Revision: March 14, 2013, midnight
SB 162-FN – AS INTRODUCED
2013 SESSION
04/03
SENATE BILL 162-FN
AN ACT relative to licensing of postsecondary career schools.
SPONSORS: Sen. Stiles, Dist 24; Sen. Bradley, Dist 3; Sen. D'Allesandro, Dist 20; Rep. Lovejoy, Rock 36; Rep. Copeland, Rock 19; Rep. Abrami, Rock 19; Rep. Shaw, Hills 16; Rep. Ladd, Graf 4
COMMITTEE: Health, Education and Human Services
This bill moves the licensing and regulation of career schools from the department of education to the department of employment security under the direction of the career school commission.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
13-0299
04/03
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Thirteen
AN ACT relative to licensing of postsecondary career schools.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Subdivision; Career School Licensing. Amend RSA 282-A by inserting after section 180 the following new subdivision:
282-A:181 Applicability. The department of employment security, career school commission shall administer and regulate the licensing of career schools as provided in this subdivision.
282-A:182 Definitions; Exclusions.
I. In this subdivision:
(a) “Alternative delivery” means a mode of instruction which does not involve face-to-face instruction between instructor and student in the same geographic location. This mode of instruction shall include Internet, televised, video, telephonic, and correspondence media.
(b) “Career school” means any for-profit or nonprofit postsecondary career entity maintaining a physical presence in this state providing education or training for tuition or a fee that enhances a person’s occupational skills, or provides continuing education or certification, or fulfills a training or education requirement in one’s employment, career, trade, profession, or occupation. Schools that offer resident or nonresident programs, including programs using modes of alternative delivery, beyond the secondary school level to an entity shall be included in this definition regardless of the fact that the school’s tuition and fees from education and training programs constitute only a part of the school’s revenue.
(c) “Commission” means the career school commission as established in RSA 282-A:183.
(d) “Conference” or “seminar” means a scheduled meeting of 2 or more persons for discussing matters of common concern and where, if training or education is offered, it shall be incidental to the purpose of the conference.
(e) “Entity” means any individual, firm, partnership, association, corporation, organization, trust, school, or other legal entity or combination of these entities.
(f) “Physical presence” means any physical location, place of contact, telephone exchange, or mail drop in this state, and if an individual is conducting one or more of the following activities within this state:
(1) Advertising.
(2) Solicitation of potential students.
(3) Enrollment of students.
(4) Providing student services.
(5) Student mentoring.
(6) Instruction of students.
(g) “Third party administrator” means any entity which has been selected through a competitive bidding process conducted by the commission for the purpose of administering the career school licensing process pursuant to this subdivision on behalf of the state.
(h) “Vendor” means an entity that promotes or exchanges goods or services for money.
(i) “Workshop” means a brief, intensive education or training program that focuses on developing techniques and skills in a particular area.
II. In this subdivision, “career school” shall not include:
(a) Schools authorized to grant degrees pursuant to RSA 292.
(b) Schools specifically licensed as an education or training school by a state agency other than the commission.
(c) Schools operated by a business organization exclusively for the training of that business’ own employees and at no charge to its employees.
(d) Schools offering noncredit courses exclusively for a vocational purposes.
(e) Schools established, operated, and governed by the state of New Hampshire or any of its political subdivisions, or any other state or its political subdivisions.
(f) Noncredit courses or programs sponsored by recognized trade, business, or professional organizations solely for the instruction of their members that do not prepare or qualify individuals for employment in any occupation or trade.
(g) Schools that offer programs and courses exclusively on federal military installations.
(h) Companies, individuals, or other legal entities that offer training at seminars, workshops, or conferences, if:
(1) Any training or education offered is incidental to the purpose of the seminar, workshop, or conference; and
(2) The attendee receiving the training is not awarded any form of a certificate, diploma, or credit including continuing education units for having received the training.
(i) Vendors that offer incidental training associated with the purchase of a product from said vendor, if the training is at no cost, its purpose is to familiarize the purchaser with the product’s use and the purchaser is not awarded any form of a certificate or diploma for having received the training.
(j) An individual or facility training students under 14 C.F.R. part 91 or 14 C.F.R. part 141, or receiving flight or ground instruction required by the Federal Aviation Administration.
(k) Entities offering only training courses at a total cost, including tuition and all other fees and charges, of not more than $800 per course for which no payment, including a deposit, is required or collected prior to the first day of the course. This subparagraph shall not apply to entities that use alternative delivery methods.
(l) Entities offering training in the trades that have been approved by a state agency with appropriate jurisdiction, including but not limited to the plumbers’ board, the electricians’ board, the office of the state fire marshal, and the division of fire standards and training and emergency medical services.
(m) Computer technology vendors that offer fee-based training on courses of instruction in the use of hardware or software if the course is offered to purchasers of such hardware or software, or to the purchaser’s employees, by a person who manufactures and sells, develops and sells, or supports the hardware or software, and if the seller is not primarily engaged in the business of providing courses of instruction in the use of the hardware or software.
(n) Entities that license software, the content of which is focused on training or education, if the entity:
(1) Is primarily engaged in the business of licensing software;
(2) Licenses its software primarily to other legal entities, and not directly to an end user or individual student;
(3) Does not confer degrees, diplomas, continuing education units, or any other form of credit in connection with the software that it licenses;
(4) Is not accredited and does not seek accreditation in connection with the software that it licenses or the content it offers; and
(5) Does not offer an admissions process, financial aid, career advice, or job placement in connection with the software that it licenses.
282-A:183 Career School Commission.
I. There is established the career school commission in the department of employment security. The commission shall consist of the following members:
(a) One member from the department of employment security, appointed by the commissioner of the department of employment security.
(b) Two owners or directors of career schools, appointed by the governor and council.
(c) One employer who currently utilizes at least one graduate of a career school, appointed by the governor and council.
(d) One public member, appointed by the governor and council.
(e) One member from the New Hampshire Council for Professional Education, appointed by the executive director of the Council, who shall be a nonvoting member.
II. The commission shall elect a chairperson from its membership, and any other officers it deems necessary. The terms of the appointed members shall be 3 years. In the event of a vacancy, a new member shall be appointed for the unexpired term in the same manner as the original appointment. The members of the commission, shall serve without compensation, but may be reimbursed for actual travel and other expenses incurred in the performance of their duties on the commission from funds appropriated to the department of employment security specifically for this purpose.
III. The commission shall:
(a) Approve all license applications submitted to them by the third party administrator.
(b) Annually review and approve all license fees and fines to be imposed, provided that the fees and fines shall be sufficient to produce estimated revenues equal to 120 percent of the direct operating expenses of the commission for the previous fiscal year.
(c) Hear appeals from license applicants whose applications are denied.
(d) Hear all appeals from aggrieved students.
282-A:184 Licenses and Fees.
I. Prior to registering or renewing a business or trade name, or soliciting students for enrollment, an entity maintaining a physical presence in this state shall submit an initial license application accompanied by the required application fee to the commission. The commission shall forward all submitted applications to the third party administrator which shall review all applications to determine if an entity requires a license. The commission shall establish procedures to accomplish this review. The commission shall establish an initial license application fee which shall not be not less than $400. The commission shall establish renewal license application fees in subsequent years based on a percentage of the entity’s gross tuition, provided the renewal fee shall not exceed 2-½ percent of the entity’s gross tuition. In this paragraph, “gross tuition” means the total amount collected by the entity during its most recently completed fiscal year for tuition, application fees, and registration fees, less any refunds.
II. A career school shall register to obtain a license or license renewal from the commission. The license shall be issued or renewed pursuant to rules, adopted under RSA 541-A, by the commission. The rules shall establish minimum criteria, including but not limited to, financial stability, educational program, administrative and staff qualifications, business procedures, facilities, equipment, ethical practices to be met by licensees, criteria for rejecting a licensing applicant, including an administrative hearings process for rejected applicants, and a procedure for suspending or revoking a license.
III. An entity that is not required to obtain a license may apply for a license and, upon issuance of the license, shall be subject to the provisions of this subdivision. Such entity may voluntarily surrender its license and revert to its original status.
IV. The commission shall adopt rules pursuant to RSA 541-A to establish reasonable fines, reimbursement rates for consultants, and procedures for complaint investigations and enforcement actions, which are necessary for the administration of this subdivision.
V. An entity which the third party administrator has determined requires a career school license shall, prior to the issuance of a license, comply with the provisions of this subdivision.
282-A:185 Surety Indemnification. Before a license is issued or renewed, a career school shall meet the requirements of this subdivision by providing acceptable surety indemnification as determined in this section.
I. A surety bond shall be provided by the career school in an amount prescribed in this section. The obligation of the bond is that the school, its officers, agents, and employees shall faithfully perform the terms and conditions of contracts for tuition and other instructional fees entered into between the career school and entity enrolling as students. The bond shall be issued by a company authorized to do business in the state of New Hampshire. The bond shall be issued in the name of the commission, and is to be used only for payment of a refund of tuition and instructional fees due to a student or potential student, and the expense of investigating and processing the claims.
II. The amount of such bond shall be based on income from tuition at 10 percent of gross tuition, with a $10,000 minimum. If a career school licensed under this subdivision should fail to provide the services required in a contract with any entity, as determined by a court of competent jurisdiction, the bond shall be forfeited, and the proceeds distributed by the commission in such manner as justice and the circumstances require.
III. The bond company may not be relieved of liability on the bond unless it gives the career school and the commission 90 days written notice of the company’s intent to cancel the bond. If at any time the company that issued the bond cancels or discontinues the coverage, the career school’s license is revoked as a matter of law on the effective date of the cancellation or discontinuance of bond coverage, unless a replacement bond is obtained and provided to the commission.
IV. For the purposes of this section the forms of indemnification other than a surety bond which may be furnished to the commission for licensure are the following:
(a) An irrevocable letter of credit, maintained for the licensing period as a minimum, issued by a financial institution authorized to do business in New Hampshire in an amount to be determined by the commission with the commission designated as the beneficiary; or
(b) A term deposit account held in the state treasury, payable to the commission, held in trust for the benefit of students entitled thereto under this section. Said account shall be maintained for the licensing period as a minimum, in an amount determined by the commission. Any interest shall be paid annually to the appropriate career school, unless the term deposit account is activated due to a school closing. Should the licensee for any reason, while not in default, discontinue operation, all moneys on deposit, including any interest, shall be released to the appropriate school subject to the approval of the commission.
282-A:186 Inspections. The commission may at any time inspect the premises, curriculum, teaching materials, faculty performance, sales literature, financial data, or other matters which are relevant to the educational and business activities of a licensed career school in order to determine compliance with applicable laws and rules.
282-A:187 Revocation; Hearing. The commission may, after due notice and hearing, revoke the license of any career school licensed pursuant to this subdivision for violating the provisions of this subdivision or rules adopted hereunder. The provisions of RSA 541 shall apply to actions taken pursuant to this section.
282-A:188 Waiting Period. Every contract that purports to bind any entity to pay money to a career school in return for training shall be construed to be a home solicitation sales contract under RSA 361-B and shall be subject to the provisions of RSA 361-B.
282-A:189 Veterans, Education and Services Approval. The department of employment security may approve for veterans’ education and services any institution licensed under this subdivision. The department may adopt rules, under RSA 541-A, relative to the procedures for approval of institutions for veterans’ education and benefits.
282-A:190 Use of Fees. Notwithstanding any provision of law to the contrary, all license fees collected under the provisions of this subdivision shall be deposited in the career school licensing fund established in this subdivision for use in meeting the expenses of administering this subdivision.
282-A:191 Penalty.
I. Whoever violates any provision of this subdivision shall be guilty of a misdemeanor if a natural person, or guilty of a felony if any other person.
II. Whenever the commission determines that a person is violating any provision of this subdivision or the rules adopted hereunder, the commission shall request the attorney general, or other appropriate official having jurisdiction, to provide appropriate relief.
III. The commission, upon verifying that a career school is operating without a license, shall issue a cease and desist order to such school.
IV. The commission shall be notified whenever a cease and desist order is issued to a career school, or if a career school fails to provide the services required under a contract with any entity causing the bond to be forfeited, or if a career school is required to have a license but is operating without a license.
282-A:192 Career School Licensing Fund Established. There is established in the department of employment security a nonlapsing fund to be known as the career school licensing fund to be administered by the commission, which shall be kept distinct and separate from all other funds. All moneys in the fund shall be continually appropriated to the commission for the purpose of administering this subdivision. The commission shall deposit all fees and fines collected pursuant to this subdivision into this fund.
2 Application of Receipts; Career School Licensing Fund. RSA 6:12, I(b)(228) is repealed and reenacted to read as follows:
(228) Fees collected by the career school commission pursuant to RSA 282-A:192.
3 New Hampshire Workforce Opportunity Council; Membership. Amend RSA 12-A:60, II to read as follows:
II. Membership of the council shall be as set forth in section 111(b) of the Workforce Investment Act of 1998, Public Law 105-220, codified at 29 U.S.C. section 2801 et seq., as such may be amended, reauthorized, and in effect from time to time. There shall be 2 additional members: one member to be appointed by the governor and council on recommendation by the New Hampshire Council for Professional Education, who shall be a resident of the state and an owner or director of a career school, and the executive director of the New Hampshire Council for Professional Education. Members of the council [shall be] appointed by the governor [and] shall serve at the pleasure of the governor. The governor shall select a chairperson for the council from among the members of the council, in accordance with 29 U.S.C. section 2821(c).
4 Student Tuition Guaranty Fund; Disbursement of Funds. The higher education commission established in RSA 21-N:8-a shall refund the balance of funds in the student tuition guaranty fund established in the former RSA 188-G:4 as of the effective date of this act, less interest, to the schools which were responsible for contributing such funds. The higher education commission shall disburse any interest on such funds calculated as of the effective date of this act to the third party administrator as defined in RSA 282-A:182, I(g) as inserted by section 1 of this act, for the purpose of establishing and administering the career school licensing procedure.
5 Repeal. The following are repealed:
I. RSA 21-N:8-a, II(e)(3), relative to duty of the higher education commission to regulate private postsecondary career schools.
II. RSA 21-N:8-a, II(a)(9), relative to a member of the higher education commission who is a representative of a private postsecondary career school.
III. RSA 21-N:8-a, II(e)(6)(C), relative to rulemaking authority of higher education commission regarding private postsecondary career schools.
IV. RSA 188-G, relative to private postsecondary career schools.
V. RSA 6:12, I(b)(233), relative to the student tuition guaranty fund.
6 Effective Date. This act shall take effect July 1, 2013.
LBAO
13-0299
01/22/13
SB 162-FN - FISCAL NOTE
AN ACT relative to licensing of postsecondary career schools.
FISCAL IMPACT:
Due to time constraints, the Office of Legislative Budget Assistant is unable to provide a fiscal note for this bill, as introduced, at this time. When completed, the fiscal note will be forwarded to the Senate Clerk's Office.