By: Jackson S.B. No. 1343
(In the Senate - Filed March 13, 2003; March 19, 2003, read
first time and referred to Committee on Education; April 24, 2003,
reported favorably by the following vote: Yeas 8, Nays 0;
April 24, 2003, sent to printer.)
A BILL TO BE ENTITLED
AN ACT
relating to the regulation and operation of certain proprietary
schools.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 132.001, Education Code, is amended by
amending Subdivision (1) and adding Subdivision (13) to read as
follows:
(1) "Proprietary school" means any business
enterprise operated for a profit[,] or on a nonprofit basis[,] that
maintains a place of business within this state[,] or solicits
business within this state, [and] that is not specifically exempted
by this chapter, and:
(A) that offers or maintains a course or courses
of instruction or study; or
(B) at which place of business such a course or
courses of instruction or study are [is] available through
classroom instruction or by distance education [correspondence],
or both, to a person for the purpose of training or preparing the
person for a field of endeavor in a business, trade, technical, or
industrial occupation, or for avocational or personal improvement.
(13) "Distance education" means a formal education
process in which:
(A) the student and instructor are separated by
physical distance; and
(B) a variety of communication technologies may
be used to deliver synchronous or asynchronous instruction to the
student.
SECTION 2. Section 132.002, Education Code, is amended by
amending Subsections (a) and (d) and adding Subsections (e) and (f)
to read as follows:
(a) The following schools or educational institutions may
be exempted [are specifically exempt] from this chapter by the
commission under Subsection (d) [and are not within the definition
of "proprietary school"]:
(1) a school or educational institution supported by
taxation from either a local or state source;
(2) a nonprofit school [schools] owned, controlled,
operated, and conducted by a bona fide religious, denominational,
eleemosynary, or similar public institution [institutions] exempt
from property taxation under the laws of this state[, but such
schools may choose to apply for a certificate of approval
hereunder, and upon approval and issuance, are subject to this
chapter as determined by the commission];
(3) a school or training program that offers
instruction of purely avocational or recreational subjects as
determined by the commission;
(4) a course or courses of instruction or study
sponsored by an employer for the training and preparation of its own
employees, and for which no tuition fee is charged to the student;
(5) a course or courses of study or instruction
sponsored by a recognized trade, business, or professional
organization for the instruction of the members of the organization
with a closed membership;
(6) a private college [colleges] or university
[universities] that awards [award] a recognized baccalaureate, or
higher degree, and that maintains [maintain] and operates [operate]
educational programs for which a majority of the credits given are
transferable to a college, junior college, or university supported
entirely or partly by taxation from either a local or state source;
(7) a school or course that is otherwise regulated and
approved under and pursuant to any other law or rulemaking process
of this state or approved for continuing education credit by an
organization that accredits courses for the maintenance of a
license, except as provided by Subsection (c);
(8) an aviation school [schools] or instructor
[instructors] approved by and under the supervision of the Federal
Aviation Administration;
(9) a school that offers intensive review of a
student's acquired education, training, or experience to prepare
the student for an examination, other than a high school
equivalency examination, that the student by law may not take
unless the student has completed or substantially completed a
particular degree program, or that the student is required to take
as a precondition for enrollment in or admission to a particular
degree program;
(10) a private school offering primary or secondary
education, which may include a kindergarten or prekindergarten
program, and that satisfies the compulsory attendance requirements
of Section 25.085 pursuant to Section 25.086(a)(1);
(11) a course or courses of instruction by bona fide
electrical trade associations for the purpose of preparing students
for electrical tests required for licensing and for the purpose of
providing continuing education to students for the renewal of
electrical licenses;
(12) a nonprofit arts organization that has as its
primary purpose the provision of instruction in the dramatic arts
and the communications media to persons younger than 19 years of
age;
(13) a course or training program conducted by a
nonprofit association of air conditioning and refrigeration
contractors approved by the Air Conditioning and Refrigeration
Contractors Advisory Board to provide instruction for technical,
business, or license examination preparation programs relating to
air conditioning and refrigeration contracting, as that term is
defined by Chapter 1302, Occupations Code [the Air Conditioning and
Refrigeration Contractor License Law (Article 8861, Vernon's Texas
Civil Statutes)];
(14) a course of instruction by a plumbing trade
association to prepare students for a plumbing test or program
required for licensing, certification, or endorsement or to provide
continuing education approved by the Texas State Board of Plumbing
Examiners; and
(15) a course of instruction in the use of
technological hardware or software if the course is offered to a
purchaser of the hardware or software or to the purchaser's
employee by a person who manufactures and sells, or develops and
sells, the hardware or software, and if the seller is not primarily
in the business of providing courses of instruction in the use of
the hardware or software, as determined by the commission.
(d) A school or educational institution is exempt from
regulation under this chapter only if:
(1) the owner of the school or educational
institution:
(A) applies to the commission for an exemption
under this section; and
(B) provides to the commission any information
considered necessary by the commission to support the owner's
application for an exemption; and
(2) the commission declares that the school or
educational institution is exempt after finding that the school or
institution is a school or institution listed in Subsection (a).
(e) After a school or educational institution is declared
exempt by the commission under this section, 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) A school or educational institution listed in
Subsection (a) [Notwithstanding the exemptions listed in
Subsection (a), a dispute resolution organization, as defined by
Section 154.001, Civil Practice and Remedies Code,] may seek a
certificate of approval under [pursuant to] Subchapter C.
SECTION 3. Subsection (b), Section 132.051, Education Code,
is amended to read as follows:
(b) Any contract entered into with any person for a course
of instruction by or on behalf of any person operating any
proprietary school to which a certificate of approval has not been
issued pursuant to this chapter is unenforceable in any action
brought thereon. Any note, other instrument of indebtedness, or
contract relating to payment for educational services obtained from
a proprietary school 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 4. Section 132.055, Education Code, is amended to
read as follows:
Sec. 132.055. CRITERIA. The commission may approve the
application of such proprietary school when the school is found,
upon investigation at the premises of the school, to have met the
following criteria:
(a) The courses, curriculum, and instruction are of such
quality, content, and length as may reasonably and adequately
achieve the stated objective for which the courses, curriculum, or
instruction are offered. Before a school conducts a course of
instruction in court reporting, the school must produce evidence
that the school has obtained approval for the curriculum from the
Court Reporters Certification Board.
(b) There is in the school adequate space, equipment,
instructional material, and instructor personnel to provide
training of good quality.
(c) Educational and experience qualifications of directors,
administrators, and instructors are adequate.
(d) The school maintains a written record of the previous
education and training of the applicant student and clearly
indicates that appropriate credit has been given by the school for
previous education and training, with the new training period
shortened where warranted through use of appropriate skills or
achievement tests and the student so notified.
(e) A copy of the course outline; schedule of tuition, fees,
refund policy, and other charges; regulations pertaining to
absence, grading policy, and rules of operation and conduct;
regulations pertaining to incomplete grades; the name, mailing
address, and telephone number of the commission for the purpose of
directing complaints to the agency; the current rates of job
placement and employment of students issued a certificate of
completion; and notification of the availability of the cost
comparison information prepared under Section 132.021(b) through
the commission will be furnished the student prior to enrollment.
(f) Except as provided by Section 132.062, on completion of
training, the student is given a certificate by the school
indicating the course and that training was satisfactorily
completed.
(g) Adequate records as prescribed by the commission are
kept to show attendance and progress or grades, and satisfactory
standards relating to attendance, progress, and conduct are
enforced.
(h) The school complies with all local, city, county,
municipal, state, and federal regulations, such as fire, building,
and sanitation codes. The commission may require such evidence of
compliance as is deemed necessary.
(i) The school is financially sound and capable of
fulfilling its commitments for training.
(j) The school's administrators, directors, owners, and
instructors are of good reputation and character.
(k) The school has, maintains, and publishes in its
catalogue and enrollment contract the proper policy for the refund
of the unused portion of tuition, fees, and other charges in the
event the student enrolled by the school fails to take the course or
withdraws or is discontinued therefrom at any time prior to
completion.
(l) The school does not utilize erroneous or misleading
advertising, either by actual statement, omission, or intimation as
determined by the commission.
(m) Such additional criteria as may be required by the
commission.
(n) The school does not use a name like or similar to an
existing [tax supported] school unless the commission approves the
school's use of the name [in the same area].
(o) The school furnishes to the commission the current rates
of students who receive a certificate of completion and of job
placement and employment of students issued a certificate of
completion.
(p) The school furnishes to the commission for approval or
disapproval student admission requirements for each course or
program offered by the school.
(q) The school furnishes to the commission for approval or
disapproval the course hour lengths and curriculum content for each
course offered by the school.
(r) The school does not owe a penalty under Section 132.152,
132.155, or 132.157.
SECTION 5. Subsection (b), Section 132.061, Education Code,
is amended to read as follows:
(b) Except as provided by Subsection (g), as a condition for
granting certification each proprietary school must maintain a
policy for the refund of the unused portion of tuition, fees, and
other charges in the event the student, after expiration of the
72-hour cancellation privilege, fails to enter the course,
withdraws, or is discontinued therefrom at any time prior to
completion, and such policy must provide:
(1) refunds for resident courses and synchronous
distance education courses will be based on the period of
enrollment computed on the basis of course time expressed in clock
hours;
(2) the effective date of the termination for refund
purposes in residence schools will be the earliest of the
following:
(A) the last date of attendance, if the student
is terminated by the school;
(B) the date of receipt of written notice from
the student; or
(C) 10 school days following the last date of
attendance;
(3) if tuition and fees are collected in advance of
entrance, and if, after expiration of the 72-hour cancellation
privilege, the student does not enter the residence school, not
more than $100 shall be retained by the school;
(4) for the student who enters a residence or a
synchronous distance education course of not more than 12 months in
length, terminates, or withdraws, the school may retain $100 of
tuition and fees and the minimum refund of the remaining tuition and
fees will be:
(A) during the first week or one-tenth of the
course, whichever is less, 90 percent of the remaining tuition and
fees;
(B) after the first week or one-tenth of the
course, whichever is less, but within the first three weeks or
one-fifth of the course, whichever is less, 80 percent of the
remaining tuition and fees;
(C) after the first three weeks or one-fifth of
the course, whichever is less, but within the first quarter of the
course, 75 percent of the remaining tuition and fees;
(D) during the second quarter of the course, 50
percent of the remaining tuition and fees;
(E) during the third quarter of the course, 10
percent of the remaining tuition and fees; or
(F) during the last quarter of the course, the
student may be considered obligated for the full tuition and fees;
(5) for residence or synchronous distance education
courses more than 12 months in length, the refund shall be applied
to each 12-month period paid, or part thereof separately, and the
student is entitled to a refund as provided by Subdivision (4);
(6) refunds of items of extra expense to the student,
such as instructional supplies, books, student activities,
laboratory fees, service charges, rentals, deposits, and all other
such ancillary miscellaneous charges, where these items are
separately stated and shown in the data furnished the student
before enrollment, will be made in a reasonable manner acceptable
to the commission;
(7) refunds based on enrollment in residence and
synchronous distance education schools will be totally consummated
within 60 days after the effective date of termination;
(8) refunds for asynchronous distance education
[correspondence] courses will be computed on the basis of the
number of lessons in the course;
(9) the effective date of the termination for refund
purposes in asynchronous distance education [correspondence]
courses will be the earliest of the following:
(A) the date of notification to the student if
the student is terminated;
(B) the date of receipt of written notice from
the student; or
(C) the end of the third calendar month following
the month in which the student's last lesson assignment was
received unless notification has been received from the student
that the student wishes to remain enrolled;
(10) if tuition and fees are collected before any
lessons have been completed, and if, after expiration of the
72-hour cancellation privilege, the student fails to begin the
course, not more than $50 shall be retained by the school;
(11) in cases of termination or withdrawal after the
student has begun the asynchronous distance education
[correspondence] course, the school may retain $50 of tuition and
fees, and the minimum refund policy must provide that the student
will be refunded the pro rata portion of the remaining tuition,
fees, and other charges that the number of lessons completed and
serviced by the school bears to the total number of lessons in the
course; and
(12) refunds based on enrollment in asynchronous
distance education [correspondence] schools will be totally
consummated within 60 days after the effective date of termination.
SECTION 6. Subsections (c) through (i), Section 132.152,
Education Code, are amended to read as follows:
(c) If, after examination of a possible violation and the
facts relating to that possible violation, the commission concludes
that a violation has occurred, the commission shall issue a
preliminary report that states the facts on which the conclusion is
based, the fact that an administrative penalty is to be imposed
[recommended], and the amount of the penalty to be assessed
[recommended]. Not later than the 10th day after the date on which
the commission issues the preliminary report, the commission shall
send a copy of the report [by certified mail] to the person charged
with the violation, together with a statement of the right of the
person to a hearing relating to the alleged violation and the amount
of the penalty.
(d) Not later than the 20th day after the date on which the
[person receives the] report is sent, the person charged must
either make a written request for a hearing or remit the amount of
the administrative penalty to the commission. Failure either to
request a hearing or to remit the amount of the administrative
penalty within the time provided by this subsection results in a
waiver of a right to a hearing under this section. If the person
charged requests a hearing, the hearing shall be conducted in the
same manner as a hearing on the denial of certificate of approval
under Section 132.101. If the hearing results in a finding that a
violation has occurred, the commission shall:
(1) provide to the person written notice of:
(A) the findings established at the hearing; and
(B) the amount of the penalty; and
(2) enter an order requiring the person to pay the
amount of the penalty [by an administrative law judge of the State
Office of Administrative Hearings. The administrative law judge
shall make findings of fact and conclusions of law and promptly
issue to the commission a proposal for a decision about the
occurrence of the violation and the amount of the proposed penalty.
Based on the findings of fact, conclusions of law, and proposal for
decision, the commission by order may:
[(1) find that a violation has occurred and impose a
penalty; or
[(2) find that a violation has not occurred].
(e) [The notice of the commission's order given to the
person under Chapter 2001, Government Code, must include a
statement of the person's right to judicial review of the order.
[(f)] Not later than the 30th day after the date the person
receives the order entered by the commission under Subsection (d)
[commission's order is final under Section 2001.144, Government
Code], the person shall:
(1) pay the amount of the penalty;
(2) remit [pay] the amount of the penalty to the
commission for deposit in an escrow account and file a petition for
judicial review contesting the occurrence of the violation, the
amount of the penalty, or both the occurrence of the violation and
the amount of the penalty; or
(3) without paying the amount of the penalty, file a
petition for judicial review contesting the occurrence of the
violation, the amount of the penalty, or both the occurrence of the
violation and the amount of the penalty and file with the court a
sworn affidavit stating that the person is financially unable to
pay the amount of the penalty.
(f) The commission's order is subject to judicial review in
the same manner as an appeal of a decision to deny a certificate of
approval under Section 132.102.
(g) If on review the court does not sustain the occurrence
of the violation or finds that the amount of the penalty should be
reduced, the commission shall remit the appropriate amount to the
person charged with the violation not later than the 30th day after
the date the court's judgment becomes final [Within the period
prescribed by Subsection (f), a person who acts under Subsection
(f)(3) may:
[(1) stay enforcement of the penalty by:
[(A) paying the amount of the penalty to the
court for placement in an escrow account; or
[(B) giving to the court a supersedeas bond
approved by the court that is in the amount of the penalty and that
is effective until all judicial review of the commission's order is
final; or
[(2) request the court to stay enforcement of the
penalty by:
[(A) filing with the court a sworn affidavit of
the person stating that the person is financially unable to pay the
amount of the penalty and is financially unable to give the
supersedeas bond; and
[(B) giving a copy of the affidavit to the
commission by certified mail].
(h) If the court sustains the occurrence of the violation:
(1) the court:
(A) shall order the person to pay the amount of
the penalty; and
(B) may award to the commission the attorney's
fees and court costs incurred by the commission in defending the
action; and
(2) the commission shall remit the amount of the
penalty to the comptroller for deposit in the general revenue fund
[The commission may file with the court a contest to an affidavit
received under Subsection (g)(2) not later than the fifth day after
the date the commission receives the copy. The court shall hold a
hearing on the facts alleged in the affidavit as soon as practicable
and shall stay the enforcement of the penalty on finding that the
alleged facts are true. The person who files an affidavit has the
burden of proving that the person is financially unable to pay the
amount of the penalty and to give a supersedeas bond].
(i) If the person does not pay the amount of the penalty
after the commission's order becomes final for all purposes [and
the enforcement of the penalty is not stayed], the commission may
refer the matter to the attorney general for collection of the
amount of the penalty.
SECTION 7. Subsections (j) through (m), Section 132.152,
Education Code, are repealed.
SECTION 8. The change in law made by this Act to Subsection
(b), Section 132.051, Education Code, applies only to a note or
other instrument issued, or a contract entered into, on or after the
effective date of this Act. A note or other instrument issued, or a
contract entered into, before the effective date of this Act is
governed by the law in effect on the date the note or other
instrument was issued or the contract was entered into, and the
former law is continued in effect for that purpose.
SECTION 9. The change in law made by this Act to Section
132.055, Education Code, applies only to an application for a
certificate of approval filed with the Texas Workforce Commission
on or after the effective date of this Act. An application for a
certificate of approval filed before the effective date of this Act
is governed by the law in effect on the date the application was
filed, and the former law is continued in effect for that purpose.
SECTION 10. The changes in law made by this Act to
Subsection (b), Section 132.061, Education Code, apply only to the
refund policy of a proprietary school 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 11. The changes in law made by this Act to Section
132.152, Education Code, apply only to an alleged violation of
Section 132.151, Education Code, that occurs on or after the
effective date of this Act. An alleged violation that occurs before
the effective date of this Act is governed by the law in effect on
the date the alleged violation occurred, and the former law is
continued in effect for that purpose.
SECTION 12. This Act takes effect September 1, 2003.
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