Senate Bill No. 442

(By Senators Lucht and Burdette, Mr. President)

____________

[Introduced February 21, 1994;

referred to the Committee on Education.]

____________




A BILL to amend and reenact section five, article three, chapter eighteen-b of the code of West Virginia, one thousand nine hundred thirty-one, as amended, relating to regulation of certain schools; requiring a permit from the board of directors of the state college system; establishing a permit fee and a permit renewal fee; requiring certain bonds; providing for fines for certain solicitations and advertisements; providing a method for resolving disputes; and declaring certain due process rights.

Be it enacted by the Legislature of West Virginia:
That section five, article three, chapter eighteen-b of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted to read as follows:
ARTICLE 3. BOARD OF DIRECTORS OF THE STATE COLLEGE SYSTEM.

§18B-3-5. Permits required for correspondence, business, occupational and trade schools; surety bonds and fees; issuance, renewal and revocation of permit; reports; rules;
penalty and enforcement.
(a) Private training or educational institutions, schools or academies or other organizations, referred to later in this section as "schools", may not provide vocational or technical training or education, or advertise or solicit, in this state without the permit required under the provisions of this section. This section does not apply to: (1) Public education institutions; (2) private education institutions that are expressly authorized to offer four-year degree programs; (3) other educational programs in this state licensed or authorized under other provisions of this code; or (4) to private organizations that offer only tax return preparation courses or offer only nonvocational, nontechnical instruction or training, and such instruction or training is not represented to the public as enhancing the student's prospects for employment or job performance.
Any private training or educational institution, school or academy or other organization may apply for a permit from the board of directors of the state college system on forms provided by the board. Each initial application shall be accompanied by a nonrefundable fee of two thousand five hundred dollars. The board may also assess an additional fee based on any additional expense required to evaluate the application. The board shall make a determination on the permit application within ninety days after receipt of the application and fee. An applicant for a permit shall show proof at the time of filing an application thatadequate facilities are available and ready for occupancy and that all instructional equipment, books and supplies and personnel are in place and ready for operation. A representative of the board shall make an on-site visit to an applicants' facilities to confirm its readiness for operation prior to issuance of the permit if the facilities are located in West Virginia.
A school is considered to be established under the provisions of this article on the date it first begins to lawfully operate. An established school is not required to reapply for a permit as a result of changes in governance, administration, ownership or form of operation. After the first permit year an annual fee of five hundred dollars is imposed on each school for each campus it operates in this state.
(b) Each application shall be accompanied by a surety bond in the penal sum of thirty-five thousand dollars for any school which has its physical facilities located in this state and which has operated in this state for at least ten years: Provided, That any school which has operated in West Virginia for less than ten years shall provide a surety bond of fifty thousand dollars if it participates in any government sponsored education or training programs: Provided, however, That any school may be required to increase its bond to one hundred thousand dollars if its accreditation is terminated for cause or if the school's institutional eligibility under the Higher Education Act of 1965, as amended, has been terminated for cause and such terminationhas been upheld on appeal, if the school appeals. (Expiration, nonrenewal or voluntary relinquishment of accreditation or institutional eligibility under said act, or failure to meet the requirements of one or more programs under said act, shall not be deemed a termination for cause.)
In addition, any school that is required to increase its bond to one hundred thousand dollars may be required to further increase its bond to an amount not to exceed four hundred thousand dollars if, in accordance with the standards of the American institute of certified public accountants, the school's continued financial viability as an ongoing concern is in doubt, and the board of directors determines an increased bond is reasonably necessary to protect the financial obligations legally due the students then enrolled at the institution. A school may be required to maintain the increased bonding requirements described above until all students attending classes at the date of termination either graduate or withdraw. Schools with more than one campus within the state shall be required to provide a bond for each of its campuses in an amount equal to the bond required for its oldest established campus in this state. The bond may be continuous and shall be conditioned to provide indemnification to any student suffering loss as a result of any fraud or misrepresentation used in procuring the student's enrollment or failure of the school to meet contractual obligations. The bond shall be given by the school itself as a blanket bond covering all of its representatives. The surety onany such bond may cancel the same upon giving thirty days' notice in writing to the principal on said bond and to the state board of directors and thereafter shall be relieved of liability for any breach of condition occurring after the effective date of said cancellation.
(c) A permit shall be valid for one year corresponding to the effective date of the bond and, upon application, accompanied by the required fee and the surety bond as herein required, may be renewed. All fees collected for the issuance or renewal of such permit shall be deposited in the state treasury to the credit of the board of directors.
The board may refuse a permit to any school if the board finds that the school engages in practices which are inconsistent with this section or with rules and regulations issued pursuant thereto. A permit issued hereunder, upon fifteen days' notice and after a hearing, if a hearing is requested by the school, may be suspended or revoked by the board of directors for fraud or misrepresentation in soliciting or enrolling students, for failure of the school to fulfill its contract with one or more students who are residents of West Virginia, or for violation of or failure to comply with any provision of this section or with any regulation of the state board of directors pertinent thereto. Prior to the board taking any adverse action, including refusal, suspension or revocation of a permit, the school shall be given reasonable opportunity to take corrective measures. Any refusal, suspension or revocation of a permit, or any other adverse actionagainst a school, shall comply with all constitutional provisions, including due process, relating to the protection of property rights.
(d) All correspondence, business, occupational or trade schools which have been issued a permit shall make annual reports to the board of directors on forms furnished by the board and shall provide such appropriate information as the board reasonably may require. All correspondence, business, occupational or trade schools which have been issued a permit shall furnish to the board of directors a list of its official representatives. Each school shall be issued a certificate of identification by the board of directors for each of its official representatives.
(e) The issuance of a permit pursuant to this section does not constitute approval or accreditation of any course or school. No school nor any representative of a school shall make any representation stating, asserting or implying that a permit issued pursuant to this section constitutes approval or accreditation by the state of West Virginia, state board of directors or any other department or agency of the state.
The board of directors is hereby authorized to adopt rules and conduct on-site reviews to evaluate academic standards maintained by schools for the awarding of certificates, diplomas and specialized associate degrees, which standards may include curriculum, personnel, facilities, materials and equipment: Provided, That in the case of accredited correspondence,business, occupational and trade schools under permit on the first day of July, one thousand nine hundred seventy-nine, having their physical facilities located in this state, and which are accredited by the appropriate nationally recognized accrediting agency or association approved by the United States department of education, the accrediting agency's standards, procedures and criteria shall be accepted as meeting applicable laws, standards and rules of the board of directors: Provided, however, That institutions, which are institutionally accredited by accrediting agencies that are recognized by the United States department of education to establish academic standards for post-secondary education, may offer post-secondary educational programs leading to (and upon successful completion of such programs award graduates) certificates, diplomas and associate degrees in accordance with the academic standards required by such accrediting agency. If a review undertaken by the board indicates there may be deficiencies in the academic standards the institution maintains in its educational programs, that are of such a material nature as to jeopardize continued accreditation, the board shall notify the institution. If the board and the institution are unable to agree on the deficiencies or the steps necessary to correct the deficiencies, the board shall consult with the institution's accrediting agency regarding an academically appropriate resolution, which resolution may include a joint on-site review by the board and the accrediting agency. The board may also review the academic standards of unaccreditedinstitutions and may require such institutions to maintain recognized academic standards that are reasonably appropriate to the nature of the institution and the training offered. The board of directors may authorize an investigation of written student complaints alleging a violation of this section, board rules or accreditation standards and may take appropriate action based on the findings of such an investigation. All evaluations or investigations of correspondence, business, occupational and trade schools, and actions resulting from such evaluations or investigations, shall be made in accordance with rules promulgated by the board of directors pursuant to article three- a, chapter twenty-nine-a of this code.
For the purposes of this section, proprietary schools that award specialized associate degrees shall be defined as institutions of higher education, and specialized associate degrees shall mean degrees awarded by such institutions pursuant to a program of not less than two academic years: Provided, That nothing herein shall be construed to qualify the said proprietary schools for additional state moneys not otherwise qualified for under other provisions of the code.
(f) In regard to private, proprietary educational institutions operating under this section, accredited by a national or regional accrediting agency or association recognized by the United States department of education and which provide training at a campus located in this state:
(1) Any rule or standard which is authorized by this or anysection of this code or other law, and which is now in effect or promulgated hereafter by the board of directors (or other agency with jurisdiction) shall be clearly, specifically and expressly authorized by narrowly construed enabling law and shall be unenforceable and without legal effect unless authorized by an act of the Legislature under the provisions of article three-a, chapter twenty-nine-a of this code.
(2) Notwithstanding any other provision of this section or other law to the contrary, the institution's accrediting agency standards, procedures and criteria shall be accepted as the standards and rules of the board of directors (or other agency with jurisdiction), and as meeting other law or legal requirements relating to the operation of proprietary institutions which such board or other agency has the legal authority to enforce under any section of this code or other law: Provided, That nothing in this section shall be construed to deny students the use of remedies that would otherwise be available under state or federal consumer laws or federal law relating to federal college financial assistance programs.
(3) Accredited institutions operating hereunder are hereby recognized as postsecondary. Academic progress shall be measured and reported in credit hours and all reports/documents filed on a credit hour basis unless the institution notifies the board that it utilizes clock hours as its unit of measurement.
(g) A representative of a new school that has not previously held legal authorization to provide instruction in this state,who solicits or advertises in any manner in this state or enrolls students prior to the new school receiving its first permit, may be fined not more than two hundred dollars for each violation by the board per violation, not to exceed a maximum of two thousand dollars and, if the school is based or domiciled in another state, the board may deny it a permit for a period of three years from the date of the solicitation or advertisement. No correspondence, business, occupational or trade school shall maintain an action in any court of this state to recover for services rendered pursuant to a contract solicited by the school if the school did not hold a valid permit at the time the contract was signed by any of the parties thereto. The attorney general or any county prosecuting attorney, at the request of the board of directors or upon his or her own motion, may bring any appropriate action or proceeding in any court of competent jurisdiction for the enforcement of the provisions of this section relating to permits, bonds and sureties.
(h) In regard to institutions operating under this section, all substantive standards and procedural requirements established by the board of directors (or the West Virginia state program review entity or other agency with jurisdiction over institutions operating hereunder) shall meet all substantive and procedural standards of due process relating to the protection of an individual citizen's property rights as provided for under the United States Constitution, and shall follow the substantive standards and procedural requirements established by or underauthority of this section.

____________


(NOTE: The purpose of this bill is to clarify and regulate the process of granting permits for certain correspondence, business, occupational and trade schools and institutions. Under the bill, the Board of Directors of the State College System is given responsibility for granting permits and for ensuring that schools and institutions meet certain requirements. The bill also establishes a permit fee and a permit renewal fee and it requires that schools be bonded. Fines are levied for violation of restrictions on solicitations and advertisements. The bill sets a mechanism for resolving disputes between the board and schools and it sets out certain due process and property rights of students.)