73R8999 CAS-D
          By Delco                                              H.B. No. 1259
          Substitute the following for H.B. No. 1259:
          By Delco                                          C.S.H.B. No. 1259
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the regulation and operation of proprietary schools and
    1-3  to related licenses, permits, and fees; providing penalties.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5                 PART 1.  TEXAS PROPRIETARY SCHOOL ACT
    1-6        SECTION 1.01.  Section 32.02, Education Code, is amended to
    1-7  read as follows:
    1-8        Sec. 32.02.  Purpose and Objectives.  The aim in adopting
    1-9  this Chapter is to provide licensing <certification> and regulation
   1-10  of proprietary schools in Texas.
   1-11        SECTION 1.02.  Section 32.11, Education Code, is amended by
   1-12  amending Subdivisions (1), (5), and (6) and adding Subdivisions
   1-13  (10), (11), and (12) to read as follows:
   1-14              (1)  "Proprietary School," referred to as "school,"
   1-15  means any business enterprise operated for a profit, or on a
   1-16  nonprofit basis, which maintains a place of business within the
   1-17  State of Texas, or solicits business within the State of Texas, and
   1-18  which is not specifically exempted by the provisions of this
   1-19  Chapter and;
   1-20                    (A)  which offers or maintains a program <course
   1-21  or courses> of instruction <or study>; or
   1-22                    (B)  at which place of business such a program
   1-23  <course or courses> of instruction <or study> is available through
   1-24  classroom instruction or by correspondence, or both, to a person or
    2-1  persons for the purpose of training or preparing the person for a
    2-2  field of endeavor in a business, trade, technical, or industrial
    2-3  occupation, or for avocational or personal improvement, except as
    2-4  hereinafter excluded.
    2-5              (5)  "Administrator" means the commissioner of higher
    2-6  education <State Commissioner of Education> or a person,
    2-7  knowledgeable in the administration of regulating proprietary
    2-8  schools, designated by the Commissioner to administer the
    2-9  provisions of this chapter.
   2-10              (6)  "Notice to the school" means written
   2-11  correspondence sent to the address of record for legal service
   2-12  contained in the application for a license to operate <certificate
   2-13  of approval>.  "Date of Notice" means the date the notice is mailed
   2-14  by the administrator.
   2-15              (10)  "Probation" means a limitation on the continued
   2-16  approval of the license held by a school.
   2-17              (11)  "Central Education Agency" or "State Board of
   2-18  Education" means the Texas Higher Education Coordinating Board.
   2-19              (12)  "Commissioner of Education" means the
   2-20  commissioner of higher education.
   2-21        SECTION 1.03.  Section 32.12, Education Code, is amended to
   2-22  read as follows:
   2-23        Sec. 32.12.  EXEMPTIONS.  (a)  The following schools or
   2-24  educational institutions are specifically exempt from the
   2-25  provisions of this chapter and are not within the definition of
   2-26  "proprietary school":
   2-27              (1)  a school or educational institution supported by
    3-1  taxation from either a local or State source;
    3-2              (2)  nonprofit schools owned, controlled, operated, and
    3-3  conducted by bona fide religious, denominational, or eleemosynary<,
    3-4  or similar public> institutions exempt from property taxation under
    3-5  the laws of this State, but such schools may choose to apply for a
    3-6  license to operate <certificate of approval> hereunder, and upon
    3-7  <approval and> issuance, shall be subject to the provisions of this
    3-8  chapter as determined by the administrator;
    3-9              (3)  a school or training program which offers
   3-10  instruction of purely avocational or recreational subjects as
   3-11  determined by the administrator;
   3-12              (4)  a program <course or courses> of instruction <or
   3-13  study> sponsored by an employer for the training and preparation of
   3-14  its own employees, and for which no tuition fee is charged to the
   3-15  student;
   3-16              (5)  a program <course or courses> of <study or>
   3-17  instruction sponsored by a recognized trade, business, or
   3-18  professional organization for the instruction of the members of the
   3-19  organization with a closed membership;
   3-20              (6)  private colleges or universities which award a
   3-21  recognized baccalaureate, or higher degree, and which maintain and
   3-22  operate educational programs for which a majority of the credits
   3-23  given are transferable to a college, junior college, or university
   3-24  supported entirely or partly by taxation from either a local or
   3-25  State source;
   3-26              (7)  a school which is otherwise regulated and approved
   3-27  under and pursuant to any other law of the State, except as
    4-1  provided by Subsection (c) of this section;
    4-2              (8)  aviation schools or instructors approved by and
    4-3  under the supervision of the Federal Aviation Administration;
    4-4              (9)  a school which offers intensive review courses
    4-5  designed to prepare students for certified public accountancy
    4-6  tests, <public accountancy tests,> law school aptitude tests, bar
    4-7  examinations, or medical college admissions tests; and<.>
    4-8              (10)  schools <(b)  Schools> offering a program <course
    4-9  or courses> of special <study or> instruction financed <and/>or
   4-10  subsidized by local, state or federal funds or any person, firm,
   4-11  association, or agency other than the student involved, on a
   4-12  contract basis and having a closed enrollment that applies <may
   4-13  apply> to the Administrator for exemption <of such course or
   4-14  courses from the provisions of this Chapter> and that <such course
   4-15  or courses may be declared exempt by> the Administrator declares
   4-16  exempt because the program is <where he finds the course or courses
   4-17  to be> outside the purview of this Chapter.
   4-18        (b) <(c)>  If a State agency that issues a license or other
   4-19  authorization for the practice of an occupation elects not to
   4-20  regulate or approve subject <course> hours that exceed the minimum
   4-21  education requirements for the issuance of the license or other
   4-22  authorization, the licensing agency shall enter into a memorandum
   4-23  of understanding with the Central Education Agency for the
   4-24  regulation of those excess subject <course> hours under this
   4-25  chapter.  Any course taught under a letter of approval or other
   4-26  written authorization issued by the licensing agency before the
   4-27  effective date of the memorandum is authorized under State law
    5-1  until the program <course> is reviewed by the Central Education
    5-2  Agency.  The licensing agency may terminate the memorandum of
    5-3  understanding on notice to the Central Education Agency.
    5-4        SECTION 1.04.  Section 32.21(b), Education Code, is amended
    5-5  to read as follows:
    5-6        (b)  The Central Education Agency shall prepare a comparison
    5-7  of the cost to a student of <courses of instruction or training>
    5-8  programs at proprietary schools to the cost to a student of similar
    5-9  <courses or> programs at schools that are exempt from this chapter
   5-10  under Section 32.12 of this code.
   5-11        SECTION 1.05.  Effective immediately, Subchapter C, Chapter
   5-12  32, Education Code, is amended by adding Section 32.211 to read as
   5-13  follows:
   5-14        Sec. 32.211.  TRANSFER OF ADMINISTRATION TO COORDINATING
   5-15  BOARD.  (a)  The Central Education Agency and the commissioner of
   5-16  higher education shall enter into an interagency contract for the
   5-17  transfer of the regulation of proprietary schools from the Central
   5-18  Education Agency to the Texas Higher Education Coordinating Board.
   5-19  The transfer shall take effect on a date specified in the contract,
   5-20  but not later than February 1, 1994.  On the effective date of the
   5-21  transfer:
   5-22              (1)  all powers, duties, rights, and obligations of the
   5-23  Central Education Agency relating to the regulation of proprietary
   5-24  schools are transferred to the Texas Higher Education Coordinating
   5-25  Board;
   5-26              (2)  all assets, liabilities, equipment, data,
   5-27  documents, facilities, and other items of the Central Education
    6-1  Agency relating to the regulation of proprietary schools are
    6-2  transferred to the Texas Higher Education Coordinating Board; and
    6-3              (3)  any appropriation to the Central Education Agency
    6-4  relating to the regulation of proprietary schools is transferred to
    6-5  the Texas Higher Education Coordinating Board.
    6-6        (b)  The commissioner of higher education shall publish the
    6-7  contract in the Texas Register.
    6-8        (c)  The officers and employees of the Central Education
    6-9  Agency shall cooperate fully with the reorganization.
   6-10        (d)  Until the effective date of a transfer under Subsection
   6-11  (a) of this section, a reference in this chapter to the
   6-12  commissioner of higher education is considered to be a reference to
   6-13  the commissioner of education, and a reference to the Texas Higher
   6-14  Education Coordinating Board is considered to be a reference to the
   6-15  Central Education Agency.
   6-16        (e)  This section does not affect:
   6-17              (1)  the validity of any action taken by the Central
   6-18  Education Agency under this chapter before the effective date of
   6-19  the transfer described in Subsection (a) of this section; or
   6-20              (2)  a civil or administrative proceeding completed
   6-21  before the effective date of the transfer.
   6-22        (f)  This section does not affect the validity of a civil or
   6-23  administrative proceeding under this chapter, including
   6-24  certification or rulemaking, in progress on the effective date of
   6-25  the transfer described in Subsection (a) of this section.  A civil
   6-26  or administrative proceeding under this chapter that is in progress
   6-27  on the effective date of the transfer described in Subsection (a)
    7-1  of this section continues as if it had been initiated by the Texas
    7-2  Higher Education Coordinating Board under the law in effect on that
    7-3  date.
    7-4        (g)  All forms, rules, and procedures adopted by the Central
    7-5  Education Agency for the administration and enforcement of this
    7-6  chapter and in effect on the effective date of the transfer
    7-7  described in Subsection (a) of this section remain in effect on or
    7-8  after that date as if adopted by the Texas Higher Education
    7-9  Coordinating Board until amended, repealed, withdrawn, or otherwise
   7-10  superseded by the Texas Higher Education Coordinating Board.  A
   7-11  certificate of approval issued under this chapter and in effect on
   7-12  the effective date of the transfer described in Subsection (a) of
   7-13  this section remains in effect according to its terms as if issued
   7-14  by the Texas Higher Education Coordinating Board until the
   7-15  certificate expires or is revoked or surrendered.
   7-16        SECTION 1.06.  Section 32.23(c), Education Code, is amended
   7-17  to read as follows:
   7-18        (c)  The commission shall meet regularly in Austin once each
   7-19  month during the months of March, July, and November at a time and
   7-20  on a date designated by the chair <at 10:00 a.m. on the second
   7-21  Tuesday of January, May, and September>, and shall conduct special
   7-22  meetings at the call of the chair, the administrator, or upon the
   7-23  written petition of at least four members of the commission.
   7-24        SECTION 1.07.  Section 32.24(a), Education Code, is amended
   7-25  to read as follows:
   7-26        (a)  The administrator shall carry out the policies of this
   7-27  chapter and enforce the rules and regulations adopted by the State
    8-1  Board of Education.  He shall also certify the names of those
    8-2  schools meeting the requirements for a license to operate
    8-3  <certificate of approval>.
    8-4        SECTION 1.08.  Section 32.31, Education Code, is amended to
    8-5  read as follows:
    8-6        Sec. 32.31.  LICENSE TO OPERATE <CERTIFICATE OF APPROVAL>.
    8-7  (a)  A school may not maintain, advertise, solicit for, or conduct
    8-8  any program <course> of instruction in Texas before the later of:
    8-9              (1)  the 30th day after the date the school applies for
   8-10  a license to operate <certificate of approval> under this chapter;
   8-11  or
   8-12              (2)  the date the school receives a license to operate
   8-13  <certificate of approval> from the administrator.
   8-14        (b)  Any contract entered into with any person for a program
   8-15  <course> of instruction after the effective date of this chapter by
   8-16  or on behalf of any person operating any school to which a license
   8-17  to operate <certificate of approval> has not been issued pursuant
   8-18  to the provisions of this chapter, shall be unenforceable in any
   8-19  action brought thereon.
   8-20        SECTION 1.09.  Section 32.32, Education Code, is amended to
   8-21  read as follows:
   8-22        Sec. 32.32.  APPLICATION FOR License to Operate <Certificate
   8-23  of Approval>.  (a)  Every proprietary school desiring to operate in
   8-24  the State of Texas or do business in the State shall make written
   8-25  application to the administrator for a license to operate
   8-26  <certificate of approval>.  Such application shall be verified, be
   8-27  in such form as may be prescribed by the State Board of Education,
    9-1  and shall furnish the administrator such information as he may
    9-2  require.  The application must include a statement of any final
    9-3  convictions of the owners, school directors, recruiters,
    9-4  instructional faculty, or other selected personnel of the school as
    9-5  determined by the administrator.  The administrator may obtain
    9-6  criminal history records of school directors or instructional
    9-7  faculty from any law enforcement agency, including the United
    9-8  States Department of Justice, the Department of Public Safety of
    9-9  the State of Texas, the Texas Department of Criminal Justice, or
   9-10  the police department of a municipality.
   9-11        (b)  The State Board of Education may adopt rules providing
   9-12  for the issuance of various classes of licenses based on the number
   9-13  of students attending the school.  The license classifications may
   9-14  allow for stricter regulation and greater frequency of inspection
   9-15  of large schools, as defined by board rule, and for limited
   9-16  regulation of small schools, as defined by board rule.
   9-17        (c)  The administrator may not use the word "approval" or a
   9-18  variation of that term on the license of a school.  The terminology
   9-19  must be "licensed" to operate, or a variation of that phrase.
   9-20        SECTION 1.10.  Section 32.33, Education Code, is amended to
   9-21  read as follows:
   9-22        Sec. 32.33.  Criteria.  Except for a school or program
   9-23  intended to prepare a student for a course, school, or program
   9-24  listed in Section 32.331 of this code, the <The> administrator may
   9-25  approve the application of such proprietary school when the school
   9-26  is found, upon investigation at the premises of the school, to have
   9-27  met the following criteria:
   10-1              (a)  The subjects <courses>, programs <curriculum>, and
   10-2  instruction are of such quality, content, and length as may
   10-3  reasonably and adequately achieve the stated objective for which
   10-4  the subjects <courses>, programs, <curriculum> or instruction are
   10-5  offered.
   10-6              (b)  There is in the school adequate space, equipment,
   10-7  instructional material and instructor personnel to provide training
   10-8  of good quality.
   10-9              (c)  Educational and experience qualifications of
  10-10  directors, administrators and instructors are adequate.
  10-11              (d)  The school maintains a written record of the
  10-12  previous education and training of the applicant student and
  10-13  clearly indicates that appropriate credit has been given by the
  10-14  school for previous education and training, with the new training
  10-15  period shortened where warranted through use of appropriate skills
  10-16  or achievement tests and the student so notified.
  10-17              (e)  A copy of the program <course> outline; schedule
  10-18  of tuition, fees, refund policy, and other charges; regulations
  10-19  pertaining to absence, grading policy, and rules of operation and
  10-20  conduct; regulations pertaining to incomplete grades; the name,
  10-21  mailing address, and telephone number of the Central Education
  10-22  Agency for the purpose of directing complaints to the agency; the
  10-23  current rates of job placement and employment of students issued a
  10-24  certificate of completion; and notification of the availability of
  10-25  the cost comparison information prepared under Section 32.21(b) of
  10-26  this code through the Central Education Agency will be furnished
  10-27  the student prior to enrollment.
   11-1              (f)  Except as provided by Section 32.40 of this code,
   11-2  on completion of training, the student is given a certificate by
   11-3  the school indicating the program <course> and that training was
   11-4  satisfactorily completed.
   11-5              (g)  Adequate records as prescribed by the
   11-6  administrator are kept to show attendance and progress or grades,
   11-7  and satisfactory standards relating to attendance, progress and
   11-8  conduct are enforced.
   11-9              (h)  The school complies with all local, city, county,
  11-10  municipal, state and federal regulations<, such as fire, building
  11-11  and sanitation codes>.  The administrator may require such evidence
  11-12  of compliance as is deemed necessary.
  11-13              (i)  The school is financially sound and capable of
  11-14  fulfilling its commitments for training.
  11-15              (j)  The school's administrators, directors, owners,
  11-16  and instructors are of good reputation and character.
  11-17              (k)  The school has, maintains and publishes in its
  11-18  catalogue and enrollment contract, the proper policy for the refund
  11-19  of the unused portion of tuition, fees and other charges in the
  11-20  event the student enrolled by the school fails to take the program
  11-21  <course> or withdraws or is discontinued therefrom at any time
  11-22  prior to completion.
  11-23              (l)  The school does not utilize erroneous or
  11-24  misleading advertising, either by actual statement, omission, or
  11-25  intimation as determined by the State Board of Education.
  11-26              (m)  Such additional criteria as may be required by the
  11-27  State Board of Education.
   12-1              (n)  The school does not use a name like or similar to
   12-2  an existing tax supported school in the same area.
   12-3              (o)  The school furnishes to the Central Education
   12-4  Agency the current rates of students who receive a certificate of
   12-5  completion and of job placement and employment of students issued a
   12-6  certificate of completion.
   12-7              (p)  The school furnishes to the Central Education
   12-8  Agency for approval or disapproval student admission requirements
   12-9  for each course or program offered by the school.
  12-10              (q)  The school furnishes to the Central Education
  12-11  Agency for approval or disapproval the program <course> hour
  12-12  lengths and curriculum content for each program <course> offered by
  12-13  the school.
  12-14              (r)  The school does not owe a civil penalty under
  12-15  Section 32.611 of this code.
  12-16        SECTION 1.11.  Subchapter D, Chapter 32, Education Code, is
  12-17  amended by adding Section 32.331 to read as follows:
  12-18        Sec. 32.331.  TEST PREPARATION PROGRAMS FOR HIGHER EDUCATION
  12-19  ENTRANCE; PROFESSIONAL AND OCCUPATIONAL LICENSING; AND SHORT
  12-20  COURSES.  Test preparation courses, programs, or schools intended
  12-21  to prepare students for undergraduate, graduate, or postgraduate
  12-22  higher education, professional licensing and occupational entrance
  12-23  examinations, and short courses not exceeding 40 hours in length
  12-24  may be licensed by the administrator on the administrator's
  12-25  determination that the applicant has met the following criteria:
  12-26              (1)  the school must be educationally sufficient;
  12-27              (2)  instructors of the school must have the necessary
   13-1  educational qualifications;
   13-2              (3)  the school must be fiscally sound and have the
   13-3  necessary assets to offer the programs; and
   13-4              (4)  the school must comply with other rules and
   13-5  regulations the administrator may prescribe.
   13-6        SECTION 1.12.  Sections 32.34(a)-(e), Education Code, are
   13-7  amended to read as follows:
   13-8        (a)  The administrator, upon review of an application for a
   13-9  license to operate <certificate of approval> duly submitted in
  13-10  accordance with the provisions of Section 32.32 and meeting the
  13-11  requirements of Section 32.33 of this code <chapter>, shall issue a
  13-12  license to operate <certificate of approval> to the applicant
  13-13  school.  The license to operate <certificate of approval> shall be
  13-14  in a form recommended by the commission and approved by the State
  13-15  Board of Education and shall state in a clear and conspicuous
  13-16  manner at least the following information:
  13-17              (1)  date of issuance, effective date, and term of
  13-18  licensing <approval>;
  13-19              (2)  correct name and address of the school;
  13-20              (3)  authority for the license <approval> and
  13-21  conditions of licensing <approval>, if any, referring specifically
  13-22  to the <approved> catalogue or bulletin published by the school;
  13-23              (4)  signature of the administrator or such person as
  13-24  may have been designated by him to administer the provisions of
  13-25  this chapter; and
  13-26              (5)  any other fair and reasonable representations that
  13-27  are consistent with this chapter and deemed necessary by the
   14-1  administrator.
   14-2        (b)  The term for which a license to operate <certificate of
   14-3  approval> shall be issued shall not exceed one year.
   14-4        (c)  The license to operate <certificate of approval> shall
   14-5  be issued to the owner of the applicant school and shall be
   14-6  nontransferable.  In the event of a change in ownership of the
   14-7  school, a new owner must, at least 60 <thirty (30)> days prior to
   14-8  the change in ownership, apply for a new license to operate
   14-9  <certificate of approval>.
  14-10        (d)  At least 60 <thirty (30)> days prior to expiration of a
  14-11  license to operate <certificate of approval>, the school shall
  14-12  forward to the administrator an application for renewal.  The
  14-13  administrator shall reexamine the school at the premises of the
  14-14  school and either renew or cancel the school's license to operate
  14-15  <certificate of approval>.  If a school fails to file a complete
  14-16  application for renewal at least 60 <thirty (30)> days before the
  14-17  expiration date of the license to operate <certificate of
  14-18  approval>, the school, as a condition of renewal, must pay, in
  14-19  addition to the annual renewal fee, a late renewal fee in an amount
  14-20  established by State Board of Education rule of at least $100.
  14-21        (e)  A school not yet in operation when its application for
  14-22  license to operate <certificate of approval> is filed may not begin
  14-23  operation until receipt of the license to operate <certificate of
  14-24  approval>.
  14-25        SECTION 1.13.  Section 32.35, Education Code, is amended to
  14-26  read as follows:
  14-27        Sec. 32.35.  Denial of License to Operate <Certificate of
   15-1  Approval>.  (a)  If the administrator, upon review and
   15-2  consideration of an application for license to operate <certificate
   15-3  of approval>, shall determine the applicant to be unacceptable, the
   15-4  administrator shall set forth the reasons for denial, in writing,
   15-5  to the applicant.
   15-6        (b)  Any applicant whose application for a license to operate
   15-7  <certificate of approval> is denied shall have the right of appeal
   15-8  under Subchapter E of this chapter.
   15-9        SECTION 1.14.  Section 32.36, Education Code, is amended to
  15-10  read as follows:
  15-11        Sec. 32.36.  DENIAL OF, LIMITATION ON, OR Revocation of
  15-12  License to Operate <Certificate of Approval>.  (a)  The
  15-13  Administrator may revoke an issued license to operate <certificate
  15-14  of approval> or place reasonable conditions upon <the> continued
  15-15  licensing <approval represented by the certificate>.  Prior to
  15-16  revocation or imposition of conditions upon a license to operate
  15-17  <certificate of approval>, the Administrator shall notify the
  15-18  holder of the license <certificate>, in writing, of the impending
  15-19  action and set forth the grounds for the action.  The Administrator
  15-20  may reexamine a school two or more times during each year in which
  15-21  a notice relating to the school has been issued or conditions have
  15-22  been imposed on the school under this subsection.
  15-23        (b)  A license to operate <certificate of approval> may be
  15-24  revoked or made conditional if the Administrator has reasonable
  15-25  cause to believe that the school is guilty of a violation of this
  15-26  chapter or of any rules and regulations promulgated hereunder.
  15-27        (c)  The Administrator may deny, suspend, or revoke a license
   16-1  to operate or place the school on probation if the school or a
   16-2  representative of the school gives a prospective student
   16-3  information relating to the school that is false, fraudulent,
   16-4  deceptive, substantially inaccurate, or misleading.
   16-5        (d)  A holder of a license revoked or made conditional under
   16-6  this section may appeal the revocation or imposition of conditions
   16-7  decision under Subchapter E of this chapter.
   16-8        (e)  During any period a school is on probation under this
   16-9  section, the school must state clearly in any student solicitation
  16-10  that the school is on probation.
  16-11        SECTION 1.15.  Section 32.37(c), Education Code, is amended
  16-12  to read as follows:
  16-13        (c)  Denial or revocation of registration of a representative
  16-14  by the administrator shall be in accordance with the provisions of
  16-15  this chapter applicable to denial or revocation of a license to
  16-16  operate <certificate of approval>; provided, however, the
  16-17  administrator may deny, suspend or revoke the registration of a
  16-18  representative who has been convicted of a felony, whether within
  16-19  or without the State of Texas.
  16-20        SECTION 1.16.  Section 32.39, Education Code, is amended by
  16-21  amending Subsections (a), (b), (c), (d), and (e) and adding
  16-22  Subsections (g), (h), and (i) to read as follows:
  16-23        (a)  As a condition for granting a license to operate
  16-24  <certification> each school must maintain a cancellation and
  16-25  settlement policy which must provide a full refund of all monies
  16-26  paid by a student if:
  16-27              (1)  the student cancels the enrollment agreement or
   17-1  contract within 72 hours (until midnight of the third day excluding
   17-2  Saturdays, Sundays, and legal holidays) after the enrollment
   17-3  contract is signed by the prospective student;
   17-4              (2)  the enrollment of the student was procured as the
   17-5  result of any misrepresentation in advertising, promotional
   17-6  materials of the school, or representations by the owner or
   17-7  representatives of the school.
   17-8        (b)  As a condition for granting a license <certification>,
   17-9  each school must maintain a policy for the refund of the unused
  17-10  portion of tuition, fees, and other charges in the event the
  17-11  student, after expiration of the 72-hour cancellation privilege
  17-12  terminates enrollment or is terminated by the school, as provided
  17-13  by this subsection, <fails to enter the course, or withdraws, or is
  17-14  discontinued therefrom at any time prior to completion,> and such
  17-15  policy must provide:
  17-16              (1)  refunds for resident programs <courses> will be
  17-17  based on the period of enrollment computed on the basis of program
  17-18  <course> time expressed in clock hours;
  17-19              (2)  the effective date of the termination for payment
  17-20  of a refund <refund purposes> in residence schools will be the
  17-21  earliest of the following:
  17-22                    (A)  the last date of attendance, if the student
  17-23  is terminated for failure to satisfy a school attendance, grade, or
  17-24  work requirement <by the school>;
  17-25                    (B)  the date of receipt of written notice from
  17-26  the student;
  17-27                    (C)  the 10th consecutive school day the student
   18-1  has been absent, unless any of the absences are excused by the
   18-2  school <ten school days following the last date of attendance>; or
   18-3                    (D)  the date the student fails to return, as
   18-4  scheduled, from a leave of absence;
   18-5              (3)  if tuition and fees are <is> collected in advance
   18-6  of entrance, and if, after expiration of the 72-hour cancellation
   18-7  privilege, the student does not enter the residence school, not
   18-8  more than $100 shall be retained by the school;
   18-9              (4)  for the student who enters a residence program
  18-10  <course> of not more than 12 months in length, terminates or
  18-11  withdraws, the school may retain $100 of tuition and fees and the
  18-12  minimum refund of the remaining tuition and fees will be:
  18-13                    (A)  during the first week or one-tenth of the
  18-14  program <course>, whichever is less, 90 percent of the remaining
  18-15  tuition and fees;
  18-16                    (B)  after the first week or one-tenth of the
  18-17  program <course>, whichever is less, but within the first three
  18-18  weeks of the program <course>, 80 percent of the remaining tuition
  18-19  and fees;
  18-20                    (C)  after the first three weeks of the program
  18-21  <course>, but within the first quarter of the program <course>, 75
  18-22  percent of the remaining tuition and fees;
  18-23                    (D)  during the second quarter of the program
  18-24  <course>, 50 percent of the remaining tuition and fees;
  18-25                    (E)  during the third quarter of the program
  18-26  <course>, 10 percent of the remaining tuition and fees;
  18-27                    (F)  during the last quarter of the program
   19-1  <course>, the student may be considered obligated for the full
   19-2  tuition and fees;
   19-3              (5)  for residence programs <courses> more than 12
   19-4  months in length, the refund shall be applied to each 12-month
   19-5  period, or part thereof separately, in the manner provided by
   19-6  Subsection (b)(4) of this section;
   19-7              (6)  refunds of items of extra expense to the student,
   19-8  such as instructional supplies, books, student activities,
   19-9  laboratory fees, service charges, rentals, deposits, and all other
  19-10  such ancillary miscellaneous charges, where these items are
  19-11  separately stated and shown in the data furnished the student
  19-12  before enrollment, will be made in a reasonable manner acceptable
  19-13  to the administrator;
  19-14              (7)  refunds based on enrollment in residence schools
  19-15  will be totally consummated within 60 <30> days after the effective
  19-16  date of termination, as determined under Subdivision (2) of this
  19-17  subsection;
  19-18              (8)  refunds for correspondence programs <courses> will
  19-19  be computed on the basis of the number of lessons in the program
  19-20  <course>;
  19-21              (9)  the effective date of the termination for refund
  19-22  purposes in correspondence programs <courses> will be the earliest
  19-23  of the following:
  19-24                    (A)  the date of notification to the student if
  19-25  the student is terminated;
  19-26                    (B)  the date of receipt of written notice from
  19-27  the student;
   20-1                    (C)  the end of the third calendar month
   20-2  following the month in which the student's last lesson assignment
   20-3  was received unless notification has been received from the student
   20-4  that he wishes to remain enrolled;
   20-5              (10)  if tuition and fees are <is> collected before any
   20-6  lessons have been completed, and if, after expiration of the
   20-7  72-hour cancellation privilege, the student fails to begin the
   20-8  program <course>, not more than $50 shall be retained by the
   20-9  school;
  20-10              (11)  in cases of termination or withdrawal after the
  20-11  student has begun the correspondence program <course>, the school
  20-12  may retain $50 of tuition and fees, and the minimum refund policy
  20-13  must provide that the student will be refunded the pro rata portion
  20-14  of the remaining tuition fees and other charges that the number of
  20-15  lessons completed and serviced by the school bears to the total
  20-16  number of lessons in the program <course>;
  20-17              (12)  refunds based on enrollment in correspondence
  20-18  schools will be totally consummated within 60 <30> days after the
  20-19  effective date of termination, as determined under Subdivision (9)
  20-20  of this subsection.
  20-21        (c)  In lieu of the refund policy herein set forth, <for
  20-22  programs of instruction not regularly offered to the general
  20-23  public,> the State Board of Education may, for good cause shown,
  20-24  amend, modify, substitute and/or alter the terms of such policy due
  20-25  to the specialized nature and objective of the subject school's
  20-26  program <course> of instruction, including authorizing a refund on
  20-27  a pro rata basis or the elimination of the 72-hour cancellation
   21-1  privilege provided by Subsection (a) of this section, for a program
   21-2  conducted for 40 or fewer hours, such as a seminar or workshop.
   21-3        (d)  If a program <course of instruction> is discontinued by
   21-4  the school and this prevents the student from completing the
   21-5  program <course>, all tuition and fees paid are <then> due and
   21-6  refundable.
   21-7        (e)  If a refund is not made within the period required by
   21-8  this section, the school shall pay, as a penalty, interest on the
   21-9  refund for the interval beginning with the first day following the
  21-10  expiration of the refund period and ending with the day immediately
  21-11  preceding the date the refund is made.  If the refund is made to a
  21-12  lending institution, the interest shall also be paid to that
  21-13  institution and applied against the student's loan.  The
  21-14  commissioner of education annually shall establish the level of
  21-15  interest at a level sufficient to provide a deterrent to the
  21-16  retention of student funds.  The Central Education Agency may
  21-17  exempt a school from the payment of the interest if the school
  21-18  makes a good faith effort to refund the tuition but is unable to
  21-19  locate the student.  The school shall provide to the agency on
  21-20  request documentation of the effort to locate the student.
  21-21        (g)  Refunds under this section shall be applied:
  21-22              (1)  first, to the repayment of student loans;
  21-23              (2)  second, to the repayment of other government
  21-24  loans;
  21-25              (3)  third, to the repayment of other financial loans;
  21-26  and
  21-27              (4)  last, to the student's personal tuitional
   22-1  expenditures.
   22-2        (h)  Not later than the 30th day after the date on which a
   22-3  refund is due to a student who has received a student loan, the
   22-4  school shall notify the guaranty agency and the lender of the
   22-5  required refund and any refund previously made.  The guaranty
   22-6  agency and the lender shall notify the student and the school if
   22-7  the student's loan has been transferred to another holder.
   22-8        (i)  The failure of a school or a person to pay a tuition and
   22-9  fees refund as required by this section is a deceptive trade
  22-10  practice under Subchapter E, Chapter 17, Business & Commerce Code.
  22-11        SECTION 1.17.  Section 32.401, Education Code, is amended to
  22-12  read as follows:
  22-13        Sec. 32.401.  APPROVED DEGREES.  <(a)>  A proprietary school
  22-14  may offer a <an associate of applied arts or an associate of
  22-15  applied science> degree approved by the Texas Higher Education
  22-16  Coordinating Board.
  22-17        <(b)  A proprietary school may offer an applied technology
  22-18  degree, an occupational studies degree, or other degree approved by
  22-19  the Central Education Agency.  The Central Education Agency shall
  22-20  have no authority to approve a degree title that uses "associate,"
  22-21  "bachelor's," "master's," or "doctor's" in the title and shall
  22-22  consult with the Texas Higher Education Coordinating Board to
  22-23  ensure that the titles of degrees approved by the agency are
  22-24  distinctly different from the titles of degrees approved by the
  22-25  board.>
  22-26        SECTION 1.18.  Subchapter D, Chapter 32, Education Code, is
  22-27  amended by adding Sections 32.402-32.4014 to read as follows:
   23-1        Sec. 32.402.  CONSUMER INFORMATION.  (a)  A school must
   23-2  submit to the administrator for approval, on an annual basis, a
   23-3  school catalog or comparable written documents detailing the
   23-4  consumer information that must be given to a prospective student
   23-5  before enrollment.  The school catalog or document must include:
   23-6              (1)  the name and address of the school and the
   23-7  school's governing body and officials;
   23-8              (2)  a calendar of the school year;
   23-9              (3)  school policies on enrollment;
  23-10              (4)  rules relating to absences;
  23-11              (5)  the school grading policy;
  23-12              (6)  the school's hours of operation and rules of
  23-13  conduct;
  23-14              (7)  a schedule of the tuition and other fees assessed;
  23-15              (8)  the school's cancellation and refund policy;
  23-16              (9)  a general description of the programs offered;
  23-17              (10)  information on entrance testing and remedial
  23-18  development plans;
  23-19              (11)  state licensing requirements for programs
  23-20  intended to result in licensing of the student;
  23-21              (12)  starting range and reported average salaries for
  23-22  the prior year's graduates in occupations for which programs are
  23-23  offered, if the information is available;
  23-24              (13)  the current rates of job placement and employment
  23-25  of students who complete a program;
  23-26              (14)  the school policy on credit for previous
  23-27  education and training;
   24-1              (15)  school regulations relating to incomplete grades;
   24-2              (16)  information on the transferability of credits
   24-3  earned;
   24-4              (17)  the name, mailing address, and telephone number
   24-5  of the administrator for the purpose of directing complaints to the
   24-6  administrator and the mechanism and procedures for resolving
   24-7  grievances submitted to the administrator;
   24-8              (18)  a statement that the administrator has
   24-9  information on cost comparison with similar schools;
  24-10              (19)  market and job availability information, if
  24-11  available;
  24-12              (20)  the names of the members of any advisory council
  24-13  of the school and the company for which they work; and
  24-14              (21)  other information required by the administrator
  24-15  if reasonable notice has been given by the administrator to the
  24-16  school of the additional requirements.
  24-17        (b)  A school may not accept a signed student enrollment
  24-18  contract or accept a student into any school program until at least
  24-19  24 hours after the student has received the catalog or comparable
  24-20  written documents required under this section.
  24-21        (c)  A student must sign a receipt stating that:
  24-22              (1)  the catalog was received by the student before any
  24-23  commitment made by the student to the school or by the school to
  24-24  the student;
  24-25              (2)  the student was given an opportunity to discuss
  24-26  the catalog with a representative of the school; and
  24-27              (3)  the student understands the contents and
   25-1  implications of the catalog.
   25-2        (d)  The receipt required by Subsection (c) of this section
   25-3  must be placed in the student's permanent school file, and a copy
   25-4  of the receipt must be delivered to the student.
   25-5        Sec. 32.403.  PROGRAM LENGTH AND CURRICULUM.  (a)  A school
   25-6  must submit to the administrator for approval the program lengths
   25-7  and curriculum content for each program offered by the school.  The
   25-8  program lengths and content may not be implemented unless the
   25-9  administrator approves them.  The program lengths and content shall
  25-10  reasonably ensure that students develop the job skills and
  25-11  knowledge necessary for employment.
  25-12        (b)  The administrator shall require a school to fully
  25-13  account for all curriculum contents and program lengths before
  25-14  issuing or renewing a license to operate, and a school that is
  25-15  offering program lengths below or above industry standards may be
  25-16  issued a conditional license to operate.
  25-17        Sec. 32.404.  COMPLETION, EMPLOYMENT, AND PLACEMENT.  (a)
  25-18  The administrator shall set and enforce minimum standards for
  25-19  completion and employment rates of programs, based on collected
  25-20  data.
  25-21        (b)  In determining whether to renew a license to operate,
  25-22  the administrator shall consider the completion, placement, and
  25-23  employment rates of students of the programs.
  25-24        (c)  Before a school may begin offering a new program for
  25-25  students, the school must show the administrator the opportunity
  25-26  for jobs for graduates of the program and the possibility of
  25-27  placement or employment.
   26-1        (d)  Before the administrator issues or renews a license to
   26-2  operate involving a school that offers or advertises a placement
   26-3  service, the administrator may require the school to file a
   26-4  certified copy of the school's placement records for the previous
   26-5  year.
   26-6        Sec. 32.405.  ON-SITE INSPECTIONS.  (a)  The administrator
   26-7  shall conduct on-site inspections of a school to determine the
   26-8  normal operating conditions of the school.
   26-9        (b)  The inspection required by Subsection (a) of this
  26-10  section shall be unannounced.
  26-11        (c)  The administrator may inspect such things as the
  26-12  instructional books and records, classrooms, dormitories, tools,
  26-13  equipment, and classes of a school or an applicant for a license to
  26-14  operate at any reasonable time.
  26-15        Sec. 32.406.  LICENSING REQUIREMENTS DISCLOSURE.  (a)  A
  26-16  school must disclose to all prospective students state licensing
  26-17  requirements to practice the occupation for which the student is
  26-18  training.
  26-19        (b)  A school must disclose to all prospective students the
  26-20  performance of graduates from the school on any licensing
  26-21  examination if that information is available.
  26-22        Sec. 32.407.  ENTRANCE REQUIREMENTS; MINIMUM SKILLS TEST.
  26-23  (a)  The administrator shall approve entrance requirements,
  26-24  including minimum skills testing, for students who may be accepted
  26-25  for a program in a school.  The requirements must be specific and
  26-26  provide that students who are allowed to enter a program will have
  26-27  a reasonable chance of completing the program.
   27-1        (b)  The school shall administer a standardized test to
   27-2  students with a high school diploma or high school equivalency
   27-3  certificate entering the school, if testing for minimal skill
   27-4  competency is determined by the administrator as appropriate and
   27-5  necessary to determine if remediation is needed.  The test must be
   27-6  administered before enrollment and must be nationally recognized as
   27-7  appropriate and effective for minimum skills testing and high
   27-8  school equivalency.  If the test reveals the necessity for
   27-9  remediation, the school must implement a plan to encourage the
  27-10  student to improve in basic general education skills.
  27-11        (c)  A student must achieve a successful score on the test
  27-12  required by this section before the student is obligated for
  27-13  tuition and fees for the vocational portion of the school's
  27-14  program.
  27-15        (d)  The school may, in accordance with federal statutory
  27-16  provisions affecting guaranteed student loan programs, on a
  27-17  case-by-case basis, refuse to provide the certification statements
  27-18  required for guaranteed student loan eligibility, or reduce the
  27-19  determination of need for a guaranteed student loan if the school
  27-20  determines that the student's expenses to be covered by the loan
  27-21  and the estimated cost of attendance, can be met more appropriately
  27-22  by the school, directly by the student, or by other sources.
  27-23        Sec. 32.408.  STUDENTS IN NEED OF REMEDIAL HELP.  (a)  An
  27-24  applicant without a high school diploma or high school equivalency
  27-25  certificate must pass an entrance test approved by the
  27-26  administrator and be considered to have the ability to benefit from
  27-27  the school before the school may enroll the student.
   28-1        (b)  A school that admits a student who does not have a high
   28-2  school diploma or high school equivalency certificate must develop
   28-3  and implement a plan for counseling the student on curriculum,
   28-4  student aid, employment opportunities, and the remediation
   28-5  necessary for the student to obtain a high school equivalency
   28-6  certificate and improve in basic general education skills.
   28-7        (c)  The school must assist the student in obtaining the
   28-8  remediation necessary for the student to pass a standardized
   28-9  minimum skills equivalency test, approved by the administrator, and
  28-10  the student must pass the test before entering the final quarter of
  28-11  the program.
  28-12        Sec. 32.409.  ENROLLMENT POLICIES.  (a)  The enrollment
  28-13  contract of a school must contain:
  28-14              (1)  a disclosure that the contract is a legally
  28-15  binding instrument on written acceptance of the student by the
  28-16  school, unless canceled as provided by law;
  28-17              (2)  the school's cancellation and refund policy;
  28-18              (3)  the method of cancellation of the contract, the
  28-19  effective date of any cancellation, and the name and address to
  28-20  which the notice of cancellation should be sent or delivered;
  28-21              (4)  the total cost of the program, including tuition
  28-22  and all other charges;
  28-23              (5)  a notification that the fair market value of
  28-24  equipment or supplies furnished to the student that the student
  28-25  fails to return in a condition suitable for resale not later than
  28-26  the 10th business day after the date of cancellation may be
  28-27  retained by the school and deducted from any refund of the student;
   29-1              (6)  a statement that if a student's enrollment is
   29-2  canceled for any reason, the school will notify an agency known to
   29-3  the school to be providing financial aid to the student of the
   29-4  cancellation not later than the 30th day after the date of
   29-5  cancellation;
   29-6              (7)  the name of the programs, including the number of
   29-7  hours of classroom instruction or home study lessons; and
   29-8              (8)  the Federal Trade Commission statement for a
   29-9  holder in due course.
  29-10        (b)  An enrollment contract may not contain a wage assignment
  29-11  provision or a confession of judgment clause.
  29-12        (c)  Immediately after a prospective student has signed an
  29-13  enrollment contract, the school shall give the prospective student
  29-14  a copy of the contract, and a copy shall be placed in the student's
  29-15  permanent school file.
  29-16        (d)  A promissory note signed by a student must include the
  29-17  Federal Trade Commission statement required for a holder in due
  29-18  course.
  29-19        Sec. 32.4010.  LOAN COUNSELING.  (a)  A school shall conduct
  29-20  loan counseling entrance interviews with each prospective student
  29-21  seeking a loan during the enrollment process.  A student borrower
  29-22  shall be counseled before the initial disbursement of loan
  29-23  proceeds, shortly before the student completes one-half of the
  29-24  program, and before the student is issued a certificate of
  29-25  completion.
  29-26        (b)  The school's financial aid officer or counselor shall
  29-27  conduct the interviews required by Subsection (a) of this section.
   30-1  The interview must include a discussion of:
   30-2              (1)  the rights and responsibilities of the student as
   30-3  a borrower;
   30-4              (2)  what a loan is and the importance of repayment;
   30-5              (3)  the total cost of the program in which the student
   30-6  will be enrolled;
   30-7              (4)  the availability of other forms of financial aid,
   30-8  grants, and part-time work;
   30-9              (5)  the starting range and average reported salaries
  30-10  of those in the occupation for which the student will be trained,
  30-11  if available; and
  30-12              (6)  job placement services provided by the school and
  30-13  the employment rate of persons who attended the school and were
  30-14  enrolled in the program in which the student is enrolled.
  30-15        (c)  A school approved to accept state or federal educational
  30-16  loans or grants shall adopt, in addition to the provisions in this
  30-17  section, measures to reduce defaults and improve borrowers
  30-18  understanding and respect for the loan repayment obligation as
  30-19  provided in 34 C.F.R., Parts 668 and 682.
  30-20        (d)  The school must give a copy of the Texas Guaranteed
  30-21  Student Loan Corporation's "Your Future" guide, or a comparable
  30-22  document, approved by the administrator, to a prospective student
  30-23  at a time and in a manner that provides the student with sufficient
  30-24  opportunity to read the guide or other document and discuss the
  30-25  contents with the school's financial aid officer, if necessary for
  30-26  understanding and clarity, before signing an enrollment contract
  30-27  and before the school accepts the student in a program.
   31-1        (e)  The prospective student must sign a document stating
   31-2  that the student:
   31-3              (1)  attended a loan counseling entrance interview; and
   31-4              (2)  received a copy of the "Your Future" guide or
   31-5  comparable document in the time provided by Subsection (d) of this
   31-6  section.
   31-7        (f)  A copy of the signed document required by Subsection (e)
   31-8  of this section must be sent to the student, guarantor, and lender
   31-9  and must be placed in the student's permanent school file.
  31-10        Sec. 32.4011.  RECORDS.  (a)  A school shall maintain
  31-11  permanent records for all students enrolled, as required by the
  31-12  administrator.
  31-13        (b)  A school shall adopt a plan to preserve permanent
  31-14  records and submit the plan to the administrator for approval.  The
  31-15  plan must:
  31-16              (1)  provide that at least one copy of the records will
  31-17  be held in a secure depository; and
  31-18              (2)  designate an appropriate official to provide a
  31-19  student with copies of records or transcripts on request.
  31-20        (c)  The school shall make the first copy of records or
  31-21  transcripts at no charge to the student.  The school may make a
  31-22  reasonable charge to provide additional copies of records,
  31-23  transcripts, or other student information.
  31-24        (d)  If a school closes, the records become the property of
  31-25  the state.
  31-26        Sec. 32.4012.  DISPLAY OF LICENSE TO OPERATE; COMPLAINTS.
  31-27  (a)  A holder of a license to operate issued under this chapter
   32-1  shall display the license in a conspicuous place at the premises of
   32-2  the school.
   32-3        (b)  A school that has received a license to operate under
   32-4  this chapter shall post on the premises of the school at a
   32-5  prominent and conspicuous location the name, mailing address, and
   32-6  telephone number of the administrator for the purpose of directing
   32-7  complaints to the administrator.
   32-8        Sec. 32.4013.  FINANCIAL STABILITY.  (a)  A school may not
   32-9  reflect unearned tuition as a current asset unless the amount shown
  32-10  in current assets that reflects unearned tuition is offset by an
  32-11  equal amount shown as a current liability.  The school must meet
  32-12  one of the following criteria in order to be determined as
  32-13  financially sound and capable of fulfilling its commitments for
  32-14  training:
  32-15              (1)  current assets must bear a relationship to current
  32-16  liabilities in a ratio of at least one-to-one;
  32-17              (2)  the equity of the owner of the school must be in
  32-18  excess of $10,000,000; or
  32-19              (3)  the school must have posted, or set aside in a
  32-20  dedicated escrow account, a bond, certificate of deposit,
  32-21  irrevocable letter of credit, or comparable security, acceptable to
  32-22  the administrator,  each made payable to the State of Texas, in an
  32-23  amount sufficient to cover the school's record storage costs,
  32-24  teachout, and tuition and fees refund and recovery exposure based
  32-25  on the evidence the school submits proving its projected maximum
  32-26  total unearned tuition during the period covered by the evidence of
  32-27  indebtedness to the State.
   33-1        (b)  The school must demonstrate to the satisfaction of the
   33-2  administrator its financial soundness and ability to fulfill its
   33-3  commitments for training.
   33-4        Sec. 32.4014.  COMPLAINTS.  The administrator shall prepare
   33-5  information of public interest describing the functions of the
   33-6  agency and the procedures by which complaints are filed with and
   33-7  resolved by the administrator against a proprietary school.  The
   33-8  agency shall make the information available to the public, to the
   33-9  appropriate state agencies, and to the schools.
  33-10        SECTION 1.19.  Section 32.41, Education Code, is amended to
  33-11  read as follows:
  33-12        Sec. 32.41.  Hearing.  Should the applicant be dissatisfied
  33-13  with the imposition of conditions on, or the denial or revocation
  33-14  of, a license to operate <certificate of approval> by the
  33-15  Administrator, the applicant shall have the right to appeal the
  33-16  decision of the Administrator and request a hearing with the
  33-17  Administrator within fifteen (15) days after receipt of notice.
  33-18  Upon receipt of the request for a hearing, the Administrator shall
  33-19  set a time and place for said hearing and then send notice to the
  33-20  school of said time and place.  Said hearing shall be held within
  33-21  thirty (30) days from the receipt of the request for a hearing.  At
  33-22  said hearing, an applicant may appear in person or by counsel and
  33-23  present evidence to the Administrator in support of the licensing
  33-24  without conditions or the retaining or granting of the permit
  33-25  specified herein.  All interested persons may also appear and
  33-26  present oral and documentary evidence to the Administrator,
  33-27  concerning the issuance of a license to operate <certificate of
   34-1  approval> to the applicant school.  Within ten (10) days after the
   34-2  hearing, the Administrator shall send notice to the school either
   34-3  affirming or rescinding <revoking> the revocation or denial of, or
   34-4  conditions imposed on, the license to operate <certificate of
   34-5  approval>.
   34-6        SECTION 1.20.  Section 32.61, Education Code, is amended to
   34-7  read as follows:
   34-8        Sec. 32.61.  Prohibitions.  No person shall:
   34-9              (1)  operate a school without a license to operate or
  34-10  assume ownership of an existing school without obtaining a new
  34-11  license to operate <certificate of approval issued by the
  34-12  Administrator>;
  34-13              (2)  solicit prospective students without being
  34-14  licensed <bonded> as required by this Chapter;
  34-15              (3)  accept contracts or enrollment applications from a
  34-16  representative who is not registered <bonded> as required by this
  34-17  Chapter;
  34-18              (4)  utilize advertising designed to mislead or deceive
  34-19  prospective students;
  34-20              (5)  fail to notify the Administrator of the
  34-21  discontinuance of the operation of any school within 72 hours of
  34-22  cessation of classes and make available accurate records as
  34-23  required by this Chapter;
  34-24              (6)  fail to secure and file within 30 days an
  34-25  increased bond as required by this Chapter;
  34-26              (7)  negotiate any promissory instrument received as
  34-27  payment of tuition or other charge prior to completion of 75
   35-1  percent of the course, provided that prior to such  time, the
   35-2  instrument may be transferred by assignment to a purchaser who
   35-3  shall be subject to all the defenses available against the school
   35-4  named as payee;
   35-5              (8)  enroll a student who fails to satisfy entrance
   35-6  requirements; or
   35-7              (9) <(8)>  violate any provision of this Chapter or a
   35-8  rule adopted under this Chapter.
   35-9        SECTION 1.21.  Section 32.611, Education Code, is amended to
  35-10  read as follows:
  35-11        Sec. 32.611.  ADMINISTRATIVE <CIVIL> PENALTY.  (a)  The
  35-12  administrator may impose an administrative penalty against a person
  35-13  who violates Section 32.61 of this code.
  35-14        (b)  The penalty for a violation may be in an amount not to
  35-15  exceed $10,000.
  35-16        (c)  The amount of the penalty shall be based on:
  35-17              (1)  the seriousness of the violation, including the
  35-18  nature, circumstances, extent, and gravity of any prohibited acts;
  35-19              (2)  efforts to correct the violation; and
  35-20              (3)  any other matter that justice may require.
  35-21        (d)  If the administrator determines that a violation has
  35-22  occurred, the administrator may issue a report that states the
  35-23  facts on which the determination is based and the administrator's
  35-24  recommendation on the imposition of a penalty, including a
  35-25  recommendation on the amount of the penalty.
  35-26        (e)  Within 14 days after the date the report is issued, the
  35-27  administrator shall give written notice of the report to the
   36-1  person.  The notice may be given by certified mail.  The notice
   36-2  must include a brief summary of the alleged violation and a
   36-3  statement of the amount of the recommended penalty and must inform
   36-4  the person that the person has a right to a hearing on the
   36-5  occurrence of the violation, the amount of the penalty, or both the
   36-6  occurrence of the violation and the amount of the penalty.
   36-7        (f)  Within 20 days after the date the person receives the
   36-8  notice, the person in writing may accept the determination and
   36-9  recommended penalty of the administrator or may make a written
  36-10  request for a hearing on the occurrence of the violation, the
  36-11  amount of the penalty, or both the occurrence of the violation and
  36-12  the amount of the penalty.
  36-13        (g)  If the person accepts the determination and recommended
  36-14  penalty of the administrator, the administrator by order shall
  36-15  impose the recommended penalty.
  36-16        (h)  If the person requests a hearing or fails to respond
  36-17  timely to the notice, the administrator shall set a hearing and
  36-18  give notice of the hearing to the person.  The hearing shall be
  36-19  held by the  administrator.  The administrator shall make findings
  36-20  of fact and conclusions of law and, based on the findings of fact
  36-21  and conclusions of law, by order may find that a violation has
  36-22  occurred and impose a penalty or find that no violation occurred.
  36-23        (i)  The notice of the administrator's order given to the
  36-24  person under the Administrative Procedure and Texas Register Act
  36-25  (Article 6252-13a, Vernon's Texas Civil Statutes) must include a
  36-26  statement of the right of the person to judicial review of the
  36-27  order.
   37-1        (j)  Within 30 days after the date the administrator's order
   37-2  is final as provided by Section 16(c), Administrative Procedure and
   37-3  Texas Register Act (Article 6252-13a, Vernon's Texas Civil
   37-4  Statutes), the person shall:
   37-5              (1)  pay the amount of the penalty;
   37-6              (2)  pay the amount of the penalty and file a petition
   37-7  for judicial review contesting the occurrence of the violation, the
   37-8  amount of the penalty, or both the occurrence of the violation and
   37-9  the amount of the penalty; or
  37-10              (3)  without paying the amount of the penalty, file a
  37-11  petition for judicial review contesting the occurrence of the
  37-12  violation, the amount of the penalty, or both the occurrence of the
  37-13  violation and the amount of the penalty.
  37-14        (k)  Within the 30-day period, a person who acts under
  37-15  Subsection (j)(3) of this section may:
  37-16              (1)  stay enforcement of the penalty by:
  37-17                    (A)  paying the amount of the penalty to the
  37-18  court for placement in an escrow account; or
  37-19                    (B)  giving to the court a supersedeas bond that
  37-20  is approved by the court for the amount of the penalty and that is
  37-21  effective until all judicial review of the board's order is final;
  37-22  or
  37-23              (2)  request the court to stay enforcement of the
  37-24  penalty by:
  37-25                    (A)  filing with the court a sworn affidavit of
  37-26  the person stating that the person is financially unable to pay the
  37-27  amount of the penalty and is financially unable to give the
   38-1  supersedeas bond; and
   38-2                    (B)  giving a copy of the affidavit to the
   38-3  administrator by certified mail.
   38-4        (l)  If the administrator receives a copy of an affidavit
   38-5  under Subsection (k)(2) of this section, the administrator may file
   38-6  with the court, within five days after the date the copy is
   38-7  received, a contest to the affidavit.  The court shall hold a
   38-8  hearing on the facts alleged in the affidavit as soon as
   38-9  practicable and shall stay the enforcement of the penalty on
  38-10  finding that the alleged facts are true.  The person who files an
  38-11  affidavit has the burden of proving that the person is financially
  38-12  unable to pay the amount of the penalty and to give a supersedeas
  38-13  bond.
  38-14        (m)  If the person does not pay the amount of the penalty and
  38-15  the enforcement of the penalty is not stayed, the administrator may
  38-16  refer the matter to the attorney general for collection of the
  38-17  amount of the penalty.
  38-18        (n)  Judicial review of the order of the administrator:
  38-19              (1)  is instituted by filing a petition as provided by
  38-20  Section 19, Administrative Procedure and Texas Register Act
  38-21  (Article 6252-13a, Vernon's Texas Civil Statutes); and
  38-22              (2)  is under the substantial evidence rule.
  38-23        (o)  If the court sustains the occurrence of the violation,
  38-24  the court may uphold or reduce the amount of the penalty and order
  38-25  the person to pay the full or reduced amount of the penalty.  If
  38-26  the court does not sustain the occurrence of the violation, the
  38-27  court shall order that no penalty is owed.
   39-1        (p)  When the judgment of the court becomes final, the court
   39-2  shall proceed under this subsection.  If the person paid the amount
   39-3  of the penalty and if that amount is reduced or is not upheld by
   39-4  the court, the court shall order that the appropriate amount plus
   39-5  accrued interest be remitted to the person.  The rate of the
   39-6  interest is the rate charged on loans to depository institutions by
   39-7  the New York Federal Reserve Bank, and the interest shall be paid
   39-8  for the period beginning on the date the penalty was paid and
   39-9  ending on the date the penalty is remitted.  If the person gave a
  39-10  supersedeas bond and if the amount of the penalty is not upheld by
  39-11  the court, the court shall order the release of the bond.  If the
  39-12  person gave a supersedeas bond and if the amount of the penalty is
  39-13  reduced, the court shall order the release of the bond after the
  39-14  person pays the amount.
  39-15        (q)  A penalty collected under this section shall be remitted
  39-16  to the comptroller for deposit in the general revenue fund.
  39-17        (r)  All proceedings under this section are subject to the
  39-18  Administrative Procedure and Texas Register Act (Article 6252-13a,
  39-19  Vernon's Texas Civil Statutes).  <If a person violates Section
  39-20  32.61 of this code, the administrator may assess a civil penalty
  39-21  against that person as provided by this section.>
  39-22        <(b)  The administrator may assess the civil penalty in an
  39-23  amount not to exceed $1,000.  In determining the amount of the
  39-24  penalty, the administrator shall consider the seriousness of the
  39-25  violation.>
  39-26        <(c)  If, after examination of a possible violation and the
  39-27  facts relating to that possible violation, the administrator
   40-1  concludes that a violation has occurred, the administrator shall
   40-2  issue a preliminary report that states the facts on which the
   40-3  conclusion is based, the fact that a civil penalty is to be
   40-4  imposed, and the amount to be assessed.  Not later than the 10th
   40-5  day after the date on which the administrator issues the
   40-6  preliminary report, the administrator shall send a copy of the
   40-7  report to the person charged with the violation, together with a
   40-8  statement of the right of the person to a hearing relating to the
   40-9  alleged violation and the amount of the penalty.>
  40-10        <(d)  Not later than the 20th day after the date on which the
  40-11  report is sent, the person charged must either make a written
  40-12  request for a hearing or remit the amount of the civil penalty to
  40-13  the administrator.  Failure either to request a hearing or to remit
  40-14  the amount of the civil penalty within the time provided by this
  40-15  subsection results in a waiver of a right to a hearing under this
  40-16  section.  If the person charged requests a hearing, the hearing
  40-17  shall be conducted in the same manner as a hearing on the denial of
  40-18  certificate of approval under Section 32.41 of this code.  If it is
  40-19  determined after a hearing that the person has committed the
  40-20  alleged violation, the administrator shall give written notice to
  40-21  the person of the findings established by the hearing and the
  40-22  amount of the penalty and shall enter an order requiring the person
  40-23  to pay the penalty.>
  40-24        <(e)  Not later than the 30th day after the date on which the
  40-25  notice is received, the person charged must pay the civil penalty
  40-26  in full or, if the person wishes to contest either the amount of
  40-27  the penalty or the fact of the violation, remit the assessed amount
   41-1  to the administrator for deposit in an escrow account.  If, after
   41-2  judicial review, it is determined that no violation occurred or
   41-3  that the amount of the penalty should be reduced, the administrator
   41-4  shall remit the appropriate amount to the person charged with the
   41-5  violation not later than the 30th day after the date on which the
   41-6  judicial determination becomes final.>
   41-7        <(f)  Failure to remit the amount of the civil penalty to the
   41-8  board within the time provided by Subsection (e) of this section
   41-9  results in a waiver of all legal rights to contest the violation or
  41-10  the amount of the penalty.>
  41-11        <(g)  A civil penalty owed under this section plus reasonable
  41-12  attorney fees and court costs may be recovered in a civil action
  41-13  brought by the attorney general at the request of the
  41-14  administrator.  Civil penalties recovered shall be deposited in the
  41-15  General Revenue Fund.  Attorney fees and court costs shall be
  41-16  appropriated to the attorney general.>
  41-17        SECTION 1.22.  Section 32.612, Education Code, is amended to
  41-18  read as follows:
  41-19        Sec. 32.612.  Competitive Bidding; Advertising.  (a)  The
  41-20  State Board of Education may not adopt rules that <to> restrict
  41-21  competitive bidding or advertising by a proprietary school except
  41-22  to prohibit false, misleading, or deceptive competitive bidding or
  41-23  advertising practices.  The <Those> rules may not restrict:
  41-24              (1)  the use of an advertising medium;
  41-25              (2)  the size or duration of an advertisement; or
  41-26              (3)  advertisement under a trade name.
  41-27        (b)  A school, the representative of a school, or a recruiter
   42-1  for the school may not advertise or represent, in writing or
   42-2  orally, that a school is approved or accredited by the state.
   42-3  Those entities or persons may advertise that the school has been
   42-4  licensed to operate by the state.
   42-5        (c)  A school, representative of a school, or recruiter of a
   42-6  school may not make or cause to be made a statement or
   42-7  representation, written, oral, or visual, offering or publicizing a
   42-8  subject, program, or school, if the school, representative, or
   42-9  recruiter knew or reasonably should have known that the statement
  42-10  or representation was false, fraudulent, deceptive, substantially
  42-11  inaccurate, or misleading.
  42-12        SECTION 1.23.  Section 32.64, Education Code, is amended by
  42-13  amending Subsection (a) and adding Subsection (c) to read as
  42-14  follows:
  42-15        (a)  If the Central Education Agency has reasonable cause to
  42-16  believe that a proprietary school has violated this chapter or a
  42-17  rule adopted under this chapter, the agency may:
  42-18              (1)  order a peer review of the school; or
  42-19              (2)  suspend the admission of students to the school,
  42-20  as provided by Subsection (c) of this section.
  42-21        (c)  The agency may suspend the admission of students to a
  42-22  school under Subsection (a) of this section after the administrator
  42-23  has given written notice to the applicant for or holder of a
  42-24  license to operate a proprietary school of the suspension and of
  42-25  the intent to deny or revoke the license, as provided by Section
  42-26  32.35 or 32.36 of this code, as applicable.  In addition, the
  42-27  notice shall state that a hearing will be held at a time and place
   43-1  and on a date specified in the notice to review the denial or
   43-2  revocation decision.  Except as provided by this subsection, the
   43-3  hearing is in place of a hearing under Section 32.41 of this code,
   43-4  and shall be held not later than the 20th day after the date notice
   43-5  was given.  If, after the hearing, the administrator upholds the
   43-6  denial or revocation of the license, the applicant for or holder of
   43-7  a license may appeal the decision, as provided by Section 32.42 of
   43-8  this code.  The admission of students is suspended during the
   43-9  period the decision is being appealed.  If the applicant for or
  43-10  holder of a license appears and the agency fails to hold a timely
  43-11  hearing, the agency may not continue to suspend the enrollment of
  43-12  students without the consent of the applicant for or holder of a
  43-13  license, and the applicant for or holder of a license is entitled
  43-14  to a hearing under Section 32.41 of this code not later than the
  43-15  30th day after the date the hearing under this subsection was to be
  43-16  held.  If the applicant for or holder of a license fails to appear,
  43-17  the applicant for or holder of a license is not entitled to any
  43-18  other hearing or to an appeal under Section 32.42 of this code, and
  43-19  the administrator may make final the decision to deny or revoke the
  43-20  license.
  43-21        SECTION 1.24.  Subchapter G, Chapter 32, Education Code, is
  43-22  amended by adding Section 32.65 to read as follows:
  43-23        Sec. 32.65.  CRIMINAL PENALTIES.  (a)  A person commits an
  43-24  offense if the person fails to comply with Section 32.61(1) or
  43-25  32.39 of this code.  Except as provided by Subsection (b) of this
  43-26  section, an offense under this subsection is a Class A misdemeanor.
  43-27        (b)  A person commits an offense if the person intentionally
   44-1  or knowingly uses for personal benefit funds in an amount greater
   44-2  than $10,000 that are due as student refunds under Section 32.39 of
   44-3  this code.  An offense under this subsection is a felony of the
   44-4  third degree.
   44-5        SECTION 1.25.  Subchapter G, Chapter 32, Education Code, is
   44-6  amended by adding Section 32.66 to read as follows:
   44-7        Sec. 32.66.  INVESTIGATION OF STUDENT COMPLAINTS.  The
   44-8  administrator shall investigate complaints filed against a school
   44-9  by a current or former student that identifies a possible violation
  44-10  of statute or rule that occurred on a date not earlier than two
  44-11  years before the date of the letter of complaint.  If the school is
  44-12  found to be at fault, the agency may, in addition to assessing an
  44-13  appropriate penalty and fee as provided by this chapter, order the
  44-14  school to provide a refund in an amount not to exceed the total
  44-15  tuition and fee charge to the student.
  44-16        SECTION 1.26.  Section 32.91, Education Code, is amended to
  44-17  read as follows:
  44-18        Sec. 32.91.  CONSOLIDATION OF FEES AND PROPRIETARY SCHOOL
  44-19  ACCOUNT <TUITION PROTECTION FUND>.  (a)  At the beginning of each
  44-20  fiscal year the <At the time that each school pays its annual
  44-21  renewal fee, in the years provided by Subsection (c) of this
  44-22  section, the> State Board of Education shall <also> collect a fee
  44-23  from the school for deposit to the credit of a special account
  44-24  <fund> in the general revenue fund in the state treasury to be
  44-25  called the proprietary school account and to be administered by the
  44-26  Central Education Agency <tuition protection fund>.
  44-27        (b)  The amount of the fee is determined by applying a
   45-1  percentage established by the State Board of Education, based on
   45-2  the recommendation of the school accounts advisory board, to each
   45-3  school's annual gross tuition, with consideration given to the
   45-4  school's size, expense of regulation, potential for teachouts,
   45-5  tuition refund and recovery exposure, and loan default rates (with
   45-6  schools with high default rates paying higher fees), and any other
   45-7  relevant factors <renewal fee>.  The account shall be used for:
   45-8              (1)  the administration of this chapter;
   45-9              (2)  the cost of teachouts as provided by Section 32.92
  45-10  of this code;
  45-11              (3)  the cost of tuition and fees recovery and the cost
  45-12  of student refunds that a school has not made in violation of
  45-13  Section 32.39 of this code; and
  45-14              (4)  the cost of storing student records that have
  45-15  become property of the state under this Act.  <The percentage is
  45-16  the rate as determined by the board that, when applied to the total
  45-17  of all renewal fees, will result in the collection of $250,000 for
  45-18  deposit in the fund in the first two years that the fee is
  45-19  collected.>
  45-20        (c)  The administrator may grant an exemption from payment
  45-21  into the account to a small school, as determined by the
  45-22  administrator, or to a school that does not use guaranteed student
  45-23  loans for tuition revenue.  A school exempt as provided for by this
  45-24  subsection must pay the necessary fees for regulation, as
  45-25  determined by the administrator, and provide a bond, certificate of
  45-26  deposit, or comparable security, as determined and approved by the
  45-27  administrator, that is sufficient to cover the cost of the school's
   46-1  record storage costs, teachout, and tuition and fees refund and
   46-2  recovery exposure based on the evidence the school submits proving
   46-3  its projected maximum total unearned tuition during the period of
   46-4  the license to operate.
   46-5        (d)  The security shall be provided by the school for the
   46-6  period during which the license to operate is issued, and the
   46-7  obligation of the bond or other security must be that neither this
   46-8  chapter nor any rule adopted under this chapter is violated by the
   46-9  school or any of its officers, agents, or employees.
  46-10        (e)  The bond, certificate of deposit, or comparable security
  46-11  must be issued by a company authorized to do business in the state,
  46-12  conditioned that the parties to the transaction shall pay all
  46-13  damages or expenses that the state or any governmental subdivision
  46-14  or any student or potential student sustains resulting from a
  46-15  violation.  The bond, certificate of deposit, or comparable
  46-16  security shall be to the state to be used only for payment for the
  46-17  school's teachout and tuition and fees refund due to a student or
  46-18  potential student.  The security must be filed with the
  46-19  administrator and shall be in such form as shall be approved by the
  46-20  administrator.
  46-21        (f)  Schools domiciled, or having their principal place of
  46-22  business, outside the state, that engage representatives to
  46-23  canvass, solicit, or contract with any person in the state are
  46-24  subject to the fee and security requirements of Subsection (c) of
  46-25  this section.
  46-26        (g)  The administrator shall refer all expenses incurred by
  46-27  the school account in administering Subsections (b)(2) and (3) of
   47-1  this section to the attorney general's office for collection.  The
   47-2  amounts collected shall be deposited to the credit of the account.
   47-3  Attorney's fees and court costs shall be appropriated to the
   47-4  attorney general's office  <Beginning on January 1, 1990, the board
   47-5  shall collect the fee for two years.  If on January 1, 1993, or any
   47-6  subsequent year the amount in the fund is less than $200,000, the
   47-7  board shall collect a fee during that year by applying a percentage
   47-8  to each school's annual renewal fee at a rate that will bring the
   47-9  balance of the fund to $250,000>.
  47-10        (h)  Interest the account earns shall be reinvested in the
  47-11  account.  <(d)>  The state treasurer shall invest the account
  47-12  <fund> in the same manner as other state funds.  Sufficient funds
  47-13  from the account, other fees collected by the agency, and earned
  47-14  federal funds <tuition protection fund> shall be appropriated to
  47-15  Central Education Agency administration for the purpose outlined in
  47-16  this subchapter <section>.
  47-17        (i)  The administrator by rule shall establish and assess
  47-18  reasonable and necessary fees to all persons and entities licensed
  47-19  under this Act to be used for the regulation of those persons and
  47-20  entities licensed under this Act and to supplement the
  47-21  administration and purposes outlined by this Act.
  47-22        (j)  The administrator may permit payment of any fee
  47-23  authorized under this section that exceeds $1,000 to be paid by
  47-24  installment.  The administrator shall provide for appropriate
  47-25  interest charges and late penalties in addition to any other remedy
  47-26  that is provided for by law for the late payment of a fee
  47-27  installment authorized under this section.  The administrator may
   48-1  assess a reasonable service charge to be paid by a school that pays
   48-2  a fee by installment in an amount not to exceed an annual rate of
   48-3  10 percent of the fee that is to be paid by installment.
   48-4        SECTION 1.27.  Subchapter J, Education Code, is amended by
   48-5  adding Section 32.911 to read as follows:
   48-6        Sec. 32.911.  SCHOOL ACCOUNTS ADVISORY BOARD.  (a)  The
   48-7  school accounts advisory board is created.  The board members
   48-8  consist of:
   48-9              (1)  the attorney general or the designee of the
  48-10  attorney general;
  48-11              (2)  the comptroller of public accounts or the designee
  48-12  of the comptroller;
  48-13              (3)  the president of the Texas Guaranteed Student Loan
  48-14  Corporation or the designee of the president;
  48-15              (4)  the commissioner of the Texas Higher Education
  48-16  Coordinating Board or the designee of the commissioner;
  48-17              (5)  the president of the Association of Texas Lenders
  48-18  for Education or the designee of the president;
  48-19              (6)  the president of the Texas Association of Student
  48-20  Financial Aid Administrators or the designee of the president;
  48-21              (7)  the commissioner of the Texas Department of
  48-22  Licensing and Regulation or the designee of the commissioner;
  48-23              (8)  the commissioner of education or the designee of
  48-24  the commissioner;
  48-25              (9)  the director of the division of the Central
  48-26  Education Agency that regulates proprietary schools or the designee
  48-27  of the director;
   49-1              (10)  the executive director of the Texas Board of
   49-2  Private Investigators and Private Security Agencies or the designee
   49-3  of the executive director;
   49-4              (11)  the commissioner of health or the designee of the
   49-5  commissioner;
   49-6              (12)  the executive director of the State Board of
   49-7  Barber Examiners or the designee of the executive director;
   49-8              (13)  the executive director of the Texas Cosmetology
   49-9  Commission or the designee of the executive director;
  49-10              (14)  one member each, elected by the recognized
  49-11  constituent organization, representing schools regulated by the
  49-12  Central Education Agency proprietary schools division, the Texas
  49-13  Board of Private Investigators and Private Security Agencies, the
  49-14  massage registration division of the Texas Department of Health or
  49-15  its successor in that function, the State Board of Barber
  49-16  Examiners, and the Texas Cosmetology Commission;
  49-17              (15)  two public members, not affiliated with
  49-18  proprietary schools or state government, appointed by the governor;
  49-19              (16)  one public member, not affiliated with
  49-20  proprietary schools or state government, appointed by the
  49-21  lieutenant governor; and
  49-22              (17)  one public member, not affiliated with
  49-23  proprietary schools or state government, appointed by the speaker
  49-24  of the house of representatives.
  49-25        (b)  Each member of the school accounts advisory board has
  49-26  one vote, and decisions shall be made on the basis of a majority of
  49-27  the board.  The school accounts advisory board shall meet, at the
   50-1  call of the board's elected chairman, to recommend fees for and
   50-2  expenditures from:
   50-3              (1)  the proprietary school account;
   50-4              (2)  the security officer school account;
   50-5              (3)  the massage school account;
   50-6              (4)  the barber school or college account; and
   50-7              (5)  the private beauty culture school account.
   50-8        (c)  The school accounts advisory board shall, on an annual
   50-9  basis, recommend the percentage applied to annual gross tuition and
  50-10  fees to be used in establishing the baseline amount, based on
  50-11  anticipated needs sufficient to fully cover the purposes of the
  50-12  school accounts listed in Subsection (b) of this section.  The
  50-13  school accounts advisory board shall monitor the administration of
  50-14  the accounts and the schools or colleges contributing to the
  50-15  accounts and make recommendations to the appropriate state agency
  50-16  regarding the percentage of annual gross tuition to charge schools
  50-17  or colleges for the appropriate account provided by Subsection (b)
  50-18  of this section or other aspects of the administration of the
  50-19  account or the schools or colleges.
  50-20        (d)  The school accounts advisory board may request an audit
  50-21  of the appropriate state agency regarding the administration of the
  50-22  appropriate account provided by Subsection (b) of this section.
  50-23        (e)  The school accounts advisory board shall serve as
  50-24  arbitrator and shall hear appeals and mediate the resolution of
  50-25  grievances regarding the administration of the accounts brought by
  50-26  any member of the board.  The school accounts advisory board shall
  50-27  hear second appeals as provided by Subsection (k) of this section.
   51-1        (f)  The school accounts advisory board shall monitor the
   51-2  default management of agencies administering school accounts,
   51-3  including this Act and the rules in 34 C.F.R., Parts 668 and 682.
   51-4  The board may, on findings that the default reduction initiatives
   51-5  of an agency are not sufficient, as evidenced by a school that that
   51-6  agency regulates exceeding the acceptable default rate as
   51-7  determined by the board, require the agency to approve a default
   51-8  prevention plan to be implemented by the affected school.
   51-9        (g)  The school accounts advisory board shall be funded by
  51-10  the member organizations.  Each member organization shall
  51-11  appropriate funds to pay a portion of the cost to administer the
  51-12  board and to pay the expenses incurred by that organization's
  51-13  representative on the board.
  51-14        (h)  The school accounts advisory board may consider and rule
  51-15  on any matter regarding the regulation of a school or licensee
  51-16  under this chapter, the administration of an agency regulating
  51-17  schools under this chapter, or the application by a school of a
  51-18  policy regarding the students enrolled in a school regulated under
  51-19  this chapter, if the board considers such consideration and ruling
  51-20  are appropriate and necessary.
  51-21        (i)  Each state agency administering an account shall
  51-22  consider the recommendations of the school accounts advisory board
  51-23  when making decisions regarding the account administered by that
  51-24  agency.
  51-25        (j)  Each state agency administering an account shall
  51-26  recognize a constituent organization comprised of representatives
  51-27  of schools regulated by the agency and the school's advisory
   52-1  council if one exists.  The recognized constituent organization
   52-2  must be independent, both fiscally and administratively, from the
   52-3  agency regulating constituent schools.  The agency shall consider
   52-4  the recommendations of the recognized constituent organization
   52-5  regarding the regulation of the constituent schools.
   52-6        (k)  Each state agency administering an account shall
   52-7  prepare, submit for approval of the school accounts advisory board,
   52-8  and on approval shall publish the agency's mechanism and procedures
   52-9  by which complaints may be brought before the agency by the
  52-10  recognized constituent organization representing schools regulated
  52-11  by the agency.  The procedure shall include the investigation,
  52-12  hearing, and appeals process of the agency to resolve grievances
  52-13  brought against the agency or a school regulated by the agency,
  52-14  regarding any aspect of the regulation of the constituent schools.
  52-15        SECTION 1.28.  Section 32.92, Education Code, is amended to
  52-16  read as follows:
  52-17        Sec. 32.92.  Closed School.  (a)  The State Board of
  52-18  Education shall adopt rules specifying the circumstances under
  52-19  which the administrator may declare a school closed.  If a
  52-20  proprietary school closes, the Central Education Agency shall
  52-21  attempt to arrange for students of the closed school to attend:
  52-22              (1)  another proprietary school with similar programs;
  52-23              (2)  a public or private school with similar programs;
  52-24              (3)  a similar program recognized by the Central
  52-25  Education Agency; or
  52-26              (4)  a similar program established by private industry.
  52-27        (b)  The expense incurred by a school in providing a teachout
   53-1  that is directly related to educating a student placed in the
   53-2  school under this section, including the applicable tuition and
   53-3  fees for the period of time for which the student has paid tuition
   53-4  and fees, shall be paid in accordance with rules of the State Board
   53-5  of Education <from the proprietary school tuition protection fund>.
   53-6        (c)  If the student cannot be placed in another school, the
   53-7  student's tuition and fees shall be refunded under Section 32.39(d)
   53-8  of this code.
   53-9        (d)  If a student does not accept a place that is available
  53-10  and reasonable in another school, the student's tuition and fees
  53-11  shall be refunded under the refund policy maintained by the closing
  53-12  school under Section 32.39(b) of this code.
  53-13        (e)  The administrator shall make reasonable attempts to
  53-14  ensure that schools under the administrator's jurisdiction,
  53-15  including closed schools, fulfill the refund obligation as provided
  53-16  by Section 32.39 of this code.  If a school refuses to fulfill the
  53-17  school's obligation or the school's bond is insufficient to pay the
  53-18  cost of the teachout and refund expenses, the teachout or the
  53-19  refund may be paid from the proprietary school account, except that
  53-20  no school owned, either in whole or in part, by a person or
  53-21  corporate entity who was an owner, in whole or in part, of a
  53-22  previously closed school shall be permitted to receive compensation
  53-23  for a teachout under this section  <If the amount of the closed
  53-24  school's bond under Section 32.38 of this code is less than the
  53-25  amount required for student refunds under Subsections (c) and (d)
  53-26  of this section, the refunds shall be paid from the proprietary
  53-27  school tuition protection fund in an amount not to exceed $25,000>.
   54-1        (f)  <If another school assumes responsibility for the closed
   54-2  school's students with no significant changes in the quality of
   54-3  training, the student is not entitled to a refund under Subsection
   54-4  (c) or (d) of this section.>
   54-5        <(g)>  Attorney's fees, court costs, or damages may not be
   54-6  paid from the proprietary school <tuition protection> fund.
   54-7        <(h)  This section take effect January 1, 1992.>
   54-8        SECTION 1.29.  Sections 32.21(d), 32.42(f), 32.71, and
   54-9  32.92(f), Education Code, are repealed.
  54-10        SECTION 1.30.  (a)  Section 32.38(a), Education Code, is
  54-11  amended to read as follows:
  54-12        (a)  Before a license to operate <certificate of approval> is
  54-13  issued under this chapter, a bond shall be provided by the school
  54-14  for the period during which the license to operate <certificate of
  54-15  approval> is issued, and the obligation of the bond shall be that
  54-16  neither a provision of this chapter nor any rule or regulation
  54-17  adopted pursuant thereto shall be violated by the school or any of
  54-18  its officers, agents, or employees.  The bond shall be in the penal
  54-19  sum of $5,000 or a multiple of $5,000 that is not greater than
  54-20  $25,000.  The administrator shall determine the amount based on the
  54-21  evidence the school submits of its projected maximum total unearned
  54-22  tuition during the period of the license to operate <certificate of
  54-23  approval>.  The bond shall be a corporate surety bond issued by a
  54-24  company authorized to do business in the State, conditioned that
  54-25  the parties thereto shall pay all damages or expenses which the
  54-26  State or any governmental subdivision thereof, or any student or
  54-27  potential student may sustain resulting from a violation.  The bond
   55-1  shall be to the State to be used only for payment of a tuition
   55-2  refund due to a student or potential student.  The bond shall be
   55-3  filed with the administrator and shall be in such form as shall be
   55-4  approved by the administrator.
   55-5        (b)  Effective September 1, 1994, Section 32.38, Education
   55-6  Code, is repealed.  Any license to operate bond or any certificate
   55-7  of approval bond submitted before repeal remains in full force and
   55-8  effect.  Any obligation under a license to operate bond or
   55-9  certificate of approval bond submitted under Section 32.38 before
  55-10  repeal is not impaired by repeal.
  55-11        SECTION 1.31.  Any balance remaining in the tuition
  55-12  protection fund shall be transferred to the proprietary school
  55-13  account on the effective date of this Act.
  55-14        SECTION 1.32.  A proprietary school that holds a certificate
  55-15  of approval on the effective date of this Act is considered to hold
  55-16  a license to operate under Chapter 32, Education Code, as amended
  55-17  by this part.  The administrator shall replace a certificate with a
  55-18  license after the expiration of the certificate and on application
  55-19  for renewal.
  55-20                   PART 2.  SECURITY OFFICER SCHOOLS
  55-21        SECTION 2.01.  Section 20, Private Investigators and Private
  55-22  Security Agencies Act (Article 4413(29bb), Vernon's Texas Civil
  55-23  Statutes), is amended to read as follows:
  55-24        Sec. 20.  SECURITY OFFICER SCHOOL LICENSE; APPLICATION;
  55-25  REFUND POLICY <Training Programs>.  (a)  The board shall establish
  55-26  a basic training course for security officers.  The course must be
  55-27  offered and taught by schools and instructors licensed <approved>
   56-1  by the board.  To receive a license <board approval,> a school or
   56-2  an instructor must submit an application to the board on a form
   56-3  provided by the board.
   56-4        (b)  The basic training course approved by the board shall
   56-5  consist of a minimum of 30 hours and shall include:
   56-6              (1)  legal limitations on the use of firearms and on
   56-7  the powers and authority of a security officer;
   56-8              (2)  familiarity with this Act;
   56-9              (3)  field note taking and report writing;
  56-10              (4)  range firing and procedure, and firearms safety
  56-11  and maintenance; and
  56-12              (5)  any other topics of security officer training
  56-13  curriculum which the board deems necessary.
  56-14        (c)  The board shall develop a commissioned security officer
  56-15  training manual to be used in the instructing and training of
  56-16  commissioned security officers.
  56-17        (d)  The board shall promulgate all rules necessary to
  56-18  administer the provisions of this section concerning the training
  56-19  requirements of this Act.
  56-20        (e)  An application for a license to instruct at a security
  56-21  officer school must state the education and experience level of the
  56-22  applicant in all courses or programs that the applicant will teach
  56-23  or instruct and be on a form prescribed by the board.  The board
  56-24  shall review an application for competency, consistency, and the
  56-25  overall quality of the applicant.  An applicant for an instructor's
  56-26  license must receive a passing grade on an examination administered
  56-27  by the board.
   57-1        (f)  The board may not issue a security officer commission to
   57-2  an applicant employed by a licensee unless the applicant submits
   57-3  evidence satisfactory to the board that:
   57-4              (1)  he has completed the basic training course at a
   57-5  school or under an instructor approved by the board;
   57-6              (2)  he meets all qualifications established by this
   57-7  Act and by the rules of the board;
   57-8              (3)  he has satisfied his firearm training instructor
   57-9  that he has attained with a handgun a minimum average marksmanship
  57-10  competency of 160 out of 300 on an "Army L" target or a minimum of
  57-11  80 out of 150 on an F.B.I. Silhouette target (N.R.A. B-27), at 50
  57-12  feet with 10 shots slow fire, 10 shots time fire and 10 shots
  57-13  double-action or complies with the standards of marksmanship set by
  57-14  the board;
  57-15              (4)  he has satisfied his firearm training instructor
  57-16  that he has complied with the standards of marksmanship set by the
  57-17  board for minimum marksmanship competency with a shotgun.
  57-18        (g) <(f)>  In addition to the requirements of Subsection (f)
  57-19  <(e)> of this section, the board by rules and regulations shall
  57-20  establish other qualifications for persons who are employed in
  57-21  positions requiring the carrying of firearms.  These qualifications
  57-22  may include physical and mental standards, standards of good moral
  57-23  character, and other requirements that relate to the competency and
  57-24  reliability of individuals to carry firearms.  The board shall
  57-25  prescribe appropriate forms and rules and regulations by which
  57-26  evidence that the requirements are fulfilled is presented.  The
  57-27  board shall require commissioned security officers and applicants
   58-1  for security officer commissions to demonstrate proficiency in the
   58-2  use of firearms to the satisfaction of a firearm training
   58-3  instructor who is employed by a board approved training school.  An
   58-4  applicant for a security officer commission must demonstrate
   58-5  proficiency not earlier than the 90th day before the date on which
   58-6  the security officer commission is to be issued.  A commissioned
   58-7  security officer must demonstrate proficiency not earlier than the
   58-8  90th day before the date on which the commission is to be renewed.
   58-9  The records of this proficiency shall be maintained by the school
  58-10  and available for inspection by the board.
  58-11        (h) <(g)>  The board shall prescribe appropriate rules and
  58-12  regulations for the maintenance of records relating to persons
  58-13  issued security officer commissions by the board.
  58-14        (i)  An application for a security officer school license
  58-15  must be verified by the applicant and must contain a statement of
  58-16  any final convictions of the owners, school directors, recruiters,
  58-17  instructional faculty, or other selected personnel of the security
  58-18  officer school as determined by the board.  The board may obtain
  58-19  criminal history records of school directors or instructional
  58-20  faculty from any law enforcement agency, including the United
  58-21  States Department of Justice, the Department of Public Safety of
  58-22  the State of Texas, the Texas Department of Criminal Justice, or
  58-23  the police department of a municipality.
  58-24        (j)  The board shall determine that an applicant for a
  58-25  security officer school license is financially sound and capable of
  58-26  fulfilling its commitments for training before granting the permit.
  58-27        (k)  Each licensed security officer school must maintain a
   59-1  cancellation and settlement policy that provides a full refund of
   59-2  all money paid by a student if:
   59-3              (1)  the student cancels the enrollment agreement or
   59-4  contract not later than midnight of the third day after the date on
   59-5  which the agreement or contract is signed by the prospective
   59-6  student, excluding Saturdays, Sundays, and legal holidays; or
   59-7              (2)  the enrollment of the student was procured as a
   59-8  result of a misrepresentation made in the advertising or
   59-9  promotional materials of the school or a representation by an owner
  59-10  or representative of the school.
  59-11        (l)  Each licensed security officer school must maintain a
  59-12  refund policy for the refund of the unused part of tuition, fees,
  59-13  and other charges assessed a student if the student, at the
  59-14  expiration of the cancellation period established under Subsection
  59-15  (k) of this section, terminates  enrollment or is terminated by the
  59-16  school, as provided by this subsection.  The refund policy must
  59-17  provide that:
  59-18              (1)  a refund is based on the period of the student's
  59-19  enrollment, computed on the basis of course time expressed in clock
  59-20  hours;
  59-21              (2)  the effective date of the termination for payment
  59-22  of a refund is the earliest of:
  59-23                    (A)  the last date of attendance, if the student
  59-24  is terminated for failure to satisfy a school attendance, grade, or
  59-25  work requirement;
  59-26                    (B)  the date of receipt by the license holder of
  59-27  written notice of withdrawal by the student;
   60-1                    (C)  the 10th consecutive school day the student
   60-2  has been absent, unless any of the absences are excused by the
   60-3  school; or
   60-4                    (D)  the date the student fails to return, as
   60-5  scheduled, from a leave of absence; and
   60-6              (3)  if tuition is collected before beginning the
   60-7  course of training, and if, after the expiration of the
   60-8  cancellation period, the student does not begin the course of
   60-9  training, the school may retain not more than $100.
  60-10        (m)  If a student who begins a course of training that is
  60-11  scheduled to run not more than 12 months withdraws from the course
  60-12  or is terminated from the course by the school, the security
  60-13  officer school may retain $100 in tuition and fees paid by that
  60-14  student and is not obligated to refund any additional outstanding
  60-15  tuition if the student withdraws or is terminated during the last
  60-16  quarter of the course.  If the student withdraws or is terminated
  60-17  before the last quarter of the course begins, the school shall
  60-18  refund the following percentages of any outstanding tuition:
  60-19              (1)  for withdrawal or termination occurring during the
  60-20  first week or first one-tenth of the course, whichever is less, 90
  60-21  percent;
  60-22              (2)  for withdrawal or termination occurring after the
  60-23  first week or first one-tenth of the course, whichever is less, but
  60-24  within the first three weeks of the course, 80 percent;
  60-25              (3)  for withdrawal or termination occurring after the
  60-26  first three weeks of the course but not later than the last date of
  60-27  the first quarter of the course, 75 percent;
   61-1              (4)  for withdrawal or termination occurring during the
   61-2  second quarter of the course, 50 percent; and
   61-3              (5)  for withdrawal or termination occurring during the
   61-4  third quarter of the course, 10 percent.
   61-5        (n)  A refund owed under this section must be paid not later
   61-6  than the 60th day after the date on which the student becomes
   61-7  eligible for the refund, as determined under Subsection (l) of this
   61-8  section.
   61-9        (o)  If a refund is not made within the period required by
  61-10  this section, the school shall pay, as a penalty, interest on the
  61-11  refund for the interval beginning with the first day following the
  61-12  expiration of the refund period and ending with the day immediately
  61-13  preceding the date the refund is made.  If the refund is made to a
  61-14  lending institution, the interest shall also be paid to that
  61-15  institution and applied against the student's loan.  The board
  61-16  annually shall establish the level of interest at a level
  61-17  sufficient to provide a deterrent to the retention of student
  61-18  funds.  The board may exempt a school from the payment of the
  61-19  interest if the school makes a good faith effort to refund the
  61-20  tuition but is unable to locate the student.  The school shall
  61-21  provide to the board on request documentation of the effort to
  61-22  locate the student.
  61-23        (p)  A security officer school shall record a grade of
  61-24  "incomplete" for a student who withdraws but is not entitled to a
  61-25  refund under Subsection (m) of this section if the student requests
  61-26  the grade at the time the student withdraws and the student
  61-27  withdraws for an appropriate reason unrelated to the student's
   62-1  academic status.  A student who receives a grade of incomplete may
   62-2  reenroll in the program during the 12-month period following the
   62-3  date the student withdraws and may complete those incomplete
   62-4  subjects without payment of additional tuition.
   62-5        (q)  If a course of instruction is discontinued by the school
   62-6  and this prevents the student from completing the course, all
   62-7  tuition and fees paid are due and refundable.
   62-8        (r)  Refunds under this section shall be applied:
   62-9              (1)  first, to the repayment of student loans;
  62-10              (2)  second, to the repayment of other government
  62-11  loans;
  62-12              (3)  third, to the repayment of other financial loans;
  62-13  and
  62-14              (4)  last, to the student's personal tuitional
  62-15  expenditures.
  62-16        (s)  Not later than the 30th day after the date on which a
  62-17  refund is due to a student who has received a student loan, the
  62-18  school shall notify the guaranty agency and the lender of the
  62-19  required refund and any refund previously made.  The guaranty
  62-20  agency and the lender shall notify the student and the school if
  62-21  the student's loan has been transferred to another holder.
  62-22        (t)  The failure of a school or a person to pay a tuition
  62-23  refund as required by this section is a deceptive trade practice
  62-24  under Subchapter E, Chapter 17, Business & Commerce Code.
  62-25        SECTION 2.02.  The Private Investigators and Private Security
  62-26  Agencies Act (Article 4413(29bb), Vernon's Texas Civil Statutes) is
  62-27  amended by adding Sections 20A-20U to read as follows:
   63-1        Sec. 20A.  CRITERIA FOR SECURITY OFFICER SCHOOL LICENSE.
   63-2  Before the board may approve the application of a person for a
   63-3  security officer school license, the director must find, on
   63-4  investigation at the premises of the school, that the school meets
   63-5  the following criteria:
   63-6              (1)  the courses, curriculum, and instruction are of a
   63-7  quality, content, and length as may reasonably and adequately
   63-8  achieve the stated objective for which the courses, curriculum, or
   63-9  instruction are offered;
  63-10              (2)  there is in the school adequate space, equipment,
  63-11  instructional material, and instructor personnel to provide
  63-12  training of good quality;
  63-13              (3)  educational and experience qualifications of
  63-14  directors, administrators, and instructors are adequate;
  63-15              (4)  the school maintains a written record of the
  63-16  previous education and training of the applicant student and
  63-17  clearly indicates that appropriate credit has been given by the
  63-18  school for previous education and training, with the new training
  63-19  period shortened where warranted through use of appropriate skills
  63-20  or achievement tests and the student notified;
  63-21              (5)  a copy of the course outline; schedule of tuition,
  63-22  fees, refund policy, and other charges; regulations pertaining to
  63-23  absence, grading policy, and rules of operation and conduct;
  63-24  regulations pertaining to incomplete grades; the name, mailing
  63-25  address, and telephone number of the board for the purpose of
  63-26  directing complaints to the agency; the current rates of job
  63-27  placement and employment of students issued a certificate of
   64-1  completion; and notification of the availability of the cost
   64-2  comparison information prepared under Section 20G of this Act will
   64-3  be furnished to the student before enrollment;
   64-4              (6)  on completion of training, the student is given a
   64-5  certificate by the school indicating the course and that training
   64-6  was satisfactorily completed;
   64-7              (7)  adequate records as required by the director are
   64-8  kept to show attendance and progress or grades, and satisfactory
   64-9  standards relating to attendance, progress, and conduct are
  64-10  enforced;
  64-11              (8)  the school complies with all local, city, county,
  64-12  municipal, state, and federal regulations; the director may require
  64-13  evidence of compliance as is necessary;
  64-14              (9)  the school is financially sound and capable of
  64-15  fulfilling its commitments for training;
  64-16              (10)  the school's administrators, directors, owners,
  64-17  and instructors are of good reputation and character;
  64-18              (11)  the school has, maintains, and publishes in its
  64-19  catalog or comparable documents and enrollment contract the proper
  64-20  policy for the refund of the unused portion of tuition, fees, and
  64-21  other charges in the event the student enrolled by the school fails
  64-22  to take the course or withdraws or is discontinued from the course
  64-23  at any time before completion;
  64-24              (12)  the school does not use erroneous or misleading
  64-25  advertising, either by actual statement, omission, or intimation as
  64-26  determined by the board;
  64-27              (13)  additional criteria as may be required by the
   65-1  board;
   65-2              (14)  the school does not use a name like or similar to
   65-3  an existing tax-supported school in the same area;
   65-4              (15)  the school furnishes to the board the current
   65-5  rates of students who receive a certificate of completion and of
   65-6  job placement and employment of students issued a certificate of
   65-7  completion;
   65-8              (16)  the school furnishes to the board for approval or
   65-9  disapproval student admission requirements for each course or
  65-10  program offered by the school;
  65-11              (17)  the school furnishes to the board for approval or
  65-12  disapproval the course lengths and curriculum content for each
  65-13  course offered by the school; and
  65-14              (18)  the school does not owe a civil penalty under
  65-15  Section 20P of this Act.
  65-16        Sec. 20B.  CONSUMER INFORMATION.  (a)  A security officer
  65-17  school must submit to the board for approval, on an annual basis, a
  65-18  school catalog or comparable written documents detailing the
  65-19  consumer information that must be given to a prospective student
  65-20  before enrollment.  The school catalog or documents must include:
  65-21              (1)  the name and address of the school and the
  65-22  school's governing body and officials;
  65-23              (2)  a calendar of the school year;
  65-24              (3)  school policies on enrollment;
  65-25              (4)  rules relating to absences;
  65-26              (5)  the school grading policy;
  65-27              (6)  the school's hours of operation and rules of
   66-1  conduct;
   66-2              (7)  a schedule of the tuition and other fees assessed;
   66-3              (8)  the school's cancellation and refund policy;
   66-4              (9)  a general description of the course or courses
   66-5  offered;
   66-6              (10)  information on entrance testing and remedial
   66-7  development plans;
   66-8              (11)  state licensing requirements for courses intended
   66-9  to result in licensing of a student;
  66-10              (12)  starting range and reported average salaries for
  66-11  the prior year's graduates in occupations for which courses are
  66-12  offered, if the information is available;
  66-13              (13)  the current rates of job placement and employment
  66-14  of students who complete a course of training;
  66-15              (14)  the school policy on credit for previous
  66-16  education and training;
  66-17              (15)  school regulations relating to incomplete grades;
  66-18              (16)  information on the transferability of credits
  66-19  earned;
  66-20              (17)  the name, mailing address, and telephone number
  66-21  of the board for the purpose of directing complaints to the board
  66-22  and the mechanism and procedures for resolving grievances submitted
  66-23  to the board;
  66-24              (18)  a statement that the board has information on
  66-25  cost comparison with similar schools;
  66-26              (19)  market and job availability information, if
  66-27  available;
   67-1              (20)  the names of the members of any advisory council
   67-2  of the school and the company for which they work; and
   67-3              (21)  other information required by the director or
   67-4  board if reasonable notice has been given by the administrator to
   67-5  the school of the additional requirement.
   67-6        (b)  A security officer school may not accept a signed
   67-7  student enrollment contract or accept a student into any school
   67-8  program until at least 24 hours after the student has received the
   67-9  catalog or comparable written documents required under this
  67-10  section.
  67-11        (c)  A student must sign a receipt stating that:
  67-12              (1)  the catalog was received by the student before any
  67-13  commitment made by the student to the school or by the school to
  67-14  the student;
  67-15              (2)  the student was given an opportunity to discuss
  67-16  the catalog with a representative of the school; and
  67-17              (3)  the student understands the contents and
  67-18  implications of the catalog.
  67-19        (d)  The receipt required by Subsection (c) of this section
  67-20  must be placed in the student's permanent school file and a copy of
  67-21  the receipt must be delivered to the student.
  67-22        Sec. 20C.  COURSE LENGTH AND CURRICULUM OF SECURITY OFFICER
  67-23  SCHOOL.  (a)  A security officer school must submit to the board
  67-24  for approval the course lengths and curriculum content for each
  67-25  course offered by the school.  The course lengths and content may
  67-26  not be implemented unless the board approves them.  The course
  67-27  lengths and content shall reasonably ensure that students develop
   68-1  the job skills and knowledge necessary for employment.
   68-2        (b)  The board shall require a school to fully account for
   68-3  all curriculum contents and course lengths before issuing or
   68-4  renewing a license and a school that is offering course lengths
   68-5  below or above industry standards may be issued a conditional
   68-6  license.
   68-7        Sec. 20D.  COMPLETION, EMPLOYMENT, AND PLACEMENT IN RELATION
   68-8  TO SECURITY OFFICER SCHOOL.  (a)  The board shall set and enforce
   68-9  minimum standards for completion and employment rates of courses,
  68-10  based on collected data.
  68-11        (b)  In determining whether to renew a security officer
  68-12  school license, the board shall consider the completion, placement,
  68-13  and employment rates of students of the course.
  68-14        (c)  Before a school may begin offering a new course of study
  68-15  for students, the school must show the board the opportunity for
  68-16  jobs for graduates of the course and the possibility of placement
  68-17  or employment.
  68-18        (d)  Before the board issues or renews a security officer
  68-19  school license involving a school that offers or advertises a
  68-20  placement service, the board may require the school to file a
  68-21  certified copy of the school's placement records for the previous
  68-22  year.
  68-23        Sec. 20E.  ON-SITE INSPECTIONS.  (a)  The board shall conduct
  68-24  on-site inspections of a security officer school to determine the
  68-25  normal operating conditions of the school.
  68-26        (b)  The inspection required by Subsection (a) of this
  68-27  section shall be unannounced.
   69-1        (c)  The director or a designee of the director may inspect
   69-2  such things as the instructional books and records, classrooms,
   69-3  dormitories, tools, equipment, and classes of a security officer
   69-4  school or an applicant for a license for a school at any reasonable
   69-5  time.
   69-6        Sec. 20F.  CONSOLIDATION OF FEES AND SECURITY OFFICER SCHOOL
   69-7  ACCOUNT.  (a)  At the beginning of each fiscal year the board shall
   69-8  collect a fee from the school for deposit in a special account in
   69-9  the general revenue fund in the state treasury called the security
  69-10  officer school account and to be administered by the board.
  69-11        (b)  The amount of the fee is determined by applying a
  69-12  percentage established by the board, based on the recommendation of
  69-13  the school accounts advisory board, to each school's annual gross
  69-14  tuition, with consideration given to the school's size, expense of
  69-15  regulation, potential for teachouts, tuition and fees refund and
  69-16  recovery expense, and loan default rates (with schools with high
  69-17  default rates paying higher fees), and any other relevant factors.
  69-18  The account shall be used for:
  69-19              (1)  the administration of this Act;
  69-20              (2)  the cost of teachouts as provided by this Act;
  69-21              (3)  the cost of tuition and fees recovery and the cost
  69-22  of student refunds that a school has not made; and
  69-23              (4)  the cost of storing student records that have
  69-24  become property of the state under this Act.
  69-25        (c)  The board may grant an exemption from payment into the
  69-26  account to a small school, as determined by the director, or to a
  69-27  school that does not use guaranteed student loans for tuition
   70-1  revenue.  A school exempt as provided for by this subsection must
   70-2  pay the necessary fees for regulation, as determined by the
   70-3  director, and provide a bond, certificate of deposit, or comparable
   70-4  security, as determined and approved by the board, that is
   70-5  sufficient to cover the cost of the school's record storage,
   70-6  teachout, and tuition and fees refund and recovery exposure based
   70-7  on the evidence the school submits proving its projected maximum
   70-8  total unearned tuition during the period of the license.
   70-9        (d)  The security shall be provided by the school for the
  70-10  period during which the license is issued, and the obligation of
  70-11  the bond or other security must be that neither this Act nor any
  70-12  rule adopted under this Act is violated by the school or any of its
  70-13  officers, agents, or employees.
  70-14        (e)  The bond, certificate of deposit, or comparable security
  70-15  shall be issued by a company authorized to do business in the
  70-16  state, conditioned that the parties to the transaction  shall pay
  70-17  all damages or expenses that the state or any governmental
  70-18  subdivision or any student or potential student sustains resulting
  70-19  from a violation.  The bond, certificate of deposit, or comparable
  70-20  security shall be to the state to be used only for payment for the
  70-21  school's teachout and tuition and fees refund due to a student or
  70-22  potential student.  The security must be filed with the board and
  70-23  must be in such form as shall be approved by the board.
  70-24        (f)  Schools domiciled, or having their principal place of
  70-25  business, outside the state, that engage representatives to
  70-26  canvass, solicit, or contract with any person in the state are
  70-27  subject to the fee and security requirements of Subsection (c) of
   71-1  this section.
   71-2        (g)  The board shall refer all expenses incurred by the
   71-3  school account in administering Subsections (b)(2) and (3) of this
   71-4  section to the attorney general's office for collection.  The
   71-5  amounts collected shall be deposited to the account.  Attorney's
   71-6  fees and court costs shall be appropriated to the attorney
   71-7  general's office.
   71-8        (h)  Interest the account earns shall be reinvested in the
   71-9  account. The state treasurer shall invest the account in the same
  71-10  manner as other state funds.  Sufficient funds from the account and
  71-11  other fees collected by the board shall be appropriated to the
  71-12  board for the purpose outlined in this section.  The board shall
  71-13  administer claims made against the account.
  71-14        (i)  If a school closes, the board shall attempt to arrange
  71-15  for students of the closed school to attend another security
  71-16  officer school.  The board shall adopt rules specifying the
  71-17  circumstances under which the director may declare a school closed.
  71-18        (j)  The expense incurred by a security officer school in
  71-19  providing training that is directly related to educating a student
  71-20  who was enrolled in a closed school and placed in the school under
  71-21  this section, including the applicable tuition for the period of
  71-22  time for which the student has paid tuition, shall be paid in
  71-23  accordance with the rules of the board.
  71-24        (k)  The board shall make reasonable attempts to ensure that
  71-25  schools under the board's jurisdiction, including closed schools,
  71-26  fulfill the refund obligation as provided by Section 20 of this
  71-27  Act.  If a school refuses to fulfill the school's obligation or the
   72-1  school's bond is insufficient to pay the cost of the teachout and
   72-2  refund expenses, the teachout or the refund may be paid from the
   72-3  security officer school account except that no school owned, either
   72-4  in whole or in part, by a person or corporate entity who was an
   72-5  owner, in whole or in part, of a previously closed school shall be
   72-6  permitted to receive compensation for a teachout under this
   72-7  section.
   72-8        (l)  If a student cannot be placed in another school, the
   72-9  student's tuition and fees shall be refunded under Section 20(q) of
  72-10  this Act.
  72-11        (m)  If a student does not accept a place that is available
  72-12  and reasonable in another school, the student's tuition and fees
  72-13  shall be refunded under the refund policy maintained by the closing
  72-14  school under Sections 20(l) and (m) of this Act.
  72-15        (n)  Attorney's fees, court costs, or damages may not be paid
  72-16  from the security officer school account.
  72-17        (o)  The board, by rule, shall establish and assess
  72-18  reasonable and necessary fees to all persons and entities licensed
  72-19  under this Act to be used for the regulation of those persons and
  72-20  entities licensed under this Act and to supplement the
  72-21  administration and purposes outlined by this Act.
  72-22        (p)  The board may permit payment of any fee authorized under
  72-23  this section that exceeds $1,000 to be paid by installment.  The
  72-24  board shall provide for appropriate interest charges and late
  72-25  penalties in addition to any other remedy that is provided for by
  72-26  law for the late payment of a fee installment authorized under this
  72-27  section.  The board may assess a reasonable service charge to be
   73-1  paid by a school that pays a fee by installment in an amount not to
   73-2  exceed an annual rate of 10 percent of the fee that is to be paid
   73-3  by installment.
   73-4        Sec. 20G.  COST COMPARISONS.  (a)  The board shall prepare a
   73-5  comparison of the cost to a student of courses of instruction or
   73-6  training programs at all security officer schools maintained by
   73-7  persons who hold security officer school licenses issued by the
   73-8  board.
   73-9        (b)  The cost comparison must include for each school a
  73-10  description of:
  73-11              (1)  average class size;
  73-12              (2)  facilities and equipment;
  73-13              (3)  employment and placement rates;
  73-14              (4)  length of program; and
  73-15              (5)  faculty qualifications.
  73-16        Sec. 20H.  LICENSING REQUIREMENTS DISCLOSED BY SECURITY
  73-17  OFFICER SCHOOL.  (a)  A security officer school must disclose to
  73-18  all prospective students state licensing requirements to practice
  73-19  the occupation for which the student is training.
  73-20        (b)  A school must disclose to all prospective students the
  73-21  performance of graduates from the school on the licensing
  73-22  examination of the board if that information is available.
  73-23        Sec. 20I.  ENTRANCE REQUIREMENTS FOR SECURITY OFFICER SCHOOL;
  73-24  MINIMUM SKILLS TEST.  (a)  The board shall approve entrance
  73-25  requirements, including minimum skills testing, for students who
  73-26  may be accepted for a course of study in a security officer school.
  73-27  The requirements must be specific and provide that students who are
   74-1  allowed to enter a program will have a reasonable chance of
   74-2  completing the program.
   74-3        (b)  The school shall administer a standardized test to
   74-4  students with a high school diploma or high school equivalency
   74-5  certificate entering the school, if testing for minimum skills
   74-6  competency is determined by the board as appropriate and necessary
   74-7  to determine if remediation is needed.  The test must be
   74-8  administered before enrollment and must be nationally recognized as
   74-9  appropriate and effective for minimum skills testing and high
  74-10  school equivalency.  If the test reveals the necessity for
  74-11  remediation, the school must implement a plan to encourage the
  74-12  student to improve in basic general education skills.
  74-13        (c)  A student must achieve a successful score on the test
  74-14  required by this section before the student is obligated for
  74-15  tuition and fees for the vocational portion of the school's
  74-16  program.
  74-17        (d)  The school may, in accordance with federal statutory
  74-18  provisions affecting guaranteed student loan programs, on a
  74-19  case-by-case basis, refuse to provide the certification statements
  74-20  required for guaranteed student loan eligibility, or reduce the
  74-21  determination of need for a guaranteed student loan if the school
  74-22  determines that the student's expenses to be covered by the loan
  74-23  and the estimated cost of attendance, can be met more appropriately
  74-24  by the school, directly by the student, or by other sources.
  74-25        Sec. 20J.  STUDENTS IN SECURITY OFFICER SCHOOLS IN NEED OF
  74-26  REMEDIAL HELP.  (a)  An applicant without a high school diploma or
  74-27  high school equivalency certificate must pass an entrance test
   75-1  approved by the board and be considered to have the ability to
   75-2  benefit from the school before the school may enroll the student.
   75-3        (b)  A school that admits a student who does not have a high
   75-4  school diploma or high school equivalency certificate must develop
   75-5  and implement a plan for counseling the student on curriculum,
   75-6  student aid, employment opportunities, and the remediation
   75-7  necessary for the student to obtain a high school equivalency
   75-8  certificate and improve in basic general education skills.
   75-9        (c)  The school must assist the student in obtaining the
  75-10  remediation necessary for the student to pass a standardized
  75-11  minimum skills equivalency test approved by the board, and the
  75-12  student must pass the test before entering the final quarter of the
  75-13  course.
  75-14        Sec. 20K.  ENROLLMENT POLICIES OF SECURITY OFFICER SCHOOL.
  75-15  (a)  The enrollment contract of a security officer school must
  75-16  contain:
  75-17              (1)  a disclosure that the contract is a legally
  75-18  binding instrument on written acceptance of the student by the
  75-19  school, unless canceled as provided by law;
  75-20              (2)  the school's cancellation and refund policy;
  75-21              (3)  the method of cancellation of the contract, the
  75-22  effective date of any cancellation, and the name and address to
  75-23  which the notice of cancellation should be sent or delivered;
  75-24              (4)  the total cost of the course including tuition and
  75-25  all other charges;
  75-26              (5)  a notification that the fair market value of
  75-27  equipment or supplies furnished to the student that the student
   76-1  fails to return in a condition suitable for resale not later than
   76-2  the 10th business day after the date of cancellation may be
   76-3  retained by the school and deducted from any refund of the student;
   76-4              (6)  a statement that if a student's enrollment is
   76-5  canceled for any reason, the school will notify an agency known to
   76-6  the school to be providing financial aid to the student of the
   76-7  cancellation not later than the 30th day after the date of
   76-8  cancellation;
   76-9              (7)  the name and description of the courses, including
  76-10  the number of hours of classroom instruction or home study lessons;
  76-11  and
  76-12              (8)  the Federal Trade Commission statement for a
  76-13  holder in due course.
  76-14        (b)  An enrollment contract may not contain a wage assignment
  76-15  provision or a confession of judgment clause.
  76-16        (c)  Immediately after a prospective student has signed an
  76-17  enrollment contract, the school shall give the prospective student
  76-18  a copy of the contract, and a copy shall be placed in the student's
  76-19  permanent school file.
  76-20        (d)  A promissory note signed by a student must include the
  76-21  Federal Trade Commission statement for a holder in due course.
  76-22        Sec. 20L.  LOAN COUNSELING BY SECURITY OFFICER SCHOOL.  (a)
  76-23  A school shall conduct loan counseling entrance interviews with
  76-24  each prospective student seeking a loan during the enrollment
  76-25  process.  A student borrower shall be counseled before the initial
  76-26  disbursement of loan proceeds, shortly before the student completes
  76-27  one-half of the course, and before the student is issued a
   77-1  certificate of completion.
   77-2        (b)  The school's financial aid officer or counselor shall
   77-3  conduct the interviews required by Subsection (a) of this section.
   77-4  The interview must include a discussion of:
   77-5              (1)  the rights and responsibilities of the student as
   77-6  a borrower;
   77-7              (2)  what a loan is and the importance of repayment;
   77-8              (3)  the total cost of the program in which the student
   77-9  will be enrolled;
  77-10              (4)  the availability of other forms of financial aid,
  77-11  grants, and part-time work;
  77-12              (5)  the starting range and average reported salaries
  77-13  of those in the occupation for which the student will be trained,
  77-14  if available; and
  77-15              (6)  job placement services provided by the school and
  77-16  the employment rate of persons who attended the school and were
  77-17  enrolled in the program in which the student is enrolled.
  77-18        (c)  A school approved to accept state or federal educational
  77-19  loans or grants shall adopt, in addition to the provisions in this
  77-20  section, measures to reduce defaults and improve borrowers'
  77-21  understanding and respect for the loan repayment obligation as
  77-22  provided in 34 C.F.R., Parts 668 and 682.
  77-23        (d)  The school must give a copy of the Texas Guaranteed
  77-24  Student Loan Corporation's "Your Future" guide, or a comparable
  77-25  document approved by the board, to a prospective student at a time
  77-26  and in a manner that provides the student with sufficient
  77-27  opportunity to read the guide or other document and discuss the
   78-1  contents with the school's financial aid officer, if necessary for
   78-2  understanding and clarity, before signing an enrollment contract
   78-3  and before the school accepts the student in a course of study.
   78-4        (e)  The prospective student must sign a document stating
   78-5  that the student:
   78-6              (1)  attended a loan counseling entrance interview; and
   78-7              (2)  received a copy of the "Your Future" guide or
   78-8  comparable document in the time provided by Subsection (d) of this
   78-9  section.
  78-10        (f)  A copy of the signed document required by Subsection (e)
  78-11  of this section must be sent to the student, guarantor, and lender
  78-12  and must be placed in the student's permanent school file.
  78-13        Sec. 20M.  RECORDS OF SECURITY OFFICER SCHOOL.  (a)  A
  78-14  security officer school shall maintain permanent records for all
  78-15  students enrolled, as required by the board.
  78-16        (b)  A school shall adopt a plan to preserve permanent
  78-17  records and submit the plan to the board for approval.  The plan
  78-18  must:
  78-19              (1)  provide that at least one copy of the records will
  78-20  be held in a secure depository; and
  78-21              (2)  designate an appropriate official to provide a
  78-22  student with copies of records or transcripts on request.
  78-23        (c)  The school shall make the first copy of records or
  78-24  transcripts at no charge to the student.  The school may make a
  78-25  reasonable charge to provide additional copies of records,
  78-26  transcripts, or other student information.
  78-27        (d)  If a school closes, the records become the property of
   79-1  the state.
   79-2        Sec. 20N.  DISPLAY OF LICENSE.  (a)  Every holder of a
   79-3  security officer school license issued under this Act shall display
   79-4  the license in a conspicuous place at the premises of the school.
   79-5        (b)  The board may not use the word "approval" or a variation
   79-6  of that term on the license of a security officer school.  The
   79-7  terminology must be "licensed" to operate, or a variation of that
   79-8  phrase.
   79-9        Sec. 20O.  BOARD ADDRESS.  A security officer school shall
  79-10  post on the premises of the school at a prominent and conspicuous
  79-11  location the name, mailing address, and telephone number of the
  79-12  board for the purpose of directing complaints to the board.
  79-13        Sec. 20P.  REVOCATION AND SUSPENSION.  The board may deny,
  79-14  suspend, or revoke a security officer school license or place the
  79-15  school on probation if the license holder, school, or a
  79-16  representative of the school gives a prospective student
  79-17  information relating to the school that is false, fraudulent,
  79-18  deceptive, substantially inaccurate, or misleading.
  79-19        Sec. 20Q.  FINANCIAL STABILITY.  (a)  A school may not
  79-20  reflect unearned tuition as a current asset unless the amount shown
  79-21  in current assets that reflects unearned tuition is offset by an
  79-22  equal amount shown as a current liability.  The school must meet
  79-23  one of the following criteria in order to be determined as
  79-24  financially sound and capable of fulfilling its commitments for
  79-25  training:
  79-26              (1)  current assets must bear a relationship to current
  79-27  liabilities in a ratio of at least one-to-one;
   80-1              (2)  the equity of the owner of the school must be in
   80-2  excess of $10,000,000; or
   80-3              (3)  the school must have posted, or set aside in a
   80-4  dedicated escrow account, a bond, certificate of deposit,
   80-5  irrevocable letter of credit, or comparable security, acceptable to
   80-6  the board, each made payable to the state, in an amount sufficient
   80-7  to cover the school's record storage costs, teachout, and tuition
   80-8  and fees refund and recovery exposure based on the evidence the
   80-9  school submits proving its projected maximum total unearned tuition
  80-10  during the period of time covered by the evidence of indebtedness
  80-11  to the state.
  80-12        (b)  The school must demonstrate to the satisfaction of the
  80-13  board its financial soundness and ability to fulfill its
  80-14  commitments for training.
  80-15        Sec. 20R.  PROHIBITIONS.  A person may not:
  80-16              (1)  operate a security officer school without a
  80-17  license or assume ownership of an existing security officer school
  80-18  without obtaining a new license;
  80-19              (2)  solicit prospective students for a security
  80-20  officer school without being licensed as required by this Act;
  80-21              (3)  accept contracts or enrollment applications from a
  80-22  representative of a security officer school who is not registered
  80-23  as required by any board rule requiring registration;
  80-24              (4)  use advertising designed to mislead or deceive
  80-25  prospective students of a security officer school;
  80-26              (5)  fail to notify the board of the discontinuance of
  80-27  the operation of any security officer school not later than the
   81-1  72nd hour after cessation of classes or make available accurate
   81-2  records as required by this Act;
   81-3              (6)  fail to secure and file within 30 days any
   81-4  increased bond required by this Act;
   81-5              (7)  negotiate any promissory instrument received as
   81-6  payment of tuition for a security officer school or other charge
   81-7  before completion of 75 percent of the course, provided that before
   81-8  that time, the instrument may be transferred by assignment to a
   81-9  purchaser who is subject to any defense available against the
  81-10  school named as payee;
  81-11              (8)  enroll a student in a security officer school who
  81-12  fails to satisfy entrance requirements; or
  81-13              (9)  violate any provision of this Act relating to a
  81-14  security officer school or a rule adopted under this Act relating
  81-15  to a security officer school.
  81-16        Sec. 20S.  ADMINISTRATIVE PENALTY.  (a)  The board may impose
  81-17  an administrative penalty against a person who violates Section 20R
  81-18  of this Act.
  81-19        (b)  The penalty for a violation may be in an amount not to
  81-20  exceed $10,000.
  81-21        (c)  The amount of the penalty shall be based on:
  81-22              (1)  the seriousness of the violation, including the
  81-23  nature, circumstances, extent, and gravity of any prohibited acts;
  81-24              (2)  efforts to correct the violation; and
  81-25              (3)  any other matter that justice may require.
  81-26        (d)  A director who determines that a violation has occurred
  81-27  may issue to the board a report that states the facts on which the
   82-1  determination is based and the director's recommendation on the
   82-2  imposition of a penalty, including a recommendation on the amount
   82-3  of the penalty.
   82-4        (e)  Within 14 days after the date the report is issued, the
   82-5  director shall give written notice of the report to the person.
   82-6  The notice may be given by certified mail.  The notice must include
   82-7  a brief summary of the alleged violation and a statement of the
   82-8  amount of the recommended penalty and must inform the person that
   82-9  the person has a right to a hearing on the occurrence of the
  82-10  violation, the amount of the penalty, or both the occurrence of the
  82-11  violation and the amount of the penalty.
  82-12        (f)  Within 20 days after the date the person receives the
  82-13  notice, the person in writing may accept the determination and
  82-14  recommended penalty of the director or may make a written request
  82-15  for a hearing on the occurrence of the violation, the amount of the
  82-16  penalty, or both the occurrence of the violation and the amount of
  82-17  the penalty.
  82-18        (g)  If the person accepts the determination and recommended
  82-19  penalty of the director, the board by order shall approve the
  82-20  determination and impose the recommended penalty.
  82-21        (h)  If the person requests a hearing or fails to respond
  82-22  timely to the notice, the director shall set a hearing and give
  82-23  notice of the hearing to the person.  The hearing shall be held by
  82-24  an administrative law judge of the State Office of Administrative
  82-25  Hearings.  The administrative law judge shall make findings of fact
  82-26  and conclusions of law and promptly issue to the board a proposal
  82-27  for a decision about the occurrence of the violation and the amount
   83-1  of a proposed penalty.  Based on the findings of fact, conclusions
   83-2  of law, and proposal for a decision, the board by order may find
   83-3  that a violation has occurred and impose a penalty or may find that
   83-4  no violation occurred.
   83-5        (i)  The notice of the board's order given to the person
   83-6  under the Administrative Procedure and Texas Register Act (Article
   83-7  6252-13a, Vernon's Texas Civil Statutes) and its subsequent
   83-8  amendments must include a statement of the right of the person to
   83-9  judicial review of the order.
  83-10        (j)  Within 30 days after the date the board's order is final
  83-11  as provided by Section 16(c), Administrative Procedure and Texas
  83-12  Register Act (Article 6252-13a, Vernon's Texas Civil Statutes), and
  83-13  its subsequent amendments, the person shall:
  83-14              (1)  pay the amount of the penalty;
  83-15              (2)  pay the amount of the penalty and file a petition
  83-16  for judicial review contesting the occurrence of the violation, the
  83-17  amount of the penalty, or both the occurrence of the violation and
  83-18  the amount of the penalty; or
  83-19              (3)  without paying the amount of the penalty, file a
  83-20  petition for judicial review contesting the occurrence of the
  83-21  violation, the amount of the penalty, or both the occurrence of the
  83-22  violation and the amount of the penalty.
  83-23        (k)  Within the 30-day period, a person who acts under
  83-24  Subsection (j)(3) of this section may:
  83-25              (1)  stay enforcement of the penalty by:
  83-26                    (A)  paying the amount of the penalty to the
  83-27  court for placement in an escrow account; or
   84-1                    (B)  giving to the court a supersedeas bond that
   84-2  is approved by the court for the amount of the penalty and that is
   84-3  effective until all judicial review of the board's order is final;
   84-4  or
   84-5              (2)  request the court to stay enforcement of the
   84-6  penalty by:
   84-7                    (A)  filing with the court a sworn affidavit of
   84-8  the person stating that the person is financially unable to pay the
   84-9  amount of the penalty and is financially unable to give the
  84-10  supersedeas bond; and
  84-11                    (B)  giving a copy of the affidavit to the
  84-12  director by certified mail.
  84-13        (l)  A director who receives a copy of an affidavit under
  84-14  Subsection (k)(2) of this section may file with the court, within
  84-15  five days after the date the copy is received, a contest to the
  84-16  affidavit.  The court shall hold a hearing on the facts alleged in
  84-17  the affidavit as soon as practicable and shall stay the enforcement
  84-18  of the penalty on finding that the alleged facts are true.  The
  84-19  person who files an affidavit has the burden of proving that the
  84-20  person is financially unable to pay the amount of the penalty and
  84-21  to give a supersedeas bond.
  84-22        (m)  If the person does not pay the amount of the penalty and
  84-23  the enforcement of the penalty is not stayed, the director may
  84-24  refer the matter to the attorney general for collection of the
  84-25  amount of the penalty.
  84-26        (n)  Judicial review of the order of the board:
  84-27              (1)  is instituted by filing a petition as provided by
   85-1  Section 19, Administrative Procedure and Texas Register Act
   85-2  (Article 6252-13a, Vernon's Texas Civil Statutes), and its
   85-3  subsequent amendments; and
   85-4              (2)  is under the substantial evidence rule.
   85-5        (o)  If the court sustains the occurrence of the violation,
   85-6  the court may uphold or reduce the amount of the penalty and order
   85-7  the person to pay the full or reduced amount of the penalty.  If
   85-8  the court does not sustain the occurrence of the violation, the
   85-9  court shall order that no penalty is owed.
  85-10        (p)  When the judgment of the court becomes final, the court
  85-11  shall proceed under this subsection.  If the person paid the amount
  85-12  of the penalty and if that amount is reduced or is not upheld by
  85-13  the court, the court shall order that the appropriate amount plus
  85-14  accrued interest be remitted to the person.  The rate of the
  85-15  interest is the rate charged on loans to depository institutions by
  85-16  the New York Federal Reserve Bank, and the interest shall be paid
  85-17  for the period beginning on the date the penalty was paid and
  85-18  ending on the date the penalty is remitted.  If the person gave a
  85-19  supersedeas bond and if the amount of the penalty is not upheld by
  85-20  the court, the court shall order the release of the bond.  If the
  85-21  person gave a supersedeas bond and if the amount of the penalty is
  85-22  reduced, the court shall order the release of the bond after the
  85-23  person pays the amount.
  85-24        (q)  A penalty collected under this section shall be remitted
  85-25  to the comptroller for deposit in the general revenue fund.
  85-26        (r)  All proceedings under this section are subject to the
  85-27  Administrative Procedure and Texas Register Act (Article 6252-13a,
   86-1  Vernon's Texas Civil Statutes) and its subsequent amendments.
   86-2        Sec. 20T.  CIVIL PENALTY.  A security officer school that
   86-3  violates this Act or a rule adopted under this Act is liable for a
   86-4  civil penalty in addition to any injunctive relief or other remedy
   86-5  provided by law.  The civil penalty may not exceed $1,000 a day for
   86-6  each violation.  The attorney general, at the request of the board,
   86-7  may bring a civil action to collect a civil penalty under this
   86-8  subsection.  Civil penalties recovered in a suit brought under this
   86-9  subsection shall be deposited in the state treasury to the credit
  86-10  of the general revenue fund.
  86-11        Sec. 20U.  CRIMINAL PENALTIES.  (a)  A person commits an
  86-12  offense if the person fails to comply with Section 20 of this Act.
  86-13  Except as provided by Subsection (b) of this section, an offense
  86-14  under this section is a Class A misdemeanor.
  86-15        (b)  A person commits an offense if the person intentionally
  86-16  or knowingly uses for personal benefit funds in an amount greater
  86-17  than $10,000 that are due as student refunds under Section 20 of
  86-18  this Act.  An offense under this subsection is a felony of the
  86-19  third degree.
  86-20        SECTION 2.03.  Section 30, Private Investigators and Private
  86-21  Security Agencies Act (Article 4413(29bb), Vernon's Texas Civil
  86-22  Statutes), is amended by adding Subsections (c) and (d) to read as
  86-23  follows:
  86-24        (c)  A security officer school, the representative of a
  86-25  school, or a recruiter for the school may not advertise or
  86-26  represent, in writing or orally, that a school is approved or
  86-27  accredited by the state.  Those entities or persons may advertise
   87-1  that the school has been licensed by the state.
   87-2        (d)  A school, representative of a school, or recruiter of a
   87-3  school may not make or cause to be made a statement or
   87-4  representation, written, oral, or visual, offering or publicizing a
   87-5  course, program, or school, if the school, representative, or
   87-6  recruiter knew or reasonably should have known that the statement
   87-7  or representation was false, fraudulent, deceptive, substantially
   87-8  inaccurate, or misleading.
   87-9        SECTION 2.04.  Section 50A, Private Investigators and Private
  87-10  Security Agencies Act (Article 4413(29bb), Vernon's Texas Civil
  87-11  Statutes), is amended by adding Subsection (c) to read as follows:
  87-12        (c)  The board shall prepare information of public interest
  87-13  describing the functions of the board and the procedures by which
  87-14  complaints are filed with and resolved by the board against a
  87-15  security officer school.  The board shall make the information
  87-16  available to the public and appropriate state agencies.
  87-17                       PART 3.  MASSAGE SCHOOLS
  87-18        SECTION 3.01.  Section 1(9), Chapter 752, Acts of the 69th
  87-19  Legislature, Regular Session, 1985 (Article 4512k, Vernon's Texas
  87-20  Civil Statutes), is amended to read as follows:
  87-21              (9)  "Massage school" means a person <an entity or
  87-22  organization with at least two instructors> that teaches, at a
  87-23  minimum, the course of instruction or any part of the course of
  87-24  instruction required for registration as a massage therapist under
  87-25  this Act.
  87-26        SECTION 3.02.  Section 2(b), Chapter 752, Acts of the 69th
  87-27  Legislature, Regular Session, 1985 (Article 4512k, Vernon's Texas
   88-1  Civil Statutes), is amended to read as follows:
   88-2        (b)  An individual who registers as a massage therapist under
   88-3  this Act must present evidence satisfactory to the board that the
   88-4  person:
   88-5              (1)  has satisfactorily completed massage therapy
   88-6  studies in a 300 hour, supervised course of instruction provided by
   88-7  a massage <therapy instructor, by a massage> school registered by
   88-8  the department, by a state approved educational institution, or by
   88-9  any combination of educational institutions <instructors> or
  88-10  schools, in which 125 hours are dedicated to the study of Swedish
  88-11  massage therapy techniques taught by a massage therapy instructor,
  88-12  50 hours to the study of anatomy, 25 hours to the study of
  88-13  physiology, 15 hours to the study of hydrotherapy, 15 hours to the
  88-14  study of business practices and professional ethics standards, and
  88-15  20 hours to the study of health and hygiene, and 50 hours to an
  88-16  internship program;
  88-17              (2)  is registered as a massage therapist in another
  88-18  state or country that has and maintains standards and requirements
  88-19  of practice and licensing or registration that substantially
  88-20  conform to those of this state, as determined by the department; or
  88-21              (3)  has practiced massage therapy as a profession for
  88-22  not less than five years in another state or country that does not
  88-23  have or maintain standards and requirements of practice and
  88-24  licensing or registration that substantially conform to those of
  88-25  this state, as determined by the department.
  88-26        SECTION 3.03.  Section 2A, Chapter 752, Acts of the 69th
  88-27  Legislature, Regular Session, 1985 (Article 4512k, Vernon's Texas
   89-1  Civil Statutes), is amended by amending Subsections (a) and (b) and
   89-2  adding Subsection (n) to read as follows:
   89-3        (a)  A massage school that offers, at a minimum, the course
   89-4  of instruction or any part of the course of instruction required
   89-5  for registration as a massage therapist must register with the
   89-6  department.  A massage school must meet the minimum standards of
   89-7  operation established by board rule.  The registration must include
   89-8  a statement of any final convictions of the owners, school
   89-9  directors, recruiters, instructional faculty, or other selected
  89-10  personnel of the massage school as determined by the department.
  89-11  The board may obtain criminal history records of school directors
  89-12  or instructional faculty from any law enforcement agency, including
  89-13  the United States Department of Justice, the Department of Public
  89-14  Safety of the State of Texas, the Texas Department of Criminal
  89-15  Justice, or the police department of a municipality.
  89-16        (b)  A massage therapy instructor must register with the
  89-17  department as provided by this Act.  The registration must state
  89-18  the education and experience level of the applicant in all courses
  89-19  or programs that the applicant will teach or instruct and be on a
  89-20  form prescribed by the department.  The department shall review a
  89-21  registration for competency, consistency, and the overall quality
  89-22  of the applicant.
  89-23        (n)  The department shall determine that an applicant for
  89-24  massage school registration is financially sound and capable of
  89-25  fulfilling its commitments for training before granting the
  89-26  registration.
  89-27        SECTION 3.04.  Section 5, Chapter 752, Acts of the 69th
   90-1  Legislature, Regular Session, 1985 (Article 4512k, Vernon's Texas
   90-2  Civil Statutes), is amended by adding Subsections (c)-(e) to read
   90-3  as follows:
   90-4        (c)  The department may not adopt rules that restrict
   90-5  advertising by a massage school except to prohibit false,
   90-6  misleading, or deceptive advertising practices.  The rules may not
   90-7  restrict:
   90-8              (1)  the use of an advertising medium;
   90-9              (2)  the size or duration of an advertisement; or
  90-10              (3)  advertisement under a trade name.
  90-11        (d)  A school, the representative of a school, or a recruiter
  90-12  for the school may not advertise or represent, in writing or
  90-13  orally, that a school is approved or accredited by the state.
  90-14  Those entities or persons may advertise that the school has been
  90-15  registered by the state.
  90-16        (e)  A school, representative of a school, or recruiter of a
  90-17  school may not make or cause to be made a statement or
  90-18  representation, written, oral, or visual, offering or publicizing a
  90-19  course, program, or school, if the school, representative, or
  90-20  recruiter knew or reasonably should have known that the statement
  90-21  or representation was false, fraudulent, deceptive, substantially
  90-22  inaccurate, or misleading.
  90-23        SECTION 3.05.  Section 7(b), Chapter 752, Acts of the 69th
  90-24  Legislature, Regular Session, 1985 (Article 4512k, Vernon's Texas
  90-25  Civil Statutes), is amended to read as follows:
  90-26        (b)  The department shall administer this Act.  The
  90-27  department and the Central Education Agency by agreement may
   91-1  provide for the agency to assist the department in administering
   91-2  the provisions of this Act relating to massage schools and massage
   91-3  therapy instructors.
   91-4        SECTION 3.06.  Section 10, Chapter 752, Acts of the 69th
   91-5  Legislature, Regular Session, 1985 (Article 4512k, Vernon's Texas
   91-6  Civil Statutes), is amended by adding Subsection (g) to read as
   91-7  follows:
   91-8        (g)  The department may not use the word "approval" or a
   91-9  variation of that term on the certificate of a massage school.  The
  91-10  terminology must be "registered" or a variation of that phrase, and
  91-11  a massage school must display the certificate in a conspicuous
  91-12  place.
  91-13        SECTION 3.07.  Section 11, Chapter 752, Acts of the 69th
  91-14  Legislature, Regular Session, 1985 (Article 4512k, Vernon's Texas
  91-15  Civil Statutes), is amended by adding Subsection (e) to read as
  91-16  follows:
  91-17        (e)  The department may deny, suspend, or revoke the
  91-18  registration of a massage school or place the school on probation
  91-19  if the certificate holder, school, or a representative of the
  91-20  school gives a prospective student information relating to the
  91-21  school that is false, fraudulent, deceptive, substantially
  91-22  inaccurate, or misleading.
  91-23        SECTION 3.08.  Chapter 752, Acts of the 69th Legislature,
  91-24  Regular Session, 1985 (Article 4512k, Vernon's Texas Civil
  91-25  Statutes), is amended by adding Sections 20-39 to read as follows:
  91-26        Sec. 20.  CRITERIA FOR REGISTRATION AS MASSAGE SCHOOL.
  91-27  Before the department may approve the application of a person to be
   92-1  registered as a massage school, the department must find, on
   92-2  investigation at the premises of the school, that the school meets
   92-3  the following criteria:
   92-4              (1)  the courses, curriculum, and instruction are of a
   92-5  quality, content, and length as may reasonably and adequately
   92-6  achieve the stated objective for which the courses, curriculum, or
   92-7  instruction are offered;
   92-8              (2)  there is in the school adequate space, equipment,
   92-9  instructional material, and instructor personnel to provide
  92-10  training of good quality;
  92-11              (3)  educational and experience qualifications of
  92-12  directors, administrators, and instructors are adequate;
  92-13              (4)  the school maintains a written record of the
  92-14  previous education and training of the applicant student and
  92-15  clearly indicates that appropriate credit has been given by the
  92-16  school for previous education and training in accordance with
  92-17  department rules, with the new training period shortened where
  92-18  warranted through use of appropriate skills or achievement tests
  92-19  and the student notified;
  92-20              (5)  a copy of the course outline; schedule of tuition,
  92-21  fees, refund policy, and other charges; regulations pertaining to
  92-22  absence, grading policy, and rules of operation and conduct;
  92-23  regulations pertaining to incomplete grades; the name, mailing
  92-24  address, and telephone number of the department for the purpose of
  92-25  directing complaints to the department; the current rates of job
  92-26  placement and employment of students issued a certificate of
  92-27  completion, if available;  and notification of the availability of
   93-1  the cost comparison information prepared under Section 27 of this
   93-2  Act will be furnished to the student in the catalog before
   93-3  enrollment;
   93-4              (6)  on completion of training, the student is given a
   93-5  certificate by the school indicating the course and that training
   93-6  was satisfactorily completed;
   93-7              (7)  adequate records as required by the department are
   93-8  kept to show attendance and progress or grades, and satisfactory
   93-9  standards relating to attendance, progress, and conduct are
  93-10  enforced;
  93-11              (8)  the school complies with all local, city, county,
  93-12  municipal, state, and federal regulations; the department may
  93-13  require evidence of compliance as is necessary;
  93-14              (9)  the school is financially sound and capable of
  93-15  fulfilling its commitments for training;
  93-16              (10)  the school's administrators, directors, owners,
  93-17  and instructors are of good reputation and character;
  93-18              (11)  the school has, maintains, and publishes in its
  93-19  catalog and enrollment contract the proper policy for the refund of
  93-20  the unused portion of tuition, fees, and other charges in the event
  93-21  the student enrolled by the school fails to take the course or
  93-22  withdraws or is discontinued from the course at any time before
  93-23  completion;
  93-24              (12)  the school does not use erroneous or misleading
  93-25  advertising, either by actual statement, omission, or intimation as
  93-26  determined by the commission;
  93-27              (13)  additional criteria as may be required by the
   94-1  department;
   94-2              (14)  the school does not use a name like or similar to
   94-3  an existing tax-supported school in the same area;
   94-4              (15)  the school furnishes to the department the
   94-5  current rates of students who receive a certificate of completion
   94-6  and of job placement and employment of students issued a
   94-7  certificate of completion, if available;
   94-8              (16)  the school furnishes to the department for
   94-9  approval or disapproval student admission requirements for each
  94-10  course or program offered by the school;
  94-11              (17)  the school furnishes to the department for
  94-12  approval or disapproval the course lengths and curriculum content
  94-13  for each course offered by the school that meets the educational
  94-14  requirements and curriculum established by the department;
  94-15              (18)  the physical facility used by the massage school
  94-16  meets the requirements of the department which shall take into
  94-17  consideration whether a school is based at a specific location or
  94-18  at various locations around the state; and
  94-19              (19)  the school does not owe a civil penalty under
  94-20  Section 13 of this Act.
  94-21        Sec. 21.  CONSUMER INFORMATION.  (a)  A massage school must
  94-22  submit to the department for approval, on an annual basis, a school
  94-23  catalog or comparable written documents detailing the consumer
  94-24  information that must be given to a prospective student before
  94-25  enrollment.  The school catalog or documents must include:
  94-26              (1)  the name and address of the school and the
  94-27  school's governing body and officials;
   95-1              (2)  a calendar of the school year;
   95-2              (3)  school policies on enrollment;
   95-3              (4)  rules relating to absences;
   95-4              (5)  the school grading policy;
   95-5              (6)  the school's hours of operation and rules of
   95-6  conduct;
   95-7              (7)  a schedule of the tuition and other fees assessed;
   95-8              (8)  the school's cancellation and refund policy;
   95-9              (9)  a general description of the course or courses
  95-10  offered;
  95-11              (10)  information on entrance testing and remedial
  95-12  development plans;
  95-13              (11)  state licensing requirements for courses intended
  95-14  to result in licensing of the student;
  95-15              (12)  starting range and reported average salaries for
  95-16  the prior year's graduates in occupations for which courses are
  95-17  offered, if the information is available;
  95-18              (13)  the current rates of job placement and employment
  95-19  of students who complete a course of training, if available;
  95-20              (14)  the department policy on credit for previous
  95-21  education and training;
  95-22              (15)  school regulations relating to incomplete grades;
  95-23              (16)  information on the transferability of credits
  95-24  earned;
  95-25              (17)  the name, mailing address, and telephone number
  95-26  of the department for the purpose of directing complaints to the
  95-27  department and the mechanism and procedures for resolving
   96-1  grievances submitted to the department;
   96-2              (18)  a statement that the department has information
   96-3  on cost comparison with similar schools;
   96-4              (19)  market and job availability information, if
   96-5  available;
   96-6              (20)  the names of the members of any advisory council
   96-7  of the school and the company for which they work; and
   96-8              (21)  other information required by the department if
   96-9  reasonable notice has been given by the department to the school of
  96-10  the additional requirements.
  96-11        (b)  A massage school may not accept a signed student
  96-12  enrollment contract or accept a student into any school program
  96-13  until at least 24 hours after the student has received the catalog
  96-14  or comparable written documents required under this section.
  96-15        (c)  A student must sign a receipt stating that:
  96-16              (1)  the catalog was received by the student before any
  96-17  commitment made by the student to the school or by the school to
  96-18  the student;
  96-19              (2)  the student was given an opportunity to discuss
  96-20  the catalog with a representative of the school; and
  96-21              (3)  the student understands the contents and
  96-22  implications of the catalog.
  96-23        (d)  The receipt required by Subsection (c) of this section
  96-24  must be placed in the student's permanent school file and a copy of
  96-25  the receipt must be delivered to the student.
  96-26        Sec. 22.  COURSE LENGTH AND CURRICULUM OF MASSAGE SCHOOL.
  96-27  (a)  A massage school must submit to the department for approval
   97-1  the course lengths and curriculum content for each course offered
   97-2  by the school that meets the educational requirements and
   97-3  curriculum established by the department.  The course lengths and
   97-4  content may not be implemented unless the department approves them.
   97-5  The course lengths and content shall reasonably ensure that
   97-6  students develop the job skills and knowledge necessary for
   97-7  employment.
   97-8        (b)  The department shall require a school to fully account
   97-9  for all curriculum contents and course lengths before issuing or
  97-10  renewing a license and a school that is offering course lengths
  97-11  below or above industry standards may be issued a conditional
  97-12  registration.
  97-13        Sec. 23.  COMPLETION, EMPLOYMENT, AND PLACEMENT IN RELATION
  97-14  TO MASSAGE SCHOOL.  (a)  The department shall set and enforce
  97-15  minimum standards for completion and employment rates of courses
  97-16  based on collected data.
  97-17        (b)  In determining whether to renew a massage school's
  97-18  registration, the department shall consider the completion,
  97-19  placement, and employment rates of students of the courses.
  97-20        (c)  Before a school may begin offering a new course of study
  97-21  for students the school must show the department the opportunity
  97-22  for jobs for graduates of the course and the possibility of
  97-23  placement or employment except where the new course is offered to
  97-24  credentialed professionals for professional continuing education.
  97-25        (d)  Before the department issues or renews a massage school
  97-26  registration involving a school that offers or advertises a
  97-27  placement service, the department may require the school to file a
   98-1  certified copy of the school's placement records for the previous
   98-2  year.
   98-3        Sec. 24.  ON-SITE INSPECTIONS.  (a)  The department shall
   98-4  conduct on-site inspections of a massage school to determine the
   98-5  normal operating conditions of the school.
   98-6        (b)  The inspection required by Subsection (a) of this
   98-7  section shall be unannounced.
   98-8        (c)  The commissioner or a designee of the commissioner may
   98-9  inspect such things as the instructional books and records,
  98-10  classrooms, dormitories, tools, equipment, and classes of a massage
  98-11  school or an applicant for a license for a school at any reasonable
  98-12  time.
  98-13        Sec. 25.  REFUND.  (a)  Each registered massage school must
  98-14  maintain a cancellation and settlement policy that provides a full
  98-15  refund of all money paid by a student if:
  98-16              (1)  the student cancels the enrollment agreement or
  98-17  contract not later than midnight of the third day after the date on
  98-18  which the agreement or contract is signed by the prospective
  98-19  student, excluding Saturdays, Sundays, and legal holidays; or
  98-20              (2)  the enrollment of the student was procured as a
  98-21  result of a misrepresentation made in the advertising or
  98-22  promotional materials of the school or a representation by an owner
  98-23  or representative of the school.
  98-24        (b)  Each registered massage school must maintain a refund
  98-25  policy for the refund of the unused part of tuition, fees, and
  98-26  other charges assessed a student if the student, at the expiration
  98-27  of the cancellation period established under Subsection (a) of this
   99-1  section, terminates enrollment or is terminated by the school, as
   99-2  provided by this subsection.  The refund policy must provide that:
   99-3              (1)  a refund is based on the period of the student's
   99-4  enrollment, computed on the basis of course time expressed in clock
   99-5  hours;
   99-6              (2)  the effective date of the termination for payment
   99-7  of a refund is the earliest of:
   99-8                    (A)  the last date of attendance, if the student
   99-9  is terminated for failure to satisfy a school attendance, grade, or
  99-10  work requirement;
  99-11                    (B)  the date of receipt by the school of written
  99-12  notice of withdrawal by the student;
  99-13                    (C)  the 10th consecutive school day the student
  99-14  has been absent, unless any of the absences are excused by the
  99-15  school; or
  99-16                    (D)  the date the student fails to return, as
  99-17  scheduled, from a leave of absence; and
  99-18              (3)  if tuition is collected before beginning the
  99-19  course of training, and if, after the expiration of the
  99-20  cancellation period, the student does not begin the course of
  99-21  training, the school may retain not more than $100.
  99-22        (c)  If a student who begins a course of training that is
  99-23  scheduled to run not more than 12 months withdraws from the course
  99-24  or is terminated from the course by the school,  the school may
  99-25  retain $100 in tuition and fees paid by that student and is not
  99-26  obligated to refund any additional outstanding tuition if the
  99-27  student withdraws or is terminated during the last quarter of the
  100-1  course.  If the student withdraws or is terminated before the last
  100-2  quarter of the course begins, the school shall refund the following
  100-3  percentages of any outstanding tuition:
  100-4              (1)  for withdrawal or termination occurring during the
  100-5  first week or first one-tenth of the course, whichever is less, 90
  100-6  percent;
  100-7              (2)  for withdrawal or termination occurring after the
  100-8  first week or first one-tenth of the course, whichever is less, but
  100-9  within the first three weeks of the course, 80 percent;
 100-10              (3)  for withdrawal or termination occurring after the
 100-11  first three weeks of the course but not later than the last date of
 100-12  the first quarter of the course, 75 percent;
 100-13              (4)  for withdrawal or termination occurring during the
 100-14  second quarter of the course, 50 percent; and
 100-15              (5)  for withdrawal or termination occurring during the
 100-16  third quarter of the course, 10 percent.
 100-17        (d)  A refund owed under this section must be paid not later
 100-18  than the 60th day after the date on which the student becomes
 100-19  eligible for the refund, as determined under Subsection (b) of this
 100-20  section.
 100-21        (e)  If a refund is not made within the period required by
 100-22  this section, the school shall pay, as a penalty, interest on the
 100-23  refund for the interval beginning with the first day following the
 100-24  expiration of the refund period and ending with the day immediately
 100-25  preceding the date the refund is made.  If the refund is made to a
 100-26  lending institution, the interest shall also be paid to that
 100-27  institution and applied against the student's loan.  The board with
  101-1  the advice of the advisory council annually shall establish the
  101-2  level of interest at a level sufficient to provide a deterrent to
  101-3  the retention of student funds.  The board may exempt a school from
  101-4  the payment of the interest if the school makes a good faith effort
  101-5  to refund the tuition but is unable to locate the student.  The
  101-6  school shall provide to the department on request documentation of
  101-7  the effort to locate the student.
  101-8        (f)  A massage school shall record a grade of "incomplete"
  101-9  for a student who withdraws but is not entitled to a refund under
 101-10  Subsection (c) of this section if the student requests the grade at
 101-11  the time the student withdraws and the student withdraws for an
 101-12  appropriate reason unrelated to the student's academic status.  A
 101-13  student who receives a grade of incomplete may reenroll in the
 101-14  program during the 12-month period following the date the student
 101-15  withdraws and may complete those incomplete subjects without
 101-16  payment of additional tuition.
 101-17        (g)  If a course of instruction is discontinued by the school
 101-18  and this prevents the student from completing the course, all
 101-19  tuition and fees paid are due and refundable.
 101-20        (h)  Refunds under this section shall be applied:
 101-21              (1)  first, to the repayment of student loans;
 101-22              (2)  second, to the repayment of other government
 101-23  loans;
 101-24              (3)  third, to the repayment of other financial loans;
 101-25  and
 101-26              (4)  last, to the student's personal tuitional
 101-27  expenditures.
  102-1        (i)  Not later than the 30th day after the date on which a
  102-2  refund is due to a student who has received a student loan, the
  102-3  school shall notify the guaranty agency and the lender of the
  102-4  required refund and any refund previously made.  The guaranty
  102-5  agency and the lender shall notify the student and the school if
  102-6  the student's loan has been transferred to another holder.
  102-7        (j)  The failure of a school or a person to pay a tuition
  102-8  refund as required by this section is a deceptive trade practice
  102-9  under Subchapter E, Chapter 17, Business & Commerce Code, and its
 102-10  subsequent amendments.
 102-11        Sec. 26.  CONSOLIDATION OF FEES AND MASSAGE SCHOOL ACCOUNT.
 102-12  (a)  At the beginning of each fiscal year the department shall
 102-13  collect a fee from a school for deposit in a special account in the
 102-14  general revenue fund in the state treasury called the massage
 102-15  school account and to be administered by the department.
 102-16        (b)  The amount of the fee is determined by applying a
 102-17  percentage established by the department, based on the
 102-18  recommendation of the school accounts advisory board, to each
 102-19  school's annual gross tuition, with consideration given to the
 102-20  school's size, expense of regulation, potential for teachouts,
 102-21  tuition and fees refund and recovery exposure, and loan default
 102-22  rates (with schools with high default rates paying higher fees),
 102-23  and any other relevant factors.  The account shall be used for:
 102-24              (1)  the administration of this Act;
 102-25              (2)  the cost of teachouts as provided by this Act;
 102-26              (3)  the cost of tuition and fees recovery and the cost
 102-27  of student refunds that a school has not made; and
  103-1              (4)  the cost of storing student records that have
  103-2  become property of the state under this Act.
  103-3        (c)  The department may grant an exemption from payment into
  103-4  the account to a small school, as determined by the department, or
  103-5  to a school that does not use guaranteed student loans for tuition
  103-6  revenue.  A school exempt as provided for by this subsection must
  103-7  pay the necessary fees for regulation, as determined by the
  103-8  department, and provide a bond, certificate of deposit, or
  103-9  comparable security, as determined and approved by the department,
 103-10  that is sufficient to cover the cost of the school's record storage
 103-11  costs, teachout, and tuition and fees refund and recovery exposure
 103-12  based on the evidence the school submits proving its projected
 103-13  maximum total unearned tuition during the period of registration.
 103-14        (d)  The security shall be provided by the school for the
 103-15  period during which the registration is issued, and the obligation
 103-16  of the bond or other security must be that neither this Act nor any
 103-17  rule adopted under this Act is violated by the school or any of its
 103-18  officers, agents, or employees.
 103-19        (e)  The bond, certificate of deposit, or comparable security
 103-20  must be issued by a company authorized to do business in the state,
 103-21  conditioned that the parties to the transaction shall pay all
 103-22  damages or expenses that the state or any governmental subdivision
 103-23  or any student or potential student sustains resulting from a
 103-24  violation.  The bond, certificate of deposit, or comparable
 103-25  security shall be to the state to be used only for payment for the
 103-26  school's teachout and tuition and fees refund due to a student or
 103-27  potential student.  The security must be filed with the department
  104-1  and must be in such form as shall be approved by the department.
  104-2        (f)  Schools domiciled, or having their principal place of
  104-3  business, outside the state, that engage representatives to
  104-4  canvass, solicit, or contract with any person in the state are
  104-5  subject to the fee and security requirements of Subsection (c) of
  104-6  this section.
  104-7        (g)  The department shall refer all expenses incurred by the
  104-8  school account in administering Subsections (b)(2) and (3) of this
  104-9  section to the attorney general's office for collection.  The
 104-10  amounts collected shall be deposited to the account.  Attorney's
 104-11  fees and court costs shall be appropriated to the attorney
 104-12  general's office.
 104-13        (h)  Interest the account earns shall be reinvested in the
 104-14  account.  The state treasurer shall invest the account in the same
 104-15  manner as other state funds.  Sufficient funds from the account and
 104-16  fees collected by the department from massage instructors, massage
 104-17  establishments, and massage schools shall be appropriated to the
 104-18  department for the purpose outlined in this section.  The
 104-19  department shall administer claims made against the account.
 104-20        (i)  If a school closes, the department shall attempt to
 104-21  arrange for students of the closed school to attend another massage
 104-22  school.  The department shall adopt rules specifying the
 104-23  circumstances under which a school is considered closed.
 104-24        (j)  The expense incurred by a massage school in providing
 104-25  training that is directly related to educating a student who was
 104-26  enrolled in a closed school and placed in the school under this
 104-27  section, including the applicable tuition for the period of time
  105-1  for which the student has paid tuition, shall be paid in accordance
  105-2  with rules of the department.
  105-3        (k)  The department shall make reasonable attempts to ensure
  105-4  that schools under the department's jurisdiction, including closed
  105-5  schools, fulfill the refund obligation as provided by Section 25 of
  105-6  this Act.  If a school refuses to fulfill the school's obligation
  105-7  or the school's bond is insufficient to pay the cost of the
  105-8  teachout and refund expenses, the teachout or the refund may be
  105-9  paid from the massage school account except that no school owned,
 105-10  either in whole or in part, by a person or corporate entity who was
 105-11  an owner, in whole or in part, of a previously closed school shall
 105-12  be permitted to receive compensation for a teachout under this
 105-13  section.
 105-14        (l)  If a student cannot be placed in another school, the
 105-15  student's tuition and fees shall be refunded under Section 25(g) of
 105-16  this Act.
 105-17        (m)  If a student does not accept a place that is available
 105-18  and reasonable in another school, the student's tuition and fees
 105-19  shall be refunded under the refund policy maintained by the closing
 105-20  school under Sections 25(b) and (c) of this Act.
 105-21        (n)  Attorney's fees, court costs, or damages may not be paid
 105-22  from the massage school account.
 105-23        (o)  The department by rule shall establish and assess
 105-24  reasonable and necessary fees to all persons and entities licensed
 105-25  under this Act to be used for the regulation of those persons and
 105-26  entities licensed under this Act and to supplement the
 105-27  administration and purposes outlined by this Act.
  106-1        (p)  The department may permit payment of any fee authorized
  106-2  under this section that exceeds $1,000 to be paid by installment.
  106-3  The department shall provide for appropriate interest charges and
  106-4  late penalties in addition to any other remedy that is provided for
  106-5  by law for the late payment of a fee installment authorized under
  106-6  this section.  The department may assess a reasonable service
  106-7  charge to be paid by a school that pays a fee by installment in an
  106-8  amount not to exceed an annual rate of 10 percent of the fee that
  106-9  is to be paid by installment.
 106-10        Sec. 27.  COST COMPARISONS.  (a)  The department shall
 106-11  prepare a comparison of the cost to a student of courses of
 106-12  instruction or training programs at all registered massage schools.
 106-13        (b)  The cost comparison must include for each school a
 106-14  description of:
 106-15              (1)  average class size;
 106-16              (2)  facilities and equipment;
 106-17              (3)  employment and placement rates, if available;
 106-18              (4)  length of program; and
 106-19              (5)  faculty qualifications.
 106-20        Sec. 28.  LICENSING REQUIREMENTS DISCLOSED BY MASSAGE SCHOOL.
 106-21  (a)  A massage school must disclose to all prospective students
 106-22  state requirements to practice the occupation for which the student
 106-23  is training.
 106-24        (b)  A school must disclose to all prospective students the
 106-25  performance of graduates from the school on the licensing
 106-26  examination of the department if that information is available.
 106-27        Sec. 29.  ENTRANCE REQUIREMENTS FOR MASSAGE SCHOOL; MINIMUM
  107-1  SKILLS TEST.  (a)  The department shall approve entrance
  107-2  requirements, including minimum skills testing, for students who
  107-3  may be accepted for a course of study in a massage school.  The
  107-4  requirements must be specific and provide that students who are
  107-5  allowed to enter a course will have a reasonable chance of
  107-6  completing the program.
  107-7        (b)  The school shall administer a standardized test to
  107-8  students with a high school diploma or high school equivalency
  107-9  certificate entering the school, if testing for minimum skill
 107-10  competency is determined by the department as appropriate and
 107-11  necessary to determine if remediation is needed.  The test must be
 107-12  administered before enrollment and must be nationally recognized as
 107-13  appropriate and effective for minimum skills testing and high
 107-14  school equivalency.  If the test reveals the necessity for
 107-15  remediation, the school must implement a plan to encourage the
 107-16  student to improve in basic general education skills.
 107-17        (c)  A student must achieve a successful score on the test
 107-18  required by this section before the student is obligated for
 107-19  tuition and fees for the vocational portion of the school's
 107-20  program.
 107-21        (d)  The school may, in accordance with federal statutory
 107-22  provisions affecting guaranteed student loan programs, on a
 107-23  case-by-case basis, refuse to provide the certification statements
 107-24  required for guaranteed student loan eligibility or reduce the
 107-25  determination of need for a guaranteed student loan if the school
 107-26  determines that the student's expenses to be covered by the loan
 107-27  and the estimated cost of attendance can be met more appropriately
  108-1  by the school, directly by the student, or by other sources.
  108-2        Sec. 30.  STUDENTS IN MASSAGE SCHOOLS IN NEED OF REMEDIAL
  108-3  HELP.  (a)  An applicant without a high school diploma or high
  108-4  school equivalency certificate must pass an entrance test approved
  108-5  by the department and be considered to have the ability to benefit
  108-6  from the school before the school may enroll the student.
  108-7        (b)  A school that admits a student who does not have a high
  108-8  school diploma or high school equivalency certificate must develop
  108-9  and implement a plan for counseling the student on curriculum,
 108-10  student aid, employment opportunities, and the remediation
 108-11  necessary for the student to obtain a high school equivalency
 108-12  certificate and improve in basic general education skills.
 108-13        (c)  The school must assist the student in obtaining the
 108-14  remediation necessary for the student to pass a standardized
 108-15  minimum skills equivalency test, approved by the department, and
 108-16  the student must pass the test before entering the final quarter of
 108-17  the course.
 108-18        Sec. 31.  ENROLLMENT POLICIES OF MASSAGE SCHOOL.  (a)  The
 108-19  enrollment contract of a massage school must contain:
 108-20              (1)  a disclosure that the contract is a legally
 108-21  binding instrument on written acceptance of the student by the
 108-22  school, unless canceled as provided by law;
 108-23              (2)  the school's cancellation and refund policy;
 108-24              (3)  the method of cancellation of the contract, the
 108-25  effective date of any cancellation, and the name and address to
 108-26  which the notice of cancellation should be sent or delivered;
 108-27              (4)  the total cost of the course including tuition and
  109-1  all other charges;
  109-2              (5)  a notification that the fair market value of
  109-3  equipment or supplies furnished to the student that the student
  109-4  fails to return in a condition suitable for resale not later than
  109-5  the 10th business day after the date of cancellation may be
  109-6  retained by the school and deducted from any refund of the student;
  109-7              (6)  a statement that if a student's enrollment is
  109-8  canceled for any reason, the school will notify an agency known to
  109-9  the school to be providing financial aid to the student of the
 109-10  cancellation not later than the 30th day after the date of
 109-11  cancellation;
 109-12              (7)  the name and description of the courses, including
 109-13  the number of hours of classroom instruction or home study lessons;
 109-14  and
 109-15              (8)  the Federal Trade Commission statement for a
 109-16  holder in due course.
 109-17        (b)  An enrollment contract may not contain a wage assignment
 109-18  provision or a confession of judgment clause.
 109-19        (c)  Immediately after a prospective student has signed an
 109-20  enrollment contract, the school shall give the prospective student
 109-21  a copy of the contract, and a copy shall be placed in the student's
 109-22  permanent school file.
 109-23        (d)  A promissory note signed by a student must include the
 109-24  Federal Trade Commission statement required for a holder in due
 109-25  course.
 109-26        Sec. 32.  LOAN COUNSELING BY MASSAGE SCHOOL.  (a)  A school
 109-27  shall conduct loan counseling entrance interviews with each
  110-1  prospective student seeking a loan during the enrollment process.
  110-2  A student borrower shall be counseled before the initial
  110-3  disbursement of loan proceeds, shortly before the student ceases
  110-4  one-half of the course, and before the student is issued a
  110-5  certificate of completion.
  110-6        (b)  The school's financial aid officer or counselor shall
  110-7  conduct the interviews required by Subsection (a) of this section.
  110-8  The interview must include a discussion of:
  110-9              (1)  the rights and responsibilities of the student as
 110-10  a borrower;
 110-11              (2)  what a loan is and the importance of repayment;
 110-12              (3)  the total cost of the program in which the student
 110-13  will be enrolled;
 110-14              (4)  the availability of other forms of financial aid,
 110-15  grants, and part-time work;
 110-16              (5)  the starting range and average reported salaries
 110-17  of those in the occupation for which the student will be trained,
 110-18  if available; and
 110-19              (6)  job placement services provided by the school and
 110-20  the employment rate of persons who attended the school and were
 110-21  enrolled in the program in which the student is enrolled.
 110-22        (c)  A school approved to accept state or federal educational
 110-23  loans or grants shall adopt, in addition to the provisions in this
 110-24  section, measures to reduce defaults and improve borrowers'
 110-25  understanding and respect for the loan repayment obligation as
 110-26  provided in 34 C.F.R., Parts 668 and 682.
 110-27        (d)  The school must give a copy of the Texas Guaranteed
  111-1  Student Loan Corporation's "Your Future" guide, or a comparable
  111-2  document approved by the department, to a prospective student at a
  111-3  time and in a manner that provide the student with sufficient
  111-4  opportunity to read the guide or other document and discuss the
  111-5  contents with the school's financial aid officer, if necessary for
  111-6  understanding and clarity, before signing an enrollment contract
  111-7  and before the school accepts the student in a course of study.
  111-8        (e)  The prospective student must sign a document stating
  111-9  that the student:
 111-10              (1)  attended a loan counseling entrance interview; and
 111-11              (2)  received a copy of the "Your Future" guide, or
 111-12  comparable document in the time provided by Subsection (d) of this
 111-13  section.
 111-14        (f)  A copy of the signed document required by Subsection (e)
 111-15  of this section must be sent to the student, guarantor, and lender
 111-16  and must be placed in the student's permanent school file.
 111-17        Sec. 33.  RECORDS OF MASSAGE SCHOOL.  (a)  A massage school
 111-18  shall maintain permanent records for all students enrolled, as
 111-19  required by the department.
 111-20        (b)  A school shall adopt a plan to preserve permanent
 111-21  records and submit the plan to the department for approval.  The
 111-22  plan must:
 111-23              (1)  provide that at least one copy of the records will
 111-24  be held in a secure depository; and
 111-25              (2)  designate an appropriate official to provide a
 111-26  student with copies of records or transcripts on request.
 111-27        (c)  The school shall make the first copy of records or
  112-1  transcripts at no charge to the student.  The school may make a
  112-2  reasonable charge to provide additional copies of records,
  112-3  transcripts, or other student information.
  112-4        (d)  If a school closes, the records become the property of
  112-5  the state.
  112-6        Sec. 34.  DEPARTMENT ADDRESS.  A massage school shall post on
  112-7  the premises of the school at a prominent and conspicuous location
  112-8  the name, mailing address, and telephone number of the department
  112-9  for the purpose of directing complaints to the department.
 112-10        Sec. 35.  COMPLAINTS.  The department shall prepare
 112-11  information of public interest describing the functions of the
 112-12  department and the procedures by which complaints are filed with
 112-13  and resolved by the department against a massage school.  The
 112-14  department shall make the information available to the public and
 112-15  appropriate state agencies.
 112-16        Sec. 36.  FINANCIAL STABILITY.  (a)  A school may not reflect
 112-17  unearned tuition as a current asset unless the amount shown in
 112-18  current assets that reflects unearned tuition is offset by an equal
 112-19  amount shown as a current liability.  The school must meet one of
 112-20  the following criteria in order to be determined as financially
 112-21  sound and capable of fulfilling its commitments for training:
 112-22              (1)  current assets must bear a relationship to current
 112-23  liabilities in a ratio of at least one-to-one;
 112-24              (2)  the equity of the owner of the school must be in
 112-25  excess of $10,000,000; or
 112-26              (3)  the school must have posted, or set aside in a
 112-27  dedicated escrow account, a bond, certificate of deposit,
  113-1  irrevocable letter of credit or comparable security, acceptable to
  113-2  the department, each made payable to the State of Texas, in an
  113-3  amount sufficient to cover the school's record storage costs,
  113-4  teachout, and tuition and fees refund and recovery exposure based
  113-5  on the evidence the school submits proving its projected maximum
  113-6  total unearned tuition during the period of time covered by the
  113-7  evidence of indebtedness to the state.
  113-8        (b)  The school must demonstrate to the satisfaction of the
  113-9  department its financial soundness and ability to fulfill its
 113-10  commitments for training.
 113-11        Sec. 37.  PROHIBITIONS.  A person may not:
 113-12              (1)  operate a massage school without registering with
 113-13  the department or assume ownership of an existing massage school
 113-14  without registering with the department;
 113-15              (2)  solicit prospective students for a massage school
 113-16  without being registered as required by this Act;
 113-17              (3)  accept contracts or enrollment applications from a
 113-18  representative of a massage school who is not registered as
 113-19  required by any department rule requiring registration;
 113-20              (4)  use advertising designed to mislead or deceive
 113-21  prospective massage school students;
 113-22              (5)  fail to notify the department of the
 113-23  discontinuance of the operation of any massage school not later
 113-24  than the 72nd hour after cessation of classes or make available
 113-25  accurate records as required by this Act;
 113-26              (6)  fail to secure and file within 30 days any
 113-27  increased bond required by this Act;
  114-1              (7)  negotiate any promissory instrument received as
  114-2  payment of tuition for a massage school or other charge before
  114-3  completion of 75 percent of the course, provided that before that
  114-4  time, the instrument may be transferred by assignment to a
  114-5  purchaser who is subject to any defense available against the
  114-6  school named as payee;
  114-7              (8)  enroll a student in a massage school who fails to
  114-8  satisfy  entrance requirements; or
  114-9              (9)  violate any provision of this Act relating to a
 114-10  massage school or a rule adopted under this Act relating to a
 114-11  massage school.
 114-12        Sec. 38.  ADMINISTRATIVE PENALTY.  (a)  The board may impose
 114-13  an administrative penalty against a person who violates Section 37
 114-14  of this Act.
 114-15        (b)  The penalty for a violation may be in an amount not to
 114-16  exceed $10,000.
 114-17        (c)  The amount of the penalty shall be based on:
 114-18              (1)  the seriousness of the violation, including the
 114-19  nature, circumstances, extent, and gravity of any prohibited acts;
 114-20              (2)  efforts to correct the violation; and
 114-21              (3)  any other matter that justice may require.
 114-22        (d)  If the commissioner of health determines that a
 114-23  violation has occurred, the commissioner may issue to the board a
 114-24  report that states the facts on which the determination is based
 114-25  and the  commissioner's recommendation on the imposition of a
 114-26  penalty, including a recommendation on the amount of the penalty.
 114-27        (e)  Within 14 days after the date the report is issued, the
  115-1  commissioner shall give written notice of the report to the person.
  115-2  The notice may be given by certified mail.  The notice must include
  115-3  a brief summary of the alleged violation and a statement of the
  115-4  amount of the recommended penalty and must inform the person that
  115-5  the person has a right to a hearing on the  occurrence of the
  115-6  violation, the amount of the penalty, or both the occurrence of the
  115-7  violation and the amount of the penalty.
  115-8        (f)  Within 20 days after the date the person receives the
  115-9  notice, the person in writing may accept the determination and
 115-10  recommended penalty of the commissioner or may make a written
 115-11  request for a hearing on the occurrence of the violation, the
 115-12  amount of the penalty, or both the occurrence of the violation and
 115-13  the amount of the penalty.
 115-14        (g)  If the person accepts the determination and recommended
 115-15  penalty of the commissioner, the board by order shall approve the
 115-16  determination and impose the recommended penalty.
 115-17        (h)  If the person requests a hearing or fails to respond
 115-18  timely to the notice, the commissioner shall set a hearing and give
 115-19  notice of the hearing to the person.  The hearing shall be held by
 115-20  a hearings examiner appointed by the commissioner.  The hearings
 115-21  examiner shall make findings of fact and conclusions of law and
 115-22  promptly issue to the board a proposal for a decision about the
 115-23  occurrence of the violation and the amount of a proposed penalty.
 115-24  Based on the findings of fact, conclusions of law, and proposal for
 115-25  a decision, the board by order may find that a violation has
 115-26  occurred and impose a penalty or may find that no violation
 115-27  occurred.
  116-1        (i)  The notice of the board's order given to the person
  116-2  under the Administrative Procedure and Texas Register Act (Article
  116-3  6252-13a, Vernon's Texas Civil Statutes) and its subsequent
  116-4  amendments must include a statement of the right of the person to
  116-5  judicial review of the order.
  116-6        (j)  Within 30 days after the date the board's order is final
  116-7  as provided by Section 16(c), Administrative Procedure and Texas
  116-8  Register Act (Article 6252-13a, Vernon's Texas Civil Statutes), and
  116-9  its subsequent amendments, the person shall:
 116-10              (1)  pay the amount of the penalty;
 116-11              (2)  pay the amount of the penalty and file a petition
 116-12  for judicial review contesting the occurrence of the violation, the
 116-13  amount of the penalty, or both the occurrence of the violation and
 116-14  the amount of the penalty; or
 116-15              (3)  without paying the amount of the penalty, file a
 116-16  petition for judicial review contesting the occurrence of the
 116-17  violation, the amount of the penalty, or both the occurrence of the
 116-18  violation and the amount of the penalty.
 116-19        (k)  Within the 30-day period, a person who acts under
 116-20  Subsection (j)(3) of this section may:
 116-21              (1)  stay enforcement of the penalty by:
 116-22                    (A)  paying the amount of the penalty to the
 116-23  court for placement in an escrow account; or
 116-24                    (B)  giving to the court a supersedeas bond that
 116-25  is approved by the court for the amount of the penalty and that is
 116-26  effective until all judicial review of the board's order is final;
 116-27  or
  117-1              (2)  request the court to stay enforcement of the
  117-2  penalty by:
  117-3                    (A)  filing with the court a sworn affidavit of
  117-4  the person stating that the person is financially unable to pay the
  117-5  amount of the penalty and is financially unable to give the
  117-6  supersedeas bond; and
  117-7                    (B)  giving a copy of the affidavit to the
  117-8  commissioner by certified mail.
  117-9        (l)  If the commissioner receives a copy of an affidavit
 117-10  under Subsection (k)(2) of this section the commissioner may file
 117-11  with the court, within five days after the date the copy is
 117-12  received, a contest to the affidavit.  The court shall hold a
 117-13  hearing on the facts alleged in the affidavit as soon as
 117-14  practicable and shall stay the enforcement of the penalty on
 117-15  finding that the alleged facts are true.  The person who files an
 117-16  affidavit has the burden of proving that the person is financially
 117-17  unable to pay the amount of the penalty and to give a supersedeas
 117-18  bond.
 117-19        (m)  If the person does not pay the amount of the penalty and
 117-20  the enforcement of the penalty is not stayed, the commissioner may
 117-21  refer the matter to the attorney general for collection of the
 117-22  amount of the penalty.
 117-23        (n)  Judicial review of the order of the board:
 117-24              (1)  is instituted by filing a petition as provided by
 117-25  Section 19, Administrative Procedure and Texas Register Act
 117-26  (Article 6252-13a, Vernon's Texas Civil Statutes), and its
 117-27  subsequent amendments; and
  118-1              (2)  is under the substantial evidence rule.
  118-2        (o)  If the court sustains the occurrence of the violation,
  118-3  the court may uphold or reduce the amount of the penalty and order
  118-4  the person to pay the full or reduced amount of the penalty.  If
  118-5  the court does not sustain the occurrence of the violation, the
  118-6  court shall order that no penalty is owed.
  118-7        (p)  When the judgment of the court becomes final, the court
  118-8  shall proceed under this subsection.  If the person paid the amount
  118-9  of the penalty and if that amount is reduced or is not upheld by
 118-10  the court, the court shall order that the appropriate amount plus
 118-11  accrued interest be remitted to the person.  The rate of the
 118-12  interest is the rate charged on loans to depository institutions by
 118-13  the New York Federal Reserve Bank, and the interest shall be paid
 118-14  for the period beginning on the date the penalty was paid and
 118-15  ending on the date the penalty is remitted.  If the person gave a
 118-16  supersedeas bond and if the amount of the penalty is not upheld by
 118-17  the court, the court shall order the release of the bond.  If the
 118-18  person gave a supersedeas bond and if the amount of the penalty is
 118-19  reduced, the court shall order the release of the bond after the
 118-20  person pays the amount.
 118-21        (q)  A penalty collected under this section shall be remitted
 118-22  to the comptroller for deposit in the general revenue fund.
 118-23        (r)  All proceedings under this section are subject to the
 118-24  Administrative Procedure and Texas Register Act (Article 6252-13a,
 118-25  Vernon's Texas Civil Statutes) and its subsequent amendments.
 118-26        Sec. 39.  CRIMINAL PENALTIES.  (a)  A person commits an
 118-27  offense if the person fails to comply with Section 2A or 25 of this
  119-1  Act.
  119-2        (b)  A person commits an offense if the person intentionally
  119-3  or knowingly uses for personal benefit funds in an amount greater
  119-4  than $10,000 that are due as student refunds under Section 25 of
  119-5  this Act.  An offense under this subsection is a felony of the
  119-6  third degree.  Except as provided by Subsection (b) of this
  119-7  section, an offense under this section is a Class A misdemeanor.
  119-8                  PART 4.  BARBER SCHOOLS OR COLLEGES
  119-9        SECTION 4.01.  Sections 3(b) and (f), Chapter 65, Acts of the
 119-10  41st Legislature, 1st Called Session, 1929 (Article 8407a, Vernon's
 119-11  Texas Civil Statutes), are amended to read as follows:
 119-12        (b)  Any firm, corporation or person who opens a new barber
 119-13  shop shall within three days submit an application in writing to
 119-14  the board for a temporary barber shop permit together with an
 119-15  inspection fee in an amount established by the board <not to exceed
 119-16  $70>.  The applicant must place in his application the permanent
 119-17  address of his shop including a legal description of the premises
 119-18  to be licensed and such other information as shall be required by
 119-19  the board.
 119-20        (f)  To continue operating a barber shop, a person must renew
 119-21  the permit issued to his shop by paying a renewal fee in an amount
 119-22  established by the board <not to exceed $70>.  All permits expire
 119-23  on July 1 of odd-numbered years.
 119-24        SECTION 4.02.  (a)  Effective September 1, 1994, Section
 119-25  9(a), Chapter 65, Acts of the 41st Legislature, 1st Called Session,
 119-26  1929 (Article 8407a, Vernon's Texas Civil Statutes), is amended to
 119-27  read as follows:
  120-1        (a)  Any person desiring to conduct or operate a barber
  120-2  school or college in this state shall first obtain a permit from
  120-3  the board after demonstrating that said school or college has first
  120-4  met the requirements of this section.  Said permit shall be
  120-5  prominently displayed at all times at such school or college.  The
  120-6  board shall determine that an applicant for a barber school or
  120-7  college permit is financially sound and capable of fulfilling its
  120-8  commitments for training before granting the permit.  <Each
  120-9  applicant shall furnish a surety bond in the amount of $10,000,
 120-10  payable to the state, and conditioned to refund unpaid tuition if
 120-11  the school or college closes or ceases operation before its courses
 120-12  of instruction have been completed.>
 120-13        (b)  Any surety bond furnished under Section 9(a), Chapter
 120-14  65, Acts of the 41st Legislature, 1st Called Session, 1929 (Article
 120-15  8407a, Vernon's Texas Civil Statutes), as Section 9(a) existed
 120-16  before amendment by this Act, remains in full force and effect.
 120-17  Any obligation under a surety bond furnished under Section 9(a)
 120-18  before amendment by this Act is not impaired by the amendment.
 120-19        SECTION 4.03.  Sections 9(b)-(y), Chapter 65, Acts of the
 120-20  41st Legislature, 1st Called Session, 1929 (Article 8407a, Vernon's
 120-21  Texas Civil Statutes), are amended to read as follows:
 120-22        (b)  No certificate or permit shall be issued as provided for
 120-23  herein to an applicant to be a student in such a school or college
 120-24  unless said applicant has completed at least a seventh grade
 120-25  education and such other requirements as shall be specified by the
 120-26  board.  Each applicant to be a student must submit an enrollment
 120-27  application to the board in the form prescribed by the board.  The
  121-1  application must be accompanied by a nonrefundable application fee
  121-2  set by the board <in an amount not to exceed $25>.  A separate
  121-3  application is required for each enrollment, reenrollment, or
  121-4  transfer enrollment.  However, the application fee applies only to
  121-5  the first enrollment and may not be charged for any later
  121-6  enrollment, reenrollment, or transfer enrollment.
  121-7        (c)  The board may not approve a barber school or college
  121-8  unless the school or college requires the following hours of
  121-9  instruction as a prerequisite for graduation:
 121-10              (1)  Class A barber--1,500 hours of instruction
 121-11  completed in a course of not less than nine months, with not less
 121-12  than 800 hours in the actual practice of cutting hair as a primary
 121-13  service;
 121-14              (2)  barber technician--300 hours of instruction
 121-15  completed in a course of not less than eight weeks;
 121-16              (3)  wig instructor--200 hours of instruction completed
 121-17  in a course of not less than eight weeks;
 121-18              (4)  wig specialist--300 hours of instruction completed
 121-19  in a course of not less than eight weeks;
 121-20              (5)  manicurist--300 hours of instruction completed in
 121-21  a course of not less than eight weeks; and
 121-22              (6)  teacher--1,000 hours of instruction completed in a
 121-23  course of not less than six months.
 121-24        (d)  If a school or college offers a refresher course, that
 121-25  course must require at least 300 hours of instruction.  The board
 121-26  by rule shall set the curriculum for a refresher course.
 121-27        (e)  A barber school or college shall submit a monthly
  122-1  progress report to the board regarding each student in attendance
  122-2  at the school or college.  The report must certify the daily
  122-3  attendance record of the student and the number of credit hours
  122-4  earned by the student during the previous month.  The school or
  122-5  college may not increase, decrease, or withhold for any reason the
  122-6  number of credit hours earned by a student.  On completion by a
  122-7  student of a prescribed course of instruction, the school or
  122-8  college shall certify to the board that the student has completed
  122-9  the required number of hours and is eligible to take the
 122-10  appropriate examination.  Each barber school or college permittee
 122-11  shall furnish to the board:
 122-12              (1)  the current course completion rates of students
 122-13  who attend a course of instruction offered by the school or
 122-14  college; and
 122-15              (2)  job placement rates and employment rates of
 122-16  students who complete a course of instruction.
 122-17        (f)  Such schools or colleges shall instruct students in the
 122-18  theory and practice of such subjects as may be necessary and
 122-19  beneficial in the practice of barbering, including the following:
 122-20              (1)  all laws governing the practice of barbering in
 122-21  this state;
 122-22              (2)  scientific fundamentals of barbering;
 122-23              (3)  hygienic bacteriology;
 122-24              (4)  histology of the hair, skin, muscles, and nerves;
 122-25              (5)  the structure of the head, neck and face;
 122-26              (6)  elementary chemistry relating to sterilization and
 122-27  antiseptics;
  123-1              (7)  common disorders of the skin and hair;
  123-2              (8)  massaging muscles of the scalp, face, and neck;
  123-3              (9)  hair-cutting;
  123-4              (10)  shaving, shampooing, and bleaching and dyeing of
  123-5  the hair;
  123-6              (11)  manicuring, administering facial treatments, hair
  123-7  weaving, servicing wigs; and
  123-8              (12)  any other skills, techniques, services,
  123-9  treatments, or undertakings within the definition of the practice
 123-10  of barbering provided for in this Act.
 123-11        (g)  No barber school or college which issues "Class A"
 123-12  certificates shall be approved by the Board for the issuance of a
 123-13  permit unless said school or college has the following:
 123-14              (1)  An adequate school site housed in a substantial
 123-15  building of a permanent-type construction containing a minimum of
 123-16  not less than two thousand, eight hundred (2,800) square feet of
 123-17  floor space.  Such space shall be divided into the following
 123-18  separate departments:  a senior department, a junior department, a
 123-19  class theory room, a supply room, an office space, a dressing and
 123-20  cloak room, and two (2) sanitary, modern separate rest rooms,
 123-21  equipped with one (1) commode each and a urinal in one (1) rest
 123-22  room.
 123-23              (2)  A hard-surface floor covering of tile or other
 123-24  suitable material.
 123-25              (3)  A minimum of twenty (20) modern barber chairs with
 123-26  cabinet and mirror for each chair.
 123-27              (4)  One (1) lavatory in back of each two (2) chairs.
  124-1              (5)  A liquid sterilizer for each chair.
  124-2              (6)  An adequate number of latherizers, vibrators, and
  124-3  hair dryers for the use of students.
  124-4              (7)  Adequate lighting of all rooms.
  124-5              (8)  At least twenty (20) classroom chairs, a
  124-6  blackboard, anatomical charts of the head, neck and face, and one
  124-7  (1) barber chair in the class theory room.
  124-8              (9)  A library and library facilities available to
  124-9  students, containing a medical dictionary and a standard work on
 124-10  the human anatomy.
 124-11              (10)  Adequate drinking fountain facilities, but at
 124-12  least one (1) to each floor.
 124-13              (11)  Adequate toilet facilities for the students.
 124-14              (12)  Adequate fire-fighting equipment to be maintained
 124-15  in case of emergency.
 124-16        (h)  Anything to the contrary in this Act notwithstanding,
 124-17  each such school shall place a sign on the front outside portion of
 124-18  its building in a prominent place.  Such sign shall read "BARBER
 124-19  SCHOOL--STUDENT BARBERS", and shall be a minimum size of ten-inch
 124-20  block letters.  Printed signs containing the foregoing information
 124-21  shall be prominently displayed upon each inside wall of the
 124-22  establishment.
 124-23        (i)  A minimum of five (5) hours a week must be devoted to
 124-24  the instruction of theory in the classroom, with Saturdays devoted
 124-25  exclusively to practical work over the chair.  If classes are
 124-26  conducted five (5) days a week, one (1) hour each day must be
 124-27  devoted to instruction in theory.  If classes are conducted four
  125-1  (4) days a week, one (1) hour and fifteen (15) minutes each day
  125-2  must be devoted to instruction in theory.  An attendance record
  125-3  book must be maintained by the school showing a record of the
  125-4  students' daily attendance.  These records are subject to
  125-5  inspection at any and all times by the Board.
  125-6        (j)  No barber school or college which issues "Class A"
  125-7  certificates shall be approved by the Board unless it is under the
  125-8  direct supervision and control of a barber who holds a current
  125-9  registered "Class A" certificate to practice barbering under the
 125-10  Texas Barber Law, and who can show evidence of at least five (5)
 125-11  years experience as a practicing barber.  Each school shall have at
 125-12  least one (1) teacher who has a teacher's certificate issued by the
 125-13  Board upon examination and who is capable and qualified to teach
 125-14  the curriculum outlined herein to the students of such school.  All
 125-15  such teachers are required to obtain a teacher's certificate from
 125-16  the Board and, in addition to requirements set forth by the Board,
 125-17  must meet the following requirements:
 125-18              (1)  Demonstrate their ability to teach the said
 125-19  curriculum outlined herein through a written and practical test to
 125-20  be given by the Board.
 125-21              (2)  Hold a current certificate as a registered "Class
 125-22  A" barber under this law.
 125-23              (3)  Demonstrate to the Board that such applicant is
 125-24  qualified to teach and instruct, to be determined at the discretion
 125-25  of the Board, and show evidence that the applicant has had at least
 125-26  six (6) months experience as a teacher in an approved school or
 125-27  college in Texas or in another state approved by the Board, or have
  126-1  completed 1,000 hours of instruction in a postgraduate course as a
  126-2  student teacher in an approved barber school or college in Texas.
  126-3        (k)  A licensed barber who presents evidence satisfactory to
  126-4  the Board of at least five (5) years' experience as a practicing
  126-5  barber in a barber shop operating under a permit issued by the
  126-6  Board, with not less than two (2) years' experience occurring in
  126-7  the period immediately before application, is also entitled to
  126-8  apply to take the examination for a teacher's certificate.
  126-9  Applicants desiring an examination for a teacher's certificate
 126-10  shall make an application to the Board and accompany same with an
 126-11  examination fee in an amount established by the Board <not to
 126-12  exceed $100>.  A new application and fee must be presented for each
 126-13  examination taken by the applicant and fees paid are not
 126-14  refundable.  The application must state the education and
 126-15  experience level of the applicant in all courses or programs that
 126-16  the applicant will teach or instruct.  The Board shall review an
 126-17  application for competency, consistency, and the overall quality of
 126-18  the applicant.  A teacher's certificate shall be issued upon
 126-19  satisfactory completion of the examination and payment of a
 126-20  certificate fee  in an amount established by the Board <not to
 126-21  exceed $100 if the applicant fulfills the requirements during the
 126-22  period from November 1 of an odd-numbered year and extending
 126-23  through October 31 of the following even-numbered year or not to
 126-24  exceed $50 if the applicant fulfills the requirements during the
 126-25  period from November 1 of an even-numbered year and extending
 126-26  through October 31 of the following odd-numbered year>.  Teacher's
 126-27  certificates shall be renewed biennially on or before November 1st
  127-1  of odd-numbered years upon the payment of a renewal fee in an
  127-2  amount established by the Board <not to exceed $100>.
  127-3        (l)  In addition to a minimum of one (1) teacher required in
  127-4  Subsection (j)(3) of this Section, each barber school or college
  127-5  which issues "Class A" certificates shall maintain at least one (1)
  127-6  qualified instructor, holding a registered "Class A" certificate,
  127-7  for each twenty (20) students or any fraction thereof for
  127-8  instruction in practical work; provided, however, that a teacher
  127-9  can also serve as an instructor in practical work in addition to
 127-10  his position as a theory teacher.  A barber school or college may
 127-11  not enroll more than one (1) student teacher for each licensed
 127-12  teacher who teaches at the school or college.  A student teacher
 127-13  must concentrate on teaching skills and may not be booked with
 127-14  customers.  Violation of this requirement constitutes a ground for
 127-15  the revocation of the person's student teacher barber license.
 127-16        (m)  No barber school or college shall be issued a permit to
 127-17  operate under the provisions of this Section until it has first
 127-18  furnished the following evidence to the Board:
 127-19              (1)  A detailed drawing and chart of the proposed
 127-20  physical layout of such school, showing the departments, floor
 127-21  space, equipment, lights and outlets.
 127-22              (2)  Photographs of the proposed site for such school
 127-23  including the interior and exterior of the building, rooms and
 127-24  departments.
 127-25              (3)  A detailed copy of the training program.
 127-26              (4)  A copy of the school catalog and promotional
 127-27  literature.
  128-1              (5)  A copy of the building lease or proposed building
  128-2  lease where the building is not owned by the school or college.
  128-3              (6)  A sworn statement showing the true ownership of
  128-4  the school or college.
  128-5              (7)  A permit fee in an amount established by the Board
  128-6  <not to exceed $1,000>.
  128-7              (8)  A statement of any final convictions of the
  128-8  owners, school directors, recruiters, instructional faculty, or
  128-9  other selected personnel of the barber school or college as
 128-10  determined by the Board.  The Board may obtain  criminal  history
 128-11  records of school directors or instructional faculty from any law
 128-12  enforcement agency, including the United States Department of
 128-13  Justice, the Department of Public Safety of the State of Texas, the
 128-14  Texas Department of Criminal Justice, or the police department of a
 128-15  municipality.
 128-16        (n)  A barber school or college shall post on the premises of
 128-17  the school at a prominent and conspicuous location the name,
 128-18  mailing address, and telephone number of the Board for the purpose
 128-19  of directing complaints to the Board.
 128-20        (o) <(n)>  No such school or college shall be operated and no
 128-21  students shall be solicited or enrolled by it until the Board shall
 128-22  determine by inspection that the school has been set up and
 128-23  established in accordance with this Section and Section 9A of this
 128-24  Act and the proposal submitted to the Board and approved by it
 128-25  prior to the issuance of a permit.  A barber school or college that
 128-26  is not approved by the Board on initial inspection is subject to
 128-27  reinspection by the Board.  For each reinspection, the Board shall
  129-1  charge a reinspection fee set by the Board <in an amount not to
  129-2  exceed $500>.
  129-3        (p) <(o)>  Any such school or college must obtain renewal of
  129-4  its permit by September 1st each year by the payment of an annual
  129-5  renewal fee in an amount established by the Board <not to exceed
  129-6  $300>.
  129-7        (q) <(p)>  If a barber school or college changes ownership,
  129-8  the Board shall be notified of the transfer not later than the 10th
  129-9  day before the date on which the change becomes effective.
 129-10        (r) <(q)>  Any school or college desiring to change the
 129-11  location of such school or college must first obtain approval by
 129-12  the Board by showing that the proposed location meets the
 129-13  requirements of this Section.
 129-14        (s) <(r)>  If said Board refuses to issue a permit to any
 129-15  such school or college, such school or college may by written
 129-16  request demand the reasons for said refusal and if said school or
 129-17  college shall thereupon meet said requirements and makes a showing
 129-18  that the requirements of this law have been complied with, then if
 129-19  said Board refuses to issue said permit, a suit may be instituted
 129-20  by such school or college in any of the District Courts of Travis
 129-21  County, Texas, to require said Board to issue such permit.  Any
 129-22  such suit must be filed within twenty (20) days after the final
 129-23  order of said Board refusing to issue such permit is entered,
 129-24  provided registered notice is mailed or it is otherwise shown that
 129-25  said school or college has notice within ten (10) days from the
 129-26  entering or making of said order.
 129-27        (t) <(s)>  In the event such school or college after a permit
  130-1  is issued to it violates any of the requirements of this law,
  130-2  either directly or indirectly, then said Board shall suspend or
  130-3  revoke the permit of any such school or college.  Before suspending
  130-4  or revoking any such permit, said Board must give such school or
  130-5  college a hearing, notice of which hearing shall be delivered to
  130-6  such school or college at least twenty (20) days prior to the date
  130-7  of said hearing.  If said Board suspends or revokes said permit at
  130-8  said hearing, then such school or college may file suit to prevent
  130-9  the same or to appeal from said order.  Any and all suits filed
 130-10  hereunder shall be filed within twenty (20) days from the date of
 130-11  the order of said Board in any of the District Courts of Travis
 130-12  County, Texas, and not elsewhere, and the order shall not become
 130-13  effective until said twenty (20) days has expired.
 130-14        (u) <(t)>  The Attorney General may institute any injunction
 130-15  proceedings or such other proceeding as to enforce the provisions
 130-16  of this Act, and to enjoin any barber or school or college from
 130-17  operating without having complied with the provisions hereof, and
 130-18  each shall forfeit to the State of Texas the sum of Twenty-five
 130-19  Dollars ($25) per day as a penalty for each day's violation, to be
 130-20  recovered in a suit by the Attorney General.  An action for an
 130-21  injunction under this section must be brought in Travis County.
 130-22        (v) <(u)  A holder of a barber school or college permit shall
 130-23  furnish each prospective student with:>
 130-24              <(1)  a copy of the course outline;>
 130-25              <(2)  a schedule of the tuition and other fees
 130-26  assessed;>
 130-27              <(3)  the refund policy imposed under Section 9A of
  131-1  this Act;>
  131-2              <(4)  regulations relating to absences;>
  131-3              <(5)  the grading policy;>
  131-4              <(6)  the rules of operation and conduct;>
  131-5              <(7)  regulations relating to incomplete grades;>
  131-6              <(8)  the name, mailing address, and telephone number
  131-7  of the board for the purpose of directing complaints to the board;
  131-8  and>
  131-9              <(9)  the current rates of job placement and employment
 131-10  of students who complete a course of training.>
 131-11        <(v)  A holder of a barber school or college permit shall
 131-12  publish in its catalogue and enrollment contract a description of
 131-13  the refund policy required under Section 9A of this Act.>
 131-14        <(w)  If the board has reasonable cause to believe that a
 131-15  barber school or college has violated this Act or a rule adopted
 131-16  under this Act, the board may order a peer review of the school or
 131-17  college or suspend the admission of students to the school or
 131-18  college.  A peer review ordered under this subsection shall be
 131-19  conducted by a peer review team composed of knowledgeable persons
 131-20  selected by the board.  The board shall attempt to provide a
 131-21  balance on each team between members assigned to the team who are
 131-22  from this state and those who are from other states.  The team
 131-23  shall provide the board with an objective assessment of the content
 131-24  of the curriculum and its application.  The school or college under
 131-25  review shall pay the costs of the peer review.>
 131-26        <(x)>  A barber school or college must submit to the board
 131-27  for approval the course lengths and curriculum content for each
  132-1  course offered by the school or college.  The course lengths and
  132-2  content may not be implemented unless the board approves them.  The
  132-3  course lengths and content shall reasonably ensure that students
  132-4  develop the job skills and knowledge necessary for employment.  The
  132-5  board shall require a school or college to account fully for all
  132-6  curriculum contents and course lengths before issuing or renewing a
  132-7  permit, and a school or college that is manipulating course lengths
  132-8  below or above industry standards shall be placed on probation
  132-9  until justification for the deviation is proved or the practice
 132-10  ceases.
 132-11        (w) <(y)>  A barber school or college that violates this Act
 132-12  or a rule adopted under this Act is liable for a civil penalty in
 132-13  addition to any injunctive relief or other remedy provided by law.
 132-14  The civil penalty may not exceed $1,000 a day for each violation.
 132-15  The Attorney General, at the request of the board, may bring a
 132-16  civil action to collect a civil penalty under this subsection.
 132-17  Civil penalties recovered in a suit brought under this subsection
 132-18  shall be deposited in the state treasury to the credit of the
 132-19  General Revenue Fund.
 132-20        (x)  The board may deny, suspend, or revoke a barber school
 132-21  or college permit or place the holder of the permit on probation if
 132-22  the permit holder, the school, or a representative of the school
 132-23  gives a prospective student information relating to the school that
 132-24  is false, fraudulent, deceptive, substantially inaccurate, or
 132-25  misleading.
 132-26        SECTION 4.04.  Section 9A, Chapter 65, Acts of the 41st
 132-27  Legislature, 1st Called Session, 1929 (Article 8407a, Vernon's
  133-1  Texas Civil Statutes), is amended by amending Subsections (b)-(g)
  133-2  and adding Subsections (h)-(j) to read as follows:
  133-3        (b)  Each holder of a barber school or college permit must
  133-4  maintain a refund policy for the refund of the unused part of
  133-5  tuition, fees, and other charges assessed a student if the student,
  133-6  at the expiration of the cancellation period established under
  133-7  Subsection (a) of this section, terminates enrollment or is
  133-8  terminated by the school or college, as provided by this subsection
  133-9  <fails to enter the course of training, withdraws from the course
 133-10  of training, or is terminated from the course of training before
 133-11  completion of the course>.  The refund policy must provide that:
 133-12              (1)  a refund is based on the period of the student's
 133-13  enrollment, computed on the basis of course time expressed in clock
 133-14  hours;
 133-15              (2)  the effective date of the termination for payment
 133-16  of a refund <refund purposes> is the earliest of:
 133-17                    (A)  the last date of attendance, if the student
 133-18  is terminated for failure to satisfy an attendance, grade, or work
 133-19  requirement <by the school or college>;
 133-20                    (B)  the date of receipt by the permit holder of
 133-21  written notice of withdrawal by the student; <or>
 133-22                    (C)  the 10th consecutive <10> school day the
 133-23  student has been absent, unless any of the absences are excused by
 133-24  the school or college <days after the last date of attendance>; or
 133-25                    (D)  the date the student fails to return, as
 133-26  scheduled, from a leave of absence; and
 133-27              (3)  if tuition is collected before beginning the
  134-1  course of training and if, after the expiration of the cancellation
  134-2  period, the student does not begin the course of training, the
  134-3  school or college may retain not more than $100.
  134-4        (c)  If a student who begins a course of training that is
  134-5  scheduled to run not more than 12 months withdraws from the course
  134-6  or is terminated from the course by the school or college, the
  134-7  barber school or college may retain $100 in tuition and fees paid
  134-8  by that student and is not obligated to refund any additional
  134-9  outstanding tuition if the student withdraws or is terminated
 134-10  during the last quarter <50 percent> of the course.  If the student
 134-11  withdraws or is terminated before the last quarter <50 percent> of
 134-12  the course begins, the school or college shall refund the following
 134-13  percentages of any outstanding tuition:
 134-14              (1)  for withdrawal or termination occurring during the
 134-15  first week or first one-tenth of the course, whichever is less, 90
 134-16  percent;
 134-17              (2)  for withdrawal or termination occurring after the
 134-18  first week or first one-tenth of the course, whichever is less, but
 134-19  within the first three weeks of the course, 80 percent;
 134-20              (3)  for withdrawal or termination occurring after the
 134-21  first three weeks of the course but not later than the last date of
 134-22  the first 25 percent of the course, 75 percent; <and>
 134-23              (4)  for withdrawal or termination occurring during
 134-24  <not later than the completion of> the second 25 percent of the
 134-25  course, 50 percent;
 134-26              (5)  for withdrawal or termination occurring during the
 134-27  third 25 percent of the course, 10 percent; and
  135-1              (6)  for withdrawal or termination occurring after 50
  135-2  percent of the course has been completed, the school must allow the
  135-3  student to reenter at any time during the 48-month period following
  135-4  the date of withdrawal or termination at no additional charge,
  135-5  provided the full agreed-on tuition has been tendered.
  135-6        (d)  <For students withdrawing or terminating after 50
  135-7  percent of the course has been completed, the school must allow
  135-8  that student to reenter at any time during the 48-month period
  135-9  following the date of withdrawal or termination.>
 135-10        <(e)>  A refund owed under this section must be paid not
 135-11  later than the 60th <30th> day after the date on which the student
 135-12  becomes eligible for the refund, as determined under Subsection (b)
 135-13  of this section.
 135-14        (e) <(f)>  If a refund is not made within the period required
 135-15  by this section, the school or college shall pay, as a penalty,
 135-16  interest on the refund for the interval beginning with the first
 135-17  day following the expiration of the refund period and ending with
 135-18  the day immediately preceding the date the refund is made.  If the
 135-19  refund is made to a lending institution, the interest shall also be
 135-20  paid to that institution and applied against the student's loan.
 135-21  The board <commissioner of education> annually shall establish the
 135-22  level of interest at a level sufficient to provide a deterrent to
 135-23  the retention of student funds.  The board may exempt a school or
 135-24  college from the payment of the interest if the school or college
 135-25  makes a good faith effort to refund the tuition but is unable to
 135-26  locate the student.  The school or college shall provide to the
 135-27  agency on request documentation of the effort to locate the
  136-1  student.
  136-2        (f) <(g)>  A barber school or college shall record a grade of
  136-3  "incomplete" for a student who withdraws but is not entitled to a
  136-4  refund under Subsection (c) of this section if the student requests
  136-5  the grade at the time the student withdraws and the student
  136-6  withdraws for an appropriate reason unrelated to the student's
  136-7  academic status.  A student who receives a grade of incomplete may
  136-8  reenroll in the program during the 12-month <48-month> period
  136-9  following the date the student withdraws and may complete those
 136-10  incomplete subjects without payment of additional tuition.
 136-11        (g)  If a course of instruction is discontinued by the school
 136-12  and this prevents the student from completing the course, all
 136-13  tuition and fees paid are due and refundable.
 136-14        (h)  Refunds under this section shall be applied:
 136-15              (1)  first, to the repayment of student loans;
 136-16              (2)  second, to the repayment of other government
 136-17  loans;
 136-18              (3)  third, to the repayment of other financial loans;
 136-19  and
 136-20              (4)  last, to the student's personal tuitional
 136-21  expenditures.
 136-22        (i)  Not later than the 30th day after the date on which a
 136-23  refund is due to a student who has received a student loan, the
 136-24  school or college shall notify the guaranty agency and the lender
 136-25  of the required refund and any refund previously made.  The
 136-26  guaranty agency and the lender shall notify the student and the
 136-27  school or college if the student's loan has been transferred to
  137-1  another holder.
  137-2        (j)  The failure of a school or college or a person to pay a
  137-3  tuition refund as required by this section is a deceptive trade
  137-4  practice under Subchapter E, Chapter 17, Business & Commerce Code.
  137-5        SECTION 4.05.  Chapter 65, Acts of the 41st Legislature, 1st
  137-6  Called Session, 1929 (Article 8407a, Vernon's Texas Civil
  137-7  Statutes), is amended by adding Sections 9B-9S to read as follows:
  137-8        Sec. 9B.  Before the board may approve the application of a
  137-9  person for a barber school or college permit, the board must find,
 137-10  on investigation at the premises of the school, that the school
 137-11  meets the following criteria:
 137-12              (1)  the courses, curriculum, and instruction are of a
 137-13  quality, content, and length as may reasonably and adequately
 137-14  achieve the stated objective for which the courses, curriculum, or
 137-15  instruction are offered;
 137-16              (2)  there is in the school adequate space, equipment,
 137-17  instructional material, and instructor personnel to provide
 137-18  training of good quality;
 137-19              (3)  educational and experience qualifications of
 137-20  directors, administrators, and instructors are adequate;
 137-21              (4)  the school maintains a written record of the
 137-22  previous education and training of the applicant student and
 137-23  clearly indicates that appropriate credit has been given by the
 137-24  school for previous education and training, with the new training
 137-25  period shortened where warranted through use of appropriate skills
 137-26  or achievement tests and the student notified;
 137-27              (5)  a copy of the course outline; schedule of tuition,
  138-1  fees, refund policy, and other charges; regulations pertaining to
  138-2  absence, grading policy, and rules of operation and conduct;
  138-3  regulations pertaining to incomplete grades; the name, mailing
  138-4  address, and telephone number of the board for the purpose of
  138-5  directing complaints to the agency; the current rates of job
  138-6  placement and employment of students issued a certificate of
  138-7  completion; and notification of the availability of the cost
  138-8  comparison information prepared under Section 9H of this Act will
  138-9  be furnished to the student in the school catalog or comparable
 138-10  written documents before enrollment;
 138-11              (6)  on completion of training, the student is given a
 138-12  certificate by the school indicating the course and that training
 138-13  was satisfactorily completed;
 138-14              (7)  adequate records as required by the board are kept
 138-15  to show attendance and progress or grades, and satisfactory
 138-16  standards relating to attendance, progress, and conduct are
 138-17  enforced;
 138-18              (8)  the school complies with all local, city, county,
 138-19  municipal, state, and federal regulations; the board may require
 138-20  evidence of compliance as is necessary;
 138-21              (9)  the school is financially sound and capable of
 138-22  fulfilling its commitments for training;
 138-23              (10)  the school's administrators, directors, owners,
 138-24  and instructors are of good reputation and character;
 138-25              (11)  the school has, maintains, and publishes in its
 138-26  catalog and enrollment contract the proper policy for the refund of
 138-27  the unused portion of tuition, fees, and other charges in the event
  139-1  the student enrolled by the school fails to take the course or
  139-2  withdraws or is discontinued from the course at any time before
  139-3  completion;
  139-4              (12)  the school does not use erroneous or misleading
  139-5  advertising, either by actual statement, omission, or intimation as
  139-6  determined by the board;
  139-7              (13)  additional criteria as may be required by the
  139-8  commission;
  139-9              (14)  the school does not use a name like or similar to
 139-10  an existing tax-supported school in the same area;
 139-11              (15)  the school furnishes to the board the current
 139-12  rates of students who receive a certificate of completion and of
 139-13  job placement and employment of students issued a certificate of
 139-14  completion;
 139-15              (16)  the school furnishes to the board for approval or
 139-16  disapproval student admission requirements for each course or
 139-17  program offered by the school;
 139-18              (17)  the school furnishes to the board for approval or
 139-19  disapproval the course lengths and curriculum content for each
 139-20  course offered by the school; and
 139-21              (18)  the school does not owe a civil penalty under
 139-22  Section 9 of this Act.
 139-23        Sec. 9C.  (a)  A barber school or college must submit to the
 139-24  board for approval, on an annual basis, a school catalog or
 139-25  comparable written documents detailing the consumer information
 139-26  that must be given to a prospective student before enrollment.  The
 139-27  school catalog or documents must include:
  140-1              (1)  the name and address of the school and the
  140-2  school's governing body and officials;
  140-3              (2)  a calendar of the school year;
  140-4              (3)  school policies on enrollment;
  140-5              (4)  rules relating to absences;
  140-6              (5)  the school grading policy;
  140-7              (6)  the school's hours of operation and rules of
  140-8  conduct;
  140-9              (7)  a schedule of the tuition and other fees assessed;
 140-10              (8)  the school's cancellation and refund policy;
 140-11              (9)  a general description of the course or courses
 140-12  offered;
 140-13              (10)  information on entrance testing and remedial
 140-14  development plans;
 140-15              (11)  state licensing requirements for courses intended
 140-16  to result in licensing of the student;
 140-17              (12)  starting range and average reported salaries for
 140-18  the prior year's graduates in occupations for which courses are
 140-19  offered, if the information is available;
 140-20              (13)  the current rates of job placement and employment
 140-21  of students who complete a course of training;
 140-22              (14)  the school policy on credit for previous
 140-23  education and training;
 140-24              (15)  school regulations relating to incomplete grades;
 140-25              (16)  information on the transferability of credits
 140-26  earned;
 140-27              (17)  the name, mailing address, and telephone number
  141-1  of the board for the purpose of directing complaints to the board
  141-2  and the mechanism and procedures for resolving grievances submitted
  141-3  to the board;
  141-4              (18)  a statement that the board has information on
  141-5  cost comparison with similar schools;
  141-6              (19)  market and job availability information, if
  141-7  available;
  141-8              (20)  the names of the members of any advisory council
  141-9  of the school and the company for which they work; and
 141-10              (21)  other information required by the executive
 141-11  director or board if reasonable notice has been given by the board
 141-12  to the school of the additional requirements.
 141-13        (b)  A barber school or college may not accept a signed
 141-14  student enrollment contract or accept a student into any school
 141-15  program until at least 24 hours after the student has received the
 141-16  catalog or comparable written documents required under this
 141-17  section.
 141-18        (c)  A student must sign a receipt stating that:
 141-19              (1)  the catalog was received by the student before any
 141-20  commitment made by the student to the school or by the school to
 141-21  the student;
 141-22              (2)  the student was given an opportunity to discuss
 141-23  the catalog with a representative of the school; and
 141-24              (3)  the student understands the contents and
 141-25  implications of the catalog.
 141-26        (d)  The receipt required by Subsection (c) of this section
 141-27  must be placed in the student's permanent school file and a copy of
  142-1  the receipt must be delivered to the student.
  142-2        Sec. 9D.  (a)  A barber school or college must submit to the
  142-3  board for approval the course lengths and curriculum content for
  142-4  each course offered by the school or college.  The course lengths
  142-5  and content may not be implemented unless the board approves them.
  142-6  The course lengths and content shall reasonably ensure that
  142-7  students develop the job skills and knowledge necessary for
  142-8  employment.
  142-9        (b)  The board shall require a school or college to fully
 142-10  account for all curriculum contents and course lengths before
 142-11  issuing or renewing a permit and a school or college that is
 142-12  offering course lengths below or above industry standards may be
 142-13  issued a conditional permit to operate.
 142-14        Sec. 9E.  (a)  The board shall set and enforce minimum
 142-15  standards for completion and employment rates of courses, based on
 142-16  collected data.
 142-17        (b)  In determining whether to renew a barber school or
 142-18  college permit, the board shall consider the completion, placement,
 142-19  and employment rates of students of the courses.
 142-20        (c)  Before a school or college may begin offering a new
 142-21  course of study for students the school or college must show the
 142-22  board the opportunity for jobs for graduates of the course and the
 142-23  possibility of placement or employment.
 142-24        (d)  Before the board issues or renews a barber school or
 142-25  college permit involving a school or college that offers or
 142-26  advertises a placement service, the board may require the school or
 142-27  college to file a certified copy of the school's or college's
  143-1  placement records for the previous year.
  143-2        Sec. 9F.  (a)  The board shall conduct on-site inspections of
  143-3  a barber school or college to determine the normal operating
  143-4  conditions of the school or college.
  143-5        (b)  The inspection required by Subsection (a) of this
  143-6  section shall be unannounced.
  143-7        (c)  The executive director or a designee of the executive
  143-8  director may inspect such things as the instructional books and
  143-9  records, classrooms, dormitories, tools, equipment, and classes of
 143-10  a barber school or college or an applicant for a permit for a
 143-11  school or college at any reasonable time.
 143-12        Sec. 9G.  (a)  At the beginning of each fiscal year the board
 143-13  shall collect a fee from the school or college for deposit in a
 143-14  special account in the general revenue fund of the state treasury
 143-15  called the barber school or college account and to be administered
 143-16  by the board.
 143-17        (b)  The amount of the fee is determined by applying a
 143-18  percentage established by the board, based on the recommendation of
 143-19  the school accounts advisory board, to each school's or college's
 143-20  annual gross tuition, with consideration given to the school's
 143-21  size, expense of regulation, potential for teachouts, tuition and
 143-22  fees refund and recovery exposure, and loan default rates (with
 143-23  schools with high default rates paying higher fees), and any other
 143-24  relevant factors.  The account shall be used for:
 143-25              (1)  the administration of this Act;
 143-26              (2)  the cost of teachouts as provided by this Act;
 143-27              (3)  the cost of tuition and fees recovery and the cost
  144-1  of student refunds that a school has not made; and
  144-2              (4)  the cost of storing student records that have
  144-3  become property of the state under this Act.
  144-4        (c)  The board may grant an exemption from payment into the
  144-5  account to a small school, as determined by the board, or to a
  144-6  school that does not use guaranteed student loans for tuition
  144-7  revenue.  A school exempt as provided for by this subsection must
  144-8  pay the necessary fees for regulation, as determined by the board,
  144-9  and provide a bond, certificate of deposit, or comparable security,
 144-10  as determined and approved by the board, that is sufficient to
 144-11  cover the cost of the school's or college's record storage costs,
 144-12  teachout, and tuition and fees refund and recovery exposure based
 144-13  on the evidence the school or college submits proving its projected
 144-14  maximum total unearned tuition during the period of the permit to
 144-15  operate.
 144-16        (d)  The security shall be provided by the school or college
 144-17  for the period during which the permit is issued, and the
 144-18  obligation of the bond or other security must be that neither this
 144-19  Act nor any rule adopted under this Act is violated by the school
 144-20  or college or any of its officers, agents, or employees.
 144-21        (e)  The bond, certificate of deposit, or comparable security
 144-22  must be issued by a company authorized to do business in the state,
 144-23  conditioned that the parties to the transaction shall pay all
 144-24  damages or expenses that the state or any governmental subdivision
 144-25  or any student or potential student sustains resulting from a
 144-26  violation.  The bond, certificate of deposit, or comparable
 144-27  security shall be to the state to be used only for payment for the
  145-1  school's or college's teachout and tuition and fees refund due to a
  145-2  student or potential student.  The security shall be filed with the
  145-3  board and must be in a form approved by the board.
  145-4        (f)  Schools domiciled, or having their principal place of
  145-5  business, outside the state, that engage representatives to
  145-6  canvass, solicit, or contract with any person in the state are
  145-7  subject to the fee and security requirements of Subsection (c) of
  145-8  this section.
  145-9        (g)  The board shall refer all expenses incurred by the
 145-10  school or college account in administering Subsections (b)(2) and
 145-11  (3) of this section to the attorney general's office for
 145-12  collection.  The amounts collected shall be deposited to the
 145-13  account.  Attorney's fees and court costs will be appropriated to
 145-14  the attorney general's office.
 145-15        (h)  Interest the account earns shall be reinvested in the
 145-16  account.  The state treasurer shall invest the account in the same
 145-17  manner as other state funds.  Sufficient funds from the account
 145-18  shall be appropriated to the board for the purpose outlined in this
 145-19  section.  The board shall administer claims made against the
 145-20  account.
 145-21        (i)  If a school or college closes, the board shall attempt
 145-22  to arrange for students of the closed school or college to attend
 145-23  another barber school or college.  The board shall adopt rules
 145-24  specifying the circumstances under which a school is considered
 145-25  closed.
 145-26        (j)  The expense incurred by a barber school or college in
 145-27  providing training that is directly related to educating a student
  146-1  who was enrolled in a closed school or college and placed in the
  146-2  school or college under this section, including the applicable
  146-3  tuition for the period of time for which the student has paid
  146-4  tuition, shall be paid in accordance with rules of the board.
  146-5        (k)  The board shall make reasonable attempts to ensure that
  146-6  schools under the board's jurisdiction, including closed schools,
  146-7  fulfill the refund obligation as provided by Section 9A of this
  146-8  Act.  If a school refuses to fulfill the school's obligation or the
  146-9  school's bond is insufficient to pay the cost of the teachout and
 146-10  refund expenses, the teachout or the refund may be paid from the
 146-11  barber school or college account except that no school owned,
 146-12  either in whole or in part, by a person or corporate entity who was
 146-13  an owner, in whole or in part, of a previously closed school shall
 146-14  be permitted to receive compensation for a teachout under this
 146-15  section.
 146-16        (l)  If a student cannot be placed in another school or
 146-17  college, the student's tuition and fees shall be refunded under
 146-18  Section 9A(g) of this Act.
 146-19        (m)  If a student does not accept a place that is available
 146-20  and reasonable in another school or college, the student's tuition
 146-21  and fees shall be refunded under the refund policy maintained by
 146-22  the closing school under Sections 9A(b) and (c) of this Act.
 146-23        (n)  Attorney's fees, court costs, or damages may not be paid
 146-24  from the barber school or college account.
 146-25        (o)  The board by rule shall establish and assess reasonable
 146-26  and necessary fees to all persons and entities licensed under this
 146-27  Act to be used for the regulation of those persons and entities
  147-1  licensed under this Act and to supplement the administration and
  147-2  purposes outlined by this Act.
  147-3        (p)  The board may permit payment of any fee authorized under
  147-4  this section that exceeds $1,000 to be paid by installment.  The
  147-5  board shall provide for appropriate interest charges and late
  147-6  penalties in addition to any other remedy that is provided for by
  147-7  law for the late payment of a fee installment authorized under this
  147-8  section.  The board may assess a reasonable service charge to be
  147-9  paid by a school that pays a fee by installment in an amount not to
 147-10  exceed an annual rate of 10 percent of the fee that is to be paid
 147-11  by installment.
 147-12        Sec. 9H.  (a)  The board shall prepare a comparison of the
 147-13  cost to a student of courses of instruction or training programs at
 147-14  all barber schools or colleges maintained by persons who hold
 147-15  barber school or college permits issued by the board.
 147-16        (b)  The cost comparison must include for each school or
 147-17  college a description of:
 147-18              (1)  average class size;
 147-19              (2)  facilities and equipment;
 147-20              (3)  employment and placement rates;
 147-21              (4)  length of program; and
 147-22              (5)  faculty qualifications.
 147-23        Sec. 9I.  (a)  A barber school or college must disclose to
 147-24  all prospective students state licensing requirements to practice
 147-25  the occupation for which the student is training.
 147-26        (b)  A school or college must disclose to all prospective
 147-27  students the performance of graduates from the school or college on
  148-1  the licensing examination of the board if that information is
  148-2  available.
  148-3        Sec. 9J.  (a)  The board shall approve entrance requirements,
  148-4  including minimum skills testing, for students who may be accepted
  148-5  for a course of study in a barber school or college.  The
  148-6  requirements must be specific and provide that students who are
  148-7  allowed to enter a course will have a reasonable chance of
  148-8  completing the program.
  148-9        (b)  The school or college shall administer a standardized
 148-10  test to students with a high school diploma or high school
 148-11  equivalency certificate entering the school, if testing for minimum
 148-12  skill competency is determined by the board as appropriate and
 148-13  necessary to determine if remediation is needed.  The test must be
 148-14  administered before enrollment and must be nationally recognized as
 148-15  appropriate and effective for minimum skills testing and high
 148-16  school equivalency.  If the test reveals the necessity for
 148-17  remediation, the school or college must implement a plan to
 148-18  encourage the student to improve in basic general education skills.
 148-19        (c)  A student must achieve a successful score on the test
 148-20  required by this section before the student is obligated for
 148-21  tuition and fees for the vocational portion of the school's
 148-22  program.
 148-23        (d)  The school or college may, in accordance with federal
 148-24  statutory provisions affecting guaranteed student loan programs, on
 148-25  a case-by-case basis, refuse to provide the certification
 148-26  statements required for guaranteed student loan eligibility, or
 148-27  reduce the determination of need for a guaranteed student loan if
  149-1  the school or college determines that the student's expenses to be
  149-2  covered by the loan and the estimated cost of attendance, can be
  149-3  met more appropriately by the school or college, directly by the
  149-4  student, or by other sources.
  149-5        Sec. 9K.  (a)  An applicant without a high school diploma or
  149-6  high school equivalency certificate must pass an entrance test
  149-7  approved by the board and be considered to have the ability to
  149-8  benefit from the school or college before the school or college may
  149-9  enroll the student.
 149-10        (b)  A school or college that admits a student who does not
 149-11  have a high school diploma or high school equivalency certificate
 149-12  must develop and implement a plan for counseling the student on
 149-13  curriculum, student aid, employment opportunities, and the
 149-14  remediation necessary for the student to obtain a high school
 149-15  equivalency certificate and improve in basic general education
 149-16  skills.
 149-17        (c)  The school or college must assist the student in
 149-18  obtaining the remediation necessary for the student to pass a
 149-19  standardized minimum skills equivalency test, approved by the
 149-20  board, and the student must pass the test before entering the final
 149-21  quarter of the course.
 149-22        Sec. 9L.  (a)  The enrollment contract of a barber school or
 149-23  college must contain:
 149-24              (1)  a disclosure that the contract is a legally
 149-25  binding instrument on written acceptance of the student by the
 149-26  school or college, unless canceled as provided by law;
 149-27              (2)  the school's or college's cancellation and refund
  150-1  policy;
  150-2              (3)  the method of cancellation of the contract, the
  150-3  effective date of any cancellation, and the name and address to
  150-4  which the notice of cancellation should be sent or delivered;
  150-5              (4)  the total cost of the course including tuition and
  150-6  all other charges;
  150-7              (5)  a notification that the fair market value of
  150-8  equipment or supplies furnished to the student that the student
  150-9  fails to return in a condition suitable for resale not later than
 150-10  the 10th business day after the date of cancellation may be
 150-11  retained by the school or college and deducted from any refund of
 150-12  the student;
 150-13              (6)  a statement that if a student's enrollment is
 150-14  canceled for any reason, the school or college will notify an
 150-15  agency known to the school or college to be providing financial aid
 150-16  to the student of the cancellation not later than the 30th day
 150-17  after the date of cancellation;
 150-18              (7)  the name and description of the courses, including
 150-19  the number of hours of classroom instruction or home study lessons;
 150-20  and
 150-21              (8)  the Federal Trade Commission statement for a
 150-22  holder in due course.
 150-23        (b)  An enrollment contract may not contain a wage assignment
 150-24  provision or a confession of judgment clause.
 150-25        (c)  Immediately after a prospective student has signed an
 150-26  enrollment contract, the school or college shall give the
 150-27  prospective student a copy of the contract, and a copy shall be
  151-1  placed in the student's permanent school or college file.
  151-2        (d)  A promissory note signed by a student must include the
  151-3  Federal Trade Commission statement required for a holder in due
  151-4  course.
  151-5        Sec. 9M.  (a)  A school or college shall conduct loan
  151-6  counseling entrance interviews with each prospective student
  151-7  seeking a loan during the enrollment process.  A student borrower
  151-8  shall be counseled before the initial disbursement of loan
  151-9  proceeds, shortly before the student completes one-half of the
 151-10  course, and before the student is issued a certificate of
 151-11  completion.
 151-12        (b)  The school's or college's financial aid officer or
 151-13  counselor shall conduct the interviews required by Subsection (a)
 151-14  of this section.  The interview must include a discussion of:
 151-15              (1)  the rights and responsibilities of the student as
 151-16  a borrower;
 151-17              (2)  what a loan is and the importance of repayment;
 151-18              (3)  the total cost of the program in which the student
 151-19  will be enrolled;
 151-20              (4)  the availability of other forms of financial aid,
 151-21  grants, and part-time work;
 151-22              (5)  the starting range and average reported salaries
 151-23  of those in the occupation for which the student will be trained,
 151-24  if available; and
 151-25              (6)  job placement services provided by the school or
 151-26  college and the employment rate of persons who attended the school
 151-27  or college and were enrolled in the program in which the student is
  152-1  enrolled.
  152-2        (c)  A school approved to accept state or federal educational
  152-3  loans or grants shall adopt, in addition to the provisions in this
  152-4  section, measures to reduce defaults and improve borrowers
  152-5  understanding and respect for the loan repayment obligation as
  152-6  provided in 34 C.F.R., Parts 668 and 682.
  152-7        (d)  The school or college must give a copy of the Texas
  152-8  Guaranteed Student Loan Corporation's "Your Future" guide, or a
  152-9  comparable document approved by the board, to a prospective student
 152-10  at a time and in a manner that provides the student with sufficient
 152-11  opportunity to read the guide or other document and discuss the
 152-12  contents with the school's financial aid officer, if necessary for
 152-13  understanding and clarity, before signing an enrollment contract
 152-14  and before the school accepts the student in a course of study.
 152-15        (e)  The prospective student must sign a document stating
 152-16  that the student:
 152-17              (1)  attended a loan counseling entrance interview; and
 152-18              (2)  received a copy of the "Your Future" guide or
 152-19  comparable document in the time provided by Subsection (d) of this
 152-20  section.
 152-21        (f)  A copy of the signed document required by Subsection (e)
 152-22  of this section must be sent to the student, guarantor, and lender
 152-23  and must be placed in the student's permanent school or college
 152-24  file.
 152-25        Sec. 9N.  (a)  A barber school or college shall maintain
 152-26  permanent records for all students enrolled, as required by the
 152-27  board.
  153-1        (b)  A school or college shall adopt a plan to preserve
  153-2  permanent records and submit the plan to the board for approval.
  153-3  The plan must:
  153-4              (1)  provide that at least one copy of the records will
  153-5  be held in a secure depository; and
  153-6              (2)  designate an appropriate official to provide a
  153-7  student with copies of records or transcripts on request.
  153-8        (c)  The school or college shall make the first copy of
  153-9  records or transcripts at no charge to the student.  The school or
 153-10  college may make a reasonable charge to provide additional copies
 153-11  of records, transcripts, or other student information.
 153-12        (d)  If a school or college closes, the records become the
 153-13  property of the state.
 153-14        Sec. 9O.  (a)  The board may not adopt rules that restrict
 153-15  advertising by a barber school or college except to prohibit false,
 153-16  misleading, or deceptive advertising practices.  The rules may not
 153-17  restrict:
 153-18              (1)  the use of an advertising medium;
 153-19              (2)  the size or duration of an advertisement; or
 153-20              (3)  advertisement under a trade name.
 153-21        (b)  A school or college, the representative of a school or
 153-22  college, or a recruiter for the school or college may not advertise
 153-23  or represent, in writing or orally, that a school or college is
 153-24  approved or accredited by the state.  Those entities or persons may
 153-25  advertise that the school or college has been granted a permit by
 153-26  the state.
 153-27        (c)  A school or college, representative of a school or
  154-1  college, or recruiter of a school or college may not make or cause
  154-2  to be made a statement or representation, written, oral, or visual,
  154-3  offering or publicizing a course, program, or school or college, if
  154-4  the school or college, representative, or recruiter knew or
  154-5  reasonably should have known that the statement or representation
  154-6  was false, fraudulent, deceptive, substantially inaccurate, or
  154-7  misleading.
  154-8        Sec. 9P.  (a)  A school or college may not reflect unearned
  154-9  tuition as a current asset unless the amount shown in current
 154-10  assets that reflects unearned tuition is offset by an equal amount
 154-11  shown as a current liability.  The school or college must meet one
 154-12  of the following criteria in order to be determined as financially
 154-13  sound and capable of fulfilling its commitments for training:
 154-14              (1)  current assets must bear a relationship to current
 154-15  liabilities in a ratio of at least one-to-one;
 154-16              (2)  the equity of the owner of the school or college
 154-17  must be in excess of $10,000,000; or
 154-18              (3)  the school or college must have posted, or set
 154-19  aside in a dedicated escrow account, a bond, certificate of
 154-20  deposit, irrevocable letter of credit, or comparable security,
 154-21  acceptable to the board, each made payable to the State of Texas,
 154-22  in an amount sufficient to cover the school's or college's record
 154-23  storage costs, teachout, and tuition and fees refund and recovery
 154-24  exposure based on the evidence the school or college submits
 154-25  proving its projected maximum total unearned tuition during the
 154-26  period of time covered by the evidence of indebtedness to the
 154-27  State.
  155-1        (b)  The school or college must demonstrate to the
  155-2  satisfaction of the board its financial soundness and ability to
  155-3  fulfill its commitments for training.
  155-4        Sec. 9Q.  PROHIBITIONS.  A person may not:
  155-5              (1)  operate a barber school or college without a
  155-6  permit or assume ownership of an existing barber school or college
  155-7  without obtaining a new permit;
  155-8              (2)  solicit prospective students for a barber school
  155-9  or college without having a permit as required by this Act;
 155-10              (3)  accept contracts or enrollment applications from a
 155-11  representative of a barber school or college who is not registered
 155-12  as required by any board rule requiring registration;
 155-13              (4)  use advertising designed to mislead or deceive
 155-14  prospective barber school or college students;
 155-15              (5)  fail to notify the board of the discontinuance of
 155-16  the operation of any barber school or college not later than the
 155-17  72nd hour after cessation of classes or make available accurate
 155-18  records as required by this Act;
 155-19              (6)  fail to secure and file within 30 days any
 155-20  increased bond required by this Act;
 155-21              (7)  negotiate any promissory instrument received as
 155-22  payment of tuition for a barber school or college or other charge
 155-23  before completion of 75 percent of the course, provided that before
 155-24  that time, the instrument may be transferred by assignment to a
 155-25  purchaser who is subject to any defense available against the
 155-26  barber school or college named as payee;
 155-27              (8)  enroll a student in a barber school or college who
  156-1  fails to satisfy entrance requirements; or
  156-2              (9)  violate any provision of this Act relating to a
  156-3  barber school or college or a rule adopted under this Act relating
  156-4  to a barber school or college.
  156-5        Sec. 9R.  ADMINISTRATIVE PENALTY.  (a)  The board may impose
  156-6  an administrative penalty against a person  who violates Section 9Q
  156-7  of this Act.
  156-8        (b)  The penalty for a violation may be in an amount not to
  156-9  exceed $10,000.
 156-10        (c)  The amount of the penalty shall be based on:
 156-11              (1)  the seriousness of the violation, including the
 156-12  nature, circumstances, extent, and gravity of any prohibited acts;
 156-13              (2)  efforts to correct the violation; and
 156-14              (3)  any other matter that justice may require.
 156-15        (d)  An executive director who determines that a violation
 156-16  has occurred may issue to the board a report that states the facts
 156-17  on which the determination is based and the director's
 156-18  recommendation on the imposition of a penalty, including a
 156-19  recommendation on the amount of the penalty.
 156-20        (e)  Within 14 days after the date the report is issued, the
 156-21  executive director shall give written notice of the report to the
 156-22  person.  The notice may be given by certified mail.  The notice
 156-23  must include a brief summary of the alleged violation and a
 156-24  statement of the amount of the recommended penalty and must inform
 156-25  the person that the person has a right to a hearing on the
 156-26  occurrence of the violation, the amount of the penalty, or both the
 156-27  occurrence of the violation and the amount of the penalty.
  157-1        (f)  Within 20 days after the date the person receives the
  157-2  notice, the person in writing may accept the determination and
  157-3  recommended penalty of the executive director or may make a written
  157-4  request for a hearing on the occurrence of the violation, the
  157-5  amount of the penalty, or both the occurrence of the violation and
  157-6  the amount of the penalty.
  157-7        (g)  If the person accepts the determination and recommended
  157-8  penalty of the executive director, the board by order shall approve
  157-9  the determination and impose the recommended penalty.
 157-10        (h)  If the person requests a hearing or fails to respond
 157-11  timely to the notice, the executive director shall set a hearing
 157-12  and give notice of the hearing to the person.  The hearing shall be
 157-13  held by an administrative law judge of the State Office of
 157-14  Administrative Hearings.  The administrative law judge shall make
 157-15  findings of fact and conclusions of law and promptly issue to the
 157-16  board a proposal for a decision about the occurrence of the
 157-17  violation and the amount of a proposed penalty.  Based on the
 157-18  findings of fact, conclusions of law, and proposal for a decision,
 157-19  the board by order may find that a violation has occurred and
 157-20  impose a penalty or may find that no violation occurred.
 157-21        (i)  The notice of the board's order given to the person
 157-22  under the Administrative Procedure and Texas Register Act (Article
 157-23  6252-13a, Vernon's Texas Civil Statutes) and its subsequent
 157-24  amendments must include a statement of the right of the person to
 157-25  judicial review of the order.
 157-26        (j)  Within 30 days after the date the board's order is final
 157-27  as provided by Section 16(c), Administrative Procedure and Texas
  158-1  Register Act (Article 6252-13a, Vernon's Texas Civil Statutes), and
  158-2  its subsequent amendments, the person shall:
  158-3              (1)  pay the amount of the penalty;
  158-4              (2)  pay the amount of the penalty and file a petition
  158-5  for judicial review contesting the occurrence of the violation, the
  158-6  amount of the penalty, or both the occurrence of the violation and
  158-7  the amount of the penalty; or
  158-8              (3)  without paying the amount of the penalty, file a
  158-9  petition for judicial review contesting the occurrence of the
 158-10  violation, the amount of the penalty, or both the occurrence of the
 158-11  violation and the amount of the penalty.
 158-12        (k)  Within the 30-day period, a person who acts under
 158-13  Subsection (j)(3) of this section may:
 158-14              (1)  stay enforcement of the penalty by:
 158-15                    (A)  paying the amount of the penalty to the
 158-16  court for placement in an escrow account; or
 158-17                    (B)  giving to the court a supersedeas bond that
 158-18  is approved by the court for the amount of the penalty and that is
 158-19  effective until all judicial review of the board's order is final;
 158-20  or
 158-21              (2)  request the court to stay enforcement of the
 158-22  penalty by:
 158-23                    (A)  filing with the court a sworn affidavit of
 158-24  the person stating that the person is financially unable to pay the
 158-25  amount of the penalty and is financially unable to give the
 158-26  supersedeas bond; and
 158-27                    (B)  giving a copy of the affidavit to the
  159-1  executive director by certified mail.
  159-2        (l)  An executive director who receives a copy of an
  159-3  affidavit under Subsection (k)(2) of this section may file with the
  159-4  court, within five days after the date the copy is received, a
  159-5  contest to the affidavit.  The court shall hold a hearing on the
  159-6  facts alleged in the affidavit as soon as practicable and shall
  159-7  stay the enforcement of the penalty on finding that the alleged
  159-8  facts are true.  The person who files an affidavit has the burden
  159-9  of proving that the person is financially unable to pay the amount
 159-10  of the penalty and to give a supersedeas bond.
 159-11        (m)  If the person does not pay the amount of the penalty and
 159-12  the enforcement of the penalty is not stayed, the executive
 159-13  director may refer the matter to the attorney general for
 159-14  collection of the amount of the penalty.
 159-15        (n)  Judicial review of the order of the board:
 159-16              (1)  is instituted by filing a petition as provided by
 159-17  Section 19, Administrative Procedure and Texas Register Act
 159-18  (Article 6252-13a, Vernon's Texas Civil Statutes), and its
 159-19  subsequent amendments; and
 159-20              (2)  is under the substantial evidence rule.
 159-21        (o)  If the court sustains the occurrence of the violation,
 159-22  the court may uphold or reduce the amount of the penalty and order
 159-23  the person to pay the full or reduced amount of the penalty.  If
 159-24  the court does not sustain the occurrence of the violation, the
 159-25  court shall order that no penalty is owed.
 159-26        (p)  When the judgment of the court becomes final, the court
 159-27  shall proceed under this subsection.  If the person paid the amount
  160-1  of the penalty and if that amount is reduced or is not upheld by
  160-2  the court, the court shall order that the appropriate amount plus
  160-3  accrued interest be remitted to the person.  The rate of the
  160-4  interest is the rate charged on loans to depository institutions by
  160-5  the New York Federal Reserve Bank, and the interest shall be paid
  160-6  for the period beginning on the date the penalty was paid and
  160-7  ending on the date the penalty is remitted.  If the person gave a
  160-8  supersedeas bond and if the amount of the penalty is not upheld by
  160-9  the court, the court shall order the release of the bond.  If the
 160-10  person gave a supersedeas bond and if the amount of the penalty is
 160-11  reduced, the court shall order the release of the bond after the
 160-12  person pays the amount.
 160-13        (q)  A penalty collected under this section shall be remitted
 160-14  to the comptroller for deposit in the general revenue fund.
 160-15        (r)  All proceedings under this section are subject to the
 160-16  Administrative Procedure and Texas Register Act (Article 6252-13a,
 160-17  Vernon's Texas Civil Statutes) and its subsequent amendments.
 160-18        Sec. 9S.  (a)  A person commits an offense if the person
 160-19  fails to comply with Section 9 or 9A of this Act.  Except as
 160-20  provided by Subsection (b) of this section, an offense under this
 160-21  section is a Class A misdemeanor.
 160-22        (b)  A person commits an offense if the person intentionally
 160-23  or knowingly uses for personal benefit funds in an amount greater
 160-24  than $10,000 that are due as student refunds under Section 9A of
 160-25  this Act.  An offense under this subsection is a felony of the
 160-26  third degree.
 160-27        SECTION 4.06.  Sections 15(c) and (d), Chapter 65, Acts of
  161-1  the 41st Legislature, 1st Called Session, 1929 (Article 8407a,
  161-2  Vernon's Texas Civil Statutes), are amended to read as follows:
  161-3        (c)  The application shall be made on a form prescribed by
  161-4  the board and an <a $10> administration fee in an amount
  161-5  established by the board must accompany the application.
  161-6        (d)  The applicant is entitled to a manicurist license if
  161-7  such applicant possesses the qualifications enumerated in Section
  161-8  15(b), satisfactorily completes the examination, pays a license fee
  161-9  in an amount established by the board <not to exceed $30>, and has
 161-10  not committed an act which constitutes grounds for denial of a
 161-11  license under this Act.
 161-12        SECTION 4.07.  Sections 15A(b) and (g), Chapter 65, Acts of
 161-13  the 41st Legislature, 1st Called Session, 1929 (Article 8407a,
 161-14  Vernon's Texas Civil Statutes), are amended to read as follows:
 161-15        (b)  An applicant for a manicurist specialty shop permit must
 161-16  submit a written application to the board.  The application must be
 161-17  accompanied by an inspection fee set by the board <in an amount not
 161-18  to exceed $50>.  The application must include the address of the
 161-19  shop, a legal description of the premises for which the permit is
 161-20  sought, and any other information required by the board.  As soon
 161-21  as practicable after receipt of the application and fee, the board
 161-22  shall issue a temporary manicurist specialty shop permit to the
 161-23  applicant.
 161-24        (g)  A permit issued under this section expires July 1 of
 161-25  each odd-numbered year.  A holder may renew the permit by
 161-26  submitting a renewal application to the board, accompanied by a
 161-27  renewal fee set by the board <not to exceed $50>.
  162-1        SECTION 4.08.  Sections 16(c) and (d), Chapter 65, Acts of
  162-2  the 41st Legislature, 1st Called Session, 1929 (Article 8407a,
  162-3  Vernon's Texas Civil Statutes), are amended to read as follows:
  162-4        (c)  The application shall be made on a form prescribed by
  162-5  the board <commission> and an <a $10> administration fee in an
  162-6  amount established by the board must accompany the application.
  162-7        (d)  The applicant is entitled to a wig specialist license if
  162-8  he possesses the qualifications enumerated in Subsection (b) of
  162-9  this section, satisfactorily completes the examination, pays a
 162-10  license fee in an amount established by the board <not to exceed
 162-11  $30>, and has not committed an act which constitutes grounds for
 162-12  revocation of a license under this Act.
 162-13        SECTION 4.09.  Sections 17(c) and (d), Chapter 65, Acts of
 162-14  the 41st Legislature, 1st Called Session, 1929 (Article 8407a,
 162-15  Vernon's Texas Civil Statutes), are amended to read as follows:
 162-16        (c)  The application shall be made on a form prescribed by
 162-17  the board, state the education and experience level of the
 162-18  applicant in all courses or programs that the applicant will teach
 162-19  or instruct, and an <a $5> administration fee in an amount
 162-20  established by the board must accompany the application.
 162-21        (d)  The board shall review an application for competency,
 162-22  consistency, and the overall quality of the applicant.  The
 162-23  applicant is entitled to a wig instructor license if he possesses
 162-24  the qualifications enumerated in Subsection (b) of this section,
 162-25  satisfactorily completes the examination, pays a license fee in an
 162-26  amount established by the board <not to exceed $100>, and has not
 162-27  committed any act constituting grounds for revocation of a license
  163-1  under this Act.
  163-2        SECTION 4.10.  Sections 18(b) and (g), Chapter 65, Acts of
  163-3  the 41st Legislature, 1st Called Session, 1929 (Article 8407a,
  163-4  Vernon's Texas Civil Statutes), are amended to read as follows:
  163-5        (b)  An applicant for a wig specialty shop permit must submit
  163-6  a written application to the board.  The application must be
  163-7  accompanied by an inspection fee set by the board <in an amount not
  163-8  to exceed $50>.  The application must include the address of the
  163-9  shop, a legal description of the premises for which the permit is
 163-10  sought, and any other information required by the board.  As soon
 163-11  as practicable after receipt of the application and fee, the board
 163-12  shall issue a temporary wig specialty shop permit to the applicant.
 163-13        (g)  A permit issued under this section expires July 1 of
 163-14  each odd-numbered year.  A holder may renew the permit by
 163-15  submitting a renewal application to the board, accompanied by a
 163-16  renewal fee set by the board <not to exceed $50>.
 163-17        SECTION 4.11.  Section 18.1(c), Chapter 65, Acts of the 41st
 163-18  Legislature, 1st Called Session, 1929 (Article 8407a, Vernon's
 163-19  Texas Civil Statutes), is amended to read as follows:
 163-20        (c)  The applicant is entitled to a wig school permit if the
 163-21  application shows compliance with the rules and regulations of the
 163-22  board, a <$100> permit fee in an amount established by the board is
 163-23  paid, and applicant has not committed an act which constitutes
 163-24  grounds for revocation of a license or permit under this Act.
 163-25        SECTION 4.12.  Section 19, Chapter 65, Acts of the 41st
 163-26  Legislature, 1st Called Session, 1929 (Article 8407a, Vernon's
 163-27  Texas Civil Statutes), is amended to read as follows:
  164-1        Sec. 19.  DISPLAY OF CERTIFICATE.  (a)  Every holder of a
  164-2  certificate of registration or license issued by the board shall
  164-3  display the original certificate or license, together with an
  164-4  attached photograph of the certificate holder or licensee, in a
  164-5  conspicuous place adjacent to or near the certificate holder's or
  164-6  licensee's work-chair in the shop in which the certificate holder
  164-7  or licensee is working or employed.
  164-8        (b)  The board may not use the word "approval" or a variation
  164-9  of that term on the permit of a barber school or college.  The
 164-10  terminology must be "permit" to operate, or a variation of that
 164-11  phrase.
 164-12        SECTION 4.13.  Sections 20(a), (c), and (d), Chapter 65, Acts
 164-13  of the 41st Legislature, 1st Called Session, 1929 (Article 8407a,
 164-14  Vernon's Texas Civil Statutes), are amended to read as follows:
 164-15        (a)  Each certificate of registration or license issued under
 164-16  this Act expires two years from the date of issuance.  Each
 164-17  registered Class A barber, barber technician, teacher, wig
 164-18  instructor, wig specialist, manicurist, or other licensed
 164-19  specialist who continues in active practice or service must renew
 164-20  the certificate or license on or before the expiration date.  The
 164-21  Board shall issue a renewal certificate or license on receipt of a
 164-22  renewal application in the form prescribed by the Board,
 164-23  accompanied by the renewal fee set by the Board in the amount for
 164-24  an original certificate or license<, but not to exceed $100>.
 164-25        (c)  Any registered barber or licensee whose certificate of
 164-26  registration or license has been expired for not more than five (5)
 164-27  years may reinstate the certificate of registration or license by
  165-1  making proper showing to the Board, supported by his personal
  165-2  affidavit, which, in the opinion of the Board, would justify the
  165-3  Board in issuing a certificate or license to such applicant as upon
  165-4  an original application upon payment of a fee equal to the current
  165-5  amount of the original certificate or license fee, plus a
  165-6  delinquency fee in an amount established by the Board <of $30> for
  165-7  each year or part of a year that the certificate or license has
  165-8  been expired.
  165-9        (d)  Any registered barber or licensee who retires from
 165-10  practice and whose certificate of registration or license has been
 165-11  expired for more than five (5) years may qualify for a new
 165-12  certificate of registration or license by making application to the
 165-13  Board and by making proper showing to the Board, supported by his
 165-14  personal affidavit, and by paying an examination fee in an amount
 165-15  established by the Board <not to exceed $100>, passing a
 165-16  satisfactory examination conducted by the Board, and paying the fee
 165-17  for an original certificate of registration or license.
 165-18        SECTION 4.14.  Section 20a, Chapter 65, Acts of the 41st
 165-19  Legislature, 1st Called Session, 1929 (Article 8407a, Vernon's
 165-20  Texas Civil Statutes), is amended to read as follows:
 165-21        Sec. 20a.  Any registered barber, barber technician, teacher,
 165-22  manicurist, or wig specialist shall not be required to renew his
 165-23  certificate of registration while serving on active duty in the
 165-24  military, air or naval forces of the United States, and the Board
 165-25  shall issue a renewal certificate upon application and payment of a
 165-26  renewal fee within ninety (90) days from the date such registered
 165-27  barber, barber technician, teacher, manicurist, or wig specialist
  166-1  is released or discharged from active duty in the armed forces.
  166-2  The renewal fee shall be in an amount established by the Board and
  166-3  different renewal fees may be established depending on whether<:>
  166-4              <(1)  Ten Dollars ($10) if> the application and payment
  166-5  is made:
  166-6              (1)  during the period from November 1 of an
  166-7  odd-numbered year and extending through October 31 of the following
  166-8  even-numbered year; or
  166-9              (2)  <Five Dollars ($5) if the application and payment
 166-10  is made> during the period from November 1 of an even-numbered year
 166-11  and extending through October 31 of the following odd-numbered
 166-12  year.
 166-13        SECTION 4.15.  Sections 23(b) and (c), Chapter 65, Acts of
 166-14  the 41st Legislature, 1st Called Session, 1929 (Article 8407a,
 166-15  Vernon's Texas Civil Statutes), are amended to read as follows:
 166-16        (b)  The fee <fees> to be paid to the Board by an applicant
 166-17  for an examination to determine his fitness to receive a
 166-18  certificate of registration to practice barbering or to practice as
 166-19  a barber technician shall be in an amount established by the Board
 166-20  <$10>.
 166-21        (c)  The fee <fees> to be paid to the Board by an applicant
 166-22  who has satisfactorily passed the examination and complied with the
 166-23  other provisions of this Act to receive a certificate of
 166-24  registration to practice barbering or to practice as a barber
 166-25  technician shall be set by the Board <in an amount not to exceed
 166-26  $100>.
 166-27        SECTION 4.16.  Section 29A, Chapter 65, Acts of the 41st
  167-1  Legislature, 1st Called Session, 1929 (Article 8407a, Vernon's
  167-2  Texas Civil Statutes), is amended to read as follows:
  167-3        Sec. 29A.  (a)  The board shall keep an information file
  167-4  about each complaint filed with the board that the board has
  167-5  authority to resolve.  If a written complaint is filed with the
  167-6  board that the board has authority to resolve, the board, at least
  167-7  quarterly and until final disposition of the complaint, shall
  167-8  notify the parties to the complaint of the status of the complaint
  167-9  unless the notice would jeopardize an undercover investigation.
 167-10        (b)  The board shall prepare information of public interest
 167-11  describing the functions of the board and the procedures by which
 167-12  complaints are filed with and resolved by the board against a
 167-13  barber school or college.  The board shall make the information
 167-14  available to the public and appropriate state agencies.
 167-15        SECTION 4.17.  Section 29E, Chapter 65, Acts of the 41st
 167-16  Legislature, 1st Called Session, 1929 (Article 8407a, Vernon's
 167-17  Texas Civil Statutes), is amended to read as follows:
 167-18        Sec. 29E.  A barber shop, specialty shop, or barber school
 167-19  permit that has been expired for more than 30 days may be renewed
 167-20  by filing a renewal application with the board, accompanied by the
 167-21  regular renewal fee, and a delinquency fee in an amount established
 167-22  by the board <of $30> for each year or part of a year that the
 167-23  permit has been expired.
 167-24                PART 5.  PRIVATE BEAUTY CULTURE SCHOOLS
 167-25        SECTION 5.01.  Section 9(b), Chapter 1036, Acts of the 62nd
 167-26  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
 167-27  Civil Statutes), is amended to read as follows:
  168-1        (b)  A person may not conduct or operate a beauty shop,
  168-2  private<,> beauty culture school, specialty shop, or any other
  168-3  place of business in which the practice of cosmetology is taught or
  168-4  practiced, conduct a vocational cosmetology program in a public
  168-5  school, or lease space on the premises of a beauty shop to engage
  168-6  in the practice of cosmetology as an independent contractor without
  168-7  first obtaining a license.
  168-8        SECTION 5.02.  Section 10(d), Chapter 1036, Acts of the 62nd
  168-9  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
 168-10  Civil Statutes), is amended to read as follows:
 168-11        (d)  The applicant is entitled to an operator license if he
 168-12  possesses the qualifications enumerated in Subsection (b) of this
 168-13  section, satisfactorily completes the examination, pays a <$35>
 168-14  license fee in an amount established by the commission, and has not
 168-15  committed an act that constitutes a ground for denial of a license.
 168-16        SECTION 5.03.  Section 11(d), Chapter 1036, Acts of the 62nd
 168-17  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
 168-18  Civil Statutes), is amended to read as follows:
 168-19        (d)  The applicant is entitled to a manicurist license if he
 168-20  possesses the qualifications enumerated in Subsection (b) of this
 168-21  section, satisfactorily completes the examination, pays a <$35>
 168-22  license fee in an amount established by the commission, and has not
 168-23  committed an act that constitutes a ground for denial of a license.
 168-24        SECTION 5.04.  Sections 12(c) and (d), Chapter 1036, Acts of
 168-25  the 62nd Legislature, Regular Session, 1971 (Article 8451a,
 168-26  Vernon's Texas Civil Statutes), are amended to read as follows:
 168-27        (c)  The application must state the education and experience
  169-1  level of the applicant in all courses or programs that the
  169-2  applicant will teach or instruct, be on a form prescribed by the
  169-3  commission, and <must> be filed at least 10 days before the date
  169-4  set for the examination.
  169-5        (d)  The commission shall review an application for
  169-6  competency, consistency, and the overall quality of the applicant.
  169-7  The applicant is entitled to an instructor license if he possesses
  169-8  qualifications enumerated in Subsection (b) of this section,
  169-9  satisfactorily completes the examination, pays a <$50> license fee
 169-10  in an amount established by the commission, and has not committed
 169-11  an act that constitutes a ground for denial of a license.
 169-12        SECTION 5.05.  Section 13(d), Chapter 1036, Acts of the 62nd
 169-13  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
 169-14  Civil Statutes), is amended to read as follows:
 169-15        (d)  The applicant is entitled to a specialty certificate if
 169-16  he possesses the qualifications enumerated in Subsection (b) of
 169-17  this section, pays a <$35> certificate fee in an amount established
 169-18  by the commission, and has not committed an act that constitutes a
 169-19  ground for denial of a certificate.
 169-20        SECTION 5.06.  Section 15(b), Chapter 1036, Acts of the 62nd
 169-21  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
 169-22  Civil Statutes), is amended to read as follows:
 169-23        (b)  A temporary license shall be issued on submission of an
 169-24  application form prescribed by the commission and payment of a
 169-25  <$45> temporary license fee in an amount established by the
 169-26  commission if the applicant meets the requirements of Subsection
 169-27  (a) of this section.
  170-1        SECTION 5.07.  Section 16, Chapter 1036, Acts of the 62nd
  170-2  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
  170-3  Civil Statutes), is amended to read as follows:
  170-4        Sec. 16.  Duplicate License or Certificate.  (a)  A duplicate
  170-5  license or certificate shall be issued upon application on a form
  170-6  prescribed by the commission and on the payment of a <$35> fee in
  170-7  an amount established by the commission.
  170-8        (b)  A transcript shall be given to licensees under this Act
  170-9  upon application on a form prescribed by the commission and payment
 170-10  of a <$5> fee in an amount established by the commission.
 170-11        SECTION 5.08.  Section 17(b), Chapter 1036, Acts of the 62nd
 170-12  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
 170-13  Civil Statutes), is amended to read as follows:
 170-14        (b)  The applicant shall submit an application on a form
 170-15  prescribed by the commission and pay a <$100> fee in an amount
 170-16  established by the commission, plus the applicable license or
 170-17  certification fee.
 170-18        SECTION 5.09.  Sections 18(b) and (c), Chapter 1036, Acts of
 170-19  the 62nd Legislature, Regular Session, 1971 (Article 8451a,
 170-20  Vernon's Texas Civil Statutes), are amended to read as follows:
 170-21        (b)  A student permit shall be issued on submission of an
 170-22  application form prescribed by the commission and payment of a
 170-23  <$25> fee in an amount established by the commission which must
 170-24  accompany the application.
 170-25        (c)  The cost of the permit shall also include one
 170-26  examination fee in an amount established by the commission and a
 170-27  transcript fee in an amount established by the commission and may
  171-1  not be refunded.
  171-2        SECTION 5.10.  Sections 19(b) and (c), Chapter 1036, Acts of
  171-3  the 62nd Legislature, Regular Session, 1971 (Article 8451a,
  171-4  Vernon's Texas Civil Statutes), are amended to read as follows:
  171-5        (b)  An applicant for a beauty shop license must submit an
  171-6  application on a form prescribed by the commission.  The
  171-7  application must contain proof of the particular requisites for a
  171-8  beauty shop as established by the commission and must be verified
  171-9  by the applicant.  With the application, the applicant must submit
 171-10  an <a $35> inspection fee in an amount established by the
 171-11  commission.
 171-12        (c)  The applicant is entitled to a beauty shop license if
 171-13  the application shows compliance with the rules of the commission,
 171-14  a <$45> license fee in an amount established by the commission is
 171-15  paid, and he has not committed an act that constitutes a ground for
 171-16  denial of a license.
 171-17        SECTION 5.11.  Sections 20(b) and (c), Chapter 1036, Acts of
 171-18  the 62nd Legislature, Regular Session, 1971 (Article 8451a,
 171-19  Vernon's Texas Civil Statutes), are amended to read as follows:
 171-20        (b)  An applicant for a specialty shop license must submit an
 171-21  application on a form prescribed by the commission.  The
 171-22  application must contain proof of the particular requisites for a
 171-23  specialty shop as established by the commission and must be
 171-24  verified by the applicant.  With the application, the applicant
 171-25  must submit an <a $35> inspection fee in an amount established by
 171-26  the commission.
 171-27        (c)  The applicant is entitled to a specialty shop license if
  172-1  the application shows compliance with the rules and regulations of
  172-2  the commission, a <$45> license fee in an amount established by the
  172-3  commission is paid, and he has not committed an act that
  172-4  constitutes a ground for denial of a license.
  172-5        SECTION 5.12.  Section 21, Chapter 1036, Acts of the 62nd
  172-6  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
  172-7  Civil Statutes), is amended to read as follows:
  172-8        Sec. 21.  PRIVATE BEAUTY CULTURE SCHOOL LICENSE; APPLICATION;
  172-9  REFUND POLICY.  (a)  A person holding a private beauty culture
 172-10  school license may maintain an establishment in which any practice
 172-11  of cosmetology is taught.
 172-12        (b)  An applicant for a private beauty culture school license
 172-13  must submit an application on a form prescribed by the commission.
 172-14  Each application must be verified by the applicant and must
 172-15  contain:
 172-16              (1)  a detailed floor plan of the school building
 172-17  divided into three separate areas, one for instruction in theory,
 172-18  one for practice work of senior students, and one for practice work
 172-19  of juniors; <and>
 172-20              (2)  a statement that the building is fireproof and of
 172-21  permanent type construction, contains a minimum of 3,500 square
 172-22  feet of floor space, with separate restrooms for male and female
 172-23  students, and contains or will contain before classes commence the
 172-24  equipment established by rule of the commission as sufficient to
 172-25  properly instruct a minimum of 50 students; and
 172-26              (3)  a statement of any final convictions of the
 172-27  owners, school directors, recruiters, instructional faculty, or
  173-1  other selected personnel of the private beauty culture school as
  173-2  determined by the commission.  The commission may obtain criminal
  173-3  history records of school directors or instructional faculty from
  173-4  any law enforcement agency, including the United States Department
  173-5  of Justice, the Department of Public Safety of the State of Texas,
  173-6  the Texas Department of Criminal Justice, or the police department
  173-7  of a municipality.
  173-8        (c)  The commission shall determine that an applicant for a
  173-9  private beauty culture school license is financially sound and
 173-10  capable of fulfilling the school's commitments for training before
 173-11  granting the license.
 173-12        (d)  Each application for a private beauty culture school
 173-13  license must be accompanied by payment of a <$500> license fee and
 173-14  an <a $200> inspection fee.  Each application for certification as
 173-15  a public secondary or public postsecondary beauty culture school
 173-16  must be accompanied by an <a $200> inspection fee.  The inspection
 173-17  fee is charged for each inspection trip required before approval of
 173-18  the license or certificate.  The commission shall establish the
 173-19  amount of the fees required under this section.
 173-20        (e)  The facilities of each applicant shall be inspected.
 173-21  The applicant is entitled to a private beauty culture school
 173-22  license if the inspection shows that this Act and the rules of the
 173-23  commission have been met and the applicant has not committed an act
 173-24  that constitutes a ground for denial of a license.
 173-25        (f)  Each holder of a private beauty culture school license
 173-26  must maintain a cancellation and settlement policy that provides a
 173-27  full refund of all money paid by a student if:
  174-1              (1)  the student cancels the enrollment agreement or
  174-2  contract not later than midnight of the third day after the date on
  174-3  which the agreement or contract is signed by the prospective
  174-4  student, excluding Saturdays, Sundays, and legal holidays; or
  174-5              (2)  the enrollment of the student was procured as a
  174-6  result of a misrepresentation made in the advertising or
  174-7  promotional materials of the school or a representation by an owner
  174-8  or representative of the school.
  174-9        (g)  Each holder of a private beauty culture school license
 174-10  must maintain a refund policy for the refund of the unused part of
 174-11  tuition, fees, and other charges assessed a student if the student,
 174-12  at the expiration of the cancellation period established under
 174-13  Subsection (f) of this section, terminates enrollment or is
 174-14  terminated by the school, as provided by this subsection <fails to
 174-15  enter the course of training, withdraws from the course of
 174-16  training, or is terminated from the course of training before
 174-17  completion of the course>.  The refund policy must provide that:
 174-18              (1)  a refund is based on the period of the student's
 174-19  enrollment, computed on the basis of course time expressed in clock
 174-20  hours;
 174-21              (2)  the effective date of the termination for payment
 174-22  of a refund <refund purposes> is the earliest of:
 174-23                    (A)  the last date of attendance, if the student
 174-24  is terminated for failure to satisfy a school attendance, grade, or
 174-25  work requirement <by the school>;
 174-26                    (B)  the date of receipt by the license holder of
 174-27  written notice of withdrawal by the student; <or>
  175-1                    (C)  the 10th consecutive <10> school day the
  175-2  student has been absent, unless any of the absences have been
  175-3  excused by the school <days after the last date of attendance>; or
  175-4                    (D)  the date the student fails to return, as
  175-5  scheduled, from a leave of absence; and
  175-6              (3)  if tuition is collected before beginning the
  175-7  course of training and if, after the expiration of the cancellation
  175-8  period, the student does not begin the course of training, the
  175-9  school may retain not more than $100.
 175-10        (h)  If a student who begins a course of training that is
 175-11  scheduled to run not more than 12 months withdraws from the course
 175-12  or is terminated from the course by the school, the private beauty
 175-13  culture school may retain $100 in tuition and fees paid by that
 175-14  student and is not obligated to refund any additional outstanding
 175-15  tuition if the student withdraws or is terminated during the last
 175-16  quarter <50 percent> of the course.  If the student withdraws or is
 175-17  terminated before the last quarter <50 percent> of the course
 175-18  begins, the school shall refund the following percentages of any
 175-19  outstanding tuition:
 175-20              (1)  for withdrawal or termination occurring during the
 175-21  first week or first one-tenth of the course, whichever is less, 90
 175-22  percent;
 175-23              (2)  for withdrawal or termination occurring after the
 175-24  first week or first one-tenth of the course, whichever is less, but
 175-25  within the first three weeks of the course, 80 percent;
 175-26              (3)  for withdrawal or termination occurring after the
 175-27  first three weeks of the course but not later than the completion
  176-1  of the first 25 percent of the course, 75 percent; <and>
  176-2              (4)  for withdrawal or termination occurring during the
  176-3  <not later than the completion of the> second quarter <25 percent>
  176-4  of the course, 50 percent;
  176-5              (5)  for withdrawal or termination occurring during the
  176-6  third quarter of the course, 10 percent; and
  176-7              (6)  for students withdrawing or terminating after 50
  176-8  percent of the course has been completed, the school must allow
  176-9  that student to reenter at any time during the 48-month period
 176-10  following the date of withdrawal or termination at no additional
 176-11  charge provided the full agreed on tuition has been tendered.
 176-12        (i)  <For students withdrawing or terminating after 50
 176-13  percent of the course has been completed, the school must allow
 176-14  that student to reenter at any time during the 48-month period
 176-15  following the date of withdrawal or termination.>
 176-16        <(j)>  A refund owed under this section must be paid not
 176-17  later than the 60th <30th> day after the date on which the student
 176-18  becomes eligible for the refund, as determined under Subsection (g)
 176-19  of this section.
 176-20        (j) <(k)>  If a refund is not made within the period required
 176-21  by this section, the school shall pay, as a penalty, interest on
 176-22  the refund for the interval beginning with the first day following
 176-23  the expiration of the refund period and ending with the day
 176-24  immediately preceding the date the refund is made.  If the refund
 176-25  is made to a lending institution, the interest shall also be paid
 176-26  to that institution and applied against the student's loan.  The
 176-27  commissioner of education annually shall establish the level of
  177-1  interest at a level sufficient to provide a deterrent to the
  177-2  retention of student funds.  The commission may exempt a school
  177-3  from the payment of the interest if the school makes a good faith
  177-4  effort to refund the tuition but is unable to locate the student.
  177-5  The school shall provide to the commission on request documentation
  177-6  of the effort to locate the student.
  177-7        (k) <(l)>  A private beauty culture school shall record a
  177-8  grade of "incomplete" for a student who withdraws but is not
  177-9  entitled to a refund under Subsection (h) of this section if the
 177-10  student requests the grade at the time the student withdraws and if
 177-11  the student withdraws for an appropriate reason unrelated to the
 177-12  student's academic status.  A student who receives a grade of
 177-13  incomplete may re-enroll in the program during the 12-month
 177-14  <48-month> period following the date the student withdraws and
 177-15  complete those incomplete subjects without payment of additional
 177-16  tuition.
 177-17        (l)  If a course of instruction is discontinued by the school
 177-18  and this prevents the student from completing the course, all
 177-19  tuition and fees paid are due and refundable.
 177-20        (m)  Refunds under this section shall be applied:
 177-21              (1)  first, to the repayment of student loans;
 177-22              (2)  second, to the repayment of other government
 177-23  loans;
 177-24              (3)  third, to the repayment of other financial loans;
 177-25  and
 177-26              (4)  last, to the student's personal tuitional
 177-27  expenditures.
  178-1        (n)  Not later than the 30th day after the date on which a
  178-2  refund is due to a student who has received a student loan, the
  178-3  school shall notify the guaranty agency and the lender of the
  178-4  required refund and any refund previously made.  The guaranty
  178-5  agency and the lender shall notify the student and the school if
  178-6  the student's loan has been transferred to another holder.
  178-7        (o)  The failure of a school or a person to pay a tuition
  178-8  refund as required by this section is a deceptive trade practice
  178-9  under Subchapter E, Chapter 17, Business & Commerce Code.
 178-10        SECTION 5.13.  Chapter 1036, Acts of the 62nd Legislature,
 178-11  Regular Session, 1971 (Article 8451a, Vernon's Texas Civil
 178-12  Statutes), is amended by adding Sections 21D-21L to read as
 178-13  follows:
 178-14        Sec. 21D.  ADDITIONAL CRITERIA FOR PRIVATE BEAUTY CULTURE
 178-15  SCHOOL LICENSE.  Before the commission may approve the application
 178-16  of a person for a private beauty culture school license, the
 178-17  executive director must find, on investigation at the premises of
 178-18  the school, that the school meets the following criteria:
 178-19              (1)  the courses, curriculum, and instruction are of a
 178-20  quality, content, and length as may reasonably and adequately
 178-21  achieve the stated objective for which the courses, curriculum, or
 178-22  instruction are offered;
 178-23              (2)  there is in the school adequate space, equipment,
 178-24  instructional material, and instructor personnel to provide
 178-25  training of good quality;
 178-26              (3)  educational and experience qualifications of
 178-27  directors, administrators, and instructors are adequate;
  179-1              (4)  the school maintains a written record of the
  179-2  previous education and training of the applicant student and
  179-3  clearly indicates that appropriate credit has been given by the
  179-4  school for previous education and training, with the new training
  179-5  period shortened where warranted through use of appropriate skills
  179-6  or achievement tests and the student notified;
  179-7              (5)  a copy of the course outline; schedule of tuition,
  179-8  fees, refund policy, and other charges; regulations pertaining to
  179-9  absence, grading policy, and rules of operation and conduct;
 179-10  regulations pertaining to incomplete grades; the name, mailing
 179-11  address, and telephone number of the commission for the purpose of
 179-12  directing complaints to the agency; the current rates of job
 179-13  placement and employment of students issued a certificate of
 179-14  completion; and notification of the availability of the cost
 179-15  comparison information prepared under Section 21I of this Act will
 179-16  be furnished to the student in the catalog before enrollment;
 179-17              (6)  on completion of training, the student is given a
 179-18  certificate by the school indicating the course and that training
 179-19  was satisfactorily completed;
 179-20              (7)  adequate records as required by the executive
 179-21  director are kept to show attendance and progress or grades, and
 179-22  satisfactory standards relating to attendance, progress, and
 179-23  conduct are enforced;
 179-24              (8)  the school complies with all local, city, county,
 179-25  municipal, state, and federal regulations; the executive director
 179-26  may require evidence of compliance as is necessary;
 179-27              (9)  the school is financially sound and capable of
  180-1  fulfilling its commitments for training;
  180-2              (10)  the school's administrators, directors, owners,
  180-3  and instructors are of good reputation and character;
  180-4              (11)  the school has, maintains, and publishes in its
  180-5  school catalog or comparable documents and enrollment contract the
  180-6  proper policy for the refund of the unused portion of tuition,
  180-7  fees, and other charges in the event the student enrolled by the
  180-8  school fails to take the course or withdraws or is discontinued
  180-9  from the course at any time before completion;
 180-10              (12)  the school does not use erroneous or misleading
 180-11  advertising, either by actual statement, omission, or intimation as
 180-12  determined by the commission;
 180-13              (13)  additional criteria as may be required by the
 180-14  commission;
 180-15              (14)  the school does not use a name like or similar to
 180-16  an existing tax-supported school in the same area;
 180-17              (15)  the school furnishes to the commission the
 180-18  current rates of students who receive a certificate of completion
 180-19  and of job placement and employment of students issued a
 180-20  certificate of completion;
 180-21              (16)  on the graduation of a student from a course of
 180-22  training offered by a private beauty culture school or the
 180-23  student's withdrawal or transfer from a course of training without
 180-24  completion of the training, the private beauty culture school shall
 180-25  send the commission a certified written copy of the student's
 180-26  record, indicating all course hours completed by the student and
 180-27  whether the agreed tuition has been paid;
  181-1              (17)  the school furnishes to the commission for
  181-2  approval or disapproval student admission requirements for each
  181-3  course or program offered by the school;
  181-4              (18)  the school furnishes to the commission for
  181-5  approval or disapproval the course lengths and curriculum content
  181-6  for each course offered by the school; and
  181-7              (19)  the school does not owe a civil penalty under
  181-8  Section 22 of this Act.
  181-9        Sec. 21E.  CONSUMER INFORMATION.  (a)  A private beauty
 181-10  culture school must submit to the commission for approval, on an
 181-11  annual basis, a school catalog or comparable written documents
 181-12  detailing the consumer information that must be given to a
 181-13  prospective student before enrollment.  The school catalog or
 181-14  documents must include:
 181-15              (1)  the name and address of the school and the
 181-16  school's governing body and officials;
 181-17              (2)  a calendar of the school year;
 181-18              (3)  school policies on enrollment;
 181-19              (4)  rules relating to absences;
 181-20              (5)  the school grading policy;
 181-21              (6)  the school's hours of operation and rules of
 181-22  conduct;
 181-23              (7)  a schedule of the tuition and other fees assessed;
 181-24              (8)  the school's cancellation and refund policy;
 181-25              (9)  a general description of the course or courses
 181-26  offered;
 181-27              (10)  information on entrance testing and remedial
  182-1  development plans;
  182-2              (11)  state licensing requirements for courses intended
  182-3  to result in licensing of the student;
  182-4              (12)  starting range and reported average salaries for
  182-5  the prior year's graduates in occupations for which courses are
  182-6  offered, if the information is available;
  182-7              (13)  the current rates of job placement and employment
  182-8  of students who complete a course of training;
  182-9              (14)  the school policy on credit for previous
 182-10  education and training;
 182-11              (15)  school regulations relating to incomplete grades;
 182-12              (16)  information on the transferability of credits
 182-13  earned;
 182-14              (17)  the name, mailing address, and telephone number
 182-15  of the commission for the purpose of directing complaints to the
 182-16  commission and the mechanism and procedures for resolving
 182-17  grievances submitted to the commission;
 182-18              (18)  a statement that the commission has information
 182-19  on cost comparison with similar schools;
 182-20              (19)  market and job availability information, if
 182-21  available;
 182-22              (20)  the names of the members of any advisory council
 182-23  of the school and the company for which they work; and
 182-24              (21)  other information required by the executive
 182-25  director or commission if reasonable notice has been given by the
 182-26  director or commission to the school of the additional
 182-27  requirements.
  183-1        (b)  A private beauty culture school may not accept a signed
  183-2  student enrollment contract or accept a student into any school
  183-3  program until at least 24 hours after the student has received the
  183-4  catalog or comparable written documents required under this
  183-5  section.
  183-6        (c)  A student must sign a receipt stating that:
  183-7              (1)  the catalog was received by the student before any
  183-8  commitment made by the student to the school or by the school to
  183-9  the student;
 183-10              (2)  the student was given an opportunity to discuss
 183-11  the catalog with a representative of the school; and
 183-12              (3)  the student understands the contents and
 183-13  implications of the catalog.
 183-14        (d)  The receipt required by Subsection (c) of this section
 183-15  must be placed in the student's permanent school file and a copy of
 183-16  the receipt must be delivered to the student.
 183-17        Sec. 21F.  COMPLETION, EMPLOYMENT, AND PLACEMENT IN RELATION
 183-18  TO PRIVATE BEAUTY CULTURE SCHOOL.  (a)  The commission shall set
 183-19  and enforce minimum standards for completion and employment rates
 183-20  of courses based on collected data.
 183-21        (b)  In determining whether to renew a private beauty culture
 183-22  school license, the commission shall consider the completion,
 183-23  placement, and employment rates of students of the courses.
 183-24        (c)  Before a school may begin offering a new course of study
 183-25  for students, the school must show the commission the opportunity
 183-26  for jobs for graduates of the course and the possibility of
 183-27  placement or employment.
  184-1        (d)  Before the commission issues or renews a private beauty
  184-2  culture school license involving a school that offers or advertises
  184-3  a placement service, the commission may require the school to file
  184-4  a certified copy of the school's placement records for the previous
  184-5  year.
  184-6        Sec. 21G.  ON-SITE INSPECTIONS.  (a)  The commission shall
  184-7  conduct on-site inspections of a private beauty culture school to
  184-8  determine the normal operating conditions of the school.
  184-9        (b)  The inspection required by Subsection (a) of this
 184-10  section shall be unannounced.
 184-11        (c)  The executive director or a designee of the executive
 184-12  director may inspect such things as the instructional books and
 184-13  records, classrooms, dormitories, tools, equipment, and classes of
 184-14  a private beauty culture school or an applicant for a license for a
 184-15  school at any reasonable time.
 184-16        Sec. 21H.  CONSOLIDATION OF FEES AND PRIVATE BEAUTY CULTURE
 184-17  SCHOOL ACCOUNT.  (a)  At the beginning of each fiscal year the
 184-18  commission shall collect a fee from the school for deposit in a
 184-19  special account in the general revenue fund in the state treasury
 184-20  called the private beauty culture school account and to be
 184-21  administered by the commission.
 184-22        (b)  The amount of the fee is determined by applying a
 184-23  percentage established by the commission, based on the
 184-24  recommendation of the school accounts advisory board, to each
 184-25  school's annual gross tuition, with consideration given to the
 184-26  school's size, expense of regulation, potential for teachouts,
 184-27  tuition refund and recovery exposure, and loan default rates (with
  185-1  schools with high default rates paying higher fees), and any other
  185-2  relevant factors.  The account shall be used for:
  185-3              (1)  the administration of this Act;
  185-4              (2)  the cost of teachouts as provided by this Act;
  185-5              (3)  the cost of tuition and fees recovery and the cost
  185-6  of student refunds that a school has not made; and
  185-7              (4)  the cost of storing student records that have
  185-8  become property of the state under this Act.
  185-9        (c)  The commission may grant an exemption from payment into
 185-10  the account to a small school as determined by the commission, or
 185-11  to a school that does not use guaranteed student loans for tuition
 185-12  revenue.  A school exempt as provided for by this subsection must
 185-13  pay the necessary fees for regulation, as determined by the
 185-14  commission, and provide a bond, certificate of deposit, or
 185-15  comparable security, as determined and approved by the commission,
 185-16  that is sufficient to cover the cost of the school's record storage
 185-17  costs, teachout, and tuition and fees refund and recovery exposure
 185-18  based on the evidence the school submits proving its projected
 185-19  maximum total unearned tuition during the period of the license to
 185-20  operate.
 185-21        (d)  The security must be provided by the school for the
 185-22  period during which the license to operate is issued, and the
 185-23  obligation of the bond or other security must be that neither this
 185-24  Act nor any rule adopted under this Act is violated by the school
 185-25  or any of its officers, agents, or employees.
 185-26        (e)  The bond, certificate of deposit, or comparable security
 185-27  must be issued by a company authorized to do business in the state,
  186-1  conditioned that the parties to the transaction must pay all
  186-2  damages or expenses that the state or any governmental subdivision,
  186-3  or any student or potential student sustains resulting from a
  186-4  violation.  The bond, certificate of deposit, or comparable
  186-5  security must be to the state to be used only for payment for the
  186-6  school's teachout and tuition and fees refund due to a student or
  186-7  potential student.  The security must be filed with the commission
  186-8  and shall be in a form approved by the commission.
  186-9        (f)  Schools domiciled, or having their principal place of
 186-10  business, outside the state, that engage representatives to
 186-11  canvass, solicit, or contract with any person in the state are
 186-12  subject to the fee and security requirements of Subsection (c) of
 186-13  this section.
 186-14        (g)  The commission shall refer all expenses incurred by the
 186-15  school account in administering Subsections (b)(2) and (3) of this
 186-16  section to the attorney general's office for collection.  The
 186-17  amounts collected shall be deposited to the account.  Attorney's
 186-18  fees and court costs shall be appropriated to the attorney
 186-19  general's office.
 186-20        (h)  Interest the account earns shall be reinvested in the
 186-21  account.  The state treasurer shall invest the account in the same
 186-22  manner as other state funds.  Sufficient funds from the account and
 186-23  other fees collected by the commission shall be appropriated to the
 186-24  commission for the purpose outlined in this section.  The
 186-25  commission shall administer claims made against the account.
 186-26        (i)  If a school closes, the commission shall attempt to
 186-27  arrange for students of the closed school to attend another private
  187-1  beauty culture school.  The commission shall adopt rules specifying
  187-2  the circumstances under which a school is considered closed.
  187-3        (j)  The expense incurred by a private beauty culture school
  187-4  in providing training that is directly related to educating a
  187-5  student who was enrolled in a closed school and placed in the
  187-6  school under this section, including the applicable tuition for the
  187-7  period of time for which the student has paid tuition, shall be
  187-8  paid in accordance with rules of the commission.
  187-9        (k)  The commission shall make reasonable attempts to ensure
 187-10  that schools under the commission's jurisdiction, including closed
 187-11  schools, fulfill the refund obligation as provided by Section 21 of
 187-12  this Act.  If a school refuses to fulfill the school's obligation
 187-13  or the school's bond is insufficient to pay the cost of the
 187-14  teachout and refund expenses, the teachout or the refund may be
 187-15  paid from the private beauty culture school account except that no
 187-16  school owned, either in whole or in part, by a person or corporate
 187-17  entity who was an owner, in whole or in part, of a previously
 187-18  closed school shall be permitted to receive compensation for a
 187-19  teachout under this section.
 187-20        (l)  If a student cannot be placed in another school, the
 187-21  student's tuition and fees shall be refunded under Section 21(k) of
 187-22  this Act.
 187-23        (m)  If a student does not accept a place that is available
 187-24  and reasonable in another school, the student's tuition and fees
 187-25  shall be refunded under the refund policy maintained by the closing
 187-26  school under Sections 21(f) and (g) of this Act.
 187-27        (n)  Attorney's fees, court costs, or damages may not be paid
  188-1  from the private beauty culture school account.
  188-2        (o)  The commission by rule shall establish and assess
  188-3  reasonable and necessary fees to all persons and entities licensed
  188-4  under this Act to be used for the regulation of those persons and
  188-5  entities licensed under this Act and to supplement the
  188-6  administration and purposes outlined by this Act.
  188-7        (p)  The commission may permit payment of any fee authorized
  188-8  under this section that exceeds $1,000 to be paid by installment.
  188-9  The commission shall provide for appropriate interest charges and
 188-10  late penalties in addition to any other remedy that is provided for
 188-11  by law for the late payment of a fee installment authorized under
 188-12  this section.  The commission may assess a reasonable service
 188-13  charge to be paid by a school that pays a fee by installment in an
 188-14  amount not to exceed an annual rate of 10 percent of the fee that
 188-15  is to be paid by installment.
 188-16        Sec. 21I.  COST COMPARISONS.  (a)  The commission shall
 188-17  prepare a comparison of the cost to a student of courses of
 188-18  instruction or training programs at all private beauty culture
 188-19  schools maintained by persons who hold private beauty culture
 188-20  school licenses issued by the commission.
 188-21        (b)  The cost comparison must include for each school a
 188-22  description of:
 188-23              (1)  average class size;
 188-24              (2)  facilities and equipment;
 188-25              (3)  employment and placement rates;
 188-26              (4)  length of program; and
 188-27              (5)  faculty qualifications.
  189-1        Sec. 21J.  FINANCIAL STABILITY.  (a)  A school may not
  189-2  reflect unearned tuition as a current asset unless the amount shown
  189-3  in current assets that reflects unearned tuition is offset by an
  189-4  equal amount shown as a current liability.  The school must meet
  189-5  one of the following criteria in order to be determined as
  189-6  financially sound and capable of fulfilling its commitments for
  189-7  training:
  189-8              (1)  current assets must bear a relationship to current
  189-9  liabilities in a ratio of at least one-to-one;
 189-10              (2)  the equity of the owner of the school must be in
 189-11  excess of $10,000,000; or
 189-12              (3)  the school must have posted, or set aside in a
 189-13  dedicated escrow account, a bond, certificate of deposit,
 189-14  irrevocable letter of credit, or comparable security, acceptable to
 189-15  the commission, each made payable to the State of Texas, in an
 189-16  amount sufficient to cover the school's record storage costs,
 189-17  teachout, and tuition and fees refund and recovery exposure based
 189-18  on the evidence the school submits proving its projected maximum
 189-19  total unearned tuition during the period of time covered by the
 189-20  evidence of indebtedness to the state.
 189-21        (b)  The school must demonstrate to the satisfaction of the
 189-22  commission its financial soundness and ability to fulfill its
 189-23  commitments for training.
 189-24        Sec. 21K.  PROHIBITIONS.  A person may not:
 189-25              (1)  operate a private beauty culture school without a
 189-26  license or assume ownership of an existing private beauty culture
 189-27  school without obtaining a new license to operate;
  190-1              (2)  solicit prospective students for a private beauty
  190-2  culture school without being licensed as required by this Act;
  190-3              (3)  accept contracts or enrollment applications from a
  190-4  representative of a private beauty culture school who is not
  190-5  registered as required by any commission rule requiring
  190-6  registration;
  190-7              (4)  use advertising designed to mislead or deceive
  190-8  prospective private beauty culture school students;
  190-9              (5)  fail to notify the commission of the
 190-10  discontinuance of the operation of any private beauty culture
 190-11  school not later than the 72nd hour after cessation of classes or
 190-12  make available accurate records as required by this Act;
 190-13              (6)  fail to secure and file within 30 days any
 190-14  increased bond required by this Act;
 190-15              (7)  negotiate any promissory instrument received as
 190-16  payment of tuition for a private beauty culture school or other
 190-17  charge before completion of 75 percent of the course, provided that
 190-18  before that time, the instrument may be transferred by assignment
 190-19  to a purchaser who is subject to any defense available against the
 190-20  school named as payee;
 190-21              (8)  enroll a student in a private beauty culture
 190-22  school who fails to satisfy entrance requirements; or
 190-23              (9)  violate any provision of this Act relating to
 190-24  private beauty culture schools or a rule adopted under this Act
 190-25  relating to private beauty culture schools.
 190-26        Sec. 21L.  ADMINISTRATIVE PENALTY.  (a)  The commission may
 190-27  impose an administrative penalty against a person who violates
  191-1  Section 21K of this Act.
  191-2        (b)  The penalty for a violation may be in an amount not to
  191-3  exceed $10,000.
  191-4        (c)  The amount of the penalty shall be based on:
  191-5              (1)  the seriousness of the violation, including the
  191-6  nature, circumstances, extent, and gravity of any prohibited acts;
  191-7              (2)  efforts to correct the violation; and
  191-8              (3)  any other matter that justice may require.
  191-9        (d)  An executive director who determines that a violation
 191-10  has occurred may issue to the commission a report that states the
 191-11  facts on which the determination is based and the director's
 191-12  recommendation on the imposition of a penalty, including a
 191-13  recommendation on the amount of the penalty.
 191-14        (e)  Within 14 days after the date the report is issued, the
 191-15  executive director shall give written notice of the report to the
 191-16  person.  The notice may be given by certified mail.  The notice
 191-17  must include a brief summary of the alleged violation and a
 191-18  statement of the amount of the recommended penalty and must inform
 191-19  the person that the person has a right to a hearing on the
 191-20  occurrence of the violation, the amount of the penalty, or both the
 191-21  occurrence of the violation and the amount of the penalty.
 191-22        (f)  Within 20 days after the date the person receives the
 191-23  notice, the person in writing may accept the determination and
 191-24  recommended penalty of the executive director or may make a written
 191-25  request for a hearing on the occurrence of the violation, the
 191-26  amount of the penalty, or both the occurrence of the violation and
 191-27  the amount of the penalty.
  192-1        (g)  If the person accepts the determination and recommended
  192-2  penalty of the executive director, the commission by order shall
  192-3  approve the determination and impose the recommended penalty.
  192-4        (h)  If the person requests a hearing or fails to respond
  192-5  timely to the notice, the executive director shall set a hearing
  192-6  and give notice of the hearing to the person.  The hearing shall be
  192-7  held by an administrative law judge of the State Office of
  192-8  Administrative Hearings.  The administrative law judge shall make
  192-9  findings of fact and conclusions of law and promptly issue to the
 192-10  commission a proposal for a decision about the occurrence of the
 192-11  violation and the amount of a proposed penalty.  Based on the
 192-12  findings of fact, conclusions of law, and proposal for a decision,
 192-13  the commission by order may find that a violation has occurred and
 192-14  impose a penalty or may find that no violation occurred.
 192-15        (i)  The notice of the commission's order given to the person
 192-16  under the Administrative Procedure and Texas Register Act (Article
 192-17  6252-13a, Vernon's Texas Civil Statutes) and its subsequent
 192-18  amendments must include a statement of the right of the person to
 192-19  judicial review of the order.
 192-20        (j)  Within 30 days after the date the commission's order is
 192-21  final as provided by Section 16(c), Administrative Procedure and
 192-22  Texas Register Act (Article 6252-13a, Vernon's Texas Civil
 192-23  Statutes), and its subsequent amendments, the person shall:
 192-24              (1)  pay the amount of the penalty;
 192-25              (2)  pay the amount of the penalty and file a petition
 192-26  for judicial review contesting the occurrence of the violation, the
 192-27  amount of the penalty, or both the occurrence of the violation and
  193-1  the amount of the penalty; or
  193-2              (3)  without paying the amount of the penalty, file a
  193-3  petition for judicial review contesting the occurrence of the
  193-4  violation, the amount of the penalty, or both the occurrence of the
  193-5  violation and the amount of the penalty.
  193-6        (k)  Within the 30-day period, a person who acts under
  193-7  Subsection (j)(3) of this section may:
  193-8              (1)  stay enforcement of the penalty by:
  193-9                    (A)  paying the amount of the penalty to the
 193-10  court for placement in an escrow account; or
 193-11                    (B)  giving to the court a supersedeas bond that
 193-12  is approved by the court for the amount of the penalty and that is
 193-13  effective until all judicial review of the board's order is final;
 193-14  or
 193-15              (2)  request the court to stay enforcement of the
 193-16  penalty by:
 193-17                    (A)  filing with the court a sworn affidavit of
 193-18  the person stating that the person is financially unable to pay the
 193-19  amount of the penalty and is financially unable to give the
 193-20  supersedeas bond; and
 193-21                    (B)  giving a copy of the affidavit to the
 193-22  executive director by certified mail.
 193-23        (l)  An executive director who receives a copy of an
 193-24  affidavit under Subsection (k)(2) of this section may file with the
 193-25  court, within five days after the date the copy is received, a
 193-26  contest to the affidavit.  The court shall hold a hearing on the
 193-27  facts alleged in the affidavit as soon as practicable and shall
  194-1  stay the enforcement of the penalty on finding that the alleged
  194-2  facts are true.  The person who files an affidavit has the burden
  194-3  of proving that the person is financially unable to pay the amount
  194-4  of the penalty and to give a supersedeas bond.
  194-5        (m)  If the person does not pay the amount of the penalty and
  194-6  the enforcement of the penalty is not stayed, the executive
  194-7  director may refer the matter to the attorney general for
  194-8  collection of the amount of the penalty.
  194-9        (n)  Judicial review of the order of the commission:
 194-10              (1)  is instituted by filing a petition as provided by
 194-11  Section 19, Administrative Procedure and Texas Register Act
 194-12  (Article 6252-13a, Vernon's Texas Civil Statutes), and its
 194-13  subsequent amendments; and
 194-14              (2)  is under the substantial evidence rule.
 194-15        (o)  If the court sustains the occurrence of the violation,
 194-16  the court may uphold or reduce the amount of the penalty and order
 194-17  the person to pay the full or reduced amount of the penalty.  If
 194-18  the court does not sustain the occurrence of the violation, the
 194-19  court shall order that no penalty is owed.
 194-20        (p)  When the judgment of the court becomes final, the court
 194-21  shall proceed under this subsection.  If the person paid the amount
 194-22  of the penalty and if that amount is reduced or is not upheld by
 194-23  the court, the court shall order that the appropriate amount plus
 194-24  accrued interest be remitted to the person.  The rate of the
 194-25  interest is the rate charged on loans to depository institutions by
 194-26  the New York Federal Reserve Bank, and the interest shall be paid
 194-27  for the period beginning on the date the penalty was paid and
  195-1  ending on the date the penalty is remitted.  If the person gave a
  195-2  supersedeas bond and if the amount of the penalty is not upheld by
  195-3  the court, the court shall order the release of the bond.  If the
  195-4  person gave a supersedeas bond and if the amount of the penalty is
  195-5  reduced, the court shall order the release of the bond after the
  195-6  person pays the amount.
  195-7        (q)  A penalty collected under this section shall be remitted
  195-8  to the comptroller for deposit in the general revenue fund.
  195-9        (r)  All proceedings under this section are subject to the
 195-10  Administrative Procedure and Texas Register Act (Article 6252-13a,
 195-11  Vernon's Texas Civil Statutes) and its subsequent amendments.
 195-12        SECTION 5.14.  Section 22, Chapter 1036, Acts of the 62nd
 195-13  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
 195-14  Civil Statutes), is amended to read as follows:
 195-15        Sec. 22.  Additional Requirements Applying to Private Beauty
 195-16  Culture Schools.  (a)  The holder of a private beauty culture
 195-17  school license shall:
 195-18              (1)  maintain a sanitary establishment;
 195-19              (2)  maintain on its staff and on duty during business
 195-20  hours not less than two full-time instructors licensed under this
 195-21  Act, except that one instructor will be sufficient whenever the
 195-22  student enrollment drops below 15;
 195-23              (3)  maintain a daily record of attendance of students;
 195-24              (4)  establish regular class and instruction hours and
 195-25  grades, and hold examinations before issuing diplomas;
 195-26              (5)  require a school term of not less than nine months
 195-27  and not less than 1,500 hours instruction for a complete course in
  196-1  cosmetology;
  196-2              (6)  require a school term of not less than 250 hours
  196-3  instruction for a complete course in manicuring;
  196-4              (7)  require no student to work or be instructed or
  196-5  receive credit for more than eight hours of instruction in any one
  196-6  day or for more than six days in any one calendar week;
  196-7              (8)  maintain a copy of its curriculum in a conspicuous
  196-8  place and verify that this curriculum is being followed as to
  196-9  subject matter being taught; and
 196-10              (9)  submit to the executive director the name of each
 196-11  student within 10 days after enrollment in the school and notify
 196-12  the executive director of the withdrawal or graduation of a student
 196-13  within 10 days of the withdrawal or graduation.
 196-14        (b)  Each holder of a private beauty culture school license
 196-15  shall furnish to the commission:
 196-16              (1)  the current course completion rates of students
 196-17  who attend a course of instruction offered by the school; and
 196-18              (2)  job placement rates and employment rates of
 196-19  students who complete a course of instruction.
 196-20        (c)  On the graduation of a student from a course of training
 196-21  offered by a private beauty culture school or the student's
 196-22  withdrawal or transfer from a course of training without completion
 196-23  of the training, the private beauty culture school shall send the
 196-24  commission a certified written copy of the student's record,
 196-25  indicating all course hours completed by the student and whether
 196-26  the agreed tuition has been paid.
 196-27        (d)  <A holder of a private beauty culture school license
  197-1  shall furnish each prospective student with:>
  197-2              <(1)  a copy of the course outline;>
  197-3              <(2)  a schedule of the tuition and other fees
  197-4  assessed;>
  197-5              <(3)  the refund policy required under Section 21 of
  197-6  this Act;>
  197-7              <(4)  school regulations relating to absences;>
  197-8              <(5)  the school grading policy;>
  197-9              <(6)  the school rules of operation and conduct;>
 197-10              <(7)  school regulations  relating to incomplete
 197-11  grades;>
 197-12              <(8)  the name, mailing address, and telephone number
 197-13  of the commission for the purpose of directing complaints to the
 197-14  commission; and>
 197-15              <(9)  the current rates of job placement and employment
 197-16  of students who complete a course of training.>
 197-17        <(e)  A holder of a private beauty culture school license
 197-18  shall publish in its catalogue and enrollment contract a
 197-19  description of the refund policy required under Section 21 of this
 197-20  Act.>
 197-21        <(f)  If the commission has reasonable cause to believe that
 197-22  a private beauty culture school has violated this Act or a rule
 197-23  adopted under this Act, the commission may order a peer review of
 197-24  the school or suspend the admission of students to the school.  A
 197-25  peer review ordered under this subsection shall be conducted by a
 197-26  peer review team composed of knowledgeable persons selected by the
 197-27  commission.  The commission shall attempt to provide a balance on
  198-1  each team between members assigned to the team who are from this
  198-2  state and those who are from other states.  The team shall provide
  198-3  the commission with an objective assessment of the content of the
  198-4  school's curriculum and its application.  The school under review
  198-5  shall pay the costs of the peer review.>
  198-6        <(g)>  A private beauty culture school that violates this Act
  198-7  or a rule adopted under this Act is liable for a civil penalty in
  198-8  addition to any injunctive relief or other remedy provided by law.
  198-9  The civil penalty may not exceed $1,000 a day for each violation.
 198-10  The attorney general, at the request of the commission, may bring a
 198-11  civil action to collect a civil penalty under this subsection.
 198-12  Civil penalties recovered in a suit brought under this subsection
 198-13  shall be deposited in the state treasury to the credit of the
 198-14  General Revenue Fund.
 198-15        SECTION 5.15.  Chapter 1036, Acts of the 62nd Legislature,
 198-16  Regular Session, 1971 (Article 8451a, Vernon's Texas Civil
 198-17  Statutes), is amended by adding Sections 22A-22F to read as
 198-18  follows:
 198-19        Sec. 22A.  LICENSING REQUIREMENTS DISCLOSED BY PRIVATE BEAUTY
 198-20  CULTURE SCHOOL.  (a)  A private beauty culture school must disclose
 198-21  to all prospective students state licensing requirements to
 198-22  practice the occupation for which the student is training.
 198-23        (b)  A school must disclose to all prospective students the
 198-24  performance of graduates from the school on the licensing
 198-25  examination of the commission if that information is available.
 198-26        Sec. 22B.  ENTRANCE REQUIREMENTS FOR PRIVATE BEAUTY CULTURE
 198-27  SCHOOL; MINIMUM SKILLS TEST.  (a)  The commission shall approve
  199-1  entrance requirements, including minimum skills testing, for
  199-2  students who may be accepted for a course of study in a private
  199-3  beauty culture school.  The requirements must be specific and
  199-4  provide that students who are allowed to enter a course will have a
  199-5  reasonable chance of completing the program.
  199-6        (b)  The school shall administer a standardized test to
  199-7  students with a high school diploma or high school equivalency
  199-8  certificate entering the school, if testing for minimum skill
  199-9  competency is determined by the commission as appropriate and
 199-10  necessary to determine if remediation is needed.  The test must be
 199-11  administered before enrollment and must be nationally recognized as
 199-12  appropriate and effective for minimum skills testing and high
 199-13  school equivalency.  If the test reveals the necessity for
 199-14  remediation, the school must implement a plan to encourage the
 199-15  student to improve in basic general education skills.
 199-16        (c)  A student must achieve a successful score on the test
 199-17  required by this section before the student is obligated for
 199-18  tuition and fees for the vocational portion of the school's
 199-19  program.
 199-20        (d)  The school may, in accordance with federal statutory
 199-21  provisions affecting guaranteed student loan programs, on a
 199-22  case-by-case basis, refuse to provide the certification statements
 199-23  required for guaranteed student loan eligibility, or reduce the
 199-24  determination of need for a guaranteed student loan if the school
 199-25  determines that the student's expenses to be covered by the loan,
 199-26  and the estimated cost of attendance, can be met more appropriately
 199-27  by the school, directly by the student, or by other sources.
  200-1        Sec. 22C.  STUDENTS IN PRIVATE BEAUTY CULTURE SCHOOLS IN NEED
  200-2  OF REMEDIAL HELP.  (a)  An applicant without a high school diploma
  200-3  or high school equivalency certificate must pass an entrance test
  200-4  approved by the commission and be considered to have the ability to
  200-5  benefit from the school before the school may enroll the student.
  200-6        (b)  A school that admits a student who does not have a high
  200-7  school diploma or high school equivalency certificate must develop
  200-8  and implement a plan for counseling the student on curriculum,
  200-9  student aid, employment opportunities, and the remediation
 200-10  necessary for the student to obtain a high school equivalency
 200-11  certificate and improve in basic general education skills.
 200-12        (c)  The school must assist the student in obtaining the
 200-13  remediation necessary for the student to pass a standardized
 200-14  minimum skills equivalency test, approved by the commission, and
 200-15  the student must pass the test before entering the final quarter of
 200-16  the course.
 200-17        Sec. 22D.  ENROLLMENT POLICIES OF PRIVATE BEAUTY CULTURE
 200-18  SCHOOL.  (a)  The enrollment contract of a private beauty culture
 200-19  school must contain:
 200-20              (1)  a disclosure that the contract is a legally
 200-21  binding instrument on written acceptance of the student by the
 200-22  school, unless canceled as provided by law;
 200-23              (2)  the school's cancellation and refund policy;
 200-24              (3)  the method of cancellation of the contract, the
 200-25  effective date of any cancellation, and the name and address to
 200-26  which the notice of cancellation should be sent or delivered;
 200-27              (4)  the total cost of the course including tuition and
  201-1  all other charges;
  201-2              (5)  a notification that the fair market value of
  201-3  equipment or supplies furnished to the student that the student
  201-4  fails to return in a condition suitable for resale  not later than
  201-5  the 10th business day after the date of cancellation may be
  201-6  retained by the school and deducted from any refund of the student;
  201-7              (6)  a statement that if a student's enrollment is
  201-8  canceled for any reason, the school will notify an agency known to
  201-9  the school to be providing financial aid to the student of the
 201-10  cancellation not later than the 30th day after the date of
 201-11  cancellation;
 201-12              (7)  the name and description of the courses, including
 201-13  the number of hours of classroom instruction or home study lessons;
 201-14  and
 201-15              (8)  the Federal Trade Commission statement for a
 201-16  holder in due course.
 201-17        (b)  An enrollment contract may not contain a wage assignment
 201-18  provision or a confession of judgment clause.
 201-19        (c)  Immediately after a prospective student has signed an
 201-20  enrollment contract, the school shall give the prospective student
 201-21  a copy of the contract, and a copy shall be placed in the student's
 201-22  permanent school file.
 201-23        (d)  A promissory note signed by a student must include the
 201-24  Federal Trade Commission statement required for a holder in due
 201-25  course.
 201-26        Sec. 22E.  LOAN COUNSELING BY PRIVATE BEAUTY CULTURE SCHOOL.
 201-27  (a)  A  school shall conduct loan counseling entrance interviews
  202-1  with each prospective student seeking a loan during the enrollment
  202-2  process.  A student borrower shall be counseled before the initial
  202-3  disbursement of loan proceeds, shortly before the student completes
  202-4  one-half of the course, and before the student is issued a
  202-5  certificate of completion.
  202-6        (b)  The school's financial aid officer or counselor shall
  202-7  conduct the interviews required by Subsection (a) of this section.
  202-8  The interview must include a discussion of:
  202-9              (1)  the rights and responsibilities of the student as
 202-10  a borrower;
 202-11              (2)  what a loan is and the importance of repayment;
 202-12              (3)  the total cost of the program in which the student
 202-13  will be enrolled;
 202-14              (4)  the availability of other forms of financial aid,
 202-15  grants, and part-time work;
 202-16              (5)  the starting range and average reported salaries
 202-17  of those in the occupation for which the student will be trained,
 202-18  if available; and
 202-19              (6)  job placement services provided by the school and
 202-20  the employment rate of persons who attended the school and were
 202-21  enrolled in the program in which the student is enrolled.
 202-22        (c)  A school approved to accept state or federal educational
 202-23  loans or grants shall adopt, in addition to the provisions in this
 202-24  section, measures to reduce defaults and improve borrower's
 202-25  understanding and respect for the loan repayment obligation as
 202-26  provided in 34 C.F.R., Parts 668 and 682.
 202-27        (d)  The school must give a copy of the Texas Guaranteed
  203-1  Student Loan Corporation's "Your Future" guide, or a comparable
  203-2  document approved by the commission, to a prospective student at a
  203-3  time and in a manner that provides the student with sufficient
  203-4  opportunity to read the guide or other document and discuss the
  203-5  contents with the school's financial aid officer, if necessary for
  203-6  understanding and clarity, before signing an enrollment contract
  203-7  and before the school accepts the student in a course of study.
  203-8        (e)  The prospective student must sign a document stating
  203-9  that the student:
 203-10              (1)  attended a loan counseling entrance interview; and
 203-11              (2)  received a copy of the "Your Future" guide, or
 203-12  comparable document, in the time provided by Subsection (d) of this
 203-13  section.
 203-14        (f)  A copy of the signed document required by Subsection (e)
 203-15  of this section must be sent to the student, guarantor, and lender
 203-16  and must be placed in the student's permanent school file.
 203-17        Sec. 22F.  RECORDS OF PRIVATE BEAUTY CULTURE SCHOOL.  (a)  A
 203-18  private beauty culture school shall maintain permanent records for
 203-19  all students enrolled, as required by the commission.
 203-20        (b)  A school shall adopt a plan to preserve permanent
 203-21  records and submit the plan to the commission for approval.  The
 203-22  plan must:
 203-23              (1)  provide that at least one copy of the records will
 203-24  be held in a secure depository; and
 203-25              (2)  designate an appropriate official to provide a
 203-26  student with copies of records or transcripts on request.
 203-27        (c)  The school shall make the first copy of records or
  204-1  transcripts at no charge to the student.  The school may make a
  204-2  reasonable charge to provide additional copies of records,
  204-3  transcripts, or other student information.
  204-4        (d)  If the school closes, the records become the property of
  204-5  the state.
  204-6        SECTION 5.16.  Section 27, Chapter 1036, Acts of the 62nd
  204-7  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
  204-8  Civil Statutes), is amended to read as follows:
  204-9        Sec. 27.  Display of License.  (a)  Every holder of a license
 204-10  or certificate issued under this Act shall display the license or
 204-11  certificate in a conspicuous place in his place of business or
 204-12  employment.
 204-13        (b)  The commission may not use the word "approval" or a
 204-14  variation of that term on the license of a private beauty culture
 204-15  school.  The terminology must be "licensed" to operate, or a
 204-16  variation of that phrase.
 204-17        SECTION 5.17.  Section 30(a), Chapter 1036, Acts of the 62nd
 204-18  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
 204-19  Civil Statutes), is amended to read as follows:
 204-20        (a)  The commission shall use a written examination, selected
 204-21  by the commission, to examine license applicants and shall <may>
 204-22  require a practical examination for licenses and certificates
 204-23  issued under this Act, as the commission considers necessary.  The
 204-24  written examination must be validated by independent testing
 204-25  professionals or be purchased from a national testing service.  The
 204-26  commission shall prescribe the method and content of any practical
 204-27  examination.
  205-1        SECTION 5.18.  Sections 33(c), (e), (f), and (g), Chapter
  205-2  1036, Acts of the 62nd Legislature, Regular Session, 1971 (Article
  205-3  8451a, Vernon's Texas Civil Statutes), are amended to read as
  205-4  follows:
  205-5        (c)  A renewal license shall be issued on payment of the
  205-6  renewal fee as established by the commission under this Act if the
  205-7  licensee is not in violation of this Act at the time of renewal.
  205-8        (e)  A license that has been expired for less than 30 days
  205-9  may be renewed.   A renewal license shall be issued on submission
 205-10  of a completed application form prescribed by the commission and
 205-11  payment of the renewal fee, plus a <$10> delinquency fee in an
 205-12  amount established by the commission.
 205-13        (f)  Except as provided by Subsection (h) of this section, a
 205-14  license that has been expired for more than 30 days but less than
 205-15  five years may be renewed.   A renewal license shall be issued on
 205-16  submission of an application, payment of the fee established by the
 205-17  commission under this Act for each year the license has been
 205-18  expired, and payment of a delinquency fee.  Delinquency fees for
 205-19  the following licenses shall be established by the commission
 205-20  <under this subsection are>:
 205-21              (1)  operator or specialty license           <$25>;
 205-22              (2)  instructor license                      <$50>;
 205-23              (3)  manicurist license                      <$25>; and
 205-24              (4)  beauty or specialty salon license       <$35>.
 205-25        (g)  An applicant for renewal of a license that has been
 205-26  expired for more than five years shall be issued a license on
 205-27  submission of an application, payment of the examination fee,
  206-1  satisfactory completion of the examination, and payment of a <$50>
  206-2  reinstatement fee in an amount established by the commission.
  206-3        SECTION 5.19.  Section 34(a), Chapter 1036, Acts of the 62nd
  206-4  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
  206-5  Civil Statutes), is amended to read as follows:
  206-6        (a)  Renewal fees for the following licenses shall be
  206-7  established by the commission <under this Act are>:
  206-8              (1)  Operator or specialty license        <$35>;
  206-9              (2)  Instructor license                   <$50>;
 206-10              (3)  Manicurist license                   <$35>;
 206-11              (4)  Private beauty school license <$200 per year>; and
 206-12              (5)  Beauty or specialty shop license    <$45>.
 206-13        SECTION 5.20.  Section 36, Chapter 1036, Acts of the 62nd
 206-14  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
 206-15  Civil Statutes), is amended to read as follows:
 206-16        Sec. 36.  Grounds for Denial, Suspension, or Revocation of a
 206-17  Permit.  (a)  A license or certificate may be denied, or after a
 206-18  hearing, suspended or revoked if the applicant or licensee has:
 206-19              (1)  secured a license or certificate by fraud or
 206-20  deceit;
 206-21              (2)  violated or conspired to violate this Act or a
 206-22  rule issued under this Act;
 206-23              (3)  knowingly made false or misleading statements in
 206-24  any advertising of the licensee's services;
 206-25              (4)  advertised, practiced, or attempted to practice
 206-26  under the name or trade name of another licensee under this Act; or
 206-27              (5)  engaged in gross malpractice in practicing
  207-1  cosmetology.
  207-2        (b)  In addition to taking a disciplinary action under
  207-3  Subsection (a) of this section, the commission may deny, suspend,
  207-4  or revoke a private beauty culture school license or place the
  207-5  holder of the license on probation if the license holder, the
  207-6  school, or a representative of the school gives a prospective
  207-7  student information relating to the school that is false,
  207-8  fraudulent, deceptive, substantially inaccurate, or misleading.
  207-9        SECTION 5.21.  Section 41, Chapter 1036, Acts of the 62nd
 207-10  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
 207-11  Civil Statutes), is amended by amending Subsection (a) and adding
 207-12  Subsections (c) and (d) to read as follows:
 207-13        (a)  The commission shall keep an information file about each
 207-14  complaint filed with the commission relating to a cosmetologist,
 207-15  <or> cosmetology establishment, or private beauty culture school.
 207-16        (c)  The commission shall prepare information of public
 207-17  interest describing the functions of the commission and the
 207-18  procedures by which complaints are filed with and resolved by the
 207-19  commission against a private beauty culture school.  The commission
 207-20  shall make the information available to the public and appropriate
 207-21  state agencies.
 207-22        (d)  A private beauty culture school shall post on the
 207-23  premises of the school at a prominent and conspicuous location the
 207-24  name, mailing address, and telephone number of the commission for
 207-25  the purpose of directing complaints to the commission.
 207-26        SECTION 5.22.  Chapter 1036, Acts of the 62nd Legislature,
 207-27  Regular Session, 1971 (Article 8451a, Vernon's Texas Civil
  208-1  Statutes), is amended by adding Sections 42 and 43 to read as
  208-2  follows:
  208-3        Sec. 42.  ADVERTISING.  (a)  The commission may not adopt
  208-4  rules that restrict advertising by a private beauty culture school
  208-5  except to prohibit false, misleading, or deceptive advertising
  208-6  practices.  The rules may not restrict:
  208-7              (1)  the use of an advertising medium;
  208-8              (2)  the size or duration of an advertisement; or
  208-9              (3)  advertisement under a trade name.
 208-10        (b)  A school, the representative of a school, or a recruiter
 208-11  for the school may not advertise or represent, in writing or
 208-12  orally, that a school is approved or accredited by the state.
 208-13  Those entities or persons may advertise that the school has been
 208-14  licensed by the state.
 208-15        (c)  A school, representative of a school, or recruiter of a
 208-16  school may not make or cause to be made a statement or
 208-17  representation, written, oral, or visual, offering or publicizing a
 208-18  course, program, or school, if the school, representative, or
 208-19  solicitor knew or reasonably should have known that the statement
 208-20  or representation was false, fraudulent, deceptive, substantially
 208-21  inaccurate, or misleading.
 208-22        Sec. 43.  CRIMINAL PENALTY.  (a)  A person commits an offense
 208-23  if the person fails to comply with Section 21 of this Act.  Except
 208-24  as provided by Subsection (b) of this section, an offense under
 208-25  this section is a Class A misdemeanor.
 208-26        (b)  A person commits an offense if the person intentionally
 208-27  or knowingly uses for personal benefit funds in an amount greater
  209-1  than $10,000 that are due as student refunds under Section 21 of
  209-2  this Act.  An offense under this subsection is a felony of the
  209-3  third degree.
  209-4        SECTION 5.23.  Section 21A, Chapter 1036, Acts of the 62nd
  209-5  Legislature, Regular Session, 1971 (Article 8451a, Vernon's Texas
  209-6  Civil Statutes), as added by S.B. No. 378, Acts of the 72nd
  209-7  Legislature, Regular Session, 1991, is repealed.
  209-8                   PART 6.  MISCELLANEOUS PROVISIONS
  209-9        SECTION 6.01.  Section 32.45(a), Penal Code, is amended to
 209-10  read as follows:
 209-11        (a)  For purposes of this section:
 209-12              (1)  "Fiduciary" includes:
 209-13                    (A)  a trustee, guardian, administrator,
 209-14  executor, conservator, and receiver;
 209-15                    (B)  a proprietary school, or its owner, that
 209-16  receives payment for tuition, fees, or other charges, including
 209-17  guaranteed student loans;
 209-18                    (C)  any other person acting in a fiduciary
 209-19  capacity, but not a commercial bailee; and
 209-20                    (D) <(C)>  an officer, manager, employee, or
 209-21  agent carrying on fiduciary functions on behalf of a fiduciary.
 209-22              (2)  "Misapply" means deal with property contrary to:
 209-23                    (A)  an agreement under which the fiduciary holds
 209-24  the property; or
 209-25                    (B)  a law prescribing the custody or disposition
 209-26  of the property.
 209-27              (3)  "Proprietary school" means any business enterprise
  210-1  operated for a profit, or on a nonprofit basis, which maintains a
  210-2  place of business within the State of Texas, or solicits business
  210-3  within the State of Texas, and:
  210-4                    (A)  which offers or maintains a course or
  210-5  courses of instruction or study; or
  210-6                    (B)  at which place of business such a course or
  210-7  courses of instruction or study is available through classroom
  210-8  instruction or by correspondence, or both, to a person or persons
  210-9  for the purpose of training or preparing the person for a field of
 210-10  endeavor in a business, trade, technical, or industrial occupation,
 210-11  or for avocational or personal improvement.
 210-12        SECTION 6.02.  (a)  The changes in law made by this Act apply
 210-13  only to an offense committed on or after the effective date of this
 210-14  Act.  For purposes of this section, an offense is committed before
 210-15  the effective date of this Act if any element of the offense occurs
 210-16  before the effective date.
 210-17        (b)  An offense committed before the effective date of this
 210-18  Act is covered by the law in effect when the offense was committed,
 210-19  and the former law is continued in effect for this purpose.
 210-20        SECTION 6.03.  Except as otherwise provided by this Act, this
 210-21  Act takes effect January 1, 1994.
 210-22        SECTION 6.04.  The importance of this legislation and the
 210-23  crowded condition of the calendars in both houses create an
 210-24  emergency and an imperative public necessity that the
 210-25  constitutional rule requiring bills to be read on three several
 210-26  days in each house be suspended, and this rule is hereby suspended,
 210-27  and that this Act take effect and be in force according to its
  211-1  terms, and it is so enacted.