SB173: relative to regulation of private postsecondary career schools.

CHAPTER 338

SB 173 – FINAL VERSION

03/29/07 0868s

04/05/07 1186s

02Jan2008… 2652h

18Mar2008… 0879h

06/05/08 2172eba

2008 SESSION

07-0367

04/03

SENATE BILL 173

AN ACT relative to regulation of private postsecondary career schools.

SPONSORS: Sen. D'Allesandro, Dist 20; Sen. Fuller Clark, Dist 24; Sen. Downing, Dist 22

COMMITTEE: Education

ANALYSIS

This bill amends the procedures for regulation of private postsecondary career schools.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03/29/07 0868s

04/05/07 1186s

02Jan2008… 2652h

18Mar2008… 0879h

06/05/08 2172eba

07-0367

04/03

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Eight

AN ACT relative to regulation of private postsecondary career schools.

Be it Enacted by the Senate and House of Representatives in General Court convened:

338:1 Private Postsecondary Career Schools; Definitions. Amend RSA 188-D:2 to read as follows:

188-D:2 Postsecondary Education Commission. There is hereby established a postsecondary education commission [of 22 members] with the following membership:

I. The president of the university of New Hampshire; the president of Keene state college; the president of Plymouth state university; the chancellor of the university system of New Hampshire; a president of one of the institutions of the community college system of New Hampshire, to be chosen by the board of trustees of the community college system;

II. Two members to be appointed by the trustees of the university system of New Hampshire, one of whom shall be a full-time undergraduate student who is a resident of the state, and whose term shall [cease] expire upon graduation [or change of status as such undergraduate] or when the member is no longer a full-time student;

III. The commissioner of the department of education and the chancellor of the community college system of New Hampshire;

IV. One [member] full-time student to be appointed by the board of trustees of the [department of regional community-technical colleges] community college system of New Hampshire who shall be a representative of the [regional community-technical institute and colleges] community college system of New Hampshire who shall be a [full-time student at one of these institutions and a] resident of the state and whose term shall expire upon graduation or when the member is no longer a full-time student;

V. Six representatives of the private 4-year colleges in New Hampshire appointed by the governor and council on recommendation by the New Hampshire College and University Council, with no more than one representative from any one college;

VI. One full-time undergraduate student of a private 4 year college in the state of New Hampshire, to be appointed by the governor and council [from a list of at least 5 students submitted] on recommendation by the New Hampshire College and University Council, who shall be a resident of New Hampshire and whose term shall expire upon graduation or change of status from a full-time student;

VII. One member to be appointed by the governor and council as a representative from [the following type of college or school: junior college, proprietary school, junior or senior college and community college] a for-profit college or university not a member of the New Hampshire College and University Council;

VIII. Four members to be appointed by the governor and council who shall be residents of the state and of the lay public, having no official connection with any [postsecondary educational institution] college, university, or private postsecondary career school as an employee, trustee or member on a board of directors [of any educational institution].

IX. One member to be appointed by the governor and council on recommendation by the New Hampshire Council for Professional Education, who shall be a resident of the state and a representative of a private postsecondary career school.

The terms of appointed members, except as indicated above, shall be for 5 years and until a successor is appointed and qualified. Vacancies shall be filled for the unexpired term.

338:2 Private Postsecondary Career Schools; Definitions. Amend RSA 188-D:19 to read as follows:

188-D:19 Definitions; Exclusions.

I. The following definitions shall apply in this subdivision except as otherwise provided:

(a) “Alternative delivery” means a mode of instruction, which does not involve face-to-face instruction between instructor and student in the same geographic location. This mode of instruction shall include Internet, televised, video, telephonic, and correspondence media.

(b) “Conference” or “seminar” means a scheduled meeting of 2 or more persons for discussing matters of common concern and where, if training or education is offered, it shall be incidental to the purpose of the conference.

(c) “Entity” means any individual, firm, partnership, association, corporation, organization, trust, school, or other legal entity or combination of these entities.

[(c)] (d) “Executive committee” means the executive committee of the postsecondary education commission as defined in the postsecondary education commission bylaws.

(e) “Executive director” means the executive director of the postsecondary education commission, or designee.

(f) “Operating balance” means the amount of funds necessary for indemnification as determined by the executive director.

(g) “Physical presence” means any physical location [or], place of contact, [including a New Hampshire] telephone exchange, or [a New Hampshire] mail drop in this state, and if an individual is conducting one or more of the following activities within this state:

(1) Advertising.

(2) Solicitation of potential students.

(3) Enrollment of students.

(4) Providing student services.

(5) Student mentoring.

(6) Instruction of students.

[(d)] (h) “Private postsecondary career school” means any for-profit or nonprofit postsecondary career [school] entity maintaining a physical presence in this state providing education or training for tuition or a fee that enhances a person’s occupational skills, or provides continuing education or certification, or fulfills a training or education requirement in one’s employment, career, trade, profession, or occupation. Schools that offer resident or non-resident programs, including programs using modes of alternative delivery, beyond the secondary school level to an entity [upon the payment of tuition or a fee] shall be included in this definition regardless of the fact that the school’s tuition and fees from education and training programs constitute only a part of the school’s revenue.

(i) “Vendor” means an entity that promotes or exchanges goods or services for money.

(j) “Workshop” means a brief, intensive education or training program that focuses on developing techniques and skills in a particular area.

II. “Private postsecondary career school” shall not include:

(a) Schools authorized to grant degrees pursuant to RSA 292.

(b) Schools specifically licensed as an education or training school by a state agency other than the postsecondary education commission.

(c) Schools operated by a business organization exclusively for the training of that business’ own employees and at no charge to its employees.

(d) Schools offering noncredit courses exclusively for avocational purposes[, as determined by the executive director, in consultation with the postsecondary education commission].

(e) Schools [directly supported, entirely or partly,] established, operated, and governed by the state of New Hampshire or any of its political subdivisions, or any other state or its political subdivisions.

(f) Noncredit courses or programs sponsored by recognized trade, business, or professional organizations solely for the instruction of their members that do not prepare or qualify individuals for employment in any occupation or trade[, unless otherwise determined by the executive director, in consultation with the postsecondary education commission].

(g) Schools that offer programs and courses exclusively on federal military installations.

(h) Companies, individuals, or other legal entities that offer training at seminars, workshops, or conferences, if [either of the following criteria are met]:

(1) [The conference or seminar does not exceed 2 days; or] Any training or education offered is incidental to the purpose of the seminar, workshop, or conference; and

(2) The attendee receiving the training is not awarded any form of a certificate, [or] diploma, or credit including continuing education units for having received the training.

(i) Vendors that offer incidental training associated with the purchase of a product from said vendor, if the training is at no cost, its purpose is to familiarize the purchaser with its use and the purchaser is not awarded any form of a certificate or diploma for having received the training.

(j) [A person with fewer than 5 students per calendar year.

(k)] An individual or facility training students under 14 [CFR] C.F.R. part 91 or 14 [CFR] C.F.R. part 141, or receiving flight or ground instruction required by the Federal Aviation Administration.

(k) Entities offering only training courses at a total cost, including tuition and all other fees and charges of not more than $800 per course for which no payment, including a deposit, is required or collected prior to the first day of the course. This subparagraph shall not apply to entities that use alternative delivery methods.

(l) Entities offering training in the trades that have been approved by a state agency with appropriate jurisdiction, including but not limited to the plumbers’ board, the electricians’ board, and the office of the state fire marshal.

(m) Computer technology vendors that offer fee based training on courses of instruction in the use of hardware or software if the course is offered to purchasers of such hardware or software, or to the purchaser’s employees, by a person who manufactures and sells, develops and sells, or supports the hardware or software, and if the seller is not primarily engaged in the business of providing courses of instruction in the use of the hardware or software.

338:3 Postsecondary Education Commission; Licenses and Fees. Amend RSA 188-D:20 to read as follows:

188-D:20 Licenses and Fees.

I. Prior to registering or renewing a business or trade name, or soliciting students for enrollment, an entity maintaining a physical presence in this state shall be reviewed by the [postsecondary education commission] executive director to determine if the entity requires a license. The executive director, in consultation with the postsecondary education commission, shall establish procedures to accomplish this review.

II. [If the postsecondary education commission determines that a license is required,] A private postsecondary career school maintaining a physical presence in this state shall register to obtain a license or license renewal from the postsecondary education commission. The license shall be issued or renewed pursuant to rules, adopted under RSA 541-A, by the executive director, in consultation with the postsecondary education commission. The rules shall establish minimum criteria, including but not limited to, financial stability, educational program, administrative and staff qualifications, business procedures, facilities, equipment, and ethical practices to be met by licensees, and criteria for rejecting a licensing applicant and for suspending or revoking a license. [In no case shall a license or license renewal be issued to any school, which has not met the requirements of RSA 188-D:20-a or RSA 188-D:20-b.]

III. [The executive director, in consultation with the postsecondary education commission, may establish reasonable fees for administration of this subdivision, including fees for licenses, renewals, penalties, reimbursement for consultants, complaint investigation, and enforcement.] A school that is not required to obtain a license may apply for a license and, upon issuance of the license, shall be subject to the provisions of RSA 188-D:19 through RSA 188-D:28. Such school may voluntarily surrender its license and revert to its original status.

IV. The executive director, in consultation with the postsecondary education commission, shall adopt rules pursuant to RSA 541-A to establish reasonable fines, reimbursement rates for consultants, and procedures for complaint investigations and enforcement actions, which are necessary for the administration of this subdivision.

V. A private postsecondary career school which the executive director has determined requires a license shall, prior to the issuance of a license, comply with RSA 188-D:20, RSA 188-D:20-a, and RSA 188-D:20-b.

338:4 Postsecondary Education Commission; Surety Indemnification. Amend RSA 188-D:20-a to read as follows:

188-D:20-a Surety Indemnification. Before a license is issued or renewed, a school shall meet the requirements of this section or RSA 188-D:20-b, by providing acceptable surety indemnification as determined [by the postsecondary education commission] in this section.

I. A surety bond shall be provided by the school in an amount prescribed [by the postsecondary education commission] in this section. The obligation of the bond is that the school, its officers, agents, and employees shall faithfully perform the terms and conditions of contracts for tuition and other instructional fees entered into between the school and entity enrolling as students. The bond shall be issued by a company authorized to do business in the state of New Hampshire. The bond shall be issued in the name of the postsecondary education commission, and is to be used only for payment of a refund of tuition and instructional fees due to a student or potential student, and the expense of investigating and processing the claims.

II. The amount of such bond shall be based on income from tuition at 10 percent of gross tuition, with a $10,000 minimum. If a school licensed under RSA 188-D:20 should fail to provide the services required in a contract with any entity, as determined by a court of competent jurisdiction, the bond shall be forfeited, and the proceeds distributed by the [postsecondary education commission] executive director in such manner as justice and the circumstances require.

III. The bond company may not be relieved of liability on the bond unless it gives the school and the postsecondary education commission 90 days written notice of the company’s intent to cancel the bond. If at any time the company that issued the bond cancels or discontinues the coverage, the school’s license is revoked as a matter of law on the effective date of the cancellation or discontinuance of bond coverage, unless a replacement bond is obtained and provided to the postsecondary education commission.

IV. For the purposes of this section the forms of indemnification other than a surety bond which may be furnished to the postsecondary education commission for licensure are the following:

(a) An irrevocable letter of credit, maintained for the licensing period as a minimum, issued by a financial institution authorized to do business in New Hampshire in an amount to be determined by the postsecondary commission with the postsecondary education commission designated as the beneficiary; or

(b) A term deposit account held in [a financial institution authorized to do business in New Hampshire] the state treasury, payable to the postsecondary education commission, shall be held in trust for the benefit of students entitled thereto under this section. Said account shall be maintained for the licensing period as a minimum, in an amount determined by the postsecondary education commission. [All] Any interest shall be paid annually to the appropriate school, unless the term deposit account is activated due to a school closing. Should the licensee for any reason, while not in default, discontinue operation, all moneys on deposit, including any interest, shall be released to the appropriate school subject to the approval of the [postsecondary education commission] executive director.

338:5 Postsecondary Education Commission; Student Guaranty Fund. Amend RSA 188-D:20-b to read as follows:

188-D:20-b Student Tuition Guaranty Fund.

I.(a) A student tuition guaranty fund is hereby established within the postsecondary education commission and shall be administered by the executive director [postsecondary education commission. In lieu of the surety bond required in 188-D:20-a, the executive director, in consultation with the postsecondary education commission, may require a private postsecondary career school seeking the issuance or renewal of a license to participate in the student tuition guaranty fund].

(b) The fund shall be funded from an annual fee to be established by the [postsecondary education commission] executive director and assessed against each school duly licensed by the postsecondary education commission and all applicants for a license under RSA 188-D:20.

(c) The funds shall be placed in an interest-bearing account in the office of the state treasurer and the state treasurer shall deposit all interest earned on the funds into the account.

(d) The fund shall be used to reimburse students when a school has failed to faithfully perform its contractual obligations for tuition and instructional fees in the event of a school closing, and the expense of investigating and processing the claims. The owner of a school which fails to perform its contractual obligations shall be personally liable to reimburse the fund for the difference between the per student amount paid into the fund by the school and the amount paid out of the fund to a student to settle a claim made against the school.

II. The executive director, in consultation with the postsecondary education commission, shall adopt rules, pursuant to RSA 541-A, relative to the administration and maintenance of the fund.

338:6 Postsecondary Education Commission; Inspections; Revocation. Amend RSA 188-D:21-22 to read as follows:

188-D:21 Inspections. The [postsecondary education commission] executive director may at any time inspect the premises, curriculum, teaching materials, faculty performance, sales literature, financial data, or other matters which are relevant to the educational and business activities of a licensed school in order to determine compliance with applicable laws and rules.

188-D:22 Revocation; Hearing. The executive [director] committee, in consultation with the postsecondary education commission may, after due notice and hearing, revoke the license of any school licensed pursuant to RSA 188-D:20 for violating the provisions of this subdivision or rules adopted hereunder. The provisions of RSA 541 shall apply to actions taken pursuant to this section.

338:7 Postsecondary Education Commission; Rulemaking. Amend RSA 188-D:26 to read as follows:

188-D:26 Rulemaking Authority. The executive director in consultation with the postsecondary education commission shall adopt such rules, pursuant to RSA 541-A, as may be necessary in order to carry out the provisions of this subdivision.

338:8 Postsecondary Education Commission; Penalty. Amend RSA 188-D:28 to read as follows:

188-D:28 Penalty.

I. Whoever violates any provision of this subdivision shall be guilty of a misdemeanor if a natural person, or guilty of a felony if any other person.

II. Whenever the executive director [postsecondary education commission] determines that a person is violating any provision of this subdivision or the rules adopted hereunder, the [postsecondary education commission] executive director shall request the attorney general, or other appropriate official having jurisdiction, to provide appropriate relief.

III. The executive director, upon verifying that a school is operating without a license, shall issue a cease and desist order to such school.

IV. The postsecondary education commission shall be notified whenever a cease and desist order is issued to a school, or if a school fails to provide the services required under a contract with any entity causing the bond to be forfeited, or if a school is required to have a license but is operating without a license.

338:9 Voluntary Corporations and Associations; Reports Required. Amend RSA 292:8-kk, I to read as follows:

I. When any institution of higher learning ceases the regular conduct of instruction, either temporarily or permanently, whether or not the corporation is dissolved, the original written academic record, or a legible, certified copy thereof as defined by the institution, of each student who has been registered for instruction at the institution shall be forwarded to the postsecondary education commission together with an explanation of the institution’s credit and grading system. The postsecondary education commission shall preserve these records and upon request of the individual concerned, shall furnish a certified copy, or reasonable number of such copies, of the individual’s record. The fee for each record so furnished to be paid to the commission shall be [a reasonable fee based on average fees collected by United States institutions] sufficient to cover related costs.

338:10 Private Postsecondary Career Schools; Fees for Licenses. The executive director, in consultation with the postsecondary education commission, shall develop a new fee schedule for licenses and license renewals for private postsecondary career schools as required under RSA 188-D:20, and shall submit such fee schedule to the house and senate education committees and the house and senate ways and means committees no later than September 1, 2008. Such fees shall be sufficient to produce estimated revenues at least equal to the direct operating expenses for the previous fiscal year.

338:11 Effective Date. This act shall take effect July 1, 2008.

Approved: July 7, 2008

Effective Date: July 1, 2008.