By Solis H.B. No. 1985
77R2812 KSD-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of proprietary schools.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Sections 132.001(2), (5), and (11), Education
1-5 Code, are amended to read as follows:
1-6 (2) "Owner" of a proprietary school means:
1-7 (A) in the case of a school owned by an
1-8 individual, that individual;
1-9 (B) in the case of a school owned by a
1-10 partnership, all full, silent, and limited partners;
1-11 (C) in the case of a school owned by a
1-12 corporation, the corporation, its directors, officers, and each
1-13 shareholder owning shares of issued and outstanding stock
1-14 aggregating at least 10 percent of the total of the issued and
1-15 outstanding shares;
1-16 (D) in the case of a school in which the
1-17 ownership interest is held in trust, the beneficiary of that trust;
1-18 or
1-19 (E) in the case of a school owned by another
1-20 legal entity, a person who owns at least 10 percent ownership
1-21 interest in the entity.
1-22 (5) "Agency administrator" means the agency
1-23 administrator of the Texas Workforce [Employment] Commission or a
1-24 person, knowledgeable in the administration of regulating
2-1 proprietary schools, designated by the agency administrator to
2-2 administer this chapter.
2-3 (11) "Commission" means the Texas Workforce
2-4 [Employment] Commission.
2-5 SECTION 2. The heading to Section 132.021, Education Code, is
2-6 amended to read as follows:
2-7 Sec. 132.021. TEXAS WORKFORCE [EMPLOYMENT] COMMISSION.
2-8 SECTION 3. Section 132.056(d), Education Code, is amended to
2-9 read as follows:
2-10 (d) At least 30 days prior to expiration of a certificate of
2-11 approval, the proprietary school shall forward to the commission an
2-12 application for renewal. The commission shall reexamine [the
2-13 school at] the premises of the school as frequently as the
2-14 commission considers necessary and [either] renew, revoke, or deny
2-15 renewal of [cancel] the school's certificate of approval. If a
2-16 school fails to file a complete application for renewal at least 30
2-17 days before the expiration date of the certificate of approval, the
2-18 school, as a condition of renewal, must pay, in addition to the
2-19 annual renewal fee, a late renewal fee in an amount established by
2-20 commission rule of at least $100.
2-21 SECTION 4. Section 132.060(a), Education Code, is amended to
2-22 read as follows:
2-23 (a) Before a certificate of approval is issued under this
2-24 chapter, a bond shall be provided by the proprietary school for the
2-25 period during which the certificate of approval is issued, and the
2-26 obligation of the bond shall be that neither this chapter nor any
2-27 rule adopted pursuant thereto shall be violated by the school or
3-1 any of its officers, agents, or employees. The bond shall be in
3-2 the penal sum of $5,000 or a multiple of $5,000 that is not greater
3-3 than $35,000 for a certificate of approval issued for a period that
3-4 begins in the fiscal year ending August 31, 2002, and $50,000 for a
3-5 certificate of approval issued for a period that begins on or after
3-6 September 1, 2002 [$25,000]. The commission shall determine the
3-7 amount based on the evidence the school submits of its projected
3-8 maximum total unearned tuition during the period of the certificate
3-9 of approval. The bond shall be a corporate surety bond issued by a
3-10 company authorized to do business in this state, conditioned that
3-11 the parties thereto shall pay all damages or expenses that the
3-12 state or any governmental subdivision thereof or any student or
3-13 potential student may sustain resulting from a violation. The bond
3-14 shall be to the state to be used only for payment of a tuition
3-15 refund due to a student or potential student. The bond shall be
3-16 filed with the commission and shall be in such form as shall be
3-17 approved by the commission.
3-18 SECTION 5. Section 132.061(b), Education Code, is amended to
3-19 read as follows:
3-20 (b) Except as provided by Subsection (g), as a condition for
3-21 granting certification each proprietary school must maintain a
3-22 policy for the refund of the unused portion of tuition, fees, and
3-23 other charges in the event the student, after expiration of the
3-24 72-hour cancellation privilege, fails to enter the course,
3-25 withdraws, or is discontinued therefrom at any time prior to
3-26 completion, and such policy must provide:
3-27 (1) refunds for resident courses will be based on the
4-1 period of enrollment computed on the basis of course time expressed
4-2 in clock hours;
4-3 (2) the effective date of the termination for refund
4-4 purposes in residence schools will be the earliest of the
4-5 following:
4-6 (A) the last date of attendance, if the student
4-7 is terminated by the school;
4-8 (B) the date of receipt of written notice from
4-9 the student; or
4-10 (C) 10 school days following the last date of
4-11 attendance;
4-12 (3) if tuition and fees are collected in advance of
4-13 entrance, and if, after expiration of the 72-hour cancellation
4-14 privilege, the student does not enter the residence school, not
4-15 more than $100 shall be retained by the school;
4-16 (4) for the student who enters a residence course of
4-17 not more than 12 months in length, terminates, or withdraws, the
4-18 school may retain $100 of tuition and fees and the minimum refund
4-19 of the remaining tuition and fees will be:
4-20 (A) during the first week or one-tenth of the
4-21 course, whichever is less, 90 percent of the remaining tuition and
4-22 fees;
4-23 (B) after the first week or one-tenth of the
4-24 course, whichever is less, but within the first three weeks or
4-25 one-fifth of the course, whichever is less, 80 percent of the
4-26 remaining tuition and fees;
4-27 (C) after the first three weeks or one-fifth of
5-1 the course, whichever is less, but within the first quarter of the
5-2 course, 75 percent of the remaining tuition and fees;
5-3 (D) during the second quarter of the course, 50
5-4 percent of the remaining tuition and fees;
5-5 (E) during the third quarter of the course, 10
5-6 percent of the remaining tuition and fees; or
5-7 (F) during the last quarter of the course, the
5-8 student may be considered obligated for the full tuition and fees;
5-9 (5) for residence courses more than 12 months in
5-10 length, the refund shall be applied to each 12-month period paid,
5-11 or part thereof separately, and the student is entitled to a refund
5-12 as provided by Subdivision (4);
5-13 (6) refunds of items of extra expense to the student,
5-14 such as instructional supplies, books, student activities,
5-15 laboratory fees, service charges, rentals, deposits, and all other
5-16 such ancillary miscellaneous charges, where these items are
5-17 separately stated and shown in the data furnished the student
5-18 before enrollment, will be made in a reasonable manner acceptable
5-19 to the commission;
5-20 (7) refunds based on enrollment in residence schools
5-21 will be totally consummated within 60 days after the effective date
5-22 of termination;
5-23 (8) refunds for correspondence courses will be
5-24 computed on the basis of the number of lessons in the course;
5-25 (9) the effective date of the termination for refund
5-26 purposes in correspondence courses will be the earliest of the
5-27 following:
6-1 (A) the date of notification to the student if
6-2 the student is terminated;
6-3 (B) the date of receipt of written notice from
6-4 the student; or
6-5 (C) the end of the third calendar month
6-6 following the month in which the student's last lesson assignment
6-7 was received unless notification has been received from the student
6-8 that the student [he] wishes to remain enrolled;
6-9 (10) if tuition and fees are collected before any
6-10 lessons have been completed, and if, after expiration of the
6-11 72-hour cancellation privilege, the student fails to begin the
6-12 course, not more than $50 shall be retained by the school;
6-13 (11) in cases of termination or withdrawal after the
6-14 student has begun the correspondence course, the school may retain
6-15 $50 of tuition and fees, and the minimum refund policy must provide
6-16 that the student will be refunded the pro rata portion of the
6-17 remaining tuition, fees, and other charges that the number of
6-18 lessons completed and serviced by the school bears to the total
6-19 number of lessons in the course; and
6-20 (12) refunds based on enrollment in correspondence
6-21 schools will be totally consummated within 60 days after the
6-22 effective date of termination.
6-23 SECTION 6. The heading to Section 132.064, Education Code, is
6-24 amended to read as follows:
6-25 Sec. 132.064. NONQUALIFICATION AS SMALL PROPRIETARY SCHOOL.
6-26 SECTION 7. Section 132.151, Education Code, is amended to
6-27 read as follows:
7-1 Sec. 132.151. PROHIBITIONS. A person may not:
7-2 (1) operate a proprietary school without a certificate
7-3 of approval issued by the commission;
7-4 (2) solicit prospective students for or on behalf of a
7-5 proprietary school without being registered as a representative of
7-6 the proprietary school [bonded] as required by this chapter;
7-7 (3) accept contracts or enrollment applications from a
7-8 representative who is not bonded as required by this chapter;
7-9 (4) utilize advertising designed to mislead or deceive
7-10 prospective students;
7-11 (5) fail to notify the commission of the
7-12 discontinuance of the operation of any proprietary school within 72
7-13 hours of cessation of classes and make available accurate records
7-14 as required by this chapter;
7-15 (6) fail to secure and file within 30 days an
7-16 increased bond as required by this chapter;
7-17 (7) negotiate any promissory instrument received as
7-18 payment of tuition or other charge prior to completion of 75
7-19 percent of the course, provided that prior to such time, the
7-20 instrument may be transferred by assignment to a purchaser who
7-21 shall be subject to all the defenses available against the
7-22 proprietary school named as payee; or
7-23 (8) violate any provision of this chapter.
7-24 SECTION 8. Section 132.201, Education Code, is amended by
7-25 amending Subsection (e) and adding Subsection (i) to read as
7-26 follows:
7-27 (e) The fee for an investigation at a proprietary school to
8-1 resolve a complaint filed against the school is $600 [$400]. The
8-2 fee may be charged only if:
8-3 (1) the complaint could not have been resolved by
8-4 telephone or written correspondence only;
8-5 (2) a representative of the commission visits the
8-6 school as a part of the complaint resolution process; and
8-7 (3) the school is found to be at fault.
8-8 (i) The commission may charge each proprietary school a fee
8-9 for the cost of a service that collects, analyzes, and reports
8-10 student-level data in order to assess the outcome of students who
8-11 attend proprietary schools. The total amount of the fees charged
8-12 under this subsection must not exceed the cost of the service to
8-13 the commission.
8-14 SECTION 9. Section 132.242(e), Education Code, is amended to
8-15 read as follows:
8-16 (e) If the amount of the closed proprietary school's bond
8-17 under Section 132.060 is less than the amount required for student
8-18 refunds under Subsections (c) and (d), the refunds shall be paid
8-19 from the proprietary school tuition protection fund in an amount
8-20 not to exceed $50,000 [$25,000].
8-21 SECTION 10. Section 132.060(b), Education Code, is repealed.
8-22 SECTION 11. (a) This Act takes effect September 1, 2001.
8-23 (b) The change in law made by this Act to Section
8-24 132.061(b), Education Code, applies only to a course of instruction
8-25 or study beginning on or after the effective date of this Act. A
8-26 course of instruction or study beginning before the effective date
8-27 of this Act is governed by the law in effect when the course began,
9-1 and the former law is continued in effect for that purpose.
9-2 (c) The change in law made by this Act to Section
9-3 132.201(e), Education Code, applies only to a fee for an
9-4 investigation conducted pursuant to a complaint filed on or after
9-5 the effective date of this Act. A fee for an investigation
9-6 conducted pursuant to a complaint filed before the effective date
9-7 of this Act is governed by the law in effect at the time the
9-8 complaint is filed, and the former law is continued in effect for
9-9 that purpose.
9-10 (d) The change in law made by this Act to Section
9-11 132.242(e), Education Code, applies only to a refund that becomes
9-12 due on or after the effective date of this Act. A refund that
9-13 becomes due before the effective date of this Act is governed by
9-14 the law in effect on the date the refund becomes due, and the
9-15 former law is continued in effect for that purpose.