By: Shapiro S.B. No. 1534

A BILL TO BE ENTITLED

AN ACT

relating to the operation and certification of career schools or colleges.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 132.001, Education Code, is amended to read as follows:

Sec. 132.001. Definitions

In this chapter:

(1) "Career school or college" 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, 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 available through classroom instruction or by distance education, 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.

(1-a) "Class" or "course" means an identifiable unit of instruction that is part of a program of instruction.

(1-b) "Course time" means a course or class period as follows:

(A) a 50-minute to 60-minute lecture, recitation, or class, including a laboratory class or shop training, in a 60-minute period;

(B) a 50-minute to 60-minute internship in a 60-minute period; or

(C) 60 minutes of preparation in asynchronous distance education.

(2) "Owner" of a career school or college means:

(A) in the case of a career school or college owned by an individual, that individual;

(B) in the case of a career school or college owned by a partnership, all full, silent, and limited partners;

(C) in the case of a career school or college owned by a corporation, the corporation, its directors, officers, and each shareholder owning shares of issued and outstanding stock aggregating at least 10 percent of the total of the issued and outstanding shares;

(D) in the case of a career school or college in which the ownership interest is held in trust, the beneficiary of that trust; or

(E) in the case of a career school or college owned by another legal entity, a person who owns at least 10 percent ownership interest in the entity.

(3) "School employee" means any person, other than an owner, who directly or indirectly receives compensation from a career school or college for services rendered.

(4) "Representative" means a person employed by a career school or college operating in this state,, whether the school or college is located within or without this state, to act as an agent, solicitor, broker, or independent contractor to directly procure students for the school or college by solicitation within or without this state at any place.

(5) "Agency administrator" means the agency administrator of the Texas Workforce Commission or a person, knowledgeable in the administration of regulating career schools and colleges, designated by the agency administrator to administer this chapter.

(6) "Notice to the career school or college" means written correspondence sent to the address of record for legal service contained in the application for a certificate of approval. "Date of Notice" means the date the notice is mailed by the commission.

(7) "Support" or "supported" means the primary source and means by which a career school or college derives revenue to perpetuate its operation.

(8) "Person" means any individual, firm, partnership, association, corporation, limited liability company, or other private entity or combination.

(9) "Unearned tuition" means total tuition and fees subject to refund under Section 132.061.

(10) "Small career school or college" means a career school or college that does not receive any payment from federal funds under 20 U.S.C. Section 1070 et seq. and its subsequent amendments or a prepaid federal or state source as compensation in whole or in part for any student tuition and fees or other charges and either:

(A) has an annual gross income from student tuition and fees that is less than or equal to $ 100,000 for programs regulated by the agency;

(B) exclusively offers programs to assist students to prepare for an undergraduate or graduate course of study at a college or university; or

(C) exclusively offers programs to assist students, who have obtained, or who are in the process of obtaining, degrees after completing an undergraduate or graduate course of study at a college or university, to prepare for an examination.

(11) "Commission" means the Texas Workforce Commission.

(12) "Division" means the division of education of the commission.

(13) "Distance education" means a formal education process offered by a career school or college operating in this state 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.

(14) "Program" or "program of instruction" means a postsecondary program of organized instruction or study offered by a career school or college operating in this state that may lead to an academic, professional, or vocational degree, certificate, or other recognized educational credential.

(15) A career school or college "operates in this state" or is "operating in this state" when it maintains a physical place of business within this state where programs or programs of instruction are offered through classroom instruction or by distance education, or both.

SECTION 2. Section 132.002, Education Code, is amended to read as follows:

Sec. 132.002. Exemptions

(a) The following schools or educational institutions may be exempted from this chapter by the commission under Subsection (d):

(1) a school or educational institution supported by taxation from either a local or state source;

(2) a nonprofit school owned, controlled, operated, and conducted by a bona fide religious, denominational, eleemosynary, or similar public institution exempt from property taxation under the laws of this state;

(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 or university that awards a recognized baccalaureate, or higher degree, and that maintains and operates 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 or instructor 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;

(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; and

(16) a school or educational institution that is physically located in another state, is legally authorized by the state of its physical location to offer postsecondary education and award degrees, is accredited by an accrediting agency recognized by the U.S. Secretary of Education, and offers in the State of Texas only postsecondary distance or correspondence programs of instruction.

(b) Schools offering a course or courses of special study or instruction financed or subsidized by local, state, or federal funds or by any person, firm, association, or agency other than the student involved, on a contract basis and having a closed enrollment, may apply to the commission for exemption of such course or courses from this chapter and such course or courses may be declared exempt by the commission where the commission finds the course or courses to be outside the purview of this chapter.

(c) If a state agency that issues a license or other authorization for the practice of an occupation elects not to regulate or approve course hours that exceed the minimum education requirements for the issuance of the license or other authorization, the licensing agency shall enter into a memorandum of understanding with the commission for the regulation of those excess course hours under this chapter. Any course taught under a letter of approval or other written authorization issued by the licensing agency before the effective date of the memorandum is authorized under state law until the course is reviewed by the commission. The licensing agency may terminate the memorandum of understanding on notice to the commission.

(d) Except as provided by Subsection (g), 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) may seek a certificate of approval under Subchapter C.

(g) An institution of higher education or a private or independent institution of higher education, as defined by Section 61.003, that was exempt from regulation under this chapter before September 1, 2003, remains exempt from regulation under this chapter and is not required to comply with this section.

SECTION 3. Section 132.021, Education Code, is amended to read as follows:

Sec. 132.021. Texas Workforce Commission

(a) The commission shall exercise jurisdiction and control of the system of career schools and colleges operating in this state, and the commission shall carry out supervision of the provisions of this chapter, and enforce minimum standards for approval of career schools and colleges under the operating regulations and policies hereinafter set forth and as may be adopted pursuant to this chapter.

(b) [Repealed by Acts 2005, 79th Leg., ch. 747 (H.B. 2806), § 12, effective September 1, 2005.]

(c) The commission may consult a recognized expert in a field of study for assistance in determining minimum program standards under this chapter for that field.

(d) The commission shall adopt policies and rules necessary for carrying out this chapter.

SECTION 4. Section 132.051, Education Code, is amended to read as follows:

Sec. 132.051. Certificate of Approval

(a) A career school or college operating in this state may not maintain, advertise, solicit for, or conduct any program of instruction in this state until the career school or college receives a certificate of approval from the commission.

(b) Any contract entered into with any person for a program of instruction by or on behalf of any person operating any career school or college in this state 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 career school or college operating in this state 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 5. Section 132.052, Education Code, is amended to read as follows:

Sec. 132.052. Application for Certificate of Approval

Every career school or college desiring to operate in this state or do business in this state shall make written application to the commission for a certificate of approval. Such application shall be verified, be in such form as may be prescribed by the commission, and shall furnish the commission such information as the commission may require.

SECTION 6. Section 132.059, Education Code, is amended to read as follows:

Sec. 132.059. Registration of Representatives

(a) All representatives employed by a career school or college operating in this state shall register with the commission. Application for registration may be made at any time and shall be based on information submitted in accordance with the provisions of Section 132.052.

(b) Registration of a representative is effective upon receipt of notice from the commission and remains in effect for a period not in excess of 12 calendar months. Renewal of representative registration shall be in accordance with the renewal application form forwarded to the career school or college by the commission.

(c) Denial or revocation of registration of a representative by the commission shall be in accordance with the provisions of this chapter applicable to denial or revocation of a certificate of approval. The commission may deny, suspend, or revoke the registration of a representative who has been convicted of a felony, whether within or without this state.

(d) Career schools and colleges domiciled or having their principal place of business outside of this state that engage representatives to canvass, solicit, or contract with any person within this state, are subject to the requirements for registration of representatives.

(e) The commission shall deny registration of a representative who owes a penalty under Section 132.152 or 132.155.

SECTION 7. Section 132.151, Education Code, is amended to read as follows:

Sec. 132.151. Prohibitions A person may not:

(1) operate a career school or college in this state without a certificate of approval issued by the commission;

(2) solicit prospective students for or on behalf of a career school or college operating in this state without being registered as a representative of the career school or college as required by this chapter;

(3) accept contracts or enrollment applications for or on behalf of a career school or college operating in this state, from a representative who is not bonded as required by this chapter;

(4) utilize advertising designed to mislead or deceive prospective students;

(5) fail to notify the commission of the discontinuance of the operation closure of any career school or college operating in this state within 72 hours of cessation of classes and make available accurate records as required by this chapter;

(6) negotiate any promissory instrument received as payment of tuition or other charge by a career school or college operating in this state prior to completion of 75 percent of the applicable program, provided that prior to such time, the instrument may be transferred by assignment to a purchaser who shall be subject to all the defenses available against the career school or college named as payee; or

(7) violate any provision of this chapter.

SECTION 8. Section 132.154, Education Code, is amended to read as follows:

Sec. 132.154. Injunctions

(a) Whenever the commission has probable cause to believe that any career school or college operating in this state has committed any acts that would be in violation of this chapter, the commission shall apply for an injunction restraining the commission of such acts.

(b) An action for an injunction under this section shall be brought in Travis County.

SECTION 9. Section 132.156, Education Code, is amended to read as follows:

Sec. 132.156. Sanctions

(a) If the commission has reasonable cause to believe that a career school or college operating in this state has violated this chapter or a rule adopted under this chapter, the commission may:

(1) order a peer review of the school or college; or

(2) suspend the admission of students to the school or college.

(b) A peer review ordered under this section shall be conducted by a peer review team composed of knowledgeable persons selected by the commission. The commission shall attempt to provide a balance on each team between members assigned to the team who are from this state and those who are from other states. The team shall provide the commission with an objective assessment of the content of the career school's or college's curriculum and its application. The costs of providing a peer review team shall be paid by the school or college.

SECTION 10. Section 132.242, Education Code, is amended to read as follows:

Sec. 132.242. Closed School or College

(a) If a career school or college operating in this state closes, the commission shall attempt to arrange for students of the closed school or college to attend another school or college, regardless of whether the school or college is a career school or college.

(b) The expense incurred by a school or college, regardless of whether the school or college is a career school or college, in providing a teachout that is directly related to educating a student placed in the school or college under this section, including the applicable tuition for the period for which the student has paid tuition, shall be paid from the career school or college tuition trust account.

(c) If the student cannot be placed in another school or college, regardless of whether the school or college is a career school or college, the student's tuition and fees shall be refunded under Section 132.061(d).

(d) If a student does not accept a place that is available and reasonable in another school or college, regardless of whether the school or college is a career school or college, the student's tuition and fees shall be refunded under the refund policy maintained by the closing career school or college under Section 132.061.

(e) For each closed career school or college, refunds shall be paid from the career school or college tuition trust account in an amount not to exceed $ 150,000.

(f) If another school or college, regardless of whether the school or college is a career school or college, assumes responsibility for the closed career school's or college's students with no significant changes in the quality of training, the student is not entitled to a refund under Subsection (c) or (d).

(g) Attorney's fees, court costs, or damages may not be paid from the career school or college tuition trust account.

SECTION 11. Section 132.301, Education Code, is amended to read as follows:

Sec. 132.301. Hearing; Notice

(a) The commission may set a hearing on whether to issue a cease and desist order against a person under Section132.303 if the commission has reason to believe that the person is operating a career school or college in this state without a certificate issued by the commission in violation of Section 132.151.

(b) The commission shall serve on the person a statement of charges and a notice of hearing, including a copy of the applicable rules of the commission.

SECTION 12. Section 132.303, Education Code, is amended to read as follows:

Sec. 132.303. Cease and Desist Order

After a hearing held under this subchapter, the commission may issue against the person charged with operating a career school or college in this state without a certificate issued by the commission an order that requires that the person immediately cease and desist from violating this chapter.

SECTION 13. This Act takes effect September 1, 2011.