Bill > A2138

Introduced Session

This bill establishes requirements for contracts between online program managers and institutions of higher education and proprietary institutions licensed to offer academic degrees. Under the bill, an institution is prohibited from providing incentive compensation, including tuition sharing, to an online program management company, or any representative or employee thereof, except for the purposes of recruiting students residing in foreign countries. The bill requires a contract or agreement between an institution and an online program management company, and any amendments to, substantive changes in, or renewals of the contract, to be submitted to the Secretary of Higher Education within 20 days of execution. A copy of any contracts or agreements between an institution and an online program management company in effect on the effective date of the bill are to be submitted to the secretary within 30 days of the effective date of the bill and are to include the expiration date of the contract. The bill requires the governing board of an institution to review and approve or disapprove of any contracts or agreements between the institution and an online program management company. The governing board is not to approve a contract or agreement that contains a provision that: (1) allows incentive compensation as payment for marketing or recruitment services, including when bundled with other services rendered by the online program management company; (2) includes or permits tuition sharing; (3) allows an online program management company to be involved in institutional governance, to share or fully delegate decision making power over the design or development of course curriculums or course instruction, to set admission standards, to determine enrollment targets, or to share or fully delegate decision-making power over the implementation or prioritization of existing or new online programs; (4) permits an online program management company to hire or provide instructors for any online program including replacing the faculty or staff of an institution of higher education with employees of an online program management company; (5) authorizes an online program management company to utilize any copyrighted or trademarked information of the institution, including institutional letterhead, web addresses, and logos, except in materials that clearly disclose that the online program management company is a third-party entity that is separate from the institution and the relationship between the online program management company and the institution; (6) authorizes or provides an online program management company or its staff with email addresses that utilize the name of the institution to appear as though the online program management company or its staff are employees of the institution; or (7) interferes with, modifies, or relinquishes any or all intellectual property rights or patentable discoveries or inventions of faculty members of the institution. The minutes of a meeting at which the governing board approves or disapproves a contract or agreement between the institution and an online program management company are required to include information concerning the governing board's approval or disapproval and review of the contract or agreement. The bill requires each online program management company that enters into a contract or agreement with an institution to submit an annual report to the governing board and chief financial officer of the institution. The annual report is to be shared with the appropriate faculty and staff unions and any governing bodies for faculty or staff. The report is to include the amounts expended by the online program manager on each of the categories of expenditures enumerated in the bill and any other information required by the secretary. The bill also requires each institution to submit an annual report to the secretary that is to include: (1) the information provided in the annual report submitted by the online program manager; (2) the amount of total payments made by the institution to the online program management company during each semester of the prior academic year; (3) the number of students receiving State financial assistance during the prior academic year that were enrolled in each academic program for which the online program management company provided services; (4) the amount of State operating aid received by the institution, on a per-student basis, during the prior academic year, and the per-student amount provided to the online program management company; (5) certain demographic information; (6) a demographic profile of student loan borrowers; (7) the number of students who received federal financial assistance; and (8) information on each contract with an online program management company, including the services provided under each contract. The secretary is required to publish each annual report on the Internet website of the Office of the Secretary of Higher Education. Additionally, the bill requires an institution that enters into a contract or agreement with an online program management company to provide marketing or recruitment services for its academic degree programs is to require the online program management company to self-identify as a third party entity that is separate from the institution at the beginning of any communication with a prospective student. The institution is to also require that any digital or print advertising provided by the online program management company or the institution for an academic program of the institution include a clear disclosure of the relationship between the online program management company and the institution. The bill further requires an institution that enters into a contract or agreement with an online program manager to make information publicly available on its website for online programs that are supported by the online program manager. The bill provides that any information submitted to the secretary pursuant to provisions of the bill may be disclosed in accordance with the State's open public records act. An institution is required to separately identify any confidential information submitted to the office pursuant to the bill, and any information that is not identified as confidential information is to be considered public information and subject to disclosure. Finally, the bill stipulates that an institution which violates the provisions of the bill is to be subject to a civil penalty in the amount of $10,000 per violation, or the maximum amount of incentive compensation due to the online program management company under the institution's contract or agreement with the online program management company, whichever is greater.

AI Summary

Committee Categories

Linda Carter (D)*,  Verlina Reynolds-Jackson (D)*, 

Introduced, Referred to Assembly Higher Education Committee (on 01/13/2026)

Official Document