III) of this section which has been granted a Certificate of Authority with restrictions may not apply for an amendment during the period of time covered by the restricted Certificate of Authority.
      (iv) An institution seeking to discontinue a degree program, without closure of the institution, shall assure the continuity of students' education by entering into a teach-out agreement with:
        (I) another institution authorized by the Board to hold a Certificate of Authority;
        (II) an institution operating under a Certificate of Authorization; or
        (III) a public or private institution of higher education as defined in Texas Education Code §61.003.
      (v) The teach-out agreement shall be in writing, shall be subject to Board staff approval, shall contain provisions for student transfer, and shall specify the conditions for completion of degree requirements at the teach-out institution. The agreement shall also contain provisions for awarding degrees.
    (B) Applications for amendments shall be accompanied by the fee described in paragraph (3) of this subsection for each amendment to an existing degree or for each application to award a new or different degree.
    (C) Based upon the information contained in the application for amendment, the Commissioner or his/her designee may utilize an outside consultant, the Certification Advisory Council, or both, to review the application for amendment in order to make a recommendation to the Board.
    (D) Upon Board approval that the new or revised degree program meets the required standards, the Board shall amend the institution's Certificate of Authority accordingly.
    (E) A change of degree level or additional program would require an amended Certificate of Authority prior to beginning the program.
  (8) Renewal of Certificate of Authority.
    (A) At least one hundred eighty (180) days, but no more than two hundred ten (210) days, prior to the expiration of the current Certificate of Authority, an institution seeking renewal shall make application to the Board on forms provided upon request. The renewal application must include any applications for or renewal of accreditation by institutional accrediting agencies. The renewal application shall be accompanied by the fee described in paragraph (3) of this subsection.
    (B) The application for renewal of the Certificate of Authority will be evaluated in the same manner as that prescribed for evaluation of an initial application, except that the renewal application must include the institution's record of improvement and progress toward accreditation. Evaluation of the renewal application will include review of compliance with any specific conditions, restrictions, or reporting requirements placed upon the institution during the period of the previous Certificate of Authority and whether continuation or addition of conditions, restrictions or reporting requirements is warranted.
    (C) An institution may be granted consecutive Certificates of Authority for a total grant of no longer than eight (8) years. Absent sufficient cause, at the end of the eight (8) years, the institution must be accredited by a recognized accrediting agency.
    (D) Subject to the application and authorization restrictions of this section, the Board shall renew the certificate if it finds that the institution has maintained all requisite standards and is making sufficient progress toward accreditation by a Board-recognized accrediting agency.
  (9) Revocation of Certificate of Authority
    (A) Grounds for revocation include:
      (i) Institution no longer holds a Certificate of Approval or Letter of Exemption issued by the Texas Workforce Commission; or
      (ii) Institution fails to comply with substantive change notification and data reporting requirements as outlined in §7.11 of this chapter (relating to Changes of Ownership and Other Substantive Changes) and §7.13 of this chapter (relating to Student Data Reporting), respectively; or
      (iii) Institution offers degrees or courses leading to a degree for which it does not have Board approval; or
      (iv) Institution fails to maintain the Standards of Operation as defined in §7.4 of this chapter; or
      (v) Failure to comply with the requirement to submit all accrediting agency correspondence, reports, or findings and institutional responses to such correspondence, reports, and findings if an institution is accredited by entities which are not recognized by the Board; or
      (vi) Failure to fully comply with any additional conditions, restrictions, or reporting requirements placed upon the institution as part of its current Certificate of Authority.
    (B) Process for revocation of Certificate of Authority to offer degrees in Texas:
      (i) Board notifies institution of grounds for revocation as outlined in this paragraph via registered or certified mail;
      (ii) Within ten (10) days of its receipt of the Commissioner's notice, the institution must either cease and desist operations or respond and offer proof of its continued qualification for the authorization, and/or submit data as required by this chapter;
      (iii) After reviewing the evidence, the Commissioner will issue a notice of determination, which in the case of an adverse determination, shall contain information regarding the reasons for the denial, and the institution's right to a hearing;
      (iv) If a determination under this section is adverse to an institution, it shall become final and binding unless, within forty-five (45) days of its receipt of the adverse determination, the institution invokes the administrative remedies contained in Chapter 1, Subchapter B of this title (relating to Dispute Resolution).
    (C) Without a valid Certificate of Authority, the institution must immediately cease and desist all operations, including granting degrees, offering courses leading to degrees, receiving payments from students for courses which may be applicable toward a degree, or enrolling new students.
      (i) If an institution must cease and desist operations, within forty-five (45) days of the adverse determination becoming final and binding, the institution must assure the continuity of students' education by entering into a teach-out agreement with another institution authorized by the Board to hold a Certificate of Authority, with an institution operating under a Certificate of Authorization, or with a public or private institution of higher education as defined in Texas Education Code §61.003.
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(ii) The teach-out agreement shall be in writing, shall be subject to Board staff approval prior to implementation, shall contain provisions for student transfer, and shall specify the conditions for completion of degree requirements at the teach-out institution. The agreement shall also contain provisions for awarding degrees.
    (D) Reapplication After Revocation of Certificate of Authority.
      (i) The institution will not be eligible to reapply for a period of one hundred eighty (180) days.
      (ii) The subsequent application must show, in addition to all other requirements described herein, correction of the deficiencies which led to the denial.
      (iii) The period of time during which the institution does not hold a Certificate of Authority shall not be counted against the eight (8) year period within which the institution must achieve accreditation from a Board-recognized accrediting agency absent sufficient cause, as described in paragraph (7)(C) of this section; the time period begins to run again upon reinstatement.
  (10) Closure of an Institution.
    (A) The governing board, owner, or chief executive officer of an institution that plans to cease operation in the state of Texas shall provide the Board with written notification of intent to close at least ninety (90) days prior to the planned closing date.
    (B) If an institution closes unexpectedly, the governing board, owner, or chief executive officer of the school shall provide the Board with written notification immediately.
    (C) If an institution closes or intends to close before all currently enrolled students have completed all requirements for graduation, the institution shall assure the continuity of students' education by entering into a teach-out agreement with another institution authorized by the Board to hold a Certificate of Authority, with an institution operating under a Certificate of Authorization, or with a public or private institution of higher education as defined in Texas Education Code §61.003. The agreement shall be in writing, shall be subject to Board approval prior to implementation, shall contain provisions for student transfer, and shall specify the conditions for completion of degree requirements at the teach-out institution. The agreement shall also contain provisions for awarding degrees.
    (D) The Certificate of Authority for an institution is automatically withdrawn as of the date the institution closes. The Commissioner may grant to an institution that has existing degree-granting authority temporary approval to award a degree(s) in a program for which the institution does not have approval in order to facilitate a formal agreement as outlined under this section.
      (i) The curriculum and delivery shall be appropriate to accommodate the remaining students.
      (ii) No new students shall be admitted to the transferred degree program unless the new entity seeks and receives permanent approval for the program(s) from the Board, or Board staff, as delegated, or the transferred degree program already has such approval.
    (E) The institution shall transfer all academic records pursuant to §7.15 of this chapter (relating to Academic Records Maintenance, Protection, and Repository of Last Resort).
    (F) The Coordinating Board has delegated its authority to approve institution closure arrangements and agreements to the Assistant Commissioner with oversight of the closing institution.

Source Note: The provisions of this §7.8 adopted to be effective December 6, 2009, 34 TexReg 8515; amended to be effective November 29, 2010, 35 TexReg 10497; amended to be effective February 26, 2013, 38 TexReg 1152; amended to be effective November 24, 2013, 38 TexReg 8434; amended to be effective March 4, 2014, 39 TexReg 1363; amended to be effective November 23, 2016, 41 TexReg 9113; amended to be effective February 28, 2018, 43 TexReg 1068; amended to be effective March 2, 2020, 45 TexReg 1395; amended to be effective November 11, 2021, 46 TexReg 7600; amended to be effectiveMay 16, 2024, 49 TexReg 3257