1-1 By: Solis (Senate Sponsor - Truan) H.B. No. 1985
1-2 (In the Senate - Received from the House April 30, 2001;
1-3 May 1, 2001, read first time and referred to Committee on
1-4 Education; May 10, 2001, reported favorably by the following vote:
1-5 Yeas 7, Nays 0; May 10, 2001, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the regulation of proprietary schools.
1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10 SECTION 1. Sections 132.001(2), (5), and (11), Education
1-11 Code, are amended to read as follows:
1-12 (2) "Owner" of a proprietary school means:
1-13 (A) in the case of a school owned by an
1-14 individual, that individual;
1-15 (B) in the case of a school owned by a
1-16 partnership, all full, silent, and limited partners;
1-17 (C) in the case of a school owned by a
1-18 corporation, the corporation, its directors, officers, and each
1-19 shareholder owning shares of issued and outstanding stock
1-20 aggregating at least 10 percent of the total of the issued and
1-21 outstanding shares;
1-22 (D) in the case of a school in which the
1-23 ownership interest is held in trust, the beneficiary of that trust;
1-24 or
1-25 (E) in the case of a school owned by another
1-26 legal entity, a person who owns at least 10 percent ownership
1-27 interest in the entity.
1-28 (5) "Agency administrator" means the agency
1-29 administrator of the Texas Workforce [Employment] Commission or a
1-30 person, knowledgeable in the administration of regulating
1-31 proprietary schools, designated by the agency administrator to
1-32 administer this chapter.
1-33 (11) "Commission" means the Texas Workforce
1-34 [Employment] Commission.
1-35 SECTION 2. The heading to Section 132.021, Education Code, is
1-36 amended to read as follows:
1-37 Sec. 132.021. TEXAS WORKFORCE [EMPLOYMENT] COMMISSION.
1-38 SECTION 3. Section 132.056(d), Education Code, is amended to
1-39 read as follows:
1-40 (d) At least 30 days prior to expiration of a certificate of
1-41 approval, the proprietary school shall forward to the commission an
1-42 application for renewal. The commission shall reexamine [the
1-43 school at] the premises of the school as frequently as the
1-44 commission considers necessary and [either] renew, revoke, or deny
1-45 renewal of [cancel] the school's certificate of approval. If a
1-46 school fails to file a complete application for renewal at least 30
1-47 days before the expiration date of the certificate of approval, the
1-48 school, as a condition of renewal, must pay, in addition to the
1-49 annual renewal fee, a late renewal fee in an amount established by
1-50 commission rule of at least $100.
1-51 SECTION 4. Section 132.060(a), Education Code, is amended to
1-52 read as follows:
1-53 (a) Before a certificate of approval is issued under this
1-54 chapter, a bond shall be provided by the proprietary school for the
1-55 period during which the certificate of approval is issued, and the
1-56 obligation of the bond shall be that neither this chapter nor any
1-57 rule adopted pursuant thereto shall be violated by the school or
1-58 any of its officers, agents, or employees. The bond shall be in
1-59 the penal sum of $5,000 or a multiple of $5,000 that is not greater
1-60 than $35,000 for a certificate of approval issued for a period that
1-61 begins in the fiscal year ending August 31, 2002, and $50,000 for a
1-62 certificate of approval issued for a period that begins on or after
1-63 September 1, 2002 [$25,000]. The commission shall determine the
1-64 amount based on the evidence the school submits of its projected
2-1 maximum total unearned tuition during the period of the certificate
2-2 of approval. The bond shall be a corporate surety bond issued by a
2-3 company authorized to do business in this state, conditioned that
2-4 the parties thereto shall pay all damages or expenses that the
2-5 state or any governmental subdivision thereof or any student or
2-6 potential student may sustain resulting from a violation. The bond
2-7 shall be to the state to be used only for payment of a tuition
2-8 refund due to a student or potential student. The bond shall be
2-9 filed with the commission and shall be in such form as shall be
2-10 approved by the commission.
2-11 SECTION 5. Section 132.061(b), Education Code, is amended to
2-12 read as follows:
2-13 (b) Except as provided by Subsection (g), as a condition for
2-14 granting certification each proprietary school must maintain a
2-15 policy for the refund of the unused portion of tuition, fees, and
2-16 other charges in the event the student, after expiration of the
2-17 72-hour cancellation privilege, fails to enter the course,
2-18 withdraws, or is discontinued therefrom at any time prior to
2-19 completion, and such policy must provide:
2-20 (1) refunds for resident courses will be based on the
2-21 period of enrollment computed on the basis of course time expressed
2-22 in clock hours;
2-23 (2) the effective date of the termination for refund
2-24 purposes in residence schools will be the earliest of the
2-25 following:
2-26 (A) the last date of attendance, if the student
2-27 is terminated by the school;
2-28 (B) the date of receipt of written notice from
2-29 the student; or
2-30 (C) 10 school days following the last date of
2-31 attendance;
2-32 (3) if tuition and fees are collected in advance of
2-33 entrance, and if, after expiration of the 72-hour cancellation
2-34 privilege, the student does not enter the residence school, not
2-35 more than $100 shall be retained by the school;
2-36 (4) for the student who enters a residence course of
2-37 not more than 12 months in length, terminates, or withdraws, the
2-38 school may retain $100 of tuition and fees and the minimum refund
2-39 of the remaining tuition and fees will be:
2-40 (A) during the first week or one-tenth of the
2-41 course, whichever is less, 90 percent of the remaining tuition and
2-42 fees;
2-43 (B) after the first week or one-tenth of the
2-44 course, whichever is less, but within the first three weeks or
2-45 one-fifth of the course, whichever is less, 80 percent of the
2-46 remaining tuition and fees;
2-47 (C) after the first three weeks or one-fifth of
2-48 the course, whichever is less, but within the first quarter of the
2-49 course, 75 percent of the remaining tuition and fees;
2-50 (D) during the second quarter of the course, 50
2-51 percent of the remaining tuition and fees;
2-52 (E) during the third quarter of the course, 10
2-53 percent of the remaining tuition and fees; or
2-54 (F) during the last quarter of the course, the
2-55 student may be considered obligated for the full tuition and fees;
2-56 (5) for residence courses more than 12 months in
2-57 length, the refund shall be applied to each 12-month period paid,
2-58 or part thereof separately, and the student is entitled to a refund
2-59 as provided by Subdivision (4);
2-60 (6) refunds of items of extra expense to the student,
2-61 such as instructional supplies, books, student activities,
2-62 laboratory fees, service charges, rentals, deposits, and all other
2-63 such ancillary miscellaneous charges, where these items are
2-64 separately stated and shown in the data furnished the student
2-65 before enrollment, will be made in a reasonable manner acceptable
2-66 to the commission;
2-67 (7) refunds based on enrollment in residence schools
2-68 will be totally consummated within 60 days after the effective date
2-69 of termination;
3-1 (8) refunds for correspondence courses will be
3-2 computed on the basis of the number of lessons in the course;
3-3 (9) the effective date of the termination for refund
3-4 purposes in correspondence courses will be the earliest of the
3-5 following:
3-6 (A) the date of notification to the student if
3-7 the student is terminated;
3-8 (B) the date of receipt of written notice from
3-9 the student; or
3-10 (C) the end of the third calendar month
3-11 following the month in which the student's last lesson assignment
3-12 was received unless notification has been received from the student
3-13 that the student [he] wishes to remain enrolled;
3-14 (10) if tuition and fees are collected before any
3-15 lessons have been completed, and if, after expiration of the
3-16 72-hour cancellation privilege, the student fails to begin the
3-17 course, not more than $50 shall be retained by the school;
3-18 (11) in cases of termination or withdrawal after the
3-19 student has begun the correspondence course, the school may retain
3-20 $50 of tuition and fees, and the minimum refund policy must provide
3-21 that the student will be refunded the pro rata portion of the
3-22 remaining tuition, fees, and other charges that the number of
3-23 lessons completed and serviced by the school bears to the total
3-24 number of lessons in the course; and
3-25 (12) refunds based on enrollment in correspondence
3-26 schools will be totally consummated within 60 days after the
3-27 effective date of termination.
3-28 SECTION 6. The heading to Section 132.064, Education Code, is
3-29 amended to read as follows:
3-30 Sec. 132.064. NONQUALIFICATION AS SMALL PROPRIETARY SCHOOL.
3-31 SECTION 7. Section 132.151, Education Code, is amended to
3-32 read as follows:
3-33 Sec. 132.151. PROHIBITIONS. A person may not:
3-34 (1) operate a proprietary school without a certificate
3-35 of approval issued by the commission;
3-36 (2) solicit prospective students for or on behalf of a
3-37 proprietary school without being registered as a representative of
3-38 the proprietary school [bonded] as required by this chapter;
3-39 (3) accept contracts or enrollment applications from a
3-40 representative who is not bonded as required by this chapter;
3-41 (4) utilize advertising designed to mislead or deceive
3-42 prospective students;
3-43 (5) fail to notify the commission of the
3-44 discontinuance of the operation of any proprietary school within 72
3-45 hours of cessation of classes and make available accurate records
3-46 as required by this chapter;
3-47 (6) fail to secure and file within 30 days an
3-48 increased bond as required by this chapter;
3-49 (7) negotiate any promissory instrument received as
3-50 payment of tuition or other charge prior to completion of 75
3-51 percent of the course, provided that prior to such time, the
3-52 instrument may be transferred by assignment to a purchaser who
3-53 shall be subject to all the defenses available against the
3-54 proprietary school named as payee; or
3-55 (8) violate any provision of this chapter.
3-56 SECTION 8. Section 132.201, Education Code, is amended by
3-57 amending Subsection (e) and adding Subsection (i) to read as
3-58 follows:
3-59 (e) The fee for an investigation at a proprietary school to
3-60 resolve a complaint filed against the school is $600 [$400]. The
3-61 fee may be charged only if:
3-62 (1) the complaint could not have been resolved by
3-63 telephone or written correspondence only;
3-64 (2) a representative of the commission visits the
3-65 school as a part of the complaint resolution process; and
3-66 (3) the school is found to be at fault.
3-67 (i) The commission may charge each proprietary school a fee
3-68 for the cost of a service that collects, analyzes, and reports
3-69 student-level data in order to assess the outcome of students who
4-1 attend proprietary schools. The total amount of the fees charged
4-2 under this subsection must not exceed the cost of the service to
4-3 the commission.
4-4 SECTION 9. Section 132.242(e), Education Code, is amended to
4-5 read as follows:
4-6 (e) If the amount of the closed proprietary school's bond
4-7 under Section 132.060 is less than the amount required for student
4-8 refunds under Subsections (c) and (d), the refunds shall be paid
4-9 from the proprietary school tuition protection fund in an amount
4-10 not to exceed $50,000 [$25,000].
4-11 SECTION 10. (a) This Act takes effect September 1, 2001.
4-12 (b) The change in law made by this Act to Section
4-13 132.061(b), Education Code, applies only to a course of instruction
4-14 or study beginning on or after the effective date of this Act. A
4-15 course of instruction or study beginning before the effective date
4-16 of this Act is governed by the law in effect when the course began,
4-17 and the former law is continued in effect for that purpose.
4-18 (c) The change in law made by this Act to Section
4-19 132.201(e), Education Code, applies only to a fee for an
4-20 investigation conducted pursuant to a complaint filed on or after
4-21 the effective date of this Act. A fee for an investigation
4-22 conducted pursuant to a complaint filed before the effective date
4-23 of this Act is governed by the law in effect at the time the
4-24 complaint is filed, and the former law is continued in effect for
4-25 that purpose.
4-26 (d) The change in law made by this Act to Section
4-27 132.242(e), Education Code, applies only to a refund that becomes
4-28 due on or after the effective date of this Act. A refund that
4-29 becomes due before the effective date of this Act is governed by
4-30 the law in effect on the date the refund becomes due, and the
4-31 former law is continued in effect for that purpose.
4-32 * * * * *