By Hamric                                             H.B. No. 2137
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to an exception from regulation as a proprietary school.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1. Section 132.001, Education Code, is amended to
 1-5     read as follows:
 1-6           Sec. 132.001.  DEFINITIONS. In this chapter:
 1-7                 (1)  "Proprietary school" means any business enterprise
 1-8     operated for a profit, or on a nonprofit basis, that maintains a
 1-9     place of business within this state, or solicits business within
1-10     this state, and that is not specifically exempted by this chapter
1-11     and:
1-12                       (A)  that offers or maintains a course or courses
1-13     of instruction or study; or
1-14                       (B)  at which place of business such a course or
1-15     courses of instruction or study is available through classroom
1-16     instruction or by correspondence, or both, to a person for the
1-17     purpose of training or preparing the person for a field of endeavor
1-18     in a business, trade, technical, or industrial occupation, or for
1-19     avocational or personal improvement.
1-20                 (2)  "Owner" of a proprietary school means:
1-21                       (A)  in the case of a school owned by an
1-22     individual, that individual;
 2-1                       (B)  in the case of a school owned by a
 2-2     partnership, all full, silent, and limited partners;
 2-3                       (C)  in the case of a school owned by a
 2-4     corporation, the corporation, its directors, officers, and each
 2-5     shareholder owning shares of issued and outstanding stock
 2-6     aggregating at least 10 percent of the total of the issued and
 2-7     outstanding shares.
 2-8                 (3)  "School employee" means any person, other than an
 2-9     owner, who directly or indirectly receives compensation from a
2-10     proprietary school for services rendered.
2-11                 (4)  "Representative" means a person employed by a
2-12     proprietary school, whether the school is located within or without
2-13     this state, to act as an agent, solicitor, broker, or independent
2-14     contractor to directly procure students for the school by
2-15     solicitation within or without this state at any place.
2-16                 (5)  "Agency administrator" means the agency
2-17     administrator of the Texas Employment Commission or a person,
2-18     knowledgeable in the administration of regulating proprietary
2-19     schools, designated by the agency administrator to administer this
2-20     chapter.
2-21                 (6)  "Notice to the proprietary school" means written
2-22     correspondence sent to the address of record for legal service
2-23     contained in the application for a certificate of approval.  "Date
2-24     of Notice" means the date the notice is mailed by the commission.
2-25                 (7)  "Support" or "supported" means the primary source
2-26     and means by which a proprietary school derives revenue to
 3-1     perpetuate its operation.
 3-2                 (8)  "Person" means any individual, firm, partnership,
 3-3     association, corporation, or other private entity or combination
 3-4     thereof.
 3-5                 (9)  "Unearned tuition" means total tuition and fees
 3-6     subject to refund under Section 132.061, total tuition and fees
 3-7     collected from students currently enrolled, and total tuition and
 3-8     fees collected from prospective students.
 3-9                 (10)  "Small proprietary school" means a proprietary
3-10     school that does not receive any payment from federal funds under
3-11     20 U.S.C. Section 1070 et seq. and its subsequent amendments or a
3-12     prepaid federal or state source as compensation in whole or in part
3-13     for any student tuition and fees or other charges and either:
3-14                       (A)  has an annual gross income from student
3-15     tuition and fees that is less than or equal to $100,000 for
3-16     programs regulated by the agency;
3-17                       (B)  exclusively offers programs to assist
3-18     students to prepare for an undergraduate or graduate course of
3-19     study at a college or university; or
3-20                       (C)  exclusively offers programs to assist
3-21     students, who have obtained, or who are in the process of
3-22     obtaining, degrees after completing an undergraduate or graduate
3-23     course of study at a college or university, to prepare for an
3-24     examination.
3-25                 (11)  "Commission" means the Texas Employment
3-26     Commission.
 4-1                 (12)  "Division" means the division of education in the
 4-2     commission.
 4-3           SECTION 2.  Section 132.002, Education Code, is amended to
 4-4     read as follows:
 4-5           Sec. 132.002.  EXEMPTIONS. (a)  The following schools or
 4-6     educational institutions are specifically exempt from this chapter
 4-7     and are not within the definition of "proprietary school":
 4-8                 (1)  a school or educational institution supported by
 4-9     taxation from either a local or state source;
4-10                 (2)  nonprofit schools owned, controlled, operated, and
4-11     conducted by bona fide religious, denominational, eleemosynary, or
4-12     similar public institutions exempt from property taxation under the
4-13     laws of this state, but such schools may choose to apply for a
4-14     certificate of approval hereunder, and upon approval and issuance,
4-15     are subject to this chapter as determined by the commission;
4-16                 (3)  a school or training program that offers
4-17     instruction of purely avocational or recreational subjects as
4-18     determined by the commission;
4-19                 (4)  a course or courses of instruction or study
4-20     sponsored by an employer for the training and preparation of its
4-21     own employees, and for which no tuition fee is charged to the
4-22     student;
4-23                 (5)  a course or courses of study or instruction
4-24     sponsored by a recognized trade, business, or professional
4-25     organization for the instruction of the members of the organization
4-26     with a closed membership;
 5-1                 (6)  private colleges or universities that award a
 5-2     recognized baccalaureate, or higher degree, and that maintain and
 5-3     operate educational programs for which a majority of the credits
 5-4     given are transferable to a college, junior college, or university
 5-5     supported entirely or partly by taxation from either a local or
 5-6     state source;
 5-7                 (7)  a school or course that is otherwise regulated and
 5-8     approved under and pursuant to any other law or rulemaking process
 5-9     of this state or approved for continuing education credit by an
5-10     organization that accredits courses for the maintenance of a
5-11     license, except as provided by Subsection (c);
5-12                 (8)  aviation schools or instructors approved by and
5-13     under the supervision of the Federal Aviation Administration;
5-14                 (9)  a school that offers intensive review of a
5-15     student's acquired education, training, or experience to prepare
5-16     the student for an examination, other than a high school
5-17     equivalency examination, that the student by law may not take
5-18     unless the student has completed or substantially completed a
5-19     particular degree program, or that the student is required to take
5-20     as a precondition for enrollment in or admission to a particular
5-21     degree program;
5-22                 (10)  a private school offering primary or secondary
5-23     education, which may include a kindergarten or prekindergarten
5-24     program, and that satisfies the compulsory attendance requirements
5-25     of Section 25.085 pursuant to Section 25.086(a)(1);
5-26                 (11)  a course or courses of instruction by bona fide
 6-1     electrical trade associations for the purpose of preparing students
 6-2     for electrical tests required for licensing and for the purpose of
 6-3     providing continuing education to students for the renewal of
 6-4     electrical licenses;
 6-5                 (12)  a nonprofit arts organization that has as its
 6-6     primary purpose the provision of instruction in the dramatic arts
 6-7     and the communications media to persons younger than 19 years of
 6-8     age;
 6-9                 (13)  a course or training program conducted by a
6-10     nonprofit association of air conditioning and refrigeration
6-11     contractors approved by the Air Conditioning and Refrigeration
6-12     Contractors Advisory Board to provide instruction for technical,
6-13     business, or license examination preparation programs relating to
6-14     air conditioning and refrigeration contracting, as that term is
6-15     defined by the Air Conditioning and Refrigeration Contractor
6-16     License Law (Article 8861, Vernon's Texas Civil Statutes);
6-17                 (14)  a course of instruction by a plumbing trade
6-18     association to prepare students for a plumbing test or program
6-19     required for licensing, certification, or endorsement or to provide
6-20     continuing education approved by the Texas State Board of Plumbing
6-21     Examiners; [and]
6-22                 (15)  a course of instruction in the use of
6-23     technological hardware or software if the course is offered to a
6-24     purchaser of the hardware or software or to the purchaser's
6-25     employee by a person who manufactures and sells, or develops and
6-26     sells, the hardware or software, and if the seller is not primarily
 7-1     in the business of providing courses of instruction in the use of
 7-2     the hardware or software, as determined by the commission; and
 7-3                 (16)  a short course of instruction of forty classroom
 7-4     hours or less that is completed within five calendar days and for
 7-5     which the tuition or fee is less than $1,000, provided that the
 7-6     course meets the following conditions:
 7-7                       (A)  the short course of instruction is designed
 7-8     to teach knowledge or skills to maintain or enhance a person's
 7-9     competency or performance in a business, trade, or occupation, or
7-10     to teach recreational or avocational subjects, as opposed to a
7-11     course of instruction that is, or is represented to be, part of a
7-12     curriculum designed to teach fundamental skills or knowledge to
7-13     enable the student to enter a stated occupation;
7-14                       (B)  no credits or units are awarded for
7-15     completion of a short course of instruction toward completion of a
7-16     course of instruction of more than forty classroom hours;
7-17                       (C)  the person offering the short course of
7-18     instruction makes available a written description of the content of
7-19     the short course of instruction to registrants at least fourteen
7-20     days prior to the start of the short course of instruction;
7-21                       (D)  if a named instructor is identified or
7-22     instructor qualifications are described in any advertising,
7-23     publicity, or solicitation for the short course of instruction, and
7-24     the actual instructor or instructor qualifications are different
7-25     than those so identified or described, the person offering the
7-26     short course of instruction shall:
 8-1                             (i)  offer in writing a refund of the
 8-2     tuition or fee for the short course of instruction to any
 8-3     registrant who, prior to the start of the course, notifies the
 8-4     person offering the course that the registrant elects not to attend
 8-5     and requests a refund.  If the person offering the course maintains
 8-6     a general refund policy that provides for a full refund of tuition
 8-7     or fees at any time before the start of the course, then the
 8-8     general refund policy shall be deemed to satisfy this requirement,
 8-9     provided that the general refund policy is made known to
8-10     registrants or potential registrants prior to the start of the
8-11     course;
8-12                             (ii)  retain records sufficient to identify
8-13     differences between advertised instructors and instructor
8-14     qualifications and actual instructors and instructor qualifications
8-15     in accordance with subsection (F) of this section;
8-16                       (E)  the person offering the short course of
8-17     instruction retains a record of attendance, fees and tuition paid
8-18     by registrants, and refunds for the short course of instruction in
8-19     accordance with subsection (F) of this section;
8-20                       (F)  the person offering the short course of
8-21     instruction retains the records required by subsections (D) and (E)
8-22     of this section for a record retention period of three (3) years
8-23     after the end of the short course of instruction.  If the person
8-24     claiming an exemption for a short course of instruction fails, upon
8-25     request of the commission made within the record retention period,
8-26     to produce the records required by subsections (D) and (E) of this
 9-1     section, the failure to produce such records shall give rise to a
 9-2     rebuttable presumption that the person offering the short course of
 9-3     instruction is within the definition of "proprietary school" and is
 9-4     not exempt from this chapter.
 9-5                 (17)  if a person offers exclusively courses of
 9-6     instruction that are exempt under paragraph (a) of this section
 9-7     from the definition of "proprietary school," then that person is
 9-8     also exempt from the definition of "proprietary school."
 9-9           (b)  Schools offering a course or courses of special study or
9-10     instruction financed or subsidized by local, state, or federal
9-11     funds or by any person, firm, association, or agency other than the
9-12     student involved, on a contract basis and having a closed
9-13     enrollment, may apply to the commission for exemption of such
9-14     course or courses from this chapter and such course or courses may
9-15     be declared exempt by the commission where the commission finds the
9-16     course or courses to be outside the purview of this chapter.
9-17           (c)  If a state agency that issues a license or other
9-18     authorization for the practice of an occupation elects not to
9-19     regulate or approve course hours that exceed the minimum education
9-20     requirements for the issuance of the license or other
9-21     authorization, the licensing agency shall enter into a memorandum
9-22     of understanding with the commission for the regulation of those
9-23     excess course hours under this chapter.  Any course taught under a
9-24     letter of approval or other written authorization issued by the
9-25     licensing agency before the effective date of the memorandum is
9-26     authorized under state law until the course is reviewed by the
 10-1    commission.  The licensing agency may terminate the memorandum of
 10-2    understanding on notice to the commission.
 10-3          (d)  Notwithstanding the exemptions listed in Subsection (a),
 10-4    a dispute resolution organization, as defined by Section 154.001,
 10-5    Civil Practice and Remedies Code, may seek a certificate of
 10-6    approval pursuant to Subchapter C.
 10-7          SECTION 3.  This Act takes effect immediately if it receives
 10-8    a vote of two-thirds of all the members elected to each house, as
 10-9    provided by Section 39, Article III, Texas Constitution.  If this
10-10    Act does not receive the vote necessary for immediate effect, this
10-11    Act takes effect September 1, 2001.