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HOUSE BILL NO. 593

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H0593..........................................................by EDUCATION
PROPRIETARY SCHOOLS - Repeals, adds to and amends existing law relating to
regulation of proprietary schools to revise general powers and duties of
the State Board of Education; to provide definitions and to revise
definitions; to revise registration requirements of postsecondary
educational institutions; to provide for registration of degree granting
proprietary schools; to revise registration requirements of proprietary
schools; to provide for an agent's certificate of identification; to delete
reference to the word proprietary and to revise the purchase statement; to
revise requirements and conditions for recovery from the Student Tuition
Recovery Account; and to revise assessment mechanisms for the Student
Tuition Recovery Account.

03/04    House intro - 1st rdg - to printing
03/05    Rpt prt - to Educ

Bill Text

                                                                       
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008

                                                                       

                              IN THE HOUSE OF REPRESENTATIVES

                                     HOUSE BILL NO. 593

                                   BY EDUCATION COMMITTEE

  1                                        AN ACT
  2    RELATING TO REGULATION OF PROPRIETARY SCHOOLS; AMENDING SECTION 33-107,  IDAHO
  3        CODE, TO REVISE GENERAL POWERS AND DUTIES OF THE STATE BOARD OF EDUCATION;
  4        AMENDING SECTION 33-2401, IDAHO CODE, TO PROVIDE DEFINITIONS AND TO REVISE
  5        DEFINITIONS;  AMENDING SECTION 33-2402, IDAHO CODE, TO REVISE REGISTRATION
  6        REQUIREMENTS OF POSTSECONDARY EDUCATIONAL INSTITUTIONS;  AMENDING  CHAPTER
  7        24,  TITLE 33, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 33-2403, IDAHO
  8        CODE, TO PROVIDE FOR REGISTRATION OF DEGREE GRANTING PROPRIETARY  SCHOOLS;
  9        AMENDING  SECTION  33-2403,  IDAHO CODE, TO REDESIGNATE THE SECTION AND TO
 10        REVISE REGISTRATION REQUIREMENTS OF PROPRIETARY SCHOOLS; AMENDING  SECTION
 11        33-2404, IDAHO CODE, TO REDESIGNATE THE SECTION, TO PROVIDE FOR AN AGENT'S
 12        CERTIFICATE OF IDENTIFICATION, TO PROVIDE REQUIREMENTS FOR THE CERTIFICATE
 13        OF  IDENTIFICATION  AND  TO  MAKE  TECHNICAL CORRECTIONS; AMENDING SECTION
 14        33-2405, IDAHO CODE, TO REDESIGNATE THE SECTION, TO  DELETE  REFERENCE  TO
 15        THE  WORD  "PROPRIETARY"  AND  TO REVISE THE PURCHASE STATEMENT; REPEALING
 16        SECTION 33-2406, IDAHO CODE, RELATING TO A SURETY BOND;  AMENDING  SECTION
 17        33-2407,  IDAHO CODE, TO REVISE REQUIREMENTS FOR AND CONDITIONS FOR RECOV-
 18        ERY FROM THE  STUDENT  TUITION  RECOVERY  ACCOUNT;  AND  AMENDING  SECTION
 19        33-2408,  IDAHO  CODE,  TO  REVISE  ASSESSMENT  MECHANISMS FOR THE STUDENT
 20        TUITION RECOVERY ACCOUNT.

 21    Be It Enacted by the Legislature of the State of Idaho:

 22        SECTION 1.  That Section 33-107, Idaho Code, be, and the  same  is  hereby
 23    amended to read as follows:

 24        33-107.  GENERAL  POWERS  AND  DUTIES  OF THE STATE BOARD. The state board
 25    shall have power to:
 26        (1)  Perform all duties prescribed for it by the school laws of the state;
 27        (2)  Acquire, hold and dispose of title, rights and interests in real  and
 28    personal property;
 29        (3)  Have general supervision, through its executive departments and offi-
 30    ces,  of  all  entities  of  public education supported in whole or in part by
 31    state funds;
 32        (4)  Delegate to its executive secretary, to its executive officer, or  to
 33    such  other administrators as the board may appoint, such powers as said offi-
 34    cers require to carry out the policies, orders and directives of the board;
 35        (5)  Through its executive departments and offices:
 36        (a)  Enforce the school laws of the state,
 37        (b)  Study the educational conditions and needs of the state and recommend
 38        to the legislature needed changes in existing laws or additional  legisla-
 39        tion;
 40        (6)  In  addition  to  the powers conferred by chapter 24, title 33, Idaho
 41    Code:
 42        (a)  Maintain  a  rRegister  of  postsecondary  educational   institutions
 43        approved to provide programs and a course or courses of study that lead to

                                       2

  1        a  degree or which provide, offer and sell or confer degrees in accordance
  2        with the procedures established in chapter 24, title 33, Idaho Code,
  3        (b)  Determine whether to accept academic credit at  public  postsecondary
  4        educational  institutions  in  Idaho.  Academic credit shall not be trans-
  5        ferred into any  Idaho  public  postsecondary  institution  from  a  post-
  6        secondary  educational institution or other entity registered as such that
  7        is not accredited by an organization recognized by the board,
  8        (c)  Register degree granting proprietary schools recognized to provide  a
  9        course  or courses of study that lead to a degree, or which provide, offer
 10        or confer degrees,  in accordance with the procedures established in chap-
 11        ter 24, title 33, Idaho Code,
 12        (d)  Maintain a rRegister of proprietary schools approved to that conduct,
 13        provide, or offer or sell a course or courses of study in accordance  with
 14        the procedures established in chapter 24, title 33, Idaho Code;
 15        (7)  Prescribe the courses and programs of study to be offered at the pub-
 16    lic  institutions  of higher education, after consultation with the presidents
 17    of the affected institutions;
 18        (8)  Approve new courses and programs of study to be offered at  community
 19    colleges  organized  pursuant  to  chapter  21, title 33, Idaho Code, when the
 20    courses or programs of study are academic in nature and  the  credits  derived
 21    therefrom  are  intended  to  be  transferable  to other state institutions of
 22    higher education for credit  toward  a  baccalaureate  degree,  and  when  the
 23    courses  or programs of study have been authorized by the board of trustees of
 24    the community college.

 25        SECTION 2.  That Section 33-2401, Idaho Code, be, and the same  is  hereby
 26    amended to read as follows:

 27        33-2401.  DEFINITIONS.  For  the  purposes  of chapter 24, title 33, Idaho
 28    Code, the following words have the following meanings:
 29        (1)  "Accredited" means that a postsecondary educational  institution  has
 30    been recognized or approved as meeting the standards established by an accred-
 31    iting agency recognized by the board.
 32        (2)  "Agent"  means  any individual within the state of Idaho who solicits
 33    students for or on behalf of a proprietary school.
 34        (3)  "Agent's permit" means a nontransferable written document  issued  to
 35    an agent by the board.
 36        (2)  "Agent's certificate of identification" means a nontransferable writ-
 37    ten document issued to an agent by the school that the agent represents.
 38        (3)  "Approved"  means  that  a postsecondary educational institution or a
 39    degree granting proprietary school  meets  the  standards  established  by  an
 40    accrediting agency recognized by the board.
 41        (4)  "Board" means the state board of education.
 42        (5)  "Course"  means  instruction imparted in a series of lessons or class
 43    meetings to meet an educational objective.
 44        (6)  "Course or courses of study" means either a single course or a set of
 45    related courses for which a student enrolls, either  for  academic  credit  or
 46    otherwise.
 47        (7)  "Degree"  means  any  academic, vocational, professional-technical or
 48    honorary title or designation, mark, appellation, series of  letters,  numbers
 49    or  words  such as, but not limited to, "bachelor's," "master's," "doctorate,"
 50    or "fellow," which signifies, purports, or is generally taken to signify  sat-
 51    isfactory   completion   of  the  requirements  of  an  academic,  vocational,
 52    professional-technical, educational or professional program  of  study  beyond
 53    the secondary school level or for a recognized title conferred for meritorious

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  1    recognition and an associate of arts or associate of science degree awarded by
  2    a  community  college  or  other  public  or private postsecondary educational
  3    institution or other entity which may be used for any purpose whatsoever.
  4        (8)  "Degree granting proprietary school" means an individual,  or  educa-
  5    tional,  business  or  other  entity that operates for profit, whether legally
  6    constituted or otherwise, and which maintains  a  presence  within,  or  which
  7    operates or purports to operate from a location within, the state of Idaho and
  8    which  provides  a  course  or courses of study that lead to a degree or which
  9    provides, offers or confers degrees.
 10        (9)  "Postsecondary educational institution" means an individual, or  edu-
 11    cational, business or other entity, whether legally constituted or otherwise a
 12    regionally accredited institution or a public or other nonprofit entity, which
 13    maintains  a presence within, or which operates or purports to operate, from a
 14    location within, the state of Idaho,  and which provides a course  or  courses
 15    or programs of study that lead to a degree, or which provides, offers or sells
 16    confers degrees.
 17        (910) "Proprietary  school"  means an individual, or educational, business
 18    or other entity that operates  for  profit,  whether  legally  constituted  or
 19    otherwise,  and  which  maintains a presence within, or which operates or pur-
 20    ports to operate, from a location within, the state of Idaho  and  which  con-
 21    ducts,  provides,  or  offers or sells a course or courses of study, but which
 22    does not provide, or offer or sell degrees.
 23        (11) "Recognized" means that a degree granting  proprietary  school  meets
 24    the  standards  established  by  an  accrediting agency which is recognized by
 25    either the United States department of education or  the  council  for  higher
 26    education accreditation.
 27        (12) "Regionally accredited institution" means a postsecondary educational
 28    institution that has been accredited by any of the following regional accredi-
 29    tation organizations:
 30        (a)  Middle  states  association of schools and colleges (MSA), commission
 31        on higher education.
 32        (b)  New england association of schools and colleges, commission on insti-
 33        tutions of higher education (NEASC-CIHE).
 34        (c)  North central association of colleges and schools, the higher  learn-
 35        ing commission (NCA-HLC).
 36        (d)  Northwest commission on colleges and universities (NWCCU).
 37        (e)  Southern  association  of  colleges and schools (SACS), commission on
 38        colleges.
 39        (f)  Western association of schools and colleges,  accrediting  commission
 40        for senior colleges and universities (WASC-ACSCU).
 41        (13) "School"  means either a degree granting proprietary school or a pro-
 42    prietary school.

 43        SECTION 3.  That Section 33-2402, Idaho Code, be, and the same  is  hereby
 44    amended to read as follows:

 45        33-2402.  REGISTRATION  OF  POSTSECONDARY  EDUCATIONAL  INSTITUTIONS.  (1)
 46    Unless exempted as provided herein, each postsecondary educational institution
 47    which  maintains  a  presence  within the state of Idaho, or which operates or
 48    purports to operate from a location within the state of Idaho, shall  register
 49    annually  with,  be  approved by, and hold a valid certificate of registration
 50    issued by the board. A public postsecondary educational institution or  agency
 51    supported  primarily  by  taxation  from  either the state of Idaho or a local
 52    source in Idaho shall not be required to  register  under  this  section.  The
 53    board may exempt a nonprofit other postsecondary educational institutions from

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  1    the  registration requirement in accordance with standards and criteria estab-
  2    lished in rule by the board. The board may permit a postsecondary  educational
  3    institution  required  to register under this section to instead register as a
  4    proprietary school under section 33-2403, Idaho Code, in accordance with stan-
  5    dards and criteria established in rule by the board.
  6        (2)  The board shall prescribe by rule  the  procedure  for  registration,
  7    which  shall include, but is not limited to, a description of each degree, and
  8    the course or program courses of study, for academic credit or otherwise, that
  9    a postsecondary educational institution intends to conduct, provide, offer. or
 10    sell. Such rule shall also prescribe the standards and criteria to be utilized
 11    by the board for recognition of approved accreditation organizations.
 12        (3)  The board may deny the registration of  a  postsecondary  educational
 13    institution  that  does not meet accreditation requirements or other standards
 14    and criteria established in rule by the board.  The  administrative  procedure
 15    act,  chapter 52, title 67, Idaho Code, shall apply to any denial of registra-
 16    tion under this section.
 17        (4)  The board shall assess an  annual  registration  fee  on  each  post-
 18    secondary educational institution required to be registered under this section
 19    based  on  the  respective  degrees,  courses or programs that each such post-
 20    secondary educational institution intends to conduct, provide, offer or  sell,
 21    not to exceed one hundred dollars ($100) for each degree, course or program as
 22    established  in  rule by the board. Such annual registration fee shall be col-
 23    lected by the board and shall be dedicated for use by the board in  connection
 24    with its responsibilities under this chapter.

 25        SECTION  4.  That  Chapter  24,  Title 33, Idaho Code, be, and the same is
 26    hereby amended by the addition thereto of a NEW SECTION, to be known and  des-
 27    ignated as Section 33-2403, Idaho Code, and to read as follows:

 28        33-2403.  REGISTRATION  OF DEGREE GRANTING PROPRIETARY SCHOOLS. (1) Unless
 29    exempted as provided herein, each degree  granting  proprietary  school  which
 30    maintains  a presence within the state of Idaho, or which operates or purports
 31    to operate from a location within the state of Idaho, shall register  annually
 32    with, be recognized by, and hold a valid certificate of registration issued by
 33    the  board or its designee. The board may permit a degree granting proprietary
 34    school required to register under this section to instead register as a  post-
 35    secondary educational institution under section 33-2402, Idaho Code, in accor-
 36    dance with the standards and criteria established in rule by the board.
 37        (2)  The  board  shall  prescribe by rule the same procedure for registra-
 38    tion, which shall include, but is  not  limited  to,  a  description  of  each
 39    degree,  and the course or courses of study, for academic credit or otherwise,
 40    that a degree granting proprietary school intends to offer.  Such  rule  shall
 41    also  prescribe the standards and criteria to be utilized by the board in rec-
 42    ognizing existing accreditation organizations.
 43        (3)  The board or its designee may  deny  the  registration  of  a  degree
 44    granting  proprietary  school that does not meet accreditation requirements or
 45    other standards and criteria established in rule by the board. The administra-
 46    tive procedure act, chapter 52, title 67,  Idaho  Code,  shall  apply  to  any
 47    denial of registration under this section.
 48        (4)  The  board  shall  assess  an  annual registration fee on each degree
 49    granting proprietary school required to be registered under this section based
 50    on the gross tuition generated by the school in the previous fiscal  year,  or
 51    the  anticipated tuition for a school that is just starting, as established in
 52    rule by the board. Such annual registration fee  shall  be  collected  by  the
 53    board or its designee and shall be designated for use by the board or its des-

                                       5

  1    ignee in connection with its responsibilities under this chapter.

  2        SECTION  5.  That  Section 33-2403, Idaho Code, be, and the same is hereby
  3    amended to read as follows:

  4        33-24034.  REGISTRATION OF PROPRIETARY SCHOOLS.  (1)  Unless  exempted  as
  5    provided  in  subsection  (4)  of  this section, each proprietary school which
  6    maintains a presence within the state of Idaho, or which operates or  purports
  7    to  operate from a location within the state of Idaho, shall register annually
  8    with and hold a valid certificate of registration issued by the board  or  its
  9    designee.
 10        (2)  The  board  shall  prescribe  by rule the procedure for registration,
 11    which shall include, but is not limited to, a description of each  the  course
 12    or  program, courses of study for academic credit or otherwise, that a propri-
 13    etary school intends to conduct, provide, or offer. or sell.
 14        (3)  The board may deny the registration of a proprietary school that does
 15    not meet the standards or criteria established  in  rule  by  the  board.  The
 16    administrative procedure act, chapter 52, title 67, Idaho Code, shall apply to
 17    any denial of registration under this section.
 18        (4)  The  following  individuals  or entities are specifically exempt from
 19    the registration provisions required by this section:
 20        (a)  An individual or entity that offers instruction  or  training  solely
 21        avocational or recreational in nature, as determined by the board.
 22        (b)  An  individual  or entity that offers courses recognized by the board
 23        which comply in whole or in part with the compulsory education law.
 24        (c)  An individual or entity that offers a  course  or  courses  of  study
 25        sponsored  by  an  employer  for  the  training and preparation of its own
 26        employees, and for which no tuition fee is charged to the student.
 27        (d)  An individual or entity which is  otherwise  regulated,  licensed  or
 28        registered  with  another  state  agency pursuant to title 54, Idaho Code.
 29        These agencies shall provide a list of regulated, licensed  or  registered
 30        schools to the board annually.
 31        (e)  Aviation  school or instructors approved by and under the supervision
 32        of the federal aviation administration.
 33        (f)  An individual or entity that offers intensive review courses designed
 34        to prepare students for certified public accountancy tests, public accoun-
 35        tancy tests, law school aptitude tests, bar examinations or  medical  col-
 36        lege admissions tests, or similar instruction for test preparation.
 37        (g)  An  individual  or entity offering only workshops or seminars lasting
 38        no longer than three (3) calendar days.
 39        (h)  A parochial or denominational institution  providing  instruction  or
 40        training  relating  solely  to  religion  and  for  which  degrees are not
 41        granted.
 42        (i)  An individual or entity that offers postsecondary  credit  through  a
 43        consortium  of public and private colleges and universities under the aus-
 44        pices of the western governors.
 45        (5)  The board shall assess an annual registration fee on each proprietary
 46    school required to be registered under this section. Such annual  registration
 47    fee  shall  be composed of a fixed portion in an amount not to exceed one hun-
 48    dred dollars ($100) for each proprietary school, and a variable portion  based
 49    on the respective course or courses of study that each such proprietary school
 50    intends  to conduct, provide, offer or sell, not to exceed one hundred dollars
 51    ($100) for each course or courses of study based on the gross  tuition  gener-
 52    ated  by  the  school  in  the previous year, or the anticipated tuition for a
 53    school that is just starting, as established in rule by the board. Such annual

                                       6

  1    registration fee shall be collected by the board or its designee, and shall be
  2    dedicated for use by the board in connection with its  responsibilities  under
  3    this chapter.

  4        SECTION  6.  That  Section 33-2404, Idaho Code, be, and the same is hereby
  5    amended to read as follows:

  6        33-24045.  AGENT'S PERMIT CERTIFICATE OF IDENTIFICATION. (1) No individual
  7    may act as an agent of a proprietary school required to  be  registered  under
  8    the  provisions  of  this chapter unless that individual holds a valid agent's
  9    permit certificate of identification issued by the board and maintains at  all
 10    times  a  surety  bond as described in section 33-2406, Idaho Code school that
 11    the agent represents.
 12        The application for an agent's permit shall be furnished by the board  and
 13    shall include the following:
 14        (1)  A  statement signed by the applicant that he or she has read the pro-
 15    visions of this chapter and the rules promulgated pursuant thereto.
 16        (2)  An annual fee for each permit not to exceed fifty  dollars  ($50.00).
 17    The board shall set by rule the amount of such annual agent's permit fee.
 18        (2)  All  agent's permits shall be renewed annually upon reapplication and
 19    proper qualifications Each agent's  certificate  of  identification  shall  be
 20    reissued  annually by the school that the agent represents on the first day of
 21    July. If courses are solicited or sold by more than one (1) agent, a  separate
 22    permit certificate of identification is required for each agent.
 23        (3)  The  agent's  permit certificate of identification shall consist of a
 24    pocket card and shall bear:
 25        (a)  Tthe name and address of the agent,;
 26        (b)  Tthe name and address of the proprietary school, and that  the  agent
 27        represents;
 28        (c)  Aa  statement  that  the bearer is an authorized agent of the propri-
 29        etary school, and may solicit and sell courses students  for  the  propri-
 30        etary school.
 31        (4)  The agent shall surrender the agent's permit certificate of identifi-
 32    cation to the proprietary school upon termination of employment.
 33        (5)  An  agent  representing  more  than  one (1) proprietary school shall
 34    obtain a separate agent's permit certificate of identification for  each  pro-
 35    prietary school represented.
 36        (6)  No  individual shall be issued an agent's permit Prior to issuing the
 37    agent a certificate of identification, the school shall  complete  a  criminal
 38    history check that includes the state bureau of identification, federal bureau
 39    of  investigation  and  statewide  sex  offender registry and other guidelines
 40    established in rule by the board for every agent having  direct  contact  with
 41    minors.  No  agent shall be issued an agent's certificate of identification if
 42    he or she has been previously found in any judicial or administrative proceed-
 43    ing to have violated this chapter.
 44        (7)  An agent's permit certificate of identification shall  be  valid  for
 45    the  state's  fiscal year in which it is issued, unless sooner revoked or sus-
 46    pended by the board for fraud or  misrepresentation  in  connection  with  the
 47    solicitation  for  the  sale  of any course of study, for any violation of the
 48    provisions of this chapter or rules promulgated pursuant to this  chapter,  or
 49    for  the existence of any condition in respect to the agent or the proprietary
 50    school he or she represents, which if in existence at  the  time  the  agent's
 51    permit  was  issued, would have been grounds for denial for the agent's permit
 52    school.
 53        (8)  The agent shall carry the agent's permit certificate  of  identifica-

                                       7

  1    tion with him or her for identification purposes when engaged in the solicita-
  2    tion  for  the  sale and the selling of courses of study of students away from
  3    the premises of the proprietary school, and shall produce the  agent's  permit
  4    certificate of identification for inspection upon request.
  5        The  administrative procedure act, chapter 52, title 67, Idaho Code, shall
  6    apply to any denial of an agent's permit or proceeding to revoke or suspend an
  7    agent's permit of the board conducted pursuant to this section.
  8        (9)  The issuance of an agent's permit certificate of identification  pur-
  9    suant  to  this  section shall not be interpreted as, and it shall be unlawful
 10    for any individual holding any agent's permit certificate of identification to
 11    expressly or impliedly represent by any means whatever  whatsoever,  that  the
 12    board  has  made  any evaluation, recognition, accreditation or endorsement of
 13    any proprietary school or of any course of study being offered for sale by the
 14    agent of any such proprietary school. Any oral or  written  statement,  adver-
 15    tisement  or  solicitation  by any proprietary school or agent which refers to
 16    the board shall state:
 17        "(Name of school) is registered with  the  State  Board  of  Education  in
 18        accordance with Section 33-2403 or 33-2404, Idaho Code."
 19        (10) It shall be unlawful for any agent holding an agent's permit certifi-
 20    cate  of  identification  under the provisions of this section to expressly or
 21    impliedly represent, by any means whatsoever, that the issuance of the agent's
 22    permit certificate of identification constitutes an  assurance  by  the  board
 23    that  any  course  of study being offered for sale by the agent or proprietary
 24    school will provide and require of the student a course of education or train-
 25    ing necessary to reach a professional, educational, or  vocational  objective,
 26    or  will result in employment or personal earning for the student, or that the
 27    board has made any evaluation, recognition, accreditation, or  endorsement  of
 28    any course of study being offered for sale by the agent or proprietary school.
 29        (11) No  agent  shall make any untrue or misleading statement or engage in
 30    sales, collection, credit, or other practices of any type  that  are  illegal,
 31    false, deceptive, misleading or unfair.
 32        (12) The  board  school  shall maintain records for five (5) years of each
 33    application for an agent's permit, each bond  certificate  of  identification,
 34    and  each  issuance,  denial,  termination,  suspension  and  revocation of an
 35    agent's permit certificate of identification.
 36        (13) The school shall provide as part of the annual  registration  process
 37    the  names and results of the criminal history check for each agent to whom it
 38    has issued a certificate of identification. The criminal history check will be
 39    valid for five (5) years.
 40        (14) The board or a student may bring an  action  pursuant  to  the  Idaho
 41    rules  of  civil  procedure for an agent's violation of the provisions of this
 42    chapter or any rule promulgated pursuant to this chapter, or any fraud or mis-
 43    representation. The court shall  determine  which  party  is  the  "prevailing
 44    party"  and the prevailing party shall be entitled to the recovery of damages,
 45    reasonable attorney's fees and costs both at trial and on appeal.
 46        (15) Additionally, aAny agent who violates the provisions of this  section
 47    is  also guilty of a misdemeanor punishable by imprisonment in the county jail
 48    not exceeding six (6) months, or by a fine not exceeding five thousand dollars
 49    ($5,000), or both.

 50        SECTION 7.  That Section 33-2405, Idaho Code, be, and the same  is  hereby
 51    amended to read as follows:

 52        33-24056.  PURCHASE  STATEMENT.  At  the  time of depositing any moneys to
 53    purchase the product of any proprietary school, the proprietary  school  shall

                                       8

  1    require  the student to execute the following statement on an appropriate form
  2    which shall be maintained on record  by the proprietary school in the individ-
  3    ual student's file:
  4        "I understand that (Name of proprietary school)  is  registered  with  the
  5        State  Board  of  Education in accordance with Section 33-2403 or 33-2404,
  6        Idaho Code. I also understand that the State Board of  Education  has  not
  7        accredited  or endorsed any course of study being offered by (Name of pro-
  8        prietary school), and that these courses will  may  not  be  accepted  for
  9        transfer into any Idaho public postsecondary institution."

 10        SECTION  8.  That  Section 33-2406, Idaho Code, be, and the same is hereby
 11    repealed.

 12        SECTION 9.  That Section 33-2407, Idaho Code, be, and the same  is  hereby
 13    amended to read as follows:

 14        33-2407.  STUDENT TUITION RECOVERY ACCOUNT -- CONDITIONS FOR RECOVERY. (1)
 15    There  is  hereby  created  in the state treasury the student tuition recovery
 16    account to be administered by the board or its designee  for  the  purpose  of
 17    relieving  or mitigating pecuniary losses suffered by any student of a propri-
 18    etary school registered under the provisions of this  chapter  and  who  meets
 19    either of the following conditions:
 20        (a)  The  student  was  enrolled  in  a  proprietary  school prior to that
 21        school's closure, had prepaid tuition, and suffered loss as a result of:
 22             (i)   The closure of the proprietary school; or
 23             (ii)  The proprietary school's breach or anticipatory breach  of  the
 24             agreement  for the course or courses of study used for the indemnifi-
 25             cation of any student for any loss suffered as a result of the occur-
 26             rence, during the period coverage, of any fraud or  misrepresentation
 27             used  in  connection with the solicitation for enrollment in a course
 28             of study and, if the student was enrolled in a school prior  to  that
 29             school's closure, had prepaid tuition and suffered a loss as a result
 30             of:
 31                  1.  The closure of the school; or
 32                  2.  The  school's  breach  of  the  agreement  for the course or
 33                  courses of study.
 34        For the purpose of this section, "closure" includes closure of a branch or
 35    satellite campus, the termination of either the  correspondence  or  residence
 36    portion  of  a  home  study or correspondence course, and the termination of a
 37    course of study for some or all of the students enrolled in the course  before
 38    the  time  the students have satisfactorily completed the program, or before a
 39    student who has been continuously enrolled in a course of study had been  per-
 40    mitted  to complete all the educational services and classes that comprise the
 41    course.
 42        (b)  The student obtained a judgment against the  proprietary  school  for
 43        any  violation of the provisions of this chapter or rules promulgated pur-
 44        suant to this chapter, and the student certifies that the judgment  cannot
 45        be collected after diligent collection efforts.
 46        (2)  Payments  from  the  account to any student shall be subject to rules
 47    and conditions as the board shall prescribe.:
 48        (a)  The proprietary school shall provide to the board or its designee  at
 49        the  time  of  the proprietary school's closure the names and addresses of
 50        persons who were students of the proprietary school within sixty (60) days
 51        prior to its closure, and shall notify these students within  thirty  (30)
 52        days  prior to the proprietary school's closure, of their rights under the

                                       9

  1        student tuition recovery account and how to apply for payment. Failure  to
  2        do  so  shall result in a civil penalty not exceeding one thousand dollars
  3        ($1,000)  which may be assessed by the state board and shall be  deposited
  4        in the general fund.
  5        (b)  If the proprietary school fails to comply with the provisions of this
  6        section,  the board or its designee  shall attempt to obtain the names and
  7        addresses of these students and shall notify them, within ninety (90) days
  8        of the proprietary school's closure, of their  rights  under  the  student
  9        tuition  recovery  account  and how to apply for payment. The board or its
 10        designee may require the proprietary school to reimburse the board or  its
 11        designee  for all reasonable costs and expenses incurred in notifying stu-
 12        dents.
 13        (c)  The board or its designee shall develop a  form  fully  explaining  a
 14        student's  rights,  which  shall  be used by the proprietary school or the
 15        board or its designee to comply with  the  notice  requirement.  The  form
 16        shall  include or be accompanied by a claim application form and an expla-
 17        nation of how to complete the application.
 18        (d)  Students filing for payment from the student tuition recovery account
 19        as a result of the closure of a proprietary school must submit  the  claim
 20        within  one  (1)  year from the proprietary school's or board's service of
 21        notice on the student or within two (2) years of the closure of  the  pro-
 22        prietary school, whichever is earlier.
 23        (3)  Students  entitled to payment shall file with the board or its desig-
 24    nee a verified application including, but not limited to each of  the  follow-
 25    ing:
 26        (a)  The  student's  name,  address,  telephone number and social security
 27        number.
 28        (b)  If any portion of the tuition was paid from the proceeds of  a  loan,
 29        the name of the lender and any state or federal agency that guaranteed the
 30        loan.
 31        (c)  The amount of the prepaid tuition.
 32        (d)  The  dates  the  student started and ceased attending the proprietary
 33        school.
 34        (e)  A description of the reasons the student ceased attending the propri-
 35        etary school.
 36        (f)  If the student ceased attending because of a breach  or  anticipatory
 37        breach,  a  statement describing in detail the nature of the economic loss
 38        incurred.
 39        (4)  Students entitled to payment based on a judgment shall file with  the
 40    board  or  its  designee a verified application indicating the student's name,
 41    address, telephone number and student identification, the amount of the  judg-
 42    ment  obtained  against  the proprietary school, a statement that the judgment
 43    cannot be collected, and a description of the efforts attempted to enforce the
 44    judgment. The application shall be accompanied by  a  certified  copy  of  the
 45    judgment  and  any  other  documents  indicating the student's efforts made to
 46    enforce the judgment. The application shall be filed with  the  board  or  its
 47    designee  within  two  (2) years after the date upon which the judgment became
 48    final.
 49        (5)  If the board or its designee pays the claim, the amount of  the  pay-
 50    ment  shall  be  the total amount of the student's economic loss, although the
 51    amount of the payment shall in no event exceed the  amount  of  the  student's
 52    tuition  and  cost  of  equipment and materials related to the course of study
 53    plus interest on all student loans used to pay tuition,  equipment  and  mate-
 54    rials.  Upon  payment  of the claim, the board or its designee shall be subro-
 55    gated to all of the student's rights against the  proprietary  school  to  the

                                       10

  1    extent  of  the  amount  of the payment. If the board or its designee receives
  2    several claims from students, the payment of which cannot be  totally  covered
  3    by  the  student tuition recovery account, the claims shall receive a pro rata
  4    share of the account.
  5        (6)  If the board or its designee denies a claim, the board or its  desig-
  6    nee  shall  notify  the  student  of  the denial and of the student's right to
  7    request a hearing within thirty (30) days. The hearing shall be held  pursuant
  8    to  the  administrative  procedure act, chapter 52, title 67, Idaho Code. If a
  9    hearing is not requested the board's  or  its  designee's  decision  shall  be
 10    final.
 11        (7)  It  is the intent of the legislature that, when a student is enrolled
 12    in a proprietary school that closes prior to the completion of  the  student's
 13    program,  the student shall have the option for a teach-out at another propri-
 14    etary school with a comparable course of study.  The  board  or  its  designee
 15    shall seek to promote teach-out opportunities whenever possible, with the stu-
 16    dent to be informed by the board or its designee that he or she has the option
 17    of  either  payment from the account or a teach-out which shall be funded from
 18    the account.
 19        (8)  No liability accrues to the state of Idaho from claims  made  against
 20    the student tuition recovery account.

 21        SECTION  10.  That Section 33-2408, Idaho Code, be, and the same is hereby
 22    amended to read as follows:

 23        33-2408.  ASSESSMENT FOR STUDENT TUITION RECOVERY ACCOUNT.  The  board  or
 24    its  designee  shall  assess each registered proprietary school which collects
 25    any moneys in advance of rendering services, an amount equal to  one-tenth  of
 26    one  percent  (.1%)  of  the  total course cost for each student enrolled. The
 27    assessment per student shall not be less than one dollar ($1.00), and not more
 28    than four dollars ($4.00). In addition, for each student who prepays a propri-
 29    etary school an amount in excess of four thousand dollars ($4,000), the  board
 30    shall  assess the proprietary school one-half of one percent (.5%) of the pre-
 31    paid amount which exceeds four thousand dollars ($4,000). The board shall pro-
 32    mulgate rules regarding collection and administration of the  student  tuition
 33    account.
 34        At  any  time  that  the  balance  is  in excess of fifty thousand dollars
 35    ($50,000), the board shall suspend collection, except as provided in the event
 36    of a newly registered proprietary school or the transfer  of  ownership  of  a
 37    proprietary school as provided in this section, until such time as the balance
 38    is again below fifty thousand dollars ($50,000).
 39        Newly  registered  proprietary schools shall, regardless of the balance in
 40    the account, contribute the assessment set forth in this section for  two  (2)
 41    consecutive years.
 42        If  fifty-one percent (51%) or more of the ownership interest in a propri-
 43    etary school is conveyed through sale or other means into different ownership,
 44    the new owner shall commence contributions under the provisions applying to  a
 45    new applicant.
 46        No  more  than  ten  percent  (10%)  per fiscal year shall be used for the
 47    administration of the tuition recovery program. The interest earned  on  money
 48    in the account shall be credited to the account.
 49        In  the  event  of  a closure of a proprietary school registered under the
 50    provisions of this chapter, any assessments which have been made against those
 51    proprietary schools, but have not been paid into the account, shall be  recov-
 52    ered to the extent feasible, or any payments from the student tuition recovery
 53    account  made to students on behalf of any proprietary school may be recovered

                                       11

  1    from that proprietary school by appropriate action taken  by  the  board.  The
  2    moneys  so  deposited  in the student tuition recovery account shall be exempt
  3    from execution and shall not be the subject of litigation or liability on  the
  4    part of creditors of those proprietary schools or students established in rule
  5    by  the board that utilizes a percentage of the gross tuition for the previous
  6    year, or anticipated tuition for a school in its first year of operation.  The
  7    method  of payment shall be in the form of a surety bond which is to be issued
  8    by an insurer duly authorized to do business in this state  in  favor  of  the
  9    state of Idaho for the indemnification of any student for any loss suffered as
 10    a  result of the occurrence, during the period of coverage, of closure  of the
 11    school or any fraud or misrepresentation used in connection with the solicita-
 12    tion for enrollment in a course of study. The term of the  bond  shall  extend
 13    over the period of registration with the board or its designee. The bond shall
 14    be  supplied by the school. The bond shall provide for liability in the amount
 15    established in rule by the board to fund the student tuition recovery account.
 16        The board or its designee may submit a demand upon the surety on the  bond
 17    on behalf of a student or students when it determines that a loss has occurred
 18    due to closure of the school or any fraud or misrepresentation used in connec-
 19    tion  with the solicitation for enrollment in a course of study or as a result
 20    of any violation of the provisions of this chapter or  the  rules  promulgated
 21    pursuant to this chapter. Neither the principal nor the surety on the bond may
 22    terminate  the  coverage  of  the  bond, except upon giving one hundred twenty
 23    (120) days' prior written notice to the board or its designee.

Statement of Purpose / Fiscal Impact

                       STATEMENT OF PURPOSE

                             RS 18018

This legislation updates the requirements for post secondary
educational institutions and proprietary schools registration and
oversight.  It also provides for a different process for funding a
tuition recovery fund that would be used to protect the
consumer who uses the training provided by the proprietary
schools in Idaho.  It provides for personnel to follow-up and
provide the oversight for these processes, since currently there
is virtually no oversight or follow-up with the current process.


                           FISCAL NOTE

This legislation may effect the amount paid for registration by
post secondary educational institutions, degree granting
proprietary schools, and proprietary schools.  Administration of
this section of Idaho Code will require an estimated $154,100
from the state General Fund and 2.0 Full Time Employee (FTE)
positions.  Not amending this section of Idaho Code will not
reduce the cost estimated for administration




Contact
Name: Dr. Mike Rush, State Board of Education 
Phone: (2080 334-3216 


STATEMENT OF PURPOSE/FISCAL NOTE                         H 593