C.S.S.B. 1343 78(R) BILL ANALYSIS
C.S.S.B. 1343
By: Jackson
Higher Education
Committee Report (Substituted)
BACKGROUND AND PURPOSE
Proprietary schools were regulated by the Texas Education Agency (TEA)
until an Act of the
74th Legislature, 1995, moved that responsibility to the Texas Workforce
Commission (TWC).
When TEA regulated those schools, it assessed administrative penalties
against unlicensed
schools as a tool to force the submission of licensure applications. When
a school appealed a
penalty, the appeal hearing was held at TEA at a low cost.
The responsibility for an appeals hearing sought by a proprietary school
now lies with teh State
Office of Administrative Hearings (SOAH), and TWC finds that those
hearings are costprohibitive compared to an in-house hearing at TWC. As a
result, TWC does not use this
enforcement tool to regulate proprietary schools.
As proposed, S.B. 1343 amends the provisions governing TWC's regulation of
proprietary
schools to allow the appeals process to be handled by TWC's special
hearings department;
maintains the right of a proprietary school to judicial review under the
substantial evidence rule;
requires a petition for judicial review to be filed in Travis County, thus
providing for lower costs
for contested administrative penalties; and provides TWC the ability to
seek attorney's fees and
court costs in enforcing its orders.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution.
ANALYSIS
ARTICLE 1. SUBSTANTIVE CHANGES REGARDING CAREER SCHOOLS AND COLLEGES
SECTION 1.01. Amends Section 132.001 , Education Code, by amending
subdivisions (1) - (8), (10), and (12) and adding subdivision (13) as
follows:
(1) Changes 'proprietary school' to 'career school or college.' Changes
'correspondence' to 'distance education.'
(2) Makes conforming changes.
(3) Makes conforming changes.
(4) Makes conforming changes.
(5) Makes conforming changes.
(6) Makes conforming changes.
(7) Makes conforming changes.
(8) Makes non-substantive change.
(10) Makes conforming changes.
(12) Makes non-substantive change.
(13) Defines distance education as a formal education process in which the
student and instructor are separated by a physical distance and a variety
of communication technologies may be used to deliver synchronous or
asynchronous instruction to the student.
SECTION 1.02. Amends Chapter 132, Education Code, by adding Section
132.0015 specifying that any references to proprietary schools in the
Education Code or other law actually refer to career schools and colleges.
SECTION 1.03. Amends Section 132.002 by amending subsections (a) and (d)
and adding subsections (e), (f), and (g) as follows:
(a) Allows certain schools to be exempted from the provisions relating to
career schools and colleges.
(d) Provides that schools are exempt from regulation under these
provisions under certain circumstances.
(e) Provides that after a school is declared exempt the commission may
inspect the school or institution or require the owner of the school or
institution to provide any information the commission considers necessary
for the commission to ensure the school or institution's continued
compliance with the requirements of the exemption.
(f) Provides that a school listed in subsection (a) may seek a certificate
of approval under subchapter C (Authorized Operation of Proprietary
Schools.)
(g) Provides that institutions of higher education exempt from these
provisions prior to September 1, 2003 will remain exempt.
SECTION 1.04. Amends Section 132.051(b), Education Code. Makes conforming
changes and provides that any note, other instrument of indebtedness, or
contract relating to payment for educational services obtained from a
career school or college that does not hold a certificate of approval
issued under this chapter is unenforceable in any action brought on the
note, instrument, or contract.
SECTION 1.05. Amends Section 132.055, Education Code. Makes conforming
changes and provides that a career school or college may not adopt a name
used by an existing school or college unless approved by the THECB.
SECTION 1.06. Amends Section 132.061, Education Code. Makes conforming
changes including changing references from 'proprietary school' to 'career
school or college,' 'resident course' to 'resident courses and synchronous
distance education course,' and 'correspondence course' to 'asynchronous
distance education course.'
SECTION 1.07. Amends Sections 132.152 (c)-(i) Education Code.
(c) Makes non-substantive changes.
(d) Specifies procedures if a hearing results in a finding that a
violation has occurred. If a violation
is has occurred the commission shall provide written notice of the
findings established at the hearing including the amount of the penalty.
The commission shall enter an order requiring payment of the penalty.
(e) Requires the person to submit payment within 30 days of receipt of the
order for deposit in an escrow account or file a sworn affidavit stating
the person in financially unable to pay the amount of the penalty.
(f) Makes the judicial review the same process as an appeal to deny a
certificate of approval under Section 132.102.
(g) Provides that if the court review does not sustain the occurrence of a
violation or finds that the amount of the penalty should be reduced, the
commission must remit the appropriate payment to the person charged with
the violation within 30 days of the court's final judgement.
(h) Provides that if the court review does sustain the occurrence of a
violation, the court shall order the person to pay the amount of the
penalty and may award to the commission the attorney's fees and court
costs incurred by the commission in defending the action. The commission
shall remit the amount of the penalty to the comptroller for deposit in
general revenue accounts.
(i) Makes non-substantive changes.
SECTION 1.08. Amends Section 132.2415, Education Code to create the
Tuition Trust Account
(a) Changes the name of the Texas Workforce Commission depository bonds
guarantee trust account to career school or college tuition trust account.
This account is designated to receive all amounts related to the
protection of career school or college tuition. The balance is not to
exceed $1 million.
(b) Allows the commission to collect an annual fee from career schools or
colleges for the trust account. The total amount collected annually is
set by the commission necessary to pay liabilities of the trust account
during the year. The annual fee is not to exceed 2% of gross tuition and
fees charged by career schools or colleges for the year.
(c) Designates that excess money in the trust at the end of the year be
transferred to tuition trust account.
(d) Specifies that from the tuition trust account the commission shall
attempt refund tuition and fees to each students of a closed career school
or college. The commission may refund less than the full amount of
tuition and fees if they consider the following factors whether there is
enough money in the trust fund, the cost and number of claims against the
trust resulting from closure of the school, the average claim paid in the
past, and the availability of other schools where the student could
complete training.
SECTION 1.09. Amends 132.242 (a)-(d) and (f), (g), Education Code making
conforming changes.
(e) Allows refunds for closed career school or college to be payed from
the career school and college tuition trust account in an amount not to
exceed $150,000.
SECTION 1.10. Repeals Section 132.152 (j)-(m) and 132.060 and 132.241,
Education Code.
SECTION 1.11. Changes made by this article to Section 132.051, Education
Code apply only to a note or other instrument issued, or a contract
entered into, on or after the effective date of this Act.
SECTION 1.12. Changes made by this article to Section 132.055, Education
Code apply only to an application for a certificate of approval filed with
the Texas Workforce Commission on or after the effective date of this Act.
SECTION 1.13. Changes made by this article to Section 132.061(b),
Education Code apply only to the refund policy of a career school or
college to which a certificate of approval is granted or renewed by the
Texas Workforce Commission on or after the effective date of this Act.
SECTION 1.14. Changes made by this article to Section 132.152, Education
Code apply only to an alleged violation of Section 132.151 that occurs on
or after the effective data of this Act.
SECTION 1.15. Transfers any money remaining in the tuition protection fund
under 132.241, Education Code on or after the effective date of this
article to the career school or college tuition trust account established
under Section 132.2415
ARTICLE 2. CONFORMING AMENDMENTS REGARDING CAREER SCHOOLS AND COLLEGES
SECTIONS 2.01 - 2.30. These sections make conforming changes to reflect
the change in language from 'proprietary schools' to 'career schools and
colleges', a shift to gender-neutral language, and other conforming
changes.
Article 3. Effective Date
Section 3.01 Effective date: September 1, 2003.
EFFECTIVE DATE
This Act takes effect September 1, 2003
COMPARISON OF ORIGINAL TO SUBSTITUTE
The substitute changes references to "correspondence" to "distance
education". The substitute changes all references of Proprietary schools
to Career schools and Colleges. The substitute provides that proprietary
schools that do not hold a certificate of approval or exemption issued
under this chapter will find any notes, other instruments of indebtedness,
or contract relating to payment for educational services unenforceable.
The substitute outlines the refund policy for students who participate in
synchronous (measured periods of instruction) and asynchronous
(self-paced) distance education courses. The substitute returns the
appeal process to agency hearing officers and places it in Special
Hearings. The effect of the current process has been to eliminate the
administrative penalties because of the costs to the agency in dollars and
staff time. The substitute replaces "Tuition Protection Fund" with "Trust
Account" language, and increases the account balance amount from $250K to
$1 million. The TPF was changed to a Trust account to free the use of the
funds, so that it would not be considered a cost to the State by the
Comptroller's office when funds are used.