Brief⁽¹⁾

S.B. 444 concerns proprietary schools. Principally, the bill establishes the Proprietary School Tuition Protection Fund to provide for assistance to proprietary school students in the event of closure of the school attended, provides for the state to preserve student records of closed schools, increases fees charged for proprietary school certificates of approval and registration of the representatives of such schools, and clarifies several provisions of current law. The main changes are summarized below.

Proprietary School Tuition Protection Fund and "Teach Outs"

The Proprietary School Tuition Protection Fund is established in the State Treasury. Proprietary schools will be charged fees in order to produce revenue for this Fund, as follows:

$200 at the time of issuance of a certificate of approval, and

an amount not to exceed $4 per student enrolled in the school during the preceding year at the time of annual renewal of a certificate of approval.

The State Board is to provide for the collection of these fees as necessary to attain a balance of $60,000 in the Fund and, thereafter, to maintain a Fund balance of not less than $50,000.

Any proprietary school that ceases operation in Kansas after the effective date of the law is liable to the State Board for any payments made from the Fund on behalf of its students. Amounts so recovered by the State Board are credited to the Fund.

The State Board of Education will assist students of proprietary schools that close in continuing and completing at another proprietary school the students' courses of instruction or study. The Board's expenses in assisting students to continue their study or to receive a refund from the proprietary school and any extraordinary expenses incurred by a proprietary school that is providing a "teach out" for students placed at the school under this bill may be paid from the Proprietary School Tuition Protection Fund. If another proprietary school is willing to assume responsibility for continuance of the courses of instruction or study of a student of a proprietary school that ceases operation in Kansas with no significant changes in proximity or in the quality of the courses of instruction or study, the student is not entitled to a refund. Attorney fees, court costs, and damage awards related to the cessation of operation of a proprietary school may not be paid from the Fund. Students affected by the closure of a proprietary school must apply to the State Board of Education in order to be eligible for payments from the Proprietary School Tuition Protection Fund.

Proprietary School Student Records

A new provision related to proprietary school bond requirements is that, when a school closes, the school and its personnel are bound to deliver or make available to the State Board of Education the records of all students who are in attendance at the school at the time of closure or who have attended the school at any time prior to closure.

Proprietary School Certificates of Approval--Changes

Under current law, when there is a change of ownership of a proprietary school, the new owner must apply to the State Board of Education for a new certificate of approval within 60 days prior to the change in ownership. An amendment changes the 60-day requirement to 30 days.

Under current law, the State Board of Education is required at least 30 days prior to expiration of a certificate of approval to forward to the proprietary school a renewal application form. An amendment changes the 30-day requirement to 60 days.

A new provision requires a proprietary school which does not plan to renew a certificate of approval to so notify the State Board of Education at least 60 days prior to the expiration date of the certificate.

Proprietary School Student--Prepayment of Tuition

The amount a proprietary school may collect from a student before the student receives classroom instruction is increased from $200 to $350. In this connection, the prepaid tuition cap, applicable for tuition paid more than 10 days in advance of the delivery of instruction, is changed to apply to tuition paid more than 30 days in advance of the instruction. Also, the amount of prepaid tuition the school is entitled to keep if the student fails to enter school is increased from $100 to $150.

With respect to correspondence schools, the amount of tuition that may be collected from the student prior to the first submission of a lesson is increased from $100 to $200. The provision linking this limitation to a time span of up to 10 days after the first submission of a lesson by the student is eliminated. The amount of such tuition that the school may retain if the student does not enter school is increased from $50 to $75.

Proprietary Schools--Fees for Certificates of

Approval and Registration of Representatives

Fees for certificates of approval and registration of representatives of proprietary schools are increased as follows:

Schools Domiciled or Having Their Principal Place of Business in Kansas

Initial issuance of a certificate of approval--$250 to $800.

Renewal of a certificate of approval--$200 to $300.

Initial registration of a representative--$25 to $50.

Annual renewal of registration of a representative--$15 to $25.

Schools Domiciled or Having Their Principal Place of Business Outside of Kansas

Initial issuance of a certificate of approval--$700 to $1,500.

Renewal of a certificate of approval--$600 to $750.

Initial registration of a representative--$70 to $100.

Annual renewal of registration of a representative--$50 to $75.

The bill defines "branch school" and specifies that separate licensure is not required for these operations.

Advisory Commission on Proprietary Schools

The composition of the nine-member Advisory Commission on Proprietary Schools is modified to require that, of the five members who must be owners or managers of proprietary schools, at least two must represent schools which, at the time of appointment of the member, have enrollments of less than 125 students. The other four members are selected from among the following categories: secondary schools, postsecondary schools, agriculture, business or management, organized labor, and health occupations.

(Current law requires that, of the five members who must be owners of proprietary schools, at least three must represent schools which have received accreditation from an agency recognized by the U.S. Office of Education. The other four members must be selected from among the following categories: secondary school principals, guidance counselors, agriculture, business or management, organized labor, and health occupations, except that one member must be a person who does not fall within the preceding categories.)

Background

S.B. 444, a bill requested by the State Board of Education, is identical to 1997 H.B. 2004 which was recommended by the Legislative Educational Planning Committee (LEPC) pursuant to its 1996 interim study activity. (The Committee's report is published in Committee Reports to the 1997 Kansas Legislature, Part I, Special Committees, pages 7-1 through 7-11, Kansas Legislative Research Department, December 1996.)

The 1997 bill resulted from a recommendation of the State Board of Education and the Kansas Advisory Commission on Proprietary Schools that the LEPC recommend amending the law to:

clarify which schools should be regulated, specifically with regard to those schools that offer programs that are vocational or recreational;

protect students when a proprietary school closes;

provide for disposition of student records when a proprietary school closes;

revise the fee schedule; and

remove obsolete and outdated language.

The LEPC agreed with the need for the proposed changes and noted that the fee schedule had not been changed in 20 years.

At the Senate Education Committee hearings on S.B. 444, spokespersons for the State Board of Education and the Advisory Commission on Proprietary Schools appeared as proponents. The spokesperson for the Kansas Association of Realtors expressed opposition to creation of the Proprietary School Tuition Protection Fund. The conferee explained that the Association operates a proprietary school which offers prelicense and continuing education courses to real estate licensees and is concerned about the need for a protection fund and the impact that assessments for the Fund would have on the school's students. An alternative suggestion was to increase the current proprietary school bonding requirement and expand the bonding provision to provide coverage for students affected by a school's closure. A spokesperson for the Kansas Real Estate Commission urged that the law be amended to exclude real estate continuing education courses from application of the Proprietary School Act.

The fiscal note explains that the State Department of Education had not yet provided an estimate of the increased revenues the agency could expect to receive under the bill, but that FY 1999 expenditures would increase by an estimated $30,234, to be funded by increased proprietary school fees.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext-bill.html.