Relates to licensure of private proprietary schools; and provides for the repeal of certain provisions of the education law upon expiration thereof

Summary of the Provisions of the Bill: This bill would amend Article 101 of the Education Law (sections 5001 through 5010) to eliminate the distinction between licensed private schools and registered business schools, replace the phrase "licensed private schools" with the more descriptive "licensed private career schools", adjust fees, which have not changed since 1990, and establish a candidate school category that would allow a school to operate legally while it is in the process of obtaining a nondegree-granting, proprietary school license.

Section 5001 would be amended to provide for the consolidation of registered business schools and licensed private schools into one designation, eliminating the artificial distinction between these types of schools and reflecting the current heterogeneous nature of training programs offered at these schools. The language on exempt schools in paragraph f of subdivision 2 would be made more consistent with other sections of law and with the intent of the law, by clarifying that schools that provide instruction in subjects such as dancing, music, painting, drawing, languages, reading comprehension and mathematics would not be exempt if they offer vocational training to teachers in such vocational subjects. For greater clarity, the language of existing §5001(2)0) exempting conferences, trade shows, workshops and other such courses of study from such licensing requirements would be divided into two separate paragraphs 1 and m without substantive change. Subdivision 2-b on the exemption for programs for private businesses with no tuition liability would be amended to clarify that it would apply to employees of a person or organization that has contracted with another person or organization to provide instruction at no cost. Candidate school status would be established by adding a new §5001(4)(b)(iii) to allow a practical means for prospective schools to operate legally prior to meeting all the requirements of full licensure. Section 5001(4)(e) on annual audited financial statements would be amended to require such statements on a phased-in schedule for all schools, bringing the non-degree sector into parity with schools in the degree-granting and public school sectors. Section 5001(4)(g) on private career school license applications would be amended to increase application fees to reflect NYSED's current cost of supervising schools and to meet prospective increased costs for reimbursing tuition for a significant number' of students when these students' schools close due to fiscal failure or non-compliance. For initial applications, the fee would be increased to $5,000 and for additional licensed locations, the fee would be increased to $2,500. Far renewal applications, the fee, which

is based on a school's gross annual tuition income, would be increased by 50 percent, i.e.; a fee of $500 would be increased to $750, $1,500 increased to '$2,250, and $12,000 increased to $18,000. Procedures in §5001(6) for working with schools that are not financially viable would be formalized to protect the tuition reimbursement account. School transfer requirements in .§5001(7) would be adjusted to be more consistent with how other states handle school transfers. The method of assessing schools in §5001(9) would be changed from more complicated regular and special assessment formulas to one based on the number of quarterly assessments paid, whereby newer schools with the potential to fail would pay a higher assessment than schools with a history of satisfactory licensed operation.

Section 5002 would be amended by adding a new paragraph b-1 to subdivision 1 to restrict the amount of private loan payments that a school could receive on behalf of a student prior to their completing a prop-am, thereby limiting students' loan liability as well as the tuition reimbursement account's liability for payment of loan funds. This would formally recognize that the tuition reimbursement account is to be used for student protection and not as a substitute for guaranteed student loans. Section 5002(1)(d)(1) on admission of students under the ability to benefit provision would be amended to authorize the Commissioner to accept other entrance requirement documentation, such as prerequisite coursework, professional or vendor certifications, personal interviews and/or attestations of equivalent knowledge in lieu of the examination requirement. Section 5002(3)(h) would be amended to require schools to submit for approval a school catalog that contains a weekly tuition liability chart for each program that indicates the amount of refund due a student upon withdrawal. Section 5002(4)(c)(1) and (2) would be amended to emphasize that in addition to paying the curriculum application fee, provided in section 5002(4)(a), schools would be required to pay the cost of an outside evaluation of a particular course or facility of the school. Section 5002(5) would also be amended to establish a curriculum/course application fee to fund the NYSED's curriculum unit. Fees from school and personnel license applications do not cover-the cost of curriculum review, as some schools have only a handful of courses or curricula that require approval while others have between 400 and 700. Schools requiring the most evaluation would pay more, those with few programs would pay less. Section 5001(6) would be amended so that all teacher licenses would no longer be restricted to a single school location, as private career school teacher licenses currently are. This would result in a more mobile and efficient teacher pool for schools to draw from for faculty members, reduced expense for processing teacher applications and a reduced workload for the State Education Department's Bureau of Proprietary School Supervision ("the Bureau").

Section 5003 would be amended to establish more practical timeframes for disciplinary proceedings. Section 5003(1)(c) would be amended so that the Commissioner would commence investigations within 30 days, rather than 20 days, and would be required to issue a written finding within 120 days, rather than 90 days. A new subparagraph (4) would be added to §5003(1)(c) to establish procedures for handling written complaints by students attending candidacy schools alleging failure of the school to disclose its candidacy status and the implications and to obtain the required attestation from the student. If such a

violation is found, the school would be required to provide the student a full refund of all monies received from the student. Section 5003(6) would be amended, to increase the fines established in 1990 so they reflect NYSED's current cost of school oversight. Section 5003(6)(b) would be amended to expand the list of violations that may result in the imposition of a civil penalty, including failure to offer an approved course or program.

Subdivision 3 of section 5004 would be amended to increase the amount of gifts and . other non-monetary consideration a school may provide to students or former students from $25 to $75. Subdivision 4 of section 5004 would be amended to increase private school agent fees from $100 to $200, while extending the term of a private school agent's certificate from 2 years to 3 years.

Section 5005 would not be amended.

Section 5006 on teachout plans would be amended to allow NYSED to intervene more effectively when a private career education school ceases instruction. Currently, schools that are closing are required to develop teachout plans that arrange to have students continue to receive instruction from other private career schools upon closure of the school. NYSED's experience is that schools that must close have little incentive to establish teachouts, so authorizing NYSED to arrange for a teachout plan would provide greater protection for students.

Section 5007 on refunds to students enrolled in schools that are closing would be amended to expand expenses eligible for reimbursement. Section 5007(4)(a) and (c) on refunds to students would be amended to provide for refunds of tuition, fees arid book charges paid by or on behalf of the students in cash or through loans, excluding funding obtained through government agencies. Section 5007(5)(b) would be amended to authorize the Commissioner to refund expenditures for fees, books and tuition to students of schools that have closed. Section 5007(8) would be amended to provide more realistic timeframes for providing restitution to students from the tuition reimbursement account by extending the time within which the Commissioner or the Attorney General may seek recovery of a refund from a school from 30-days to 90 days from payment of the refund by the tuition reimbursement account. The provisions for special assessments for new schools in section 5007(10) would be amended to be consistent with the assessment changes in section 5001, and to reflect NYSED's experience with assessing schools that have not been in operation for an entire year. The requirement in section 5007(11) for an annual fund audit of the tuition reimbursement account would be changed to mandate a two-year audit.

Section 5008 would be amended to provide details regarding trust accounts for schools determined to be in financial jeopardy.

Section 5009 would be amended to remove the annual reporting requirement.

Section 5010 would be amended to remove the requirement to have a student representative on the advisory council. NYSED has been unable to find a student willing to serve in this capacity. Term limits for

members would be mandated, although members could be reappointed. This would ensure that members of the advisory council continue to be affiliated with schools in the non-degree proprietary sector. Provisions that are no longer relevant to the council, including limiting the scope of its advisory responsibilities, would be deleted:

Statement in Support of the Bill: The law pertaining to non-degree proprietary schools was last amended substantially in 1990. Since then, the number of these schools has increased and their nature has changed. Only one-tenth of licensed schools currently receive federal Title IV funds for students in strictly business or trade programs. Schools today offer hybrid programs such as medical office assisting, where coding and recordkeeping are combined with clinical service such as phlebotomy. Most schools have ceased to rely on Title IV, state TAP or other similar funding sources and have turned to private sources such as Sallie Mae, banks, etc.

The Bureau of Proprietary School Supervision of the State Education Department needs the increased revenue that this bill would provide so it can adequately continue to supervise proprietary schools. With slightly over 450 currently licensed, registered, or certified schools, approximately 200 pending schools, and 1,000 or more schools currently operating unlicensed (some may be operating under a legal exemption), NYSED needs to maintain its ability to. regulate the industry and provide an even playing field for all non-degree schools subject to regulation. This additional funding would provide more stability for the tuition reimbursement account, which is used to repay students at schools that refuse to issue refunds or those that close prior to meeting their contractual commitments for training. The account nearly faced bankruptcy during summer 2003 when a chain of schools on Long Island closed. The additional funding for the tuition reimbursement account and the amendments pertaining to financial probation, financial viability, and trust accounts are intended to prevent a recurrence of that situation.

Current law limits private career school teachers to teaching a particular subject only at a single school location. Removing that limitation would allow these teachers to teach that subject at any licensed school in the state. The schools would benefit by being able to transfer teachers from one location of a school chain to another without the teachers needing to be dually licensed and they would have a larger 'supply of substitute teachers. Given that teachers would have the freedom to move from school to school, salary schedules could become more competitive within this sector. The students would have the same access to teachers previously licensed at only one school. Teachers with a record of successful student course completion and high placement rates could become more in demand from other schools.

Budgetary Implications of the Bill: This bill would generate approximately $2.8 million in revenue during the first year of its implementation based on current school figures and estimates, representing an approximate $800,000 increase over the 2007-08 year, the last completed fiscal year for which figures are available.

Prior Legislative History: In 2008 this bill was introduced in the Senate as 5.7592, referred to the Senate Education Committee, discharged and committed to the Senate Higher Education Committee, and

then reported and committed to the Senate Finance Committee. No further action was taken.

Effective Date: This bill would take effect on the one hundred twentieth day after it shall have become a law; provided that subparagraph (iii) of paragraph b of subdivision 4 of section 5001 of the Education Law, which relates to candidacy status, would expire and be deemed repealed three years after such effective date; and provided further, however, that effective immediately, the Commissioner of education would be authorized and directed to promulgate' any rules or regulations deemed necessary to implement the provisions of this act on such effective date.