senate Bill S4268C

Signed By Governor
2011-2012 Legislative Session

Relates to the licensure of private proprietary schools; repealer

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Archive: Last Bill Status Via A7859 - Signed by Governor


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Aug 17, 2012 approval memo.5
signed chap.381
Aug 06, 2012 delivered to governor
Jun 19, 2012 returned to assembly
passed senate
3rd reading cal.1303
substituted for s4268c
Jun 19, 2012 substituted by a7859a
ordered to third reading cal.1303
Jun 12, 2012 reported and committed to rules
Jan 18, 2012 reported and committed to finance
Jan 04, 2012 referred to higher education
Nov 21, 2011 print number 4268c
amend and recommit to finance
Nov 02, 2011 print number 4268b
amend and recommit to finance
Jun 10, 2011 print number 4268a
amend and recommit to finance
May 10, 2011 committed to finance
May 09, 2011 advanced to third reading
May 04, 2011 2nd report cal.
May 03, 2011 1st report cal.512
Mar 25, 2011 referred to higher education

Votes

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Jun 21, 2012 - Rules committee Vote

S4268C
24
0
committee
24
Aye
0
Nay
0
Aye with Reservations
0
Absent
1
Excused
0
Abstained
show Rules committee vote details

Jun 12, 2012 - Finance committee Vote

S4268C
29
0
committee
29
Aye
0
Nay
5
Aye with Reservations
0
Absent
1
Excused
0
Abstained
show Finance committee vote details

Jan 18, 2012 - Higher Education committee Vote

S4268C
16
1
committee
16
Aye
1
Nay
1
Aye with Reservations
0
Absent
0
Excused
0
Abstained
show Higher Education committee vote details

Higher Education Committee Vote: Jan 18, 2012

nay (1)
aye wr (1)

May 3, 2011 - Higher Education committee Vote

S4268
15
1
committee
15
Aye
1
Nay
1
Aye with Reservations
0
Absent
1
Excused
0
Abstained
show committee vote details

Committee Vote: May 3, 2011

nay (1)
aye wr (1)
excused (1)

Bill Amendments

Original
A
B
C (Active)
Original
A
B
C (Active)

S4268 - Bill Details

See Assembly Version of this Bill:
A7859A
Law Section:
Education Law
Laws Affected:
Amd Art 101 Art head, §§5001, 5002, 5003, 5004, 5006, 5007, 5008, 5009 & 5010, Ed L

S4268 - Bill Texts

view summary

Relates to the licensure of private proprietary schools; provides for increased competition among schools to improve the quality of training provided at private proprietary schools and the quality of student performance in the workplace.

view sponsor memo
BILL NUMBER:S4268

TITLE OF BILL:

An act to amend the education law, in relation to the licensure of
private proprietary schools; and providing for the repeal of certain
provisions upon the expiration thereof

PURPOSE OF THE BILL:

The purpose of this bill is to ensure that non-degree granting proprie-
tary institutions in New York State comply with current best practices
for this sector and to provide the New York State Education Department
(NYSED) with the resources to effectively oversee compliance with these
laws and to preserve the tuition reimbursement account. Additionally,
this bill would allow a new category of candidate schools: those that
are in the application process but have not perfected their license.

SUMMARY OF THE PROVISIONS OF THE BILL:

This bill would amend Article 101 of the Education Law (sections 5001
through 5010) to eliminate the distinction between licensed private
schools and registered business schools, replace the phrase "licensed
private schools" with the more descriptive "licensed private career
schools", adjust fees, which have not changed since 1990, and establish
a candidate school category that would allow a school to operate legally
while it is in the process of obtaining a non-degree-granting proprie-
tary school license.

Section 5001 would be amended to provide for the consolidation of regis-
tered business schools and licensed private schools into one desig-
nation, eliminating the artificial distinction between these types of
schools and reflecting the current heterogeneous nature of training
programs offered at these schools. Section 5001(2)(f), exempting certain
schools from licensure requirements, which was recently amended by Chap-
ter 13 of the Laws of2010 to include yoga and martial arts as subjects
exempt from such licensure requirements, would be further amended to
include Pilates as an additional subject exempt from such requirements.
Section 5001(2)(f) would also be amended to exclude schools conducted
for the purpose of teaching personal trainers from the list of schools
exempt from such licensure requirements.

For greater clarity, §5001(2), exempting conferences, trade shows, work-
shops and such other courses of study from such licensing requirements,
would also be divided into two separate paragraphs I and m without
substantive change. Subdivision 2-b of §5001, exempting programs for
private businesses with no tuition liability, would be amended to clari-
fy that the exemption would apply to employees of a person or organiza-
tion that has contracted with another person or organization to provide
instruction at no cost. Candidate school status would be established by
adding a new §5001(4) (b) (iii) to allow a practical means for prospec-

tive schools to operate legally prior to meeting all the requirements of
full licensure. For further clarity, §5001(4)(b), which addresses the
period of licensure as a private career school, would be amended to
include the specific fees for initial and renewal applications for such
licensure. The renewal fees would be increased to reflect NYSED's
current cost of supervising these schools and to meet the prospective
costs for reimbursing tuition for a significant number of students when
these students' schools close due to fiscal failure or non-compliance.
Initial application fees would be set at certain amounts and fees for
renewal would be based on the school's gross annual tuition income.

Procedures in §5001(6) for working with schools that are not financially
viable would be formalized to protect the tuition reimbursement account.
School transfer requirements in §5001(7) would be adjusted to be more
consistent with how other states handle school transfers. The method of
assessing schools in §5001(9) would be changed from more complicated
regular and special assessment formulas to one based on the number of
quarterly assessments paid, whereby newer schools with the potential to
fail would pay a higher assessment than schools with a history of satis-
factory licensed operation. Section 5001(4)(e), relating to annual
audited financial statements, would be amended to change the gross
tuition criteria for submission of such statements to the commissioner
and the tiling schedule for such statements to bring the non-degree
sector into parity with schools in the degree-granting and public school
sectors.

Section 5002 would be amended by adding a new paragraph b-1 to subdivi-
sion 1 to restrict the amount of private loan payments that a school
could receive on behalf of a student prior to their completing a
program, thereby limiting students' loan liability as well as the
tuition reimbursement account's liability for payment of loan funds.
This would formally recognize that the tuition reimbursement account is
to be used for student protection and not as a substitute for guaranteed
student loans. Section 5002(1)(d) (1) on admission of students under the
ability to benefit provision would be amended to authorize the Commis-
sioner to accept other entrance requirement documentation, such as
prerequisite coursework, professional or vendor certifications, personal
interviews and/or attestations of equivalent knowledge in lieu of the
examination requirement. Section 5002(3)(h) would be amended to require
schools to submit for approval a school catalog that contains a weekly
tuition liability chart for each program that indicates the amount of
refund due a student upon withdrawal. Section 5002(4)(c)(1) and (2)
would be amended to emphasize that in addition to paying the curriculum
application fee, provided in section 5002(4)(a), school s would be
required to pay the cost of an outside evaluation of a particular course
or facility of the school. Section 5002(5) would also be amended to
establish a curriculum/course application fee to fund the NYSED's
curriculum unit. Fees from school and personnel license applications do
not cover the cost of curriculum review, as some schools have only a
handful of courses or curricula that require approval while others have
between 400 and 700. Schools requiring the most evaluation would pay
more, those with few programs would pay less. Section 5002(6) would be

amended so that all teacher licenses would no longer be restricted to a
single school location, as private career school teacher licenses
currently are. This would result in a more mobile and efficient teacher
pool for schools to draw from for faculty members, reduced expense for
processing teacher applications and a reduced workload for the State
Education Department's Bureau of Proprietary School Supervision ("the
Bureau").

Section 5003 would be amended to establish more practical timeframes for
disciplinary proceedings. A new subparagraph (4) would be added to
§5003(1)(c) to establish procedures for handling written complaints by
students attending candidacy schools alleging failure of the school to
disclose its candidacy status and the implications and to obtain the
required attestation from the student. If such a violation is found, the
school would be required to provide the student a full refund of all
monies received from the student. Section 5003(6) would be amended to
increase the fines established in 1990 so they reflect NYSED's current
cost of school oversight. Section 5003(6)(b) would be amended to expand
the list of violations that may result in the imposition of a civil
penalty, including failure to offer an approved course or program.

Subdivision 3 of section 5004 would be amended to increase the amount of
gifts and other non-monetary consideration a school may provide to
students or former students from $25 to $75. Subdivision 4 of section
5004 would be amended to increase private school agent fees from $100 to
$200, while extending the term of a private school agent's certificate
from 2 years to 3 years.

Section 5005 would not be amended.

Section 5006 on teachout plans would be amended to allow NYSED to inter-
vene more effectively when a private career education school ceases
instruction. Currently, schools that are closing are required to develop
teachout plans that arrange to have students continue to receive
instruction from other private career schools upon closure of the
school. NYSED's experience is that schools that must close have little
incentive to establish teachouts, so authorizing NYSED to arrange for a
teachout plan would provide greater protection for students.

Section 5007 on refunds to students enrolled in schools that are closing
would be amended to expand expenses eligible for reimbursement. Section
5007(4)(a) and (c) on refunds to students would be amended to provide
for refunds of tuition, fees and book charges paid by or on behalf of
the students in cash or through loans, excluding funding obtained
through government agencies. Section 5007(5)(b) would be amended to
authorize the Commissioner to refund expenditures for fees, books and
tuition to students of schools that have closed. Section 5007(8) would
be amended to protect the interests of students in restitution from the
tuition reimbursement account by extending the time within which the
Commissioner or the Attorney General may seek recovery of a refund from
a school from 30 days to 90 days from payment of the refund by the
tuition reimbursement account. The provisions for special assessments

for new schools in section 5007(10) would be amended to be consistent
with the assessment changes in section 5001, and to reflect NYSED's
experience with assessing schools that have not been in operation for an
entire year. The requirement in section 5007(11) for an annual fund
audit of the tuition reimbursement account would be changed to mandate a
two-year audit.

Section 5008 would be amended to provide details regarding trust
accounts for schools determined to be in financial jeopardy.

Section 5009 would be amended to remove the annual reporting require-
ment.

Section 5010 would be amended to remove the requirement to have a
student representative on the advisory council. NYSED has been unable to
find a student willing to serve in this capacity. Term limits for
members would be mandated, although members could be reappointed. This
would ensure that members of the advisory council continue to be affil-
iated with schools in the non-degree proprietary sector. Provisions
that are no longer relevant to the council, including limiting the scope
of its advisory responsibilities, would be deleted.

STATEMENT IN SUPPORT OF THE BILL:

The law pertaining to non-degree proprietary schools was last amended
substantially in 1990. Since then, the number of these schools has
increased and their nature has changed. Only one-tenth of licensed
schools currently receive federal Title IV funds for students in strict-
ly business or trade programs. Schools today offer hybrid programs such
as medical office assisting, where coding and recordkeeping are combined
with clinical service such as phlebotomy. Most schools have ceased to
rely on Title IV, state TAP or other similar funding sources and have
turned to private sources such as Sallie Mae, banks, etc.

The law needs to be updated to reflect and conform to the current needs
of this area of higher education and of this vital business industry,
and to provide the Bureau of Proprietary School Supervision of the State
Education Department the flexibility it needs to adequately continue to
supervise proprietary schools, protect students and taxpayers, and
preserve and strengthen this important educational and economic indus-
try.

Currently, there are more than 450 licensed, registered, or certified
schools. In addition, approximately 200 schools are pending licensure.
Furthermore, more than 1,000 schools currently operating in New York
State are unlicensed (although some may be operating under a legal
exemption, the vast majority of these unlicensed schools are operating
illegally).

NYSED needs to maintain its ability to regulate the industry and to
strengthen schools that provide a quality education to some of this
state's most vulnerable adult learners while enforcing health, safety,

financial and other regulatory safeguards against those schools who,
either inadvertently or intentionally do not adhere to the industry's
standards and their legal obligations. Consistent, fair and assured
enforcement will even the playing field for all non-degree schools
subject to regulation, which will in turn increases competition among
such schools and increase the quality of each school's training
programs.

In addition, more stability is absolutely crucial to maintain the
tuition reimbursement account (TRA), which is used to repay students
when their school refuses to issue a refund to them for overpayments or
in those dire cases when schools close their doors, sometimes overnight,
and either are unable or unwilling to meet their contractual commitments
for training the students. Students in these situations are left out in
the cold, sometimes after they have made significant investments of time
and money into their training, with nothing to show for it. In these
situations, NYSED must have the resources to step in, make these
students financially whole and work to provide alternative educational
opportunities for them almost immediately.

In the past decade, the TRA faced near bankruptcy when a chain of
schools on Long Island closed, leaving students stranded without either
a quality education nor access to refunds of their substantial invest-
ment in the form of tuition, fees and book charges. The law pertaining
to the TRA has not been updated or reinforced since 1993. The amend-
ments pertaining to financial probation, financial viability, and trust
accounts are intended to prevent future situations where at risk
students nearly lose all of their investment of time and money.

Current law limits private career school teachers to teaching a partic-
ular subject only at a single school location. Removing that limitation
would allow these teachers to teach that subject at any licensed school
in the state. The state's schools would greatly benefit by being able to
transfer teachers from one location of a school chain to another without
the unnecessary requirement that these teachers need to be dually
licensed. Schools would also have a larger supply of substitute teach-
ers. With teachers given the freedom to move from school to school,
salary schedules could become more competitive within this sector. Also,
students would have the same access to teachers previously licensed at
only one school and teachers with a record of successful student course
completion and high placement rates could become more in demand from
other schools.

BUDGETARY IMPLICATIONS OF THE BILL:

This bill would generate some additional funds necessary to adequately
oversee, investigate, discipline and help make this important higher
education sector stronger. Current tuition levels generate approximate-
ly $3.0 million in revenue. The proposed changes in the first year the
legislation is implemented would generate approximately $800,000 (based
on current school figures and estimates). This increase is over the

2008-09 year, the last completed fiscal year for which figures are
available.

PRIOR LEGISLATIVE HISTORY:

In 2009, this bill was introduced in the Senate as S.6013, referred to
the Senate Rules Committee, and no further action was taken. Subse-
quently, this bill was introduced in the Senate as S.6043 and in the
Assembly as A.8773. S.6043 was referred to the Senate Rules Committee
and no further action was taken. A.8773 was referred to the Assembly
Higher Education Committee and no further action was taken. In 2010, it
was again referred to both the Senate and Assembly's Committee on Higher
Education, but no further action was taken.

In 2008, this bill was introduced in the Senate as S.7592, referred to
the Senate Education Committee, discharged and committed to the Senate
Higher Education Committee, and then reported and committed to the
Senate Finance Committee. No further action was taken.

EFFECTIVE DATE:

This bill would take effect on the one hundred twentieth day after it
shall have become a law; provided that subparagraph (iii) of paragraph b
of subdivision 4 of section 5001 of the Education Law, which relates to
candidacy status, would expire and be deemed repealed three years after
such effective date; and provided further, however, that effective imme-
diately, the Commissioner of Education would be authorized and directed
to promulgate any rules or regulations deemed necessary to implement the
provisions of this act on such effective date.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4268

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             March 25, 2011
                               ___________

Introduced by Sen. LAVALLE -- (at request of the State Education Depart-
  ment)  --  read  twice  and  ordered  printed,  and when printed to be
  committed to the Committee on Higher Education

AN ACT to amend the education law,  in  relation  to  the  licensure  of
  private  proprietary  schools; and providing for the repeal of certain
  provisions upon the expiration thereof

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. The article heading of article 101 of the education law is
amended to read as follows:
                       LICENSED PRIVATE [TRADE AND
              CORRESPONDENCE] CAREER SCHOOLS AND CERTIFIED
                  ENGLISH AS A SECOND LANGUAGE SCHOOLS
  S 2. Legislative intent. The Legislature  hereby  finds  and  declares
that  there  is  a  growing need to protect students enrolled in certain
non-degree granting proprietary schools from inadequate job training and
school closure, which disrupts the academic progress of  these  students
and jeopardizes their tuition funds. Given the growing needs and demands
of  business and industry, the Legislature further finds and declares it
necessary to align the state education department's current oversight of
these schools with these significantly increasing needs. The Legislature
finds it necessary for the department to review these  schools'  curric-
ulums  and instruction to help ensure students receive adequate training
to obtain employment and to successfully perform their occupation in the
workplace. It also finds it necessary for the department to intervene in
certain school closures where teach out plans  may  not  be  efficiently
implemented and students may not complete training.
  The  Legislature  also finds it necessary for the department to review
these schools for financial viability to prevent school  closure,  which
will,  in  turn,  preserve  tuition  funds and federal and state funding
sources. This act is also necessary to increase the  accountability  and

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08579-02-1

S. 4268                             2

transparency of these schools by allowing students to check on whether a
school is approved or whether a teacher at such school is licensed.
  The  Legislature  intends  for  this act to increase competition among
these schools, which will, in turn,  improve  the  quality  of  training
offered  at  these schools and the quality of student performance in the
workplace.  This act will provide the  department  with  the  tools  and
resources  necessary  to effectively supervise these schools for compli-
ance and to reimburse students for tuition and other related costs  when
these  schools  close  as  a  result of fiscal failure or noncompliance,
which will overall strengthen student protection.
  S 3. Section 5001 of the education law, as added by chapter 817 of the
laws of 1972, the section heading, subdivision 1, paragraph h of  subdi-
vision  2  and paragraph b of subdivision 4 as amended and paragraphs i,
j, k, l and m of subdivision 2 and subdivisions 2-a and 2-b as added  by
chapter 434 of the laws of 1999, paragraph b of subdivision 2 as amended
and subdivisions 5, 6, 7, 8 and 9 as added by chapter 887 of the laws of
1990,  paragraph  d of subdivision 2 and subdivision 4 as amended, para-
graphs a, b, c and d of subdivision 9 as added and subdivisions 5, 6, 7,
8 and 9 as renumbered by chapter 604 of the laws of 1993, paragraph e of
subdivision 2 as amended by chapter 439 of the laws of 1980,  and  para-
graph  f  of subdivision 2 as amended by chapter 13 of the laws of 2010,
is amended to read as follows:
  S 5001. Licensed  private  CAREER  schools  [and  registered  business
schools/computer   training  facilities].  1.  Schools  required  to  be
licensed [or registered]. No private school [or computer training facil-
ity] which charges tuition or fees  [for]  RELATED  TO  instruction  and
which  is  not  exempted  hereunder  shall  be operated by any person or
persons, firm, corporation, or private organization for the  purpose  of
teaching  or giving instruction in any subject or subjects, unless it is
licensed [or registered] by the department. As used  in  this  article[,
the following terms shall have the following meanings]:
  a.  ["Licensed]  "LICENSED private CAREER school" OR "LICENSED PRIVATE
SCHOOL" shall mean any entity offering to instruct or teach any  subject
by  any  plan  or method including written, visual or audio-visual meth-
ods[.], AND SHALL INCLUDE ANY INSTITUTION LICENSED OR  REGISTERED  AS  A
REGISTERED  BUSINESS  SCHOOL OR COMPUTER TRAINING FACILITY ON THE EFFEC-
TIVE DATE OF THE CHAPTER OF  THE  LAWS  OF  TWO  THOUSAND  ELEVEN  WHICH
AMENDED  THIS SUBDIVISION. FOLLOWING SUCH EFFECTIVE DATE, THERE SHALL BE
NO DISTINCTION BETWEEN INSTITUTIONS PREVIOUSLY  DEFINED  AS  "REGISTERED
BUSINESS  SCHOOLS"  OR "COMPUTER TRAINING FACILITIES" AND OTHER LICENSED
PRIVATE SCHOOLS, AND ANY REFERENCE  IN  LAW  TO  A  REGISTERED  BUSINESS
SCHOOL  OR  COMPUTER  TRAINING FACILITY SHALL BE DEEMED A REFERENCE TO A
LICENSED PRIVATE CAREER SCHOOL. INSTITUTIONS HOLDING  A  VALID  BUSINESS
SCHOOL  REGISTRATION ON SUCH EFFECTIVE DATE, INCLUDING COMPUTER-TRAINING
FACILITIES, SHALL HAVE SUCH REGISTRATIONS REPLACED BY THE  COMMISSIONER,
AT NO COST, WITH LICENSES VALID UNTIL THE EXPIRATION DATE LISTED ON SUCH
PREVIOUS REGISTRATION; AND
  b.  ["Registered  business  school"  shall  mean  a  school in which a
curriculum primarily provides a sequence of  courses  that  may  include
accounting or bookkeeping, marketing, business arithmetic, business law,
business     English,     shorthand,     typing,    computer    business
applications/programming, or substantially all  said  courses,  for  the
purpose  of  preparing  an  individual  to pursue a business occupation;
provided, however, that a registered business school program may include
instruction in English as a second language  at  a  beginning  or  basic
level,  provided  such  instruction shall not constitute more than fifty

S. 4268                             3

percent of such program. Such authorization shall apply to all  students
who  commence  instruction in a registered business school program prior
to July first, nineteen hundred ninety-one. A business school registered
under  this  section  shall employ only teachers licensed by the depart-
ment,  whose  qualifications  are  substantially  equivalent  to   those
required of teachers of equivalent subjects in public secondary schools.
  c.  "Computer  training  facility"  shall  mean  any  entity primarily
engaged in providing training on the use, language,  programs,  applica-
tion,  networking  and technical repair of computers] "CERTIFIED ENGLISH
AS A SECOND LANGUAGE SCHOOL" OR "CERTIFIED  ESL  SCHOOL"  SHALL  MEAN  A
LANGUAGE  SCHOOL  CONDUCTED  FOR-PROFIT  WHICH  PROVIDES  INSTRUCTION IN
ENGLISH AS A SECOND LANGUAGE AND WHICH ACCEPTS NO PUBLIC  FUNDS  AND  IS
CERTIFIED PURSUANT TO PARAGRAPH F OF SUBDIVISION FOUR OF THIS SECTION.
  2. Exempt schools. The following schools are exempted from the licens-
ing requirement of this section:
  a. institutions authorized to confer degrees in this state;
  b.  schools[, other than correspondence schools,] providing kindergar-
ten,  nursery,  elementary  or  secondary  education,   except   schools
conducted  for  profit  which provide instruction in English as a second
language or preparation for  high  school  equivalency  examinations  to
out-of-school youth or adults;
  c. schools operated by governmental agencies or authorities;
  d. schools which engage exclusively in training of students with disa-
bilities as defined in section forty-four hundred one of this chapter;
  e.  schools  conducted on a not-for-profit basis by firms or organiza-
tions for the training of their own employees only, provided  that  such
instruction is offered at no charge to such employees, or by a fraternal
society or benevolent order for its members or their immediate relatives
only;
  f.  schools  which provide instruction in the following subjects only:
religion, dancing, music, painting, drawing, sculpture, poetry, dramatic
art, languages, reading comprehension,  mathematics,  recreation,  yoga,
martial  arts, PILATES and athletics, including the training of students
to teach such subjects, PROVIDED, HOWEVER, THAT  SCHOOLS  CONDUCTED  FOR
THE  PURPOSE  OF  TRAINING PERSONAL TRAINERS SHALL BE EXCLUDED FROM THIS
EXEMPTION AND SHALL BE REQUIRED TO OBTAIN LICENSURE;
  g. schools in which the course of instruction is licensed,  registered
or  approved  under  any  other  section of this chapter or by any other
department or agency of the state;
  h. schools which provide instruction designed solely for giving flight
training and/or related ground school instruction;
  i. schools in which instruction designed solely to prepare  applicants
for admission to professional licensing examinations administered by the
department  pursuant  to title eight of this chapter, and applicants for
examination for admission to the practice of law;
  j. schools which offer continuing education  courses  exclusively  for
individuals  licensed  by the department pursuant to title eight of this
chapter and for individuals admitted to the practice of law;
  k. schools which provide instruction given exclusively to employees of
a person or organization which has contracted  with  another  person  or
organization to provide such instruction at no cost to the employees;
  l. conferences, trade shows, workshops, seminars, institutes or cours-
es  of  study  offered  and  sponsored either jointly or individually by
recognized trade, business or professional organizations for the benefit
of their membership; [or those offered to the general public by individ-
uals, firms or organizations which neither conduct such activities for a

S. 4268                             4

duration of more than five consecutive days  nor  more  frequently  than
twice in any one calendar year;]
  m. SCHOOLS THAT LIMIT THEIR TOTAL CONFERENCES, TRADE SHOWS, WORKSHOPS,
SEMINARS,  INSTITUTES OR OTHER COURSE OFFERINGS TO NO MORE THAN TWICE IN
ONE CALENDAR YEAR WITH EACH OF THOSE OFFERINGS FOR  NO  MORE  THAN  FIVE
DAYS;
  N.  schools  which provide instruction exclusively to persons employed
full-time or part-time in  the  field  in  which  instruction  is  being
offered,  where the instruction is provided to meet continuing education
standards required for professional licensure as defined by law in  this
state; AND
  O.  SCHOOLS IN CANDIDACY STATUS PURSUANT TO SUBPARAGRAPH (IV) OF PARA-
GRAPH B OF SUBDIVISION FOUR OF THIS SECTION.
  2-a. Schools exempted pursuant to subdivision two of this section  may
waive  such  exemption  and  apply  for  a  license  [or  registration];
provided, however, that the review of such applications shall be left to
the discretion of the commissioner.
  2-b. Programs offered by licensed private CAREER  schools  [or  regis-
tered  business  schools to private businesses where there is no tuition
liability] TO EMPLOYEES OF A PERSON OR ORGANIZATION WHICH HAS CONTRACTED
WITH ANOTHER PERSON OR ORGANIZATION TO PROVIDE SUCH  INSTRUCTION  AT  NO
COST  to  the  employees  shall  be exempt from the requirements of this
article, provided that the following requirements are met:
  a. Only employees of the [private business]  EMPLOYER  for  which  the
program is being offered may enroll in classes that make up the program.
  b. Certificates or diplomas awarded to students in the program may not
reference in any way the department.
  c. Prior to the commencement of the program, such schools shall submit
to  the  department  a  disclosure form, prescribed by the commissioner,
copies of which shall  be  provided  to  all  students  in  such  exempt
program,  which shall include but not be limited to the following infor-
mation:
  (i) a description of the location and time period in which the program
will be offered;
  (ii) a statement that the students enrolled in the program  shall  not
be  subject  to  any  tuition  liability  for  the program, even if such
students do not complete the program;
  (iii) a statement that the program  being  provided  to  the  [private
business]  EMPLOYER  has  not been approved by the department and is not
under the department's jurisdiction and that the students in the program
have been advised of the fact; and
  (iv) the signatures of the school director or owner of the school  and
the  representative  of  the  [private  business] EMPLOYER for which the
program is being offered certifying the accuracy of  the  statements  on
the form.
  d.  Any  additional student openings in a program deemed exempt by the
department may be made available to students  not  affiliated  with  the
[private  business] EMPLOYER on the condition that such students execute
a disclosure form as prescribed in paragraph c of this subdivision. Such
admitted students shall only constitute up to ten percent of the  exempt
program's total capacity.
  4.  Application, renewal application and application fees. a. Applica-
tion and renewal application for a license as a  private  CAREER  school
[or  registration  as  a  business  school] required by the commissioner
shall be filed on forms  prescribed  and  provided  by  the  department.
Except as provided in subparagraph (iii) of paragraph e of this subdivi-

S. 4268                             5

sion, each renewal application for [a private business school registered
pursuant to this section or for] a private CAREER school licensed pursu-
ant to this section shall include an audited financial statement audited
according  to  generally  accepted  auditing standards by an independent
certified public accountant or  an  independent  public  accountant  and
statistical reports certified by the owner or operator of the school, as
required  by  the commissioner; provided, however, that the commissioner
shall accept a copy of a current financial statement previously filed by
a school with any other  governmental  agency  in  compliance  with  the
provisions of any federal or state laws, or rules or regulations if such
statement  contains  all of the information required under this subdivi-
sion and conforms to this subdivision's requirements of auditing, review
and certification. Any required audit of the financial  statement  shall
be  a  condition of licensure [or registration] and shall be paid for by
the school, and the results of the  audit  shall  be  forwarded  to  the
commissioner.  Applications  not  accompanied  by the audits and reports
required pursuant to  this  subdivision  shall  not  be  considered  for
approval  by the commissioner. Initial applications shall be accompanied
by financial reports as required by the commissioner. [The  commissioner
shall act on an initial application for a license or registration within
one  hundred  twenty  days  of  receipt  of a complete application.] The
applicant shall receive a written approval or denial together  with  the
reasons for a denial of such application.
  b.  (i)  An  initial  license [or registration] issued pursuant to the
provisions of this article shall be valid for a period of two  years.  A
renewal  of  license [or registration] issued pursuant to the provisions
of this article shall be valid for a period of four years. [All  license
and  registration  fees for a renewal shall be double the amounts listed
in paragraph g of this subdivision.]
  (ii) EVERY APPLICANT AND RENEWAL APPLICANT SHALL PAY TO THE DEPARTMENT
A NONREFUNDABLE, NONTRANSFERABLE APPLICATION FEE. THE  INITIAL  APPLICA-
TION  FEE FOR NEW SCHOOLS SHALL BE FIVE THOUSAND DOLLARS, OF WHICH THREE
THOUSAND DOLLARS SHALL ACCRUE TO THE CREDIT  OF  THE  PROPRIETARY  VOCA-
TIONAL  SCHOOL SUPERVISION ACCOUNT AND TWO THOUSAND DOLLARS SHALL ACCRUE
TO THE TUITION REIMBURSEMENT ACCOUNT. FOR ADDITIONAL LICENSED  LOCATIONS
OF  CURRENTLY  OPERATING SCHOOLS, THE APPLICATION FEE SHALL BE TWO THOU-
SAND FIVE HUNDRED DOLLARS, WHICH SHALL  ACCRUE  TO  THE  CREDIT  OF  THE
PROPRIETARY  VOCATIONAL SCHOOL SUPERVISION ACCOUNT. FOR RENEWAL APPLICA-
TIONS, THE FEE SHALL BE BASED ON GROSS ANNUAL TUITION INCOME  AS  DETER-
MINED BY THE ANNUAL FINANCIAL STATEMENTS REQUIRED IN PARAGRAPH A OF THIS
SUBDIVISION  FOR  THE  MOST  RECENT SCHOOL FISCAL YEAR, ACCORDING TO THE
FOLLOWING SCHEDULE:

     GROSS ANNUAL TUITION INCOME           FEE

     0-$199,999                            $   750.00
     $200,000-$499,999                     $ 1,500.00
     $500,000-$999,999                     $ 2,225.00
     $1,000,000-$4,999,999                 $ 4,500.00
     $5,000,000-$9,999,999                 $ 9,000.00
     $10,000,000 OR ABOVE                  $18,000.00

  SUCH RENEWAL FEES SHALL ACCRUE TO THE CREDIT OF THE PROPRIETARY  VOCA-
TIONAL  SCHOOL  SUPERVISION  ACCOUNT.  IF THE EVALUATION OF A PARTICULAR
COURSE OR FACILITY REQUIRES THE SERVICES OF AN EXPERT  NOT  EMPLOYED  BY

S. 4268                             6

THE  DEPARTMENT,  THE DEPARTMENT SHALL RETAIN SUCH EXPERT AND THE SCHOOL
SHALL REIMBURSE THE DEPARTMENT FOR THE REASONABLE COST OF SUCH SERVICES.
  (III)  Each school shall display, near the entrance to the school [and
under glass], the license [or registration] which has been issued to it.
Such authorization shall be displayed only  during  the  period  of  its
validity.
  (IV)  A  SCHOOL  WHICH HAS APPLIED FOR A PRIVATE CAREER SCHOOL LICENSE
MAY REQUEST CANDIDACY STATUS FOR ONE TIME ONLY. CANDIDACY  STATUS  SHALL
NOT  BE  ISSUED  TO  SCHOOLS OFFERING PROGRAMS TO TRAIN STUDENTS TO PASS
LICENSURE EXAMINATIONS SUCH AS  APPEARANCE  ENHANCEMENT  TESTS,  ACHIEVE
NURSE  AIDE OR NURSE ASSISTANT CERTIFICATION, OR PASS EXAMINATIONS LEAD-
ING TO LICENSURE IN ANY OTHER PROFESSION OR OCCUPATION DETERMINED BY THE
COMMISSIONER TO REQUIRE FULL LICENSURE STATUS.   CANDIDACY STATUS  SHALL
ALLOW  A  SCHOOL  TO  OPERATE UNLICENSED FOR AN INITIAL PERIOD OF TWELVE
MONTHS DURING THE LICENSURE APPLICATION PROCESS, WHICH MAY  BE  EXTENDED
TO A MAXIMUM, NON-RENEWABLE PERIOD OF EIGHTEEN MONTHS, UNDER THE FOLLOW-
ING CONDITIONS:
  (1) THE PROSPECTIVE SCHOOL SUBMITS A CANDIDATE SCHOOL APPLICATION FEE,
SEPARATE FROM THE SCHOOL APPLICATION FEE, OF FIVE THOUSAND DOLLARS WHICH
SHALL  ACCRUE  TO THE CREDIT OF THE PROPRIETARY VOCATIONAL SCHOOL SUPER-
VISION ACCOUNT;
  (2) THE SCHOOL SHALL NOT REPRESENT THAT IT IS  LICENSED  OR  THAT  ITS
PROGRAMS ARE APPROVED THROUGH THE DEPARTMENT;
  (3)  TO  EVERY  PROSPECTIVE  STUDENT,  THE  SCHOOL SHALL DISSEMINATE A
STATEMENT, PROVIDED BY THE DEPARTMENT, THAT THE FACILITIES, INSTRUCTORS,
AND PROGRAMS BEING PROVIDED HAVE NOT BEEN APPROVED AND ARE NOT UNDER THE
DEPARTMENT'S JURISDICTION DURING THE CANDIDACY  PERIOD.  SUCH  STATEMENT
SHALL  INDICATE  THAT STUDENTS ATTENDING CANDIDATE SCHOOLS SHALL HAVE NO
RECOURSE THROUGH THE DEPARTMENT'S STUDENT COMPLAINT PROCESS NOR HAVE ANY
RESTITUTION AVAILABLE FROM THE TUITION REIMBURSEMENT  ACCOUNT.  STUDENTS
SHALL  SIGN  AN ATTESTATION TO THE RECEIPT OF THIS STATEMENT. THE SCHOOL
SHALL RETAIN THE SIGNED ATTESTATION AND PROVIDE THE STUDENT WITH A  COPY
OF SUCH SIGNED STATEMENT;
  (4)  THE  SCHOOL  SHALL  DEMONSTRATE FINANCIAL VIABILITY THROUGH MEANS
DEEMED APPROPRIATE BY THE COMMISSIONER. SUCH MEANS MAY  INCLUDE  SUBMIT-
TING AN AUDITED FINANCIAL STATEMENT BASED ON THE MOST RECENTLY COMPLETED
FISCAL YEAR; SECURING AND MAINTAINING A PERFORMANCE BOND, PAYABLE TO THE
COMMISSIONER, IN AN AMOUNT APPROPRIATE TO ELIMINATE ANY LIABILITY TO THE
TUITION  REIMBURSEMENT ACCOUNT IN THE EVENT THE SCHOOL CEASES OPERATION;
LIMITING THE COLLECTION OF TUITION FUNDS UNTIL  EACH  STUDENT  COMPLETES
THE PROGRAM OF STUDY; OR OTHER MEANS ACCEPTABLE TO THE COMMISSIONER; AND
  (5) ANY BREACH OF THE ABOVE CONDITIONS SHALL RESULT IN THE DISAPPROVAL
OF  THE  SCHOOL'S  LICENSURE APPLICATION AND THE FORFEITURE OF CANDIDATE
STATUS. CONTINUED OPERATION AFTER THIS  DISAPPROVAL  SHALL  SUBJECT  THE
SCHOOL TO THE DISCIPLINARY ACTION PRESCRIBED UNDER PARAGRAPH B OF SUBDI-
VISION SIX OF SECTION FIVE THOUSAND THREE OF THIS ARTICLE.
  (6)  ON OR BEFORE THE END OF THE INITIAL TWELVE-MONTH PERIOD OF CANDI-
DACY STATUS, THE COMMISSIONER SHALL REVIEW THE SCHOOL'S APPLICATION  FOR
LICENSURE  AND  DOCUMENTATION  RELATING TO THE SCHOOL'S CANDIDACY STATUS
AND SHALL DETERMINE WHETHER SUCH CANDIDACY STATUS SHOULD BE EXTENDED  TO
THE  FULL  EIGHTEEN MONTHS AND WHETHER THE SCHOOL MAY CONTINUE TO ENROLL
STUDENTS BEYOND THE EIGHTEEN-MONTH PERIOD OR  THE  SCHOOL'S  APPLICATION
FOR LICENSURE WILL BE INITIALLY DISAPPROVED FOR FAILURE TO MEET REQUIRED
STANDARDS.
  c.  An  application for renewal of any license [or registration] shall
be submitted at least one hundred twenty days prior  to  the  expiration

S. 4268                             7

date  of  the current authorization to operate accompanied by the nonre-
fundable application fee and  such  certified  statistical  reports  and
annual financial statements required pursuant to this subdivision.
  d.  When  complete and timely application has been made for renewal of
any license [or  registration],  the  school  shall  receive  a  written
approval  or  denial,  together  with the reasons for denial of renewal,
from the commissioner no less than thirty days prior to  the  date  such
license [or registration] expires.
  e.  Financial statements and statistical reports. (i) Licensed private
CAREER schools and [registered business] CANDIDATE schools shall  submit
such  certified  statistical  reports and annual financial statements as
required by the  commissioner.  The  commissioner  may  require  audited
statistical  reports  upon  a  determination  that a school has provided
false or inaccurate certified statistical reports. The financial  state-
ments  shall  be  based  on the fiscal year of the school and shall also
include an itemized account of tuition refunds due and owing to past  or
presently  enrolled students. Statistical reports shall include, but not
be limited to, enrollment, completion and placement  data.  The  commis-
sioner  shall  use  such  financial  statements  and statistical reports
submitted for the purposes of licensure [and registration]  of  schools,
establishing  fees or assessments pursuant to this article and determin-
ing standards pursuant to paragraph b of  subdivision  five  of  section
five thousand two of this article. The attorney general, the comptroller
and  the  president  of  the higher education services corporation shall
have access to this information when it is necessary  to  perform  their
duties as required by state law.
  (ii)  Any  school which received [in excess of two hundred fifty] FIVE
HUNDRED thousand dollars OR MORE in gross tuition  in  a  school  fiscal
year  shall  be required to submit TO THE COMMISSIONER an annual audited
financial statement [to the commissioner] PREPARED  IN  ACCORDANCE  WITH
GENERALLY  ACCEPTED ACCOUNTING PRINCIPLES for that fiscal year. In addi-
tion, any school which has a gross tuition of [two hundred  fifty]  LESS
THAN FIVE HUNDRED thousand dollars [or less] in a school fiscal year but
whose  combined  state  and  federal  student financial aid in such year
[exceeds] EQUALS one hundred thousand dollars OR MORE shall also  submit
an  annual  audited  financial  statement  to  the commissioner for that
fiscal year.
  (iii) Schools whose gross tuition is [two  hundred  fifty]  LESS  THAN
FIVE  HUNDRED  thousand  dollars  [or  less] in a school fiscal year and
which receive less than one hundred thousand dollars in state and feder-
al student financial aid in a school fiscal year  shall  file  with  the
commissioner  an unaudited financial statement in a format prescribed by
the commissioner, provided, however, that any such  school  [with  gross
tuition  in  excess  of fifty thousand dollars shall have filed at least
one audited financial statement after the first year of  its  operation.
The  statement shall be signed by the president or chief executive offi-
cer and the chief fiscal officer of the school who  shall  certify  that
the  statements  are  true and accurate] SHALL FILE AN AUDITED FINANCIAL
STATEMENT THE FISCAL  YEAR  AFTER  A  REVIEWED  FINANCIAL  STATEMENT  IS
SUBMITTED.  FOR  SUCH SCHOOLS, AUDITED FINANCIAL STATEMENTS ARE REQUIRED
EVERY TWO YEARS, AT MINIMUM, WITH REVIEWED FINANCIAL STATEMENTS  ALLOWED
DURING THE ALTERNATE YEAR. Upon a determination by the commissioner that
a  school has submitted false or inaccurate statements or that a signif-
icant, unsubstantiated  decline  in  gross  tuition  has  occurred,  the
commissioner  may  require  any such school to file an audited financial

S. 4268                             8

statement pursuant to this paragraph EVEN DURING  ALTERNATE  YEARS  WHEN
REVIEWED STATEMENTS WOULD ORDINARILY BE ALLOWED.
  f.  Alternate  licensing provision. The commissioner shall issue regu-
lations which define alternate licensing OR  CERTIFICATION  requirements
for the following:
  (1)  correspondence schools in which all approved programs and courses
are under three hundred hours;
  (2) schools which are eligible for exemption under  this  section  but
which elect to be licensed;
  (3) non-profit schools exempt from taxation under section 501(c)(3) of
the  internal  revenue  code  whose programs are funded entirely through
donations from individuals or  philanthropic  organizations,  or  endow-
ments, and interest accrued thereon; and
  (4) language schools conducted for-profit which provide instruction in
English as a second language and which accept no public funds.
  [g.  Application  fee. Every applicant and renewal applicant shall pay
to the department a nonrefundable, nontransferable fee  based  on  gross
annual  tuition  income as determined by the annual financial statements
required in paragraph a of this subdivision for the most  recent  school
fiscal year, according to the following schedule:

     GROSS ANNUAL TUITION INCOME            FEE

     0-$199,999                             $ 250.00
     $200,000-$499,999                      $ 500.00
     $500,000-$999,999                      $ 750.00
     $1,000,000-$4,999,999                 $1,500.00
     $5,000,000-$9,999,999                 $3,000.00
     $10,000,000 or above                  $6,000.00

  Such  fees  shall  accrue  to the credit of the proprietary vocational
school supervision account. If the evaluation of a particular course  or
facility  requires the services of an expert not employed by the depart-
ment, the department shall retain such expert and the school shall reim-
burse the department for the reasonable cost of such services.]
  5. Required  disclosure  for  licensure.  a.  The  commissioner  shall
require that each applicant for a license for the operation of a private
[vocational  or  business] CAREER school disclose the following informa-
tion:
  (1) Whether the applicant, or any  corporation,  partnership,  associ-
ation or organization or person holding an ownership or control interest
in  such  school,  or any employee responsible in a supervisory capacity
for the administration of student funds or governmental funds, has  been
convicted of a crime defined in this article, or any other crime involv-
ing  the  operation  of  any  educational  or  training  program, or, in
connection with the operation of any such program, a crime involving the
unlawful acquisition, use, payment  or  expenditure  of  educational  or
training program funds; and
  (2)  Whether  the  applicant, or any corporation, partnership, associ-
ation or organization or person holding an ownership or control interest
in such school, or any employee responsible in  a  supervisory  capacity
for  the  administration of student funds or governmental funds has been
convicted:
  (A) in this state of any of the  following  felonies  defined  in  the
penal law: bribery involving public servants; commercial bribery; perju-
ry  in  the  second  degree;  rewarding official misconduct; larceny, in

S. 4268                             9

connection with the provision of services  or  involving  the  theft  of
governmental  funds;  offering a false instrument for filing, falsifying
business records; tampering with public records; criminal usury;  scheme
to defraud; or defrauding the government; or
  (B)  in  any  other  jurisdiction of an offense which is substantially
similar to any of the felonies defined in clause (A)  of  this  subpara-
graph  and  for  which a sentence to a term of imprisonment in excess of
one year was authorized and is authorized in this  state  regardless  of
whether such sentence was imposed; and
  (3)  Whether  the  applicant, or any corporation, partnership, associ-
ation or organization or person holding an ownership or control interest
in such school, or any employee responsible in  a  supervisory  capacity
for  the administration of student funds or governmental funds, has been
finally determined in any administrative or  civil  proceeding  to  have
committed  a violation of any provision of this article or any rules and
regulations promulgated pursuant thereto, or any related order or deter-
mination of the commissioner, or of any  similar  statute,  rule,  regu-
lation, order or determination of another jurisdiction pertaining to the
licensure and operation of any educational or training program; and
  (4)  Whether  any  school owned or operated by the applicant closed or
ceased operation and, if so, whether at the  time  of  the  closing  the
applicant  was  subject  to a pending disciplinary action, disallowance,
fine or other penalty and whether it  owed  refunds  to  any  government
agency or students.
  b.  No  application  for any license pursuant to this article shall be
denied by reason of disclosure  pursuant  to  this  subdivision  of  the
applicant,  or any corporation, partnership, association or organization
or person holding an ownership or control interest in  such  school,  or
any  employee  responsible  in  a  supervisory capacity for the adminis-
tration of student funds or governmental funds unless  the  commissioner
makes  a  written  determination  that  there  is  a direct relationship
between one or more of such previous offenses and the license sought, or
that issuance of the license would create an unreasonable risk to  prop-
erty  or  to the safety, education or welfare of specific individuals or
the general public. In making such determination, the commissioner shall
be guided by the factors set forth in section seven hundred  fifty-three
of  the  correction law. For purposes of this subdivision, "ownership or
control interest" means: with respect to a school that is  organized  as
or  owned by a corporation, a position as an officer or director of such
corporation; or, with respect to a school that is organized as or  owned
by  a partnership, a position as a partner; or any other interest total-
ing ten percent or more, whether direct or indirect, in the total equity
or assets of such school.
  c. The commissioner may deny, suspend, revoke or decline to renew  any
license:  (1)  if  the significance of the convictions or administrative
violations warrant such action [or]; (2) if the commissioner  determines
that  a school did not make any disclosure required by this subdivision;
OR (3) IF THE COMMISSIONER DETERMINES THAT A SCHOOL'S  FINANCIAL  CONDI-
TION MAY RESULT IN THE INTERRUPTION OR CESSATION OF INSTRUCTION OR JEOP-
ARDIZE STUDENT TUITION FUNDS.
  6.  If, during the [two year] period for which a license [or registra-
tion] is granted, the commissioner determines that a school's  financial
condition  may result in the interruption or cessation of instruction or
jeopardize student tuition funds, the commissioner may, upon  notice  to
the  school,  place the school on probation for a period of no more than
[thirty days] ONE YEAR, during which time the school and the  department

S. 4268                            10

must  make  efforts  to  resolve the problems at the school.  THE SCHOOL
SHALL SUBMIT A REPORT ON ITS FINANCIAL  CONDITION  TO  THE  COMMISSIONER
WITHIN  THE TIME PRESCRIBED BY THE COMMISSIONER. SUCH REPORT SHALL BE IN
THE  FORM  AND  SHALL INCLUDE CONTENT PRESCRIBED BY THE COMMISSIONER AND
SHALL BE REVIEWED BY THE COMMISSIONER TO DETERMINE THE  SCHOOL'S  FINAN-
CIAL  VIABILITY.  THE  COMMISSIONER  MAY  SUSPEND OR REVOKE THE SCHOOL'S
LICENSE, AS WELL AS REQUIRE THE CESSATION OF STUDENT ENROLLMENT, UPON  A
DETERMINATION THAT THE SCHOOL'S FINANCIAL CONDITION CONTINUES TO THREAT-
EN  ITS  ABILITY  TO  EDUCATE STUDENTS AND/OR THE STUDENT TUITION FUNDS.
ALTERNATIVES FOR THE SCHOOL TO DEMONSTRATE A  FISCALLY  SOUND  OPERATION
MAY  INCLUDE SECURING AND MAINTAINING A PERFORMANCE BOND, PAYABLE TO THE
COMMISSIONER, IN AN APPROPRIATE AMOUNT TO ELIMINATE ANY LIABILITY TO THE
TUITION REIMBURSEMENT ACCOUNT SHOULD THE SCHOOL CEASE OPERATION,  LIMIT-
ING  THE  COLLECTION  OF  TUITION FUNDS UNTIL EACH STUDENT COMPLETES THE
PROGRAM OF STUDY, OR OTHER MEANS ACCEPTABLE TO THE COMMISSIONER.  If  no
resolution  can be attained, a hearing, pursuant to subdivisions two and
three of section five thousand three of this article will be  scheduled.
Such  probation  may include additional monitoring, inspections, limita-
tions on enrollment, teaching out some or  all  of  a  school's  present
students or temporary cessation of instruction.
  7.  No  license  [or registration] granted under this section shall be
transferable or assignable without the  approval  of  the  commissioner.
[Any]  UPON  transfer or assignment of any interest totaling [ten] TWEN-
TY-FIVE percent or more, whether direct or indirect, in the total equity
or assets of a school, SUCH SCHOOL shall be deemed a [transfer  of  such
school's license or registration. The commissioner shall approve or deny
a transfer or assignment based on the requirements set forth in subdivi-
sions three and four of this section.  Such approval or denial, together
with  the  reasons  for  denial,  shall be transmitted in writing within
ninety days of the receipt of the complete application  by  the  commis-
sioner.  Upon  a showing of good cause as to why the applicant could not
obtain the commissioner's approval prior to a  transfer  or  assignment,
the  commissioner  shall  temporarily approve the transfer or assignment
for a period not to exceed forty-five days and for such additional peri-
ods as the commissioner may deem appropriate]  NEW  SCHOOL  REQUIRED  TO
SUBMIT  A  NEW  SCHOOL  APPLICATION AND OBTAIN A NEW LICENSE PURSUANT TO
THIS ARTICLE. PROVIDED, HOWEVER, THAT UPON SUCH A SUBSTANTIAL CHANGE  IN
INTEREST,  THE  PREVIOUS SCHOOL LICENSE SHALL REMAIN IN EFFECT UNTIL THE
NEW LICENSE IS ISSUED OR DENIED OR THE PREVIOUS LICENSE  EXPIRES  OR  IS
REVOKED, WHICHEVER OCCURS FIRST.
  8.  No  licensed [or registered] school shall discontinue operation or
surrender its license  [or  registration]  unless  thirty  days  written
notice  of  its  intention  to  do so and a plan for maintenance of safe
keeping of the records of the school is provided  to  the  commissioner.
However,  upon  good  cause shown, the commissioner may waive the thirty
days notice requirement.
  9. Annual supervision fund and tuition  reimbursement  [fund]  ACCOUNT
assessment.    a.  The  commissioner shall annually assess each school a
total percentage of that school's gross tuition pursuant to  subdivision
three of section five thousand two of this article, as determined by the
annual  [financial  statement  or  annual]  audited  financial statement
required by this article. This  assessment  shall  be  based  upon  each
school's  gross  tuition from the previous year, and shall be payable to
the commissioner in equal quarterly installments which shall be  due  on
June first, September first, December first and March first.

S. 4268                            11

  b. (i) [Beginning April first, nineteen hundred ninety-one, such] SUCH
annualized  assessment shall be one percent  FOR SCHOOLS WHICH HAVE PAID
LESS THAN SIXTEEN QUARTERS OF ASSESSMENTS, BUT  SUCH  ANNUAL  ASSESSMENT
SHALL NOT FALL BELOW FIVE HUNDRED DOLLARS.
  (ii)  [Beginning  July first, nineteen hundred ninety-four, such] SUCH
annualized assessment shall be [nine-tenths] EIGHT-TENTHS of one percent
FOR SCHOOLS WHICH HAVE PAID SIXTEEN OR MORE QUARTERS OF ASSESSMENTS, BUT
SUCH ANNUAL ASSESSMENT SHALL NOT FALL BELOW FIVE HUNDRED DOLLARS.
  [(iii) Beginning April first, nineteen  hundred  ninety-five,  and  in
each  succeeding  year, such annualized assessment shall be eight-tenths
of one percent.]
  c. (i) Of the total assessment provided for herein, FIVE-TENTHS OF ONE
PERCENT SHALL ACCRUE TO THE CREDIT OF THE TUITION REIMBURSEMENT  ACCOUNT
PURSUANT  TO  SECTION  FIVE  THOUSAND  SEVEN  OF  THIS ARTICLE FOR THOSE
SCHOOLS WHICH HAVE PAID LESS THAN SIXTEEN QUARTERS  OF  ASSESSMENTS.  OF
THE  TOTAL  ASSESSMENT  PROVIDED  FOR SCHOOLS WHICH HAVE PAID SIXTEEN OR
MORE QUARTERS OF ASSESSMENTS, three-tenths of one percent  shall  accrue
to  the  credit  of the tuition reimbursement [fund] ACCOUNT pursuant to
section five thousand seven of this article.   FOR  SCHOOLS  PAYING  THE
MINIMUM FIVE HUNDRED DOLLARS ANNUAL ASSESSMENT, NONE SHALL ACCRUE TO THE
TUITION REIMBURSEMENT ACCOUNT.
  (ii)  The balance of the total assessment provided for herein shall be
dedicated  to  fund  the  department's  supervision  and  regulation  of
licensed  private  schools [and registered business schools] pursuant to
an annual appropriation and an annual plan of  expenditure  prepared  by
the  commissioner and approved by the director of the budget. [Following
the close of each fiscal year, the commissioner,  in  consultation  with
the  director  of  the  budget,  shall  determine  if the balance in the
proprietary vocational school supervision  fund  for  such  fiscal  year
exceeded  the amount required for the support of the department's super-
visory activities taking into account projected  revenues  and  expendi-
tures  for  the  subsequent fiscal year. To the extent that a surplus is
identified, the commissioner, with the approval of the director  of  the
budget,  shall  direct  the  transfer  of  such  surplus  to the tuition
reimbursement fund.]
  d. Payments made within thirty days following the due  date  shall  be
subject  to  interest  at  one  percent above the prevailing prime rate.
Thereafter, late payments may result in suspension of licensure  by  the
commissioner.  Payments required by this subdivision shall be considered
a condition of licensure [or registration].
  S 4. Section 5002 of the education law, as added by chapter 887 of the
laws of 1990, subparagraph 3 of paragraph b and paragraph d of  subdivi-
sion 1, subparagraph 2 of paragraph g of subdivision 3 and subdivision 6
as  amended and paragraph c of subdivision 1 and paragraph d of subdivi-
sion 2 as added by chapter 604 of the  laws  of  1993,  paragraph  c  of
subdivision 2, paragraph a of subdivision 4 and subdivision 7 as amended
and  paragraph  e  of  subdivision 4 and paragraph c of subdivision 6 as
added by chapter 434 of the laws of 1999, paragraph f of  subdivision  4
as  added by chapter 457 of the laws of 2003 and subparagraph 2 of para-
graph b of subdivision 5 as amended by chapter 301 of the laws of  1996,
is amended to read as follows:
  S 5002. Standards  for licensed private CAREER schools [and registered
business schools]. Any  school  licensed  [or  registered]  pursuant  to
section  five  thousand  one  of  this  article  shall  be organized and
conducted only as a school and shall be subject to the  jurisdiction  of
the  department  exclusively,  or  in  conjunction with such other state

S. 4268                            12

agency or department or district attorney upon  which  jurisdiction  has
also  been conferred by law. Such schools shall be subject to and comply
with the provisions of this section.
  1.  Standards.  a.  No program of such schools shall be conducted in a
factory or commercial establishment, except where the use of  facilities
or  equipment  of  such factory or commercial establishment is permitted
for necessary or desirable educational purposes and objectives.
  b. For every such school, the commissioner shall set  forth  in  regu-
lation standards governing all of the following:
  (1) criteria for admission, which shall provide that students at least
possess a high school diploma or its equivalent or demonstrate the abil-
ity to benefit from the instruction, except that in the case of students
who  do  not  possess  a  high school diploma or its equivalent, certif-
ication of the students' ability to benefit from  instruction  shall  be
provided to the commissioner as provided in paragraph c of this subdivi-
sion;
  (2) the standards and the methods of instruction;
  (3)  the  equipment available for instruction with the maximum enroll-
ment that such equipment and physical plant will accommodate;
  (4) the qualifications  and  experience  of  teaching  and  management
personnel;
  (5)  the  form  and  content  of  the  student enrollment agreement or
contract, provided that such agreement or contract shall be  written  in
the same language as that principally used in the sales presentation;
  (6) the methods of collecting tuition;
  (7) eligibility criteria for programs that will require licensure;
  (8) the sufficiency and suitability of the resources available for the
support of such school; and
  (9) counseling provided to students.
  B-1.  (1)  STUDENT  LOANS  OR  OTHER FINANCIAL AID FUNDS RECEIVED FROM
FEDERAL, STATE, OR LOCAL GOVERNMENTS OR ADMINISTERED UNDER  THE  FEDERAL
STUDENT FINANCIAL ASSISTANCE PROGRAMS GOVERNED BY TITLE IV OF THE HIGHER
EDUCATION ACT OF NINETEEN HUNDRED SIXTY-FIVE, 20 U.S.C.  SECTION 1070 ET
SEQ.,  AS  AMENDED,  MUST  BE  COLLECTED  AND  APPLIED  IN THE MANNER AS
CONTROLLED BY THE APPLICABLE FEDERAL, STATE OR LOCAL REGULATIONS.
  (2) STUDENT LOANS OR OTHER FINANCIAL AID FUNDS RECEIVED  FROM  PRIVATE
ENTITIES, INCLUDING, BUT NOT LIMITED TO, BANKS, FINANCING COMPANIES, AND
OTHER  LENDING  SOURCES  MUST BE COLLECTED OR DISBURSED IN THE FOLLOWING
MANNER:
  (A) LOANS OR OTHER FINANCIAL AID PAYMENTS FOR AMOUNTS OF FIVE THOUSAND
DOLLARS OR LESS MAY BE DISBURSED AS A SINGLE DISBURSEMENT, REGARDLESS OF
COURSE LENGTH.
  (B) LOANS OR OTHER FINANCIAL AID PAYMENTS  FOR  AMOUNTS  GREATER  THAN
FIVE  THOUSAND DOLLARS THAT REFLECT A CLASS TERM OF LESS THAN SIX MONTHS
SHALL HAVE TWO EQUAL DISBURSEMENTS. THE DISBURSEMENT SCHEDULE  FOR  SUCH
LOANS  OR  PAYMENTS  SHALL BE AS FOLLOWS: ONE-HALF OF THE TUITION AMOUNT
RELEASED INITIALLY, AND  THE  REMAINDER  RELEASED  HALFWAY  THROUGH  THE
COURSE TERM.
  (C)  LOANS  OR  OTHER  FINANCIAL AID PAYMENTS FOR AMOUNTS GREATER THAN
FIVE THOUSAND DOLLARS THAT REFLECT A CLASS  TERM  OF  GREATER  THAN  SIX
MONTHS, BUT LESS THAN TWELVE MONTHS MUST HAVE THREE EQUAL DISBURSEMENTS.
THE  DISBURSEMENT  SCHEDULE  FOR  SUCH  LOANS  OR  PAYMENTS  SHALL BE AS
FOLLOWS:  ONE-THIRD OF THE TUITION AMOUNT RELEASED INITIALLY, THE SECOND
DISBURSEMENT SHALL BE RELEASED ONE-THIRD OF THE WAY THROUGH  THE  LENGTH
OF  THE  TRAINING,  AND  THE  REMAINDER  RELEASED  TWO-THIRDS OF THE WAY
THROUGH THE COURSE TERM.

S. 4268                            13

  (D) LOANS OF OTHER FINANCIAL AID PAYMENTS  FOR  AMOUNTS  GREATER  THAN
FIVE  THOUSAND  DOLLARS  THAT  REFLECT  A CLASS TERM GREATER THAN TWELVE
MONTHS SHALL HAVE FOUR EQUAL DISBURSEMENTS.  THE  DISBURSEMENT  SCHEDULE
FOR  SUCH  LOANS  OR  PAYMENTS  SHALL  BE AS FOLLOWS: ONE-QUARTER OF THE
TUITION  AMOUNT  RELEASED  INITIALLY,  THE  SECOND DISBURSEMENT SHALL BE
RELEASED ONE QUARTER OF THE WAY THROUGH THE LENGTH OF THE TRAINING;  THE
THIRD  DISBURSEMENT  SHALL BE RELEASED HALFWAY THROUGH THE LENGTH OF THE
TRAINING, AND THE REMAINDER SHALL BE RELEASED THREE-QUARTERS OF THE  WAY
THROUGH THE TRAINING.
  (3) NO SCHOOL MAY ENTER INTO ANY CONTRACT OR AGREEMENT WITH OR RECEIVE
ANY  STUDENTS LOAN OR FINANCIAL AID FUNDS FROM PRIVATE ENTITIES, INCLUD-
ING, BUT NOT LIMITED TO,  BANKS,  FINANCING  COMPANIES,  AND  ANY  OTHER
PRIVATE  LENDING  SOURCES  UNLESS  THE PRIVATE ENTITY HAS A DISBURSEMENT
POLICY THAT, AT A MINIMUM, MEETS THE REQUIREMENTS OF SUBPARAGRAPH TWO OF
THIS PARAGRAPH.
  (4) THE TERM PRIVATE ENTITY REFERENCED IN SUBPARAGRAPHS TWO AND  THREE
OF  THIS  PARAGRAPH SHALL NOT BE CONSTRUED TO INCLUDE A FRIEND OR FAMILY
MEMBER OF THE STUDENT WHO IS NOT IN THE ROUTINE  BUSINESS  OF  PROVIDING
STUDENT  LOANS  OR  FINANCIAL AID FUNDS. THE PROVISION OF SUCH A LOAN OR
FUND BY A PRIVATE ENTITY SHALL ALSO  NOT  INCLUDE  THE  PAYMENT  OF  THE
STUDENT'S TUITION OR FEES BY USE OF A CREDIT CARD.
  c. Notwithstanding any other provisions of this article to the contra-
ry, the commissioner shall define alternative educational and curriculum
standards  for any program of less than forty hours designed exclusively
for non-occupational, personal enrichment purposes.
  d. Admission of students under the ability to benefit provision.
  (1) Certification. Each school admitting students who do  not  possess
at  least  a  high school diploma or its equivalent shall certify to the
satisfaction of the commissioner that  such  prospective  students  have
been  administered  and passed an examination which has been approved by
the commissioner to determine their ability to benefit from  the  chosen
curriculum prior to admission to the curriculum or course of study. Such
examination  shall,  whenever  possible, be a nationally recognized test
appropriate for the course of instruction which has been approved by the
commissioner. The examination results of each such student who is admit-
ted shall be made available to the commissioner at a time prescribed  by
the commissioner and, together with the student's original answer sheet,
shall be maintained by the school in the student's permanent record. For
any  student  failing to achieve the necessary score on such examination
for enrollment, the school shall be required  to  provide  such  student
with  a  listing of appropriate counseling and educational opportunities
available to the student at no cost, as determined by the  commissioner.
WHERE  APPROPRIATE,  THE  COMMISSIONER  MAY  ACCEPT  SUCH OTHER ENTRANCE
REQUIREMENT DOCUMENTATION SUCH AS PREREQUISITE COURSEWORK,  PROFESSIONAL
OR  VENDOR  CERTIFICATIONS,  PERSONAL INTERVIEWS, AND/OR ATTESTATIONS OF
EQUIVALENT KNOWLEDGE IN LIEU OF THE EXAMINATION REQUIREMENT.
  (2) Counseling. Each school [admitting] OFFERING CURRICULA WHICH ADMIT
students who do not possess a high  school  diploma  or  its  equivalent
shall  develop  a  plan to be approved by the commissioner for the coun-
seling of such students on an individual basis on matters including  but
not  limited to the student's ability to progress in the curriculum, the
student's financial aid rights and responsibilities, the availability of
programs to earn a high school equivalency diploma,  including  programs
provided at no cost to the student, and the potential of the training to
prepare  the  student  for available employment opportunities within the
region.

S. 4268                            14

  (3) Compliance. (A) The commissioner  shall  monitor  compliance  with
this  paragraph  and  verify  the examination and counseling process and
student examination scores. Such  procedures  may  include  but  not  be
limited  to an annual, statistically significant, random sampling of the
examinations  taken by prospective students of each school administering
such examinations.
  (B) [Such procedures shall  provide  that  the  examinations  of  each
school be inspected on site at least once annually.
  (C)]  In the event that the commissioner determines that the school is
out of compliance with  the  examination  process  and  counseling,  the
commissioner shall require that examinations and counseling for students
admitted  under  the  ability  to  benefit  provision and the counseling
required by subparagraph two of this  paragraph  be  conducted  off  the
premises  of  the  school  by an entity approved by the commissioner for
such period of time as the commissioner deems appropriate, the  cost  of
which shall be incurred by the school.
  2.  Inspections.  a.  Every  school  licensed pursuant to this article
shall maintain adequate and accurate records for a period  of  not  less
than  [six]  SEVEN  years at its principal place of business within this
state. Such records shall be maintained in a manner and form  prescribed
by  the  commissioner  and shall be made available to the department and
the higher education services corporation upon request.
  b. In addition to other requirements in this article, the  information
to be made a part of the record shall include, but not be limited to:
  (1) names and addresses of each enrolled student;
  (2) the course of study offered by the institution;
  (3) the name and address of its faculty, together with a record of the
educational qualifications of each;
  (4) the graduation date of each student; and
  (5)  for  each  student  who fails to complete his or her program, the
student's last date of attendance and, if applicable, the amount of  any
refund paid to, or on behalf of, the student and the date the refund was
made.
  c.  The commissioner shall conduct periodic unscheduled inspections of
licensed private CAREER schools [and  registered  business  schools]  to
monitor  compliance  with the provisions of this article or the rules or
regulations promulgated thereunder or any final order or decision of the
commissioner made pursuant to this article. The department shall conduct
an inspection of each school at  least  once  every  [three  years.  The
department  shall annually inspect schools: (1) having a high percentage
of students admitted under ability to benefit criteria as determined  by
the  commissioner; (2) having a high student loan default rate as deter-
mined by the commissioner in a manner consistent with federal standards;
or (3) which are the subject of a high volume of complaints by  students
or  other  parties]  LICENSURE  PERIOD.  All  schools shall provide upon
request of the department, any  and  all  records  necessary  to  review
compliance with the provisions of this article.
  d.  Student  permanent  records,  as defined in the regulations of the
commissioner, shall be maintained for a period of twenty years.
  3. Tuition liability. a. The tuition charge for programs approved  for
participation  in  student financial aid general award programs pursuant
to articles thirteen and fourteen of this chapter shall  be  apportioned
on  the  basis of terms, quarters or semesters. For the purposes of this
section, the terms "term", "quarter" and "semester" shall be defined  in
regulations by the commissioner.

S. 4268                            15

  b.  The  tuition  refund  policy  for the first term or quarter of any
program at schools licensed [or registered]  pursuant  to  section  five
thousand one of this article shall be as follows:
  (1)  For  programs  which  are divided into quarters of up to fourteen
weeks, the school shall evenly divide the total  tuition  charges  among
the  number  of  quarters.  After instruction is begun in a school, if a
student withdraws or is discontinued, the  school  may  retain  no  more
than:
  (i) zero percent of the quarter's tuition if the termination is during
the first week of instruction; or
  (ii)  twenty-five  percent of the quarter's tuition if the termination
is during the second week of instruction; or
  (iii) fifty percent of the quarter's tuition  if  the  termination  is
during the third week of instruction; or
  (iv)  seventy-five percent of the quarter's tuition if the termination
is during the fourth week of instruction; or
  (v) one hundred percent of the quarter's tuition  if  the  termination
occurs after the fourth week of instruction.
  (2)  For programs organized by terms of fifteen, sixteen, seventeen or
eighteen weeks apiece, the school shall evenly divide the total  tuition
charges  among  the  number  of  terms.  After instruction is begun in a
school, if a student withdraws or is discontinued, the school may retain
no more than:
  (i) zero percent of the term's tuition if the  termination  is  during
the first week of instruction; or
  (ii) twenty percent of the term's tuition if the termination is during
the second week of instruction; or
  (iii)  thirty-five percent of the term's tuition if the termination is
during the third week of instruction; or
  (iv) fifty percent of the term's tuition if the termination is  during
the fourth week of instruction; or
  (v) seventy percent of the term's tuition if the termination is during
the fifth week of instruction; or
  (vi)  one  hundred  percent  of  the term's tuition if the termination
occurs after the completion of the fifth week of instruction.
  c. (1) The tuition refund policy for the second term or quarter of any
program at schools licensed [or registered]  pursuant  to  section  five
thousand one of this article shall be as follows:
  (A)  For  programs  which  are divided into quarters of up to fourteen
weeks, the school shall evenly divide the total  tuition  charges  among
the  number  of  quarters.  After instruction is begun in a school, if a
student withdraws or is discontinued, the  school  may  retain  no  more
than:
  (i) twenty-five percent of the quarter's tuition if the termination is
during the first week of instruction; or
  (ii)  fifty  percent  of  the  quarter's tuition if the termination is
during the second week of instruction; or
  (iii) seventy-five percent of the quarter's tuition if the termination
is during the third week of instruction; or [.]
  (iv) one hundred percent of the quarter's tuition if  the  termination
occurs after the third week of instruction.
  (B)  For programs organized by terms of fifteen, sixteen, seventeen or
eighteen weeks apiece, the school shall evenly divide the total  tuition
charges  among  the  number  of  terms.  After instruction is begun in a
school, if a student withdraws or is discontinued, the school may retain
no more than:

S. 4268                            16

  (i) twenty percent of the term's tuition if the termination is  during
the first week of instruction; or
  (ii)  thirty-five  percent of the term's tuition if the termination is
during the second week of instruction; or
  (iii) fifty percent of the term's tuition if the termination is during
the third week of instruction; or
  (iv) seventy percent of the  term's  tuition  if  the  termination  is
during the fourth week of instruction; or
  (v)  one  hundred  percent  of  the  term's tuition if the termination
occurs after the completion of the fourth week of instruction.
  (2) Notwithstanding the provisions of subparagraph one of  this  para-
graph, the tuition refund policy set forth in paragraph b of this subdi-
vision  shall  apply  unless  the  school demonstrates that there are no
significant educational  changes  in  the  educational  program  of  the
student, such changes as defined in regulations of the commissioner.
  d.  The tuition refund policy for the third and any subsequent term or
quarter of any program licensed [or registered] pursuant to section five
thousand one of this article shall be the policy set forth  in  subpara-
graph one of paragraph c of this subdivision.
  e. No program shall have a term in excess of eighteen weeks.
  f.  The amount of the refund shall be calculated based on the last day
of student attendance.
  g. (1) Any refund due to a student shall be paid by the school  within
forty-five  days  of  the  date  on which the student withdraws from the
program. For the purposes of this article, such date shall be the earli-
est of (i) the date on which the student gives  written  notice  to  the
school or (ii) the date on which the student is deemed to have withdrawn
pursuant to subparagraph two of this paragraph.
  (2)  If  a student has failed to attend classes for a period of thirty
calendar days, the school shall send by regular mail  a  notice  to  the
student  that  the  student  shall  be deemed to have withdrawn from the
program if the student does not notify the school to the contrary within
twelve days from the date on which the letter is sent.  If  the  student
fails  to  respond  within  such twelve-day period, the student shall be
deemed to have withdrawn and the school shall notify the  higher  educa-
tion services corporation that the student has withdrawn and the date of
the withdrawal.
  h.  SCHOOLS SHALL SUBMIT, FOR APPROVAL BY THE COMMISSIONER, THE SCHOOL
CATALOG WITH A WEEKLY TUITION LIABILITY  CHART  FOR  EACH  PROGRAM  THAT
INDICATES  THE  AMOUNT  OF  REFUND DUE THE STUDENT IN THE EVENT OF WITH-
DRAWAL.
  I. Upon payment of a refund to a lender, the  school  shall  forthwith
send  a  notice  to  a  person designated by the president of the higher
education services corporation upon a form  approved  by  the  president
that such refund was made.
  [i.]  J. If the higher education services corporation fails to receive
the notice required by paragraph [h] I of  this  subdivision,  it  shall
forthwith  notify  the  student  of his or her right to a refund and the
commissioner of such failure. Upon receipt  of  such  notification,  the
commissioner shall take appropriate action against the school.
  4.  Curriculum  approval.  a. An application AND FEE shall be made for
the initial approval of a curriculum or course and  shall  include  such
information  as  the  commissioner  may  require by regulation. Approval
shall be valid for a period not to exceed four years.   THE  APPLICATION
FEE  FOR  ANY CURRICULUM OF ONE HUNDRED CLOCK HOURS OR MORE SHALL BE TWO
HUNDRED FIFTY DOLLARS. THE APPLICATION FEE FOR ANY COURSE OF  LESS  THAN

S. 4268                            17

ONE  HUNDRED  CLOCK HOURS SHALL BE ONE HUNDRED DOLLARS. SUCH APPLICATION
FEES SHALL ACCRUE TO THE CREDIT OF  THE  PROPRIETARY  VOCATIONAL  SCHOOL
SUPERVISION ACCOUNT.
  b. In approving curriculum, the commissioner shall take into consider-
ation the following:
  (1)  that  the entrance requirements demonstrate that students possess
the skills, competencies and prerequisite knowledge needed  to  progress
in the curriculum;
  (2)  that  the content will enable the student to develop those skills
and competencies required for employment in the  occupational  area  for
which the curriculum was developed;
  (3)  that  the  school will utilize appropriate instructional methods;
[and]
  (4) that the instructional equipment used  within  the  curriculum  is
comparable  to  the  equipment currently used by business or industry in
the occupational area for which the curriculum was developed; AND
  (5) THAT A CURRICULUM MAY INCLUDE INSTRUCTION IN ENGLISH AS  A  SECOND
LANGUAGE  AT A BEGINNING OR BASIC LEVEL, PROVIDED SUCH INSTRUCTION SHALL
NOT CONSTITUTE MORE THAN FIFTY PERCENT OF SUCH PROGRAM.
  c. (1) If the evaluation of a particular course or  facility  requires
the services of an expert not employed by the department, the department
shall  retain such expert [and the school shall reimburse the department
for the reasonable cost of such services] AT  THE  SCHOOL'S  EXPENSE  IN
ADDITION  TO  THE  APPLICATION  FEES  PRESCRIBED  IN PARAGRAPH A OF THIS
SUBDIVISION.
  (2) If, in the interest of expediting the approvals, a school requests
the department to employ an outside consultant, the school shall  [reim-
burse  the department for] PAY the [reasonable] cost of such services IN
ADDITION TO THE APPLICATION FEES  PRESCRIBED  IN  PARAGRAPH  A  OF  THIS
SUBDIVISION.
  d. The commissioner shall act on applications for approval of a course
or  curriculum  within  one hundred twenty days of receipt of a complete
application and, in the case of a denial, shall set forth in writing the
reasons for such denial.
  e. Notwithstanding paragraphs b, c and d of this subdivision,  curric-
ulum  certified  by a nationally recognized vendor as defined in commis-
sioner's regulations shall be recognized by the department in lieu of an
expert evaluation when such curriculum is adopted by  a  school  in  the
original  format  provided by the vendor as long as the proposed curric-
ulum is a stand alone program and not part  of  a  larger  comprehensive
course.
  f.  Notwithstanding  any other provision of the law, a [not-for-profit
registered business] school[, that is eligible for participation in  the
tuition  assistance  program and] which has national accreditation, may,
for the purpose of calculation of federal financial  aid  amounts  only,
measure students' academic progress in an approved curriculum in non-de-
gree  granting  credit hours, based upon a national accrediting agency's
conversion and approval of clock hours to non-degree credit  hours.  For
the  purposes  of  this  paragraph,  "national accreditation" shall mean
accreditation by a national accrediting agency as defined in the commis-
sioner's regulations.
  5. Application for reapproval. a. An application AND FEE shall be made
for reapproval of a curriculum or  course.  Such  application  shall  be
considered timely if submitted at least one hundred twenty days prior to
the  expiration  of  the  current  approval. THE APPLICATION FEE FOR ANY
CURRICULUM OF ONE HUNDRED CLOCK HOURS OR MORE SHALL BE TWO HUNDRED FIFTY

S. 4268                            18

DOLLARS. THE APPLICATION FEE FOR ANY COURSE OF  LESS  THAN  ONE  HUNDRED
CLOCK  HOURS SHALL BE ONE HUNDRED DOLLARS, PROVIDED THAT NO FEE SHALL BE
ASSESSED FOR THE SUBMISSION OF A REAPPROVAL APPLICATION WITHOUT  CHANGE.
SUCH APPLICATION FEE SHALL ACCRUE TO THE CREDIT OF THE PROPRIETARY VOCA-
TIONAL SCHOOL SUPERVISION ACCOUNT.
  b. Curriculum  reapproval  standards.  (1) The commissioner shall pre-
scribe by regulation, standards for reapproval after the first  year  of
licensure,  of any curriculum or course based upon factors including but
not limited to the following, as appropriate:
  (i) for each curriculum or course, the percentage of students who have
dropped out;
  (ii) the acquisition of a specified minimum level  of  skills  by  the
students; and
  (iii) for each curriculum or course, the percentage of students placed
in occupations related to the instruction, where applicable.
  (2)  Such standards shall be consistent with those applied to all non-
degree career education programs.
  c. Reapproval contingency. Reapproval of a curriculum or course  shall
be  contingent upon a demonstration by the applicant that the curriculum
or course has met the curriculum reapproval standards set forth in  this
subdivision.  Except as otherwise provided in paragraph d of this subdi-
vision, no such curriculum or course or substantially similar curriculum
or course may be given without reapproval by the commissioner.
  d. When timely and complete application is made for the reapproval  of
a  curriculum or course, and no written denial is made thirty days prior
to the date of expiration of the existing approval,  the  curriculum  or
course  shall be deemed to be approved for the period of the curriculum.
If the application is denied, the commissioner shall set forth in  writ-
ing the reasons for such denial.
  e.  The  commissioner may provide in regulations for reapproval proce-
dures, consistent with this subdivision, for applications submitted less
than one hundred twenty days from the expiration date.
  f. The commissioner shall act upon enrollment agreements and  catalogs
within  ninety  days  of  receipt, and, in the case of denial, shall set
forth in writing the reasons for such denial. If the commissioner  fails
to  act  within  ninety days, a catalog shall be deemed approved for one
year and an enrollment agreement shall  be  deemed  approved  until  the
commissioner acts upon it.
  6. a. Teachers and directors. No person shall be employed by a private
CAREER  school  as  a  director  or  teacher who is not licensed in such
capacity by the department pursuant to regulations of the  commissioner,
which  shall  take  into  consideration such factors as moral character,
educational qualifications and  practical  experience.  The  application
shall  include  a  statement, signed by the president or chief executive
officer of the school, certifying that to the best of his or  her  know-
ledge,  the applicant is able to meet the educational qualifications and
practical experience set forth in the commissioner's  regulations.  Such
application shall be considered timely if mailed to the commissioner and
postmarked  four  days  prior  to  employment  at the school and must be
completed within twenty days thereafter;  provided,  however,  that  the
commissioner  may, for good cause shown, extend the time within which to
complete the application. When  a  complete  application  is  made,  the
commissioner  shall  act upon such application within thirty days. If no
written denial is made within the thirty days, the application shall  be
deemed  to  be approved until the commissioner acts upon it or until the
end of the term or semester, whichever occurs first. If a written denial

S. 4268                            19

is made after the thirty day period,  the  commissioner  may  allow  the
applicant to teach at the school for the remainder of the term or semes-
ter if the commissioner determines that the removal of the teacher would
not  be  in the best educational interest of the students. This subdivi-
sion shall not apply to directors or teachers employed on or before July
first, nineteen hundred seventy-two. Teachers'  licenses  issued  on  or
after  [January first, nineteen hundred eighty-seven] THE EFFECTIVE DATE
OF THE CHAPTER OF THE LAWS OF TWO THOUSAND  ELEVEN  WHICH  AMENDED  THIS
PARAGRAPH  shall  be valid at all [registered business] LICENSED PRIVATE
CAREER schools for the courses, curricula, or occupations  indicated  on
the  license.  TEACHERS  HOLDING  VALID  PRIVATE SCHOOL TEACHER LICENSES
VALID AT ONLY ONE SCHOOL LOCATION SHALL HAVE THEM REPLACED, AT NO  COST,
WITH  LICENSES  VALID  AT  ANY  LICENSED  SCHOOL  IN THE SAME SUBJECT OR
SUBJECTS AND WITH THE SAME EXPIRATION DATE AS WAS LISTED ON THE PREVIOUS
TEACHING LICENSE.
  b. A school director shall have  access  to  all  student  and  school
records  which  shall  be maintained in accordance with this article and
the regulations of the commissioner and shall make such  records  avail-
able  to  the  commissioner  or the commissioner's designee upon request
during an on-site school inspection.
  c. Notwithstanding paragraph a of this subdivision, a teacher who  has
been  certified  as  an  instructor by a nationally recognized vendor as
defined in commissioner's regulations may  be  deemed  qualified  as  an
instructor  by  the department, provided such teacher shall only provide
instruction in the course or courses for which he or she holds  vendor's
certification. A teacher authorized by this paragraph will be subject to
all licensing fees required by the department for licensed teachers.
  7. Advertising. a. The commissioner is authorized to commence a disci-
plinary  proceeding  pursuant  to  this  article  for false, misleading,
deceptive or fraudulent advertising pursuant to regulations  promulgated
by  the commissioner which shall be consistent with article twenty-two-A
of the general business law. The department shall issue guidelines as to
appropriate advertising content.  In  developing  such  guidelines,  the
department  shall  consider  advertising for similar programs offered by
various educational institutions. In  a  disciplinary  action  or  other
proceeding,  such  guidelines  shall  not  be  presumptive evidence that
particular advertising is appropriate.
  b. Beginning on January first, two thousand, all schools shall include
in their advertising, promotional material, or letterhead the  statement
"Licensed  by the State of New York" [or "Registered by the State of New
York", as appropriate], and an  accompanying  symbol  to  indicate  such
status,  issued  by  the  commissioner pursuant to section five thousand
nine of this article.
  8. The higher education services corporation  shall  adopt  rules  and
regulations  to  effectuate  the  cessation  of collection activities by
lenders or by the corporation in  cases  in  which  a  licensed  private
[vocational]  CAREER  school  [or a registered business school] at which
the student enrolled has closed or ceased its teaching activities during
the academic period for which the loan was made or guaranteed.
  S 5. Section 5003 of the education law, as added by chapter 887 of the
laws of 1990, subparagraph 1 of paragraph c of subdivision 1  and  para-
graphs d and e of subdivision 6 as amended by chapter 604 of the laws of
1993,  paragraph   d of subdivision 1 as added and paragraphs b and f of
subdivision 6 as amended by chapter 434 of the laws of 1999, is  amended
to read as follows:

S. 4268                            20

  S 5003. Disciplinary actions, hearings and penalties.  1. Disciplinary
action.  a. The commissioner for good cause, after affording a school an
opportunity for a hearing, may take disciplinary action  as  hereinafter
provided against any school authorized to operate under this article.
  b. Good cause shall include, but not be limited to, any of the follow-
ing:
  (1)  fraudulent  statements  or representations to the department, the
public or any student in connection with any activity of the school;
  (2) violation of any provision of this article or  regulation  of  the
commissioner;
  (3) conviction or a plea of no contest on the part of any owner, oper-
ator, director or teacher:
  (A) of any of the following felonies defined in the penal law: bribery
involving  public  servants;  commercial  bribery; perjury in the second
degree; rewarding official misconduct; larceny, in connection  with  the
provision  of  services  or  involving  the theft of governmental funds;
offering a false instrument for  filing,  falsifying  business  records;
tampering  with  public  records;  criminal usury; scheme to defraud; or
defrauding the government; or
  (B) in any other jurisdiction of an  offense  which  is  substantially
similar  to  any  of the felonies defined in clause (A) of this subpara-
graph and for which a sentence to a term of imprisonment  in  excess  of
one  year  was  authorized and is authorized in this state regardless of
whether such sentence was imposed; or
  (4) incompetence of any owner or operator to operate a school.
  c. (1) Any person who believes he or  she  has  been  aggrieved  by  a
violation  of  this section, EXCEPT A PERSON AGGRIEVED BY THE ACTIONS OR
OMISSIONS OF A CANDIDATE SCHOOL, shall have the right to file a  written
complaint  within:  (A)  two  years of the alleged violation; or (B) one
year of receiving notification from the higher education services corpo-
ration or any other guarantee agency that the student has defaulted on a
student loan payment; provided, however, that no complaint may be  filed
after  three  years  from the date of the alleged violation. The commis-
sioner shall maintain a written record of each complaint that  is  made.
The commissioner shall also send to the complainant a form acknowledging
the  complaint and requesting further information if necessary and shall
advise the director of the school that a complaint has  been  made  and,
where appropriate the nature of the complaint.
  (2) The commissioner shall within twenty days of receipt of such writ-
ten  complaint  commence  an  investigation of the alleged violation and
shall within ninety days of the receipt of such written complaint, issue
a written finding. The commissioner shall furnish such findings  to  the
person who filed the complaint and to the chief operating officer of the
school  cited in the complaint. If the commissioner finds that there has
been a violation of this section, the commissioner shall take  appropri-
ate action.
  (3)   The   commissioner  may  initiate  an  investigation  without  a
complaint.
  d. During the initial two year licensing period,  before  the  commis-
sioner  may bring enforcement proceedings against a licensed entity, the
following shall be taken into consideration:
  (1) whether such entity has demonstrated that the regulations  promul-
gated  under  this chapter are unduly burdensome given the nature of the
instruction provided by such entity;

S. 4268                            21

  (2) whether such entity has identified potential areas  of  noncompli-
ance  with this chapter and any such regulation within sixty days of the
licensing or registration date of such entity;
  (3) whether such entity has engaged in good faith discussions with the
department  to  resolve  such  violations  and/or promulgate regulations
which further the goals of this chapter.
  2. Hearing procedures. a. Upon a finding that there is good  cause  to
believe  that  a  CANDIDATE  SCHOOL UNDER THE PROVISIONS OF SUBPARAGRAPH
(IV) OF PARAGRAPH B OF SUBDIVISION FOUR OF SECTION FIVE THOUSAND ONE  OF
THIS  ARTICLE,  OR  A  LICENSED  school, or an officer, agent, employee,
partner or teacher, has committed  a  violation  of  this  article,  the
commissioner  shall  initiate proceedings by serving a notice of hearing
upon each and every such party subject to the administrative action. The
school or such party  shall  be  given  reasonable  notice  of  hearing,
including  the  time,  place,  and nature of the hearing and a statement
sufficiently particular to give notice of  the  transactions  or  occur-
rences  intended  to  be  proved, the material elements of each cause of
action and the civil penalties and/or administrative sanctions sought.
  b. Opportunity shall be afforded to the party to respond  and  present
evidence  and  argument  on the issues involved in the hearing including
the right of cross examination. In a hearing, the school or  such  party
shall  be accorded the right to have its representative appear in person
or by or with counsel or other representative. Disposition may  be  made
in any hearing by stipulation, agreed settlement, consent order, default
or other informal method.
  c.  (1)  The commissioner shall designate an impartial hearing officer
to conduct the hearing, who shall be empowered to:
  (A) administer oaths and affirmations; and
  (B) regulate the course of the hearings, set the time  and  place  for
continued  hearings,  and  fix  the  time for filing of briefs and other
documents; and
  (C) direct the school or such party to appear and confer  to  consider
the simplification of the issues by consent; and
  (D)  grant  a request for an adjournment of the hearing only upon good
cause shown.
  (2) The strict legal rules of evidence shall not apply, but the  deci-
sion shall be supported by substantial evidence in the record.
  3.  Decision  after  hearing.  The  hearing officer shall make written
findings of fact and conclusions of law, and  shall  also  recommend  in
writing  to  the  commissioner a final decision including penalties. The
hearing officer shall mail a copy  of  his  OR  HER  findings  of  fact,
conclusions  of  law and recommended penalty to the party and his or her
attorney, or representative.   The commissioner  shall  make  the  final
decision, which shall be based exclusively on evidence and other materi-
als  introduced  at  the  hearing.  If it is determined that a party has
committed a violation, the commissioner shall issue a  final  order  and
shall impose penalties in accordance with this section. The commissioner
shall  send  by  certified mail, return receipt requested, a copy of the
final order to the party and his or her attorney, or representative. The
commissioner shall, at the request of the school or such party,  furnish
a  copy  of  the transcript or any part thereof upon payment of the cost
thereof.
  4. Judicial review. Any order imposed  under  this  section  shall  be
subject  to  judicial  review  under  article seventy-eight of the civil
practice law and rules, but no such determination  shall  be  stayed  or

S. 4268                            22

enjoined  except  upon  application  to  the  court  after notice to the
commissioner.
  5.  Enforcement  proceedings.  The attorney general, in his or her own
capacity, or at the request of the commissioner, may bring an  appropri-
ate  action  or  proceeding  in  any  court of competent jurisdiction to
recover a fine or otherwise enforce any provision of this article.
  6. Civil penalties and administrative sanctions. a. A hearing  officer
may  recommend,  and the commissioner may impose, a civil penalty not to
exceed [two] THREE thousand five hundred dollars for  any  violation  of
this  article.  In  the  case of a second or further violation committed
within [the previous] five years OF THE PREVIOUS VIOLATION, the  liabil-
ity  shall  be  a civil penalty not to exceed [five] SEVEN thousand FIVE
HUNDRED dollars for each such violation.
  b. Notwithstanding the provisions of paragraph a of this  subdivision,
a hearing officer may recommend, and the commissioner may impose a civil
penalty  not  to  exceed [fifty] SEVENTY-FIVE thousand dollars OR DOUBLE
THE DOCUMENTED AMOUNT FROM WHICH  THE  SCHOOL  BENEFITED,  WHICHEVER  IS
GREATER,  for any of the following violations: (1) operation of a school
without a license in violation of section  five  thousand  one  of  this
article; (2) operation of a school knowing that the school's license has
been  suspended  or  revoked; (3) use of false, misleading, deceptive or
fraudulent advertising; (4) employment of recruiters on the basis  of  a
commission,  bonus  or  quota, except as authorized by the commissioner;
(5) directing or authorizing recruiters to offer guarantees of jobs upon
completion of a course; (6) failure to make a tuition refund  when  such
failure is part of a pattern of misconduct; (7) the offering of a course
or  program  that has not been approved by the commissioner; (8) FAILURE
TO OFFER A COURSE OR PROGRAM AS APPROVED BY THE COMMISSIONER; (9) admit-
ting students, who subsequently drop out, who were admitted in violation
of the admission standards established by the commissioner,  where  such
admissions  constitute  a  pattern  of misconduct and where the drop out
resulted at least in part from such violation;  [(9)]  (10)  failure  to
provide  the  notice of discontinuance and the plan required by subdivi-
sion seven of section five thousand one of this article; or [(10)]  (11)
violation  of  any other provision of this article, or any rule or regu-
lation promulgated pursuant thereto,  when  such  violation  constitutes
part  of  a pattern of misconduct which significantly impairs the educa-
tional quality of the program or programs being offered by  the  school.
For  each  enumerated  offense,  a second or further violation committed
within [the previous] five years, shall be subject to  a  civil  penalty
not to exceed [seventy-five thousand dollars] ONE AND ONE-HALF TIMES THE
AMOUNT OF THE PREVIOUS VIOLATION for each such violation.
  c.  In  addition  to the penalties authorized in paragraphs a and b of
this subdivision, a hearing officer may recommend and  the  commissioner
may  impose  any  of the following administrative sanctions: (1) a cease
and desist order; (2) a mandatory direction; (3) a suspension or revoca-
tion of a license; (4) a probation order; or (5) an  order  of  restitu-
tion.
  d.  Penalty  factors.  In the recommendation of any penalty, a hearing
officer shall, at a minimum, give due consideration,  where  applicable,
to  the  good faith of the violator[; the performance of the school with
respect to student placement and retention rates, and students' acquisi-
tion of skills;] AND the gravity of the violation[; and the harm  caused
to the student].
  e.  The  commissioner may suspend a license [or registration] upon the
failure of a school to pay any fee, fine, penalty, settlement or assess-

S. 4268                            23

ment as required by this article unless such failure  is  determined  by
the commissioner to be for good cause.
  f.  All  civil  penalties,  fines and settlements received after April
first, nineteen hundred ninety shall accrue to the credit of the tuition
reimbursement account established pursuant to section ninety-seven-hh of
the state finance law.
  7. Criminal penalties. In addition to any  other  penalties  elsewhere
prescribed:
  a.  Any  person  who  knowingly violates any of the provisions of this
article shall be guilty of a class B misdemeanor punishable  in  accord-
ance  with  the  penal  law.  If  the conviction is for a second offense
committed within five years of the first  conviction  under  this  para-
graph,  such  person shall be guilty of a class A misdemeanor punishable
in accordance with the penal law.
  b. Any person who knowingly (1) falsifies or destroys school or  other
business  records relating to the operation of the school with intent to
defraud; (2) fails to make a tuition refund as required by section  five
thousand  two  of  this article with the intent to defraud more than one
person; or (3) operates a school without a  valid  license  required  by
section  five  thousand one of this article shall be guilty of a class A
misdemeanor punishable in accordance with the penal law.
  c. Any person who, having been convicted within the past five years of
failing to make a tuition refund in violation  of  subparagraph  two  of
paragraph  b of this subdivision, knowingly and intentionally engages in
a scheme constituting a systematic ongoing course of  conduct  involving
the  wrongful  withholding of refunds in violation of section five thou-
sand two of this article with the intent to defraud ten or more persons,
and so withholds tuition refunds in  excess  of  one  thousand  dollars,
shall  be  guilty  of a class E felony punishable in accordance with the
penal law.
  d. Upon a determination that there exist reasonable grounds to believe
that a violation of this article has been committed, or that  any  other
crime  has  been  committed in connection with the operation of a school
required to be licensed pursuant to this article, the commissioner shall
refer such determination, and the information upon which it is based, to
the attorney general or to the appropriate district attorney. The attor-
ney general or a district attorney may bring an action on his or her own
initiative.
  8. Private right of action. A student injured by a violation  of  this
article  may bring an action against the owner or operator of a licensed
private CAREER school [or registered business school] for actual damages
or one hundred dollars, whichever  is  greater.  A  court  may,  in  its
discretion, award reasonable attorney's fees to a prevailing plaintiff.
  S  6.  Subdivisions  3  and 4 of section 5004 of the education law, as
amended by chapter 604 of the laws of 1993, are amended and a new subdi-
vision 4-a is added to read as follows:
  3. Exempted from the requirements of this section are  persons  acting
solely  for schools which are not required to be licensed or are specif-
ically exempted from the licensing  [or  registration]  requirements  of
this  article.  Persons  who  are  paid  to  procure,  solicit or enroll
students on the premises of schools required to be licensed  [or  regis-
tered]  shall  not  be  exempt from the provisions of this section.  The
certification requirements of this section shall not  apply  to  persons
receiving  gifts or other non-monetary considerations valued at not more
than [twenty-five] SEVENTY-FIVE dollars from a school  from  which  they

S. 4268                            24

have  graduated  or are currently enrolled for each student referred for
enrollment at the school.
  4.  Application  and  renewal application for a private school agent's
certificate shall be filed on forms to be prescribed and provided by the
commissioner. Said certificate shall be valid for [two] THREE years from
the date of issuance. Certificates which  have  been  renewed  shall  be
valid  for a period of [two] THREE years from the expiration date of the
certificate which has been renewed. Every applicant and  renewal  appli-
cant shall pay to the department a fee of [one] TWO hundred dollars.
  4-A.  NOTWITHSTANDING  THE  PROVISIONS  OF  SUBDIVISION  FOUR  OF THIS
SECTION, THE SCHOOL DIRECTOR MAY APPLY  FOR  A  PRIVATE  SCHOOL  AGENT'S
CERTIFICATE  ON  FORMS TO BE PRESCRIBED AND PROVIDED BY THE COMMISSIONER
WITHOUT INCURRING THE AGENT APPLICATION FEE.
  S 7. Section 5006 of the education law, as added by chapter 887 of the
laws of 1990, is amended to read as follows:
  S 5006. Teachout plans.  1. A school may submit a teachout plan to the
commissioner for approval pursuant to  regulations  established  by  the
commissioner.  A  teachout  plan  shall  consist of a contract between a
[registered business or] licensed private CAREER  school,  with  another
school,  hereinafter  called  the  teachout school, so that in the event
that the [registered business or] licensed private CAREER school  ceases
instruction,  the teachout school will provide the necessary instruction
specified in a student's original enrollment agreement with  the  school
ceasing  instruction.  A teachout plan may employ more than one teachout
school to provide instruction to students in the school ceasing instruc-
tion. Schools under common ownership but having  separate  licenses  [or
registrations]  may,  subject to the approval of the commissioner, enter
into teachout agreements. A TEACHOUT PLAN MAY BE CONTRACTED BETWEEN  THE
COMMISSIONER  AND  ONE  OR  MORE  TEACHOUT SCHOOLS IN THE EVENT THAT THE
CLOSING SCHOOL IS UNABLE OR UNWILLING TO DO SO.
  2. A teachout plan shall include the following provisions:    (a)  the
teachout school must offer courses of study that are substantially simi-
lar to those offered in the school ceasing instruction;
  (b)  teachout  schools must be located in the geographic area in which
the school ceasing instruction was located  UNLESS  THE  SCHOOL  CEASING
INSTRUCTION PROVIDED DISTANCE LEARNING OR ONLINE TRAINING;
  (c) all provisions for a teachout plan must be included in the enroll-
ment agreement signed by the student; and
  (d)  the  teachout school shall agree to fulfill the enrollment agree-
ment signed by the student at the school ceasing instruction.
  3. The [registered business or] licensed school shall provide  to  the
teachout  school  and  to  the department [immediately upon closure] the
following information PRIOR TO CLOSURE:
  (a) Copies of the academic and financial records for all  students  in
attendance at the school at the projected time of closure;
  (b)  A  listing of all such students presently in attendance including
their names, addresses, social security numbers,  curriculum  that  each
student  is  enrolled  in and the number of hours the students will have
completed at the time of the school closure.
  4. The department will provide to  the  teachout  school,  immediately
upon  notification  of a school closing, a copy of each approved curric-
ulum that the closing school is presently offering.
  5. The commissioner shall require all teachout schools to address  the
following issues:
  (a)  Integration  of students into a curriculum which may be different
from the curriculum in which they are currently receiving instruction;

S. 4268                            25

  (b) Assessments of students' progress so that they may be placed  into
an appropriate course;
  (c)  Provision of remedial instruction to students who are found to be
deficient in one or more course areas upon their initial assessment;
  (d) Provision by  the  teachout  school  to  adhere  to  the  required
student/teacher ratios and room capacities; and
  (e)  Compliance  with statutory and regulatory requirements during the
teachout.
  6. The student shall not be subject to  any  costs  beyond  the  total
costs identified in the original enrollment agreement.
  7.  A student may decline to pursue instruction at the teachout school
and may instead seek a refund pursuant to section five thousand seven of
this article.
  S 8. Section 5007 of the education law, as added by chapter 887 of the
laws of 1990, the section heading, subdivision 1 and subdivision  10  as
amended  by  chapter 434 of the laws of 1999, paragraph a of subdivision
3, paragraphs c and d of subdivision 4, subparagraphs 1 and 3  of  para-
graph  a  and paragraph b of subdivision 5, paragraph b of subdivision 9
as amended and paragraphs e and f of subdivision 4 as added  by  chapter
604 of the laws of 1993, is amended to read as follows:
  S 5007. Tuition reimbursement account. 1. Except as otherwise provided
in subdivision six of this section, the portion of the annual assessment
of  schools  [registered and] licensed pursuant to section five thousand
one of this article as prescribed in subdivision [eight]  NINE  of  such
section  and  all  fines, penalties and settlements received pursuant to
this  article  shall  be  transferred  upon  receipt  into  the  tuition
reimbursement account.
  3. a. The commissioner shall develop a complaint form and provide such
form  to  students. In order to claim a refund, a student shall apply to
the fund with a complaint form pursuant to the requirements  of  section
five  thousand  three  of  this article. Except as otherwise provided in
this article, the commissioner shall compute the refund, if  any,  using
the  refund  formula  established  by  subdivision three of section five
thousand two of this article.
  b. Claimants who had been enrolled in schools which have not closed or
ceased operation shall be required to show in a manner determined by the
commissioner that:
  (1) the student is eligible for a refund;
  (2) the student has made a request to the school for a refund; and
  (3) the school has failed to make the refund within  the  time  period
required by this article.
  c.  The  commissioner  shall  act on each refund request within thirty
business days of such request.
  4. Students may be eligible for refunds under this section as follows:
  a. A student who is offered a teachout  plan  for  the  curriculum  in
which  the  student was enrolled at the time the school closed or ceased
operation, which has been approved  by  the  department,  may  elect  to
continue  instruction  pursuant  to  the teachout plan or may decline to
continue instruction and may instead apply for a full refund under  this
section. The option to apply for a refund shall extend to the end of the
first week of instruction at the teachout school.
  b.  A  student  who  was  enrolled in a school which has not closed or
ceased operation is entitled to a refund computed in accordance with the
refund policy established by subdivision three of section five  thousand
two of this article.

S. 4268                            26

  c. A student who was enrolled in a school at the time the school clos-
es  or  ceases  operation  is entitled to a refund of the full amount of
prepaid tuition.  In  addition,  commencing  September  first,  nineteen
hundred  ninety-three,  a  student who drops out of a school, where such
school closes within [fourteen] THIRTY days of the student's termination
and  prior  to  completion of such student's program as specified in the
enrollment agreement, shall be entitled to a FULL refund  of  [the  full
amount  of  prepaid tuition] ALL TUITION, FEES AND BOOK CHARGES PAID FOR
BY OR ON BEHALF OF THE STUDENT IN CASH OR IN  LOANS,  EXCLUDING  FUNDING
PROVIDED BY ANY GOVERNMENT AGENCIES.
  d.  A  student  who  was  enrolled in a school which has not closed or
ceased operation, and who has dropped out, is entitled to a full  refund
of all tuition, fees and other required costs paid by the student if the
student  has  submitted  a  complaint  form  to the commissioner and the
commissioner has  determined  that  a  violation  of  this  article  has
occurred  which  warrants  a  refund.  The commissioner shall promulgate
regulations identifying those violations that warrant a refund.
  e.  Commencing  September  first,  nineteen  hundred  ninety-three,  a
student who drops out of a school, which subsequently closes, and who is
owed  a  refund  for the failure of such school to follow the provisions
enumerated in subdivision three of section five  thousand  two  of  this
article  shall  be  eligible for a refund from the tuition reimbursement
fund according to the provisions of subdivision three  of  section  five
thousand two of this article.
  f.  Commencing  September  first,  nineteen  hundred ninety-three, any
student enrolled in a school based upon an ability to  benefit  examina-
tion  shall  be  eligible  for  a full refund, regardless of whether the
student is currently enrolled, graduated or dropped out, if  the  school
enrolled the student contrary to the provisions of the approved entrance
requirements  and the student complies with the requirements of subdivi-
sion one of section five thousand three of this article.
  5. a. For a student who had been enrolled in a  school  that  has  not
closed or ceased operation, the refund shall be paid as follows:
  (1)  guaranteed  student loans, if any, in which case the commissioner
shall notify the student of such payment and shall be paid  directly  to
the lender or guarantee agency where appropriate;
  (2) actual personal tuition expenditures, if any; and
  (3) tuition assistance program awards and other governmental aid.
  b.  For schools that have closed or ceased operation, the commissioner
shall refund actual personal tuition, FEES AND BOOK expenditures to  the
student.  The  repayment of any loans incurred by the student as part of
the actual personal tuition, FEES AND BOOK expenditures  shall  be  paid
directly to the lender or the guarantee agency where appropriate.
  6.  a.  Where a claim is paid to a student of an operating school, the
commissioner shall immediately notify the school.
  b. Within ten days of the receipt of  the  notice,  the  school  shall
either  request  a hearing to challenge the commissioner's determination
that a refund was owed to the student or reimburse the fund  the  amount
paid  to  the  claimant plus a penalty up to two times such amount. This
payment shall also incur interest for each day it remains unpaid  at  an
annual  interest  rate  of one percent above the prime rate. The commis-
sioner may promulgate streamlined  procedures  for  conducting  hearings
pursuant  to  this  paragraph. Any penalty assessed under this paragraph
shall be in addition to any other penalties assessed  pursuant  to  this
article.    Notwithstanding  any  other  provision of law, penalties and
interest paid pursuant to this paragraph shall accrue to the  credit  of

S. 4268                            27

the  proprietary  vocational  school  supervision account to support the
costs associated with the hearings authorized in this subdivision.
  7.  Notwithstanding  the  notice  procedures  described in subdivision
three of this section, in the event of a school closing, the commission-
er on his or her own initiative may take appropriate action  in  accord-
ance  with this section to process refund claims on behalf of all of the
students of the closed school.
  8. Assignment of rights. Persons and entities receiving refunds  under
this  section  shall  be  deemed  to  have  assigned or subrogated their
tuition reimbursement rights  to  the  commissioner  on  behalf  of  the
tuition  reimbursement  fund only for the amount refunded by the tuition
reimbursement fund. Within [thirty]  NINETY  days  of  any  refund  made
pursuant to this section, the commissioner or the attorney general shall
take appropriate action to recover the total amount of the refunds made,
plus administrative costs, from the school.
  9.  a.  A  student whose loan liability is exempted pursuant to FORMER
section six hundred eighty-three of this chapter and is entitled  to  or
owed  a  refund  shall  transfer to the higher education services corpo-
ration the right to claim the refund  owed  and  due  from  the  tuition
reimbursement  fund. In such event, the corporation shall be entitled to
receive a refund for that portion of the claim not paid  to  the  corpo-
ration  by  the  United  States  Secretary  of Education pursuant to the
federal guaranteed loan program.
  b. Any amounts remaining in the tuition reimbursement fund as of  June
first,  nineteen  hundred  ninety-three  and on every March thirty-first
thereafter, shall be made available to  the  higher  education  services
corporation  for  payment  of student loans on which collection activity
has ceased pursuant to the  provisions  of  subdivision  six  of  FORMER
section  six  hundred  eighty-three of this chapter. No amounts shall be
paid to the higher education services corporation  for  loans  on  which
collection  activity  has ceased because of the operation of section 437
of the Higher Education Act of 1965, as amended.
  10. Management of the tuition reimbursement account.  a.  As  used  in
this  subdivision,  net balance is defined as the actual cash balance of
the account as determined by the commissioner on June  thirtieth,  nine-
teen  hundred  ninety-three  and  every three months thereafter. For the
purpose of calculating the net balance, the commissioner shall not  take
into  consideration  any refunds made from the account pursuant to para-
graphs d and f of subdivision four of this section for  the  year  imme-
diately preceding the date on which the calculation is made.
  b.  In  the  event  that  the account has accumulated a net balance in
excess of one million eight hundred thousand dollars,  the  commissioner
shall,  with the approval of the director of the budget, waive an amount
not to exceed the amount due for the next quarterly assessment  pursuant
to  this  section  and  subdivision nine of section five thousand one of
this article FOR SCHOOLS WHICH HAVE PAID SIXTEEN  QUARTERS  OR  MORE  OF
ASSESSMENTS ONLY. In such event, payment of future quarterly assessments
shall  be suspended FOR SCHOOLS WHICH HAVE PAID SIXTEEN QUARTERS OR MORE
OF ASSESSMENTS until the net balance of  the  account  falls  below  one
million three hundred thousand dollars.
  c. In the event the net balance of the account falls below one million
three  hundred  thousand  dollars,  if the quarterly assessment has been
suspended FOR SCHOOLS WHICH  HAVE  PAID  SIXTEEN  QUARTERS  OR  MORE  OF
ASSESSMENTS  pursuant  to  paragraph  b of this subdivision, it shall be
reinstated for the next quarterly assessment and all subsequent quarter-

S. 4268                            28

ly assessments until the account has accumulated a net balance in excess
of one million eight hundred thousand dollars.
  d. [Notwithstanding the provisions of paragraph b of this subdivision,
in the event that the balance of the account is in excess of one million
three  hundred thousand dollars, all schools licensed after June thirti-
eth, nineteen hundred ninety-nine shall be  required  to  pay  into  the
account the equivalence of three years of annual assessments over a five
year period.
  e.  Notwithstanding  the provisions of paragraph b of this subdivision
all schools licensed after June thirtieth, nineteen hundred ninety-three
and before July first, nineteen hundred ninety-nine will be required  to
pay  into  the  account the equivalence of three years of annual assess-
ments within four years of the effective date of  this  paragraph.  This
amount  to be assessed shall be determined based upon the school's gross
tuition in its first three years of licensure.
  g. In the event that the balance of the tuition reimbursement  account
is  equal  to or in excess of one million five hundred thousand dollars,
the amounts assessed the schools in accordance with  the  provisions  of
paragraphs  d  and  e of this subdivision shall be deposited directly to
the proprietary vocational school supervision account.] IN THE EVENT THE
ACCOUNT HAS ACCUMULATED A NET BALANCE IN EXCESS OF TWO MILLION  DOLLARS,
ANY  FUNDS  IN  THE  TUITION REIMBURSEMENT FUND IN EXCESS OF TWO MILLION
DOLLARS SHALL BE  TRANSFERRED  TO  THE  PROPRIETARY  SCHOOL  SUPERVISION
ACCOUNT.
  E.  THE COMMISSIONER MAY ANNUALLY APPORTION FROM THE ACCOUNT AN AMOUNT
UP TO TWO HUNDRED THOUSAND DOLLARS FOR THE PURPOSE OF SECURING, SCANNING
AND OTHERWISE MAKING STUDENT RECORDS FROM CLOSED  SCHOOLS  AVAILABLE  TO
STUDENTS  WHO  ATTENDED SUCH SCHOOLS. PROVIDED, HOWEVER, THAT IN NO CASE
SHALL SUCH APPORTIONMENT CAUSE THE ACCOUNT TO FALL BELOW THE BALANCE SET
FORTH IN PARAGRAPH C OF THIS SUBDIVISION, NOR SHALL  SUCH  APPORTIONMENT
CAUSE  SCHOOLS  WHOSE  QUARTERLY  ASSESSMENTS HAVE BEEN SUSPENDED TO PAY
ADDITIONAL QUARTERLY ASSESSMENTS.
  11. Fund audit. The state comptroller shall [annually] audit or  cause
to  be  audited  the tuition reimbursement fund ONCE EVERY TWO YEARS and
produce an [annual] AUDITED financial statement according  to  generally
accepted accounting principles.
  12.  New  schools.  Within  the  first [six months] YEAR that a school
begins LICENSED operation, the commissioner shall assess such school  an
amount  to  be  deposited into the fund in an amount to be determined by
the commissioner.
  S 9.  Section 5008 of the education law, as added by  chapter  887  of
the laws of 1990, is amended to read as follows:
  S 5008. Trust  accounts.    1.  If  the commissioner determines that a
school has demonstrated a pattern or practice of failing to make tuition
refunds in a timely manner  consistent  with  this  article  AND/OR  THE
SCHOOL'S FINANCIAL CONDITION MAY RESULT IN THE INTERRUPTION OR CESSATION
OF  INSTRUCTION  OR  JEOPARDIZE  STUDENT TUITION FUNDS, the commissioner
shall require a school to establish a trust account in a form or  manner
which  the commissioner[, after consultation with the advisory council,]
shall [prescribe in regulations] DETERMINE TO BE APPROPRIATE. The assets
or funds contained in the trust account shall be maintained for the sole
and exclusive benefit of the students.
  2. In making this determination, the commissioner shall  consider  the
following  factors:  the  number  of refunds not paid by the school in a
timely manner; the number of claims made to, or  paid  by,  the  tuition
reimbursement  [fund]  ACCOUNT;  [and]  a  pattern  of  misconduct which

S. 4268                            29

substantially affects the financial interests of students or the  state,
POTENTIAL LIABILITY TO THE TUITION REIMBURSEMENT ACCOUNT, CURRENT ASSETS
AS  OPPOSED  TO  CURRENT  LIABILITIES, AND SUCH OTHER MEASURES AS MAY BE
APPROPRIATE.
  S  10. Section 5009 of the education law, as amended by chapter 434 of
the laws of 1999, is amended to read as follows:
  S 5009. Duties of the commissioner.  In addition to all  other  duties
assigned  in this article, the duties of the commissioner shall include,
but not be limited to:
  [(a) submitting a report to the governor, the temporary  president  of
the  senate,  the  speaker  of  the assembly, the minority leader of the
senate and the minority leader of the assembly beginning  the  fifteenth
day of January after this section shall have become effective, and annu-
ally  thereafter  on that date, on the implementation and enforcement of
this article, which shall include but not be limited to  (i)  curriculum
approval  and  reapproval  standards, (ii) student complaints, (iii) the
resolution of disciplinary actions brought by the  department  or  other
appropriate  state agency, (iv) the audited financial statements submit-
ted by the schools, (v) tuition  reimbursement  account  activity,  (vi)
data  regarding  retention and completion rates for students enrolled in
nondegree, appropriate degree or certificate programs of  two  years  or
less  at registered business schools, licensed private schools, proprie-
tary degree-granting schools and independent and public colleges,  (vii)
the  extent  to  which  the department has met the timelines mandated by
this article, (viii) entrance standards,  (ix)  the  number  of  schools
inspected annually, and (x) the number of trust accounts imposed.
  (b)] 1. ensuring that up-to-date, accurate information is available to
the  public,  via  the  internet  and other appropriate media, regarding
every duly licensed proprietary school in this state, as well as  disci-
plinary actions decided by the state.
  [(c)]  2.  developing  and  issuing  to duly licensed [and registered]
proprietary schools a symbol to indicate such status; provided that such
symbol shall be developed and made available to such  schools  no  later
than September thirtieth, nineteen hundred ninety-nine.
  [(d)] 3. administering a public information campaign aimed at increas-
ing awareness about the importance of attending licensed [or registered]
proprietary vocational schools. Such campaign shall be targeted to popu-
lations  at  risk  of enrolling in unlicensed [or unregistered] schools,
and shall be conducted using means including, but not limited to, public
service announcements  on  commercial  radio  and  television  stations,
public access television, and print media.
  [(e)]  4. providing for the orderly maintenance of any student records
which may be transferred to the department pursuant to any school's plan
developed pursuant to subdivision eight of section five thousand one  of
this  article;  including responding to student requests for transcripts
and records within twenty days of receiving a request. The  commissioner
is  hereby  authorized to impose an appropriate fee for such transcripts
pursuant to a schedule approved by the director of the budget.
  S 11. Section 5010 of the education law, as added by  chapter  887  of
the laws of 1990, subdivision 1 as amended and subdivision 4 as added by
chapter  604  of the laws of 1993, and subdivision 5 as added by chapter
434 of the laws of 1999, is amended to read as follows:
  S 5010. Advisory council. 1. An advisory council for [registered busi-
ness and] licensed [trade] PRIVATE CAREER schools is hereby created  for
the  purpose  of  advising  the board of regents and the commissioner as
provided herein.  The  council  shall  be  composed  of  eleven  members

S. 4268                            30

appointed  by the governor, two of whom shall be upon the recommendation
of the temporary president of the senate, two of whom shall be upon  the
recommendation of the speaker of the assembly, one of whom shall be upon
the  recommendation of the minority leader of the senate and one of whom
shall be upon the recommendation of the minority leader of the assembly.
Of the five remaining members, one shall be an owner or  director  of  a
school  regulated  pursuant  to  this article, [one shall be a currently
enrolled student at the time of appointment or  a  graduate  of  such  a
school who graduated within three years of appointment] and one shall be
a student advocate. The governor shall designate a chairperson from such
members.    The commissioner [of education], the president of the higher
education services corporation, the chair  of  the  consumer  protection
board,  the comptroller, the director of the division of the budget, and
the executive director of the job training partnership council, or their
designees, shall serve as ex-officio, non-voting members of the council.
  2. The council shall meet no less than four times a year.  Members  of
the  council  shall receive no compensation for their services but shall
be reimbursed for reasonable expenses actually and necessarily  incurred
by  them  in  the  performance  of their duties. COUNCIL MEMBER TERMS OF
OFFICE SHALL BE LIMITED TO THREE YEARS, PROVIDED  THAT  MEMBERS  MAY  BE
REAPPOINTED. ALL APPOINTMENTS TO THE COUNCIL TO FILL VACANCIES IN EXIST-
ENCE  ON  THE  EFFECTIVE DATE OF THE CHAPTER OF THE LAWS OF TWO THOUSAND
ELEVEN WHICH AMENDED THIS SUBDIVISION SHALL BE MADE WITHIN  NINETY  DAYS
OF SUCH EFFECTIVE DATE.
  3.  The  council shall advise the commissioner on [the following] SUCH
matters[:
  (a) trust accounts;
  (b) performance standards;
  (c) the effectiveness and utilization  of  the  tuition  reimbursement
fund;
  (d) the efficacy of instituting a fee-for-service system;
  (e) the effectivesness of the timelines mandated by this article;
  (f) the impact of assessments on schools;
  (g) recruitment bonuses; and
  (h) such other matters] as the council determines are appropriate.
  [4.  The  proprietary  school  advisory  council shall conduct a study
concerning the methodologies used to  determine  student  refunds.  Such
study  shall include, but not be limited to, refund policies promulgated
pursuant to federal statute or regulation, state statute  or  regulation
and the policies of national accrediting organizations as they relate to
term-based  and  clock  hour-based  programs. Not later than July first,
nineteen hundred ninety-four, the advisory council shall make  recommen-
dations  to the commissioner and the board of regents for any changes in
legislation, regulations, policy  or  practice  needed  to  improve  and
simplify  the  student  refund  process. The commissioner shall submit a
report of the findings of the advisory council together with the  recom-
mendations  of  the  department  to the legislature and the governor not
later than the first day of October, nineteen hundred ninety-four.
  5. The advisory council shall report to the  governor,  the  temporary
president  of  the  senate, the speaker of the assembly, and the commis-
sioner on the status of unlicensed proprietary schools  in  this  state.
The  report  shall  also contain a statement on the effectiveness of the
change in the tuition reimbursement fund and any recommendations for  an
extension  of the changes or the consideration of different changes when
such changes are repealed. Such report  is  to  be  delivered  on  April
first, two thousand two.]

S. 4268                            31

  S  12.  This  act  shall  take effect on the one hundred twentieth day
after it shall have become a law; provided, however,  that  subparagraph
(iv)  of  paragraph  b of subdivision 4 of section 5001 of the education
law, as added by section three of this act, shall expire and  be  deemed
repealed  three  years after such effective date; and provided, further,
that effective immediately, the commissioner of education is  authorized
and  directed  to  promulgate  any  regulations  needed to implement the
provisions of this act on such effective date.

S4268A - Bill Details

See Assembly Version of this Bill:
A7859A
Law Section:
Education Law
Laws Affected:
Amd Art 101 Art head, §§5001, 5002, 5003, 5004, 5006, 5007, 5008, 5009 & 5010, Ed L

S4268A - Bill Texts

view summary

Relates to the licensure of private proprietary schools; provides for increased competition among schools to improve the quality of training provided at private proprietary schools and the quality of student performance in the workplace.

view sponsor memo
BILL NUMBER:S4268A

TITLE OF BILL:

An act
to amend the education law, in relation to the licensure of private
proprietary schools; and providing for the repeal of certain provisions
upon the expiration thereof

PURPOSE OF THE BILL:

The purpose of this bill is to ensure that non-degree granting
proprietary institutions in New York State comply with current best
practices for this sector and to provide the New York State Education
Department (NYSED) with the resources to effectively oversee
compliance with law and to preserve the tuition reimbursement
account. Additionally, this bill would allow a new category of
candidate schools: those that are in the application process and have
not yet perfected their license.

SUMMARY OF THE PROVISIONS OF THE BILL:

This bill would amend Article 101 of the Education Law (sections 5001
through 5010) to eliminate the distinction between licensed private
schools and registered business schools, replace the phrase "licensed
private schools" with the more descriptive "licensed private career
schools", adjust fees, which have not changed since 1990, and
establish a candidate school category that would allow a school to
operate legally while it is in the process of obtaining a
non-degree-granting proprietary school license.

Section 5001 would be amended to provide for the consolidation of
registered business schools and licensed private schools into one
designation. eliminating the artificial distinction between these
types of schools and reflecting the current heterogeneous nature of
training programs offered at these schools. Section 5001(2)(f),
exempting certain schools from licensure requirements, which was
recently amended by Chapter 13 of the Laws of 2010 to include yoga
and martial arts as subjects exempt from such licensure requirements,
would be further amended to include Pilates as an additional subject
exempt from such requirements. Section 5001(2)(f) would also be
amended to exclude schools conducted for the purpose of teaching
personal trainers from the list of schools exempt from such
licensure requirements.

For greater clarity. §5001(2), exempting conferences, trade shows,
workshops and such other courses of study from such licensing
requirements, would also be divided into two separate paragraphs l
and m without substantive change. Subdivision 2-b of §5001, exempting
programs for private businesses with no tuition liability, would be
amended to clarify that the exemption would apply to employees of a
person or organization that has contracted with another person or
organization to provide instruction at no cost.
Candidate school status would be established by adding a new §5001(4)
(b) (iii) to allow a practical means for prospective schools to
operate legally prior to meeting all the requirements of:full


licensure. For further clarity. §5001(4)(b), which addresses the
period of licensure as a private career school, would be amended to
include the specific
fees for initial and renewal applications for such licensure. The
renewal fees would be increased to reflect NYSED's current cost of
supervising these schools and to meet the prospective costs for
reimbursing tuition for a significant number of students when these
students' schools close due to fiscal failure or non-compliance.
Initial application fees would be set at certain amounts and fees for
renewal would be based on the school's gross annual tuition income.

Procedures in §5001(6) for working with schools that are not
financially viable would be formalized to protect the tuition
reimbursement account. School transfer requirements in §5001(7) would
be adjusted to be more consistent with how other states handle school
transfers. The method of assessing schools in §5001(9) would be
changed from more complicated regular and special assessment formulas
to one based on the number of quarterly assessments paid, whereby
newer schools with the potential to fail would pay a higher
assessment than schools with a history of satisfactory licensed
operation. Section 5001(4)(e), relating to annual audited financial
statements, would be amended to change the gross tuition criteria for
submission of such statements to the commissioner and the filing
schedule for such statements to bring the non-degree sector into
parity with schools in the degree-granting and public school sectors.

Section 5002 would be amended by adding a new paragraph b-1 to
subdivision 1 to restrict the amount of private loan payments that a
school could receive on behalf of a student prior to their completing
a program, thereby limiting students' loan liability as well as the
tuition reimbursement account's liability for payment of loan funds.
This would formally recognize that the tuition reimbursement account
is to be used for student protection and not as a substitute for
guaranteed student loans. Section 5002(1)(d)(1) on admission. of
students under the ability to benefit provision would be amended to
authorize the Commissioner to accept other entrance requirement
documentation, such as prerequisite coursework, professional or
vendor certifications, personal interviews and/or attestations of
equivalent knowledge in lieu of the examination requirement. Section
5002(3) (h) would be amended to require schools to submit for
approval a school catalog that contains a weekly tuition liability
chart for each program that indicates the amount of refund due a
student upon withdrawal. Section 5002(4)(c)(1) and (2) would be
amended to emphasize that in addition to paying the curriculum
application fee, provided in section 5002(4)(a), schools would
be required to pay the cost of an outside evaluation of a
particular course or facility of the school. Section 5002(5) would
also be amended to establish a curriculum/course application fee to
fund the NYSED's curriculum unit Fees from school and personnel
license applications do not cover the cost of curriculum review, as
some schools have only a handful of courses or curricula that require
approval while others have between 400 and 700. Schools requiring the
most evaluation would pay more, those with few programs would pay
less. Section 5002(6) would be amended so that all teacher licenses
would no longer be restricted to a single school location, as private
career school teacher licenses currently are. This would result in a
more mobile and efficient teacher pool for schools to draw from for


faculty members, reduced expense for processing teacher applications
and a reduced workload for the State Education Department's Bureau of
Proprietary School Supervision ("the Bureau").

Section 5003 would be amended to establish more practical timeframes
for disciplinary proceedings. A new subparagraph (4) would be added
to §5003(1)(c) to establish procedures for handling written
complaints by students attending candidacy schools alleging failure
of the school to disclose its candidacy status and the implications
and to obtain the required attestation from the student. If such a
violation is found, the school would be required to provide the
student a full refund of all monies received from the student.
Section 5003(6) would be amended to increase the fines established in
1990 so they reflect NYSED's current cost of school oversight.
Section 5003(6)(b) would be amended to expand the list of violations
that may result in the imposition of a civil penalty, including
failure to offer an approved course or program.

Subdivision 3 of section 5004 would be amended to increase the amount
of gifts and other non-monetary consideration a school may provide to
students or former students from $25 to $75. Subdivision 4 of section
5004 would be amended to increase private school agent fees from $100
to $200, while extending the term of a private school agent's
certificate from 2 years to 3 years.

Section 5005 would not be amended.

Section 5006 on teachout plans would be amended to allow NYSED to
intervene more effectively when a private career education school
ceases instruction. Currently, schools that are closing are required
to develop teachout plans that arrange to have students continue to
receive instruction from other private career schools upon closure of
the school. NYSED's experience is that schools that must close have
little incentive to establish teachouts, so authorizing NYSED to
arrange for a teachout plan would provide greater protection for
students.

Section 5007 on refunds to students enrolled in schools that are
closing would be amended to expand expenses eligible for
reimbursement Section 5007(4)(a) and (c) on refunds to students would
be amended to provide for refunds of tuition, fees and book charges
paid by or on behalf of the students in cash or through loans,
excluding funding obtained through government agencies. Section
5007(5)(b) would be amended to authorize the Commissioner to refund
expenditures for fees, books and tuition to students of schools that
have closed. Section 5007(8) would be amended to protect the
interests of students in restitution from the tuition reimbursement
account by extending the time within which the Commissioner or the
Attorney General may seek recovery of a refund from a school from 30
days to 90 days from payment of the refund by the tuition
reimbursement account The provisions for special assessments for new
schools in section 5007(10) would be amended to be consistent with
the assessment changes in section 5001, and to reflect NYSED's
experience with assessing schools that have not been in operation for
an entire year. The requirement in section 5007(11) for an annual
fund audit of the tuition reimbursement account would be changed to
mandate a two-year audit.


Section 5008 would be amended to provide details regarding trust
accounts for schools determined to be in financial jeopardy.

Section 5009 would be amended to remove the annual reporting
requirement.

Section 5010 would be amended to remove the requirement to have a
student representative on the advisory council. NYSED has been unable
to find a student willing to serve in this capacity. Term limits for
members would be mandated, although members could be reappointed.
This would ensure that members of the advisory council continue to be
affiliated with schools in the non-degree proprietary sector.
Provisions that are no longer relevant to the council, including
limiting the scope of its advisory responsibilities, would be deleted.

STATEMENT IN SUPPORT OF THE BILL:

The law pertaining to non-degree proprietary schools was last amended
substantially in 1990. Since then, the number of these schools has
increased and their nature has changed. Only one-tenth of licensed
schools currently receive federal Title IV funds for students in
strictly business or trade programs. Schools today offer hybrid
programs such as medical office assisting, where coding and
recordkeeping are combined with clinical service such as phlebotomy.
Most schools have ceased to rely on Title IV, state TAP or other
similar funding sources and have turned to private sources such as
Sallie Mae, banks, etc.

The law needs to be updated to reflect and conform to the current
needs of this area of higher education and of this vital business
industry, and to provide the Bureau of Proprietary School Supervision
of the State Education Department the flexibility it needs to
adequately continue to supervise proprietary schools, protect
students and taxpayers, and preserve and strengthen this important
educational and economic industry.

Currently, there are more than 450 licensed, registered, or certified
schools. In addition, approximately 200 schools are pending
licensure. Furthermore, more than 1,000 schools currently operating
in New York State are unlicensed (although some may be operating
under a legal exemption, the vast majority of these unlicensed
schools are operating illegally).

NYSED needs to maintain its ability to regulate the industry and to
strengthen schools that provide a quality education to some of this
state's most vulnerable adult learners while enforcing health,
safety, financial and other regulatory safeguards against those
schools who, either inadvertently or intentionally do not adhere to
the industry's standards and their legal obligations. Consistent,
fair and assured enforcement will even the playing field for all
non-degree schools subject to regulation, which will in turn
increases competition among such schools and increase the quality of
each school's training programs.

In addition, more stability is absolutely crucial to maintain the
tuition reimbursement account (TRA), which is used to repay students
when their school refuses to issue a refund to them for overpayments


or in those dire cases when schools close their
doors, sometimes overnight, and either are unable or unwilling to meet
their contractual commitments for training the students. Students in
these situations are left out in the cold, sometimes after they have
made significant investments of time and money into their training,
with nothing to show for it. In these situations, NYSED must have the
resources to step in, make these students financially whole and work
to provide alternative educational opportunities for them almost
immediately.

In the past decade, the TRA faced near bankruptcy when a chain of
schools on Long Island closed, leaving students stranded without
either a quality education nor access to refunds of their substantial
investment in the form of tuition, fees and book charges. The law
pertaining to the TRA has not been updated or reinforced since 1993.
The amendments pertaining to financial probation, financial viability,
and trust accounts are intended to prevent future situations where
at risk students nearly lose all of their investment of time and money.

Current law limits private career school teachers to teaching a
particular subject only at a single school location. Removing that
limitation would allow these teachers to teach that subject at any
licensed school in the state. The state's schools would greatly
benefit by being able to transfer teachers from one location of a
school chain to another without the unnecessary requirement that
these teachers need to be dually licensed.
Schools would also have a larger supply of substitute teachers. With
teachers given the freedom to move from school to school, salary
schedules could become more competitive within this sector. Also,
students would have the same access to teachers previously licensed
at only one school and teachers with a record of successful student
course completion and high placement rates could become more in
demand from other schools.

BUDGETARY IMPLICATIONS OF THE BILL:

This bill would generate some additional funds necessary for NYSED to
adequately oversee, investigate, discipline and help make this
important higher education sector stronger. Current tuition levels
generate approximately $3.0 million in revenue.
The proposed changes in the first year the legislation is implemented
would generate approximately $800,000 (based on current school
figures and estimates). This increase is over the 2008-09 year, the
last completed fiscal year for which figures are available.

PRIOR LEGISLATIVE HISTORY:

In 2009, this bill was introduced in the Senate as S.6013, referred to
the Senate Rules Committee, and no further action was taken.
Subsequently, this bill was introduced in the Senate as S.6043 and in
the Assembly as A.8773. S.6043 was referred to the Senate Rules
Committee and no further action was taken. A.8773 was referred to
the Assembly Higher Education Committee and no further action was
taken. In 2010, it was again referred to both the Senate and
Assembly's Committee on Higher Education, but no further action was
taken.


In 2008. this bill was introduced in the Senate as S.7592. referred to
the Senate Education Committee. discharged and committed to the
Senate Higher Education Committee. and then reported and committed to
the Senate Finance Committee. No further action was taken.

EFFECTIVE DATE:

This bill would take effect on the one hundred twentieth day after it
shall have become a law; provided that subparagraph (iii) of
paragraph b of subdivision 4 of section 5001 of the Education Law,
which relates to candidacy status, would expire and be deemed
repealed three years after such effective date; and provided further,
however, that effective immediately, the Commissioner of Education
would be authorized and directed to promulgate any rules or
regulations deemed necessary to implement the provisions of this act
on such effective date.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 4268--A
    Cal. No. 512

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             March 25, 2011
                               ___________

Introduced by Sen. LAVALLE -- (at request of the State Education Depart-
  ment)  --  read  twice  and  ordered  printed,  and when printed to be
  committed to the Committee on Higher Education --  reported  favorably
  from  said  committee  and  committed  to  the Committee on Finance --
  committee discharged, bill amended, ordered reprinted as  amended  and
  recommitted to said committee

AN  ACT  to  amend  the  education  law, in relation to the licensure of
  private proprietary schools; and providing for the repeal  of  certain
  provisions upon the expiration thereof

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The article heading of article 101 of the education law  is
amended to read as follows:
                       LICENSED PRIVATE [TRADE AND
              CORRESPONDENCE] CAREER SCHOOLS AND CERTIFIED
                  ENGLISH AS A SECOND LANGUAGE SCHOOLS
  S  2.  Legislative  intent.  The Legislature hereby finds and declares
that there is a growing need to protect  students  enrolled  in  certain
non-degree granting proprietary schools from inadequate job training and
school  closure,  which disrupts the academic progress of these students
and jeopardizes their tuition funds. Given the growing needs and demands
of business and industry, the Legislature further finds and declares  it
necessary to align the state education department's current oversight of
these schools with these significantly increasing needs. The Legislature
finds  it  necessary for the department to review these schools' curric-
ulums and instruction to help ensure students receive adequate  training
to obtain employment and to successfully perform their occupation in the
workplace. It also finds it necessary for the department to intervene in
certain  school  closures  where  teach out plans may not be efficiently
implemented and students may not complete training.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08579-03-1

S. 4268--A                          2

  The Legislature also finds it necessary for the department  to  review
these  schools  for financial viability to prevent school closure, which
will, in turn, preserve tuition funds  and  federal  and  state  funding
sources.  This  act is also necessary to increase the accountability and
transparency of these schools by allowing students to check on whether a
school is approved or whether a teacher at such school is licensed.
  The  Legislature  intends  for  this act to increase competition among
these schools, which will, in turn,  improve  the  quality  of  training
offered  at  these schools and the quality of student performance in the
workplace.  This act will provide the  department  with  the  tools  and
resources  necessary  to effectively supervise these schools for compli-
ance and to reimburse students for tuition and other related costs  when
these  schools  close  as  a  result of fiscal failure or noncompliance,
which will overall strengthen student protection.
  S 3. Section 5001 of the education law, as added by chapter 817 of the
laws of 1972, the section heading, subdivision 1, paragraph h of  subdi-
vision  2  and paragraph b of subdivision 4 as amended and paragraphs i,
j, k, l and m of subdivision 2 and subdivisions 2-a and 2-b as added  by
chapter 434 of the laws of 1999, paragraph b of subdivision 2 as amended
and subdivisions 5, 6, 7, 8 and 9 as added by chapter 887 of the laws of
1990,  paragraph  d of subdivision 2 and subdivision 4 as amended, para-
graphs a, b, c and d of subdivision 9 as added and subdivisions 5, 6, 7,
8 and 9 as renumbered by chapter 604 of the laws of 1993, paragraph e of
subdivision 2 as amended by chapter 439 of the laws of 1980,  and  para-
graph  f  of subdivision 2 as amended by chapter 13 of the laws of 2010,
is amended to read as follows:
  S 5001. Licensed  private  CAREER  schools  [and  registered  business
schools/computer   training  facilities].  1.  Schools  required  to  be
licensed [or registered]. No private school [or computer training facil-
ity] which charges tuition or fees  [for]  RELATED  TO  instruction  and
which  is  not  exempted  hereunder  shall  be operated by any person or
persons, firm, corporation, or private organization for the  purpose  of
teaching  or giving instruction in any subject or subjects, unless it is
licensed [or registered] by the department. As used  in  this  article[,
the following terms shall have the following meanings]:
  a.  ["Licensed]  "LICENSED private CAREER school" OR "LICENSED PRIVATE
SCHOOL" shall mean any entity offering to instruct or teach any  subject
by  any  plan  or method including written, visual or audio-visual meth-
ods[.], AND SHALL INCLUDE ANY INSTITUTION LICENSED OR  REGISTERED  AS  A
REGISTERED  BUSINESS  SCHOOL OR COMPUTER TRAINING FACILITY ON THE EFFEC-
TIVE DATE OF THE CHAPTER OF  THE  LAWS  OF  TWO  THOUSAND  ELEVEN  WHICH
AMENDED  THIS SUBDIVISION. FOLLOWING SUCH EFFECTIVE DATE, THERE SHALL BE
NO DISTINCTION BETWEEN INSTITUTIONS PREVIOUSLY  DEFINED  AS  "REGISTERED
BUSINESS  SCHOOLS"  OR "COMPUTER TRAINING FACILITIES" AND OTHER LICENSED
PRIVATE SCHOOLS, AND ANY REFERENCE  IN  LAW  TO  A  REGISTERED  BUSINESS
SCHOOL  OR  COMPUTER  TRAINING FACILITY SHALL BE DEEMED A REFERENCE TO A
LICENSED PRIVATE CAREER SCHOOL. INSTITUTIONS HOLDING  A  VALID  BUSINESS
SCHOOL  REGISTRATION ON SUCH EFFECTIVE DATE, INCLUDING COMPUTER-TRAINING
FACILITIES, SHALL HAVE SUCH REGISTRATIONS REPLACED BY THE  COMMISSIONER,
AT NO COST, WITH LICENSES VALID UNTIL THE EXPIRATION DATE LISTED ON SUCH
PREVIOUS REGISTRATION; AND
  b.  ["Registered  business  school"  shall  mean  a  school in which a
curriculum primarily provides a sequence of  courses  that  may  include
accounting or bookkeeping, marketing, business arithmetic, business law,
business     English,     shorthand,     typing,    computer    business
applications/programming, or substantially all  said  courses,  for  the

S. 4268--A                          3

purpose  of  preparing  an  individual  to pursue a business occupation;
provided, however, that a registered business school program may include
instruction in English as a second language  at  a  beginning  or  basic
level,  provided  such  instruction shall not constitute more than fifty
percent of such program. Such authorization shall apply to all  students
who  commence  instruction in a registered business school program prior
to July first, nineteen hundred ninety-one. A business school registered
under this section shall employ only teachers licensed  by  the  depart-
ment,   whose  qualifications  are  substantially  equivalent  to  those
required of teachers of equivalent subjects in public secondary schools.
  c. "Computer  training  facility"  shall  mean  any  entity  primarily
engaged  in  providing training on the use, language, programs, applica-
tion, networking and technical repair of computers]  "CERTIFIED  ENGLISH
AS  A  SECOND  LANGUAGE  SCHOOL"  OR "CERTIFIED ESL SCHOOL" SHALL MEAN A
LANGUAGE SCHOOL  CONDUCTED  FOR-PROFIT  WHICH  PROVIDES  INSTRUCTION  IN
ENGLISH  AS  A  SECOND LANGUAGE AND WHICH ACCEPTS NO PUBLIC FUNDS AND IS
CERTIFIED PURSUANT TO PARAGRAPH F OF SUBDIVISION FOUR OF THIS SECTION.
  2. Exempt schools. The following schools are exempted from the licens-
ing requirement of this section:
  a. institutions authorized to confer degrees in this state;
  b. schools[, other than correspondence schools,] providing  kindergar-
ten,   nursery,   elementary  or  secondary  education,  except  schools
conducted for profit which provide instruction in English  as  a  second
language  or  preparation  for  high  school equivalency examinations to
out-of-school youth or adults;
  c. schools operated by governmental agencies or authorities;
  d. schools which engage exclusively in training of students with disa-
bilities as defined in section forty-four hundred one of this chapter;
  e. schools conducted on a not-for-profit basis by firms  or  organiza-
tions  for  the training of their own employees only, provided that such
instruction is offered at no charge to such employees, or by a fraternal
society or benevolent order for its members or their immediate relatives
only;
  f. schools which provide instruction in the following  subjects  only:
religion, dancing, music, painting, drawing, sculpture, poetry, dramatic
art,  languages,  reading  comprehension, mathematics, recreation, yoga,
martial arts, PILATES and athletics, including the training of  students
to  teach  such  subjects, PROVIDED, HOWEVER, THAT SCHOOLS CONDUCTED FOR
THE PURPOSE OF TRAINING PERSONAL TRAINERS SHALL BE  EXCLUDED  FROM  THIS
EXEMPTION AND SHALL BE REQUIRED TO OBTAIN LICENSURE;
  g.  schools in which the course of instruction is licensed, registered
or approved under any other section of this  chapter  or  by  any  other
department or agency of the state;
  h. schools which provide instruction designed solely for giving flight
training and/or related ground school instruction;
  i.  schools in which instruction designed solely to prepare applicants
for admission to professional licensing examinations administered by the
department pursuant to title eight of this chapter, and  applicants  for
examination for admission to the practice of law;
  j.  schools  which  offer continuing education courses exclusively for
individuals licensed by the department pursuant to title eight  of  this
chapter and for individuals admitted to the practice of law;
  k. schools which provide instruction given exclusively to employees of
a  person  or  organization  which has contracted with another person or
organization to provide such instruction at no cost to the employees;

S. 4268--A                          4

  l. conferences, trade shows, workshops, seminars, institutes or cours-
es of study offered and sponsored  either  jointly  or  individually  by
recognized trade, business or professional organizations for the benefit
of their membership; [or those offered to the general public by individ-
uals, firms or organizations which neither conduct such activities for a
duration  of  more  than  five consecutive days nor more frequently than
twice in any one calendar year;]
  m. SCHOOLS THAT LIMIT THEIR TOTAL CONFERENCES, TRADE SHOWS, WORKSHOPS,
SEMINARS, INSTITUTES OR OTHER COURSE OFFERINGS TO NO MORE THAN TWICE  IN
ONE  CALENDAR  YEAR  WITH  EACH OF THOSE OFFERINGS FOR NO MORE THAN FIVE
DAYS;
  N. schools which provide instruction exclusively to  persons  employed
full-time  or  part-time  in  the  field  in  which instruction is being
offered, where the instruction is provided to meet continuing  education
standards  required for professional licensure as defined by law in this
state; AND
  O. SCHOOLS IN CANDIDACY STATUS PURSUANT TO SUBPARAGRAPH (IV) OF  PARA-
GRAPH B OF SUBDIVISION FOUR OF THIS SECTION.
  2-a.  Schools exempted pursuant to subdivision two of this section may
waive  such  exemption  and  apply  for  a  license  [or  registration];
provided, however, that the review of such applications shall be left to
the discretion of the commissioner.
  2-b.  Programs  offered  by licensed private CAREER schools [or regis-
tered business schools to private businesses where there is  no  tuition
liability] TO EMPLOYEES OF A PERSON OR ORGANIZATION WHICH HAS CONTRACTED
WITH  ANOTHER  PERSON  OR ORGANIZATION TO PROVIDE SUCH INSTRUCTION AT NO
COST to the employees shall be exempt  from  the  requirements  of  this
article, provided that the following requirements are met:
  a.  Only  employees  of  the [private business] EMPLOYER for which the
program is being offered may enroll in classes that make up the program.
  b. Certificates or diplomas awarded to students in the program may not
reference in any way the department.
  c. Prior to the commencement of the program, such schools shall submit
to the department a disclosure form,  prescribed  by  the  commissioner,
copies  of  which  shall  be  provided  to  all  students in such exempt
program, which shall include but not be limited to the following  infor-
mation:
  (i) a description of the location and time period in which the program
will be offered;
  (ii)  a  statement that the students enrolled in the program shall not
be subject to any tuition  liability  for  the  program,  even  if  such
students do not complete the program;
  (iii)  a  statement  that  the  program being provided to the [private
business] EMPLOYER has not been approved by the department  and  is  not
under the department's jurisdiction and that the students in the program
have been advised of the fact; and
  (iv)  the signatures of the school director or owner of the school and
the representative of the [private  business]  EMPLOYER  for  which  the
program  is  being  offered certifying the accuracy of the statements on
the form.
  d. Any additional student openings in a program deemed exempt  by  the
department  may  be  made  available to students not affiliated with the
[private business] EMPLOYER on the condition that such students  execute
a disclosure form as prescribed in paragraph c of this subdivision. Such
admitted  students shall only constitute up to ten percent of the exempt
program's total capacity.

S. 4268--A                          5

  4. Application, renewal application and application fees. a.  Applica-
tion  and  renewal  application for a license as a private CAREER school
[or registration as a business  school]  required  by  the  commissioner
shall  be  filed  on  forms  prescribed  and provided by the department.
Except as provided in subparagraph (iii) of paragraph e of this subdivi-
sion, each renewal application for [a private business school registered
pursuant to this section or for] a private CAREER school licensed pursu-
ant to this section shall include an audited financial statement audited
according  to  generally  accepted  auditing standards by an independent
certified public accountant or  an  independent  public  accountant  and
statistical reports certified by the owner or operator of the school, as
required  by  the commissioner; provided, however, that the commissioner
shall accept a copy of a current financial statement previously filed by
a school with any other  governmental  agency  in  compliance  with  the
provisions of any federal or state laws, or rules or regulations if such
statement  contains  all of the information required under this subdivi-
sion and conforms to this subdivision's requirements of auditing, review
and certification. Any required audit of the financial  statement  shall
be  a  condition of licensure [or registration] and shall be paid for by
the school, and the results of the  audit  shall  be  forwarded  to  the
commissioner.  Applications  not  accompanied  by the audits and reports
required pursuant to  this  subdivision  shall  not  be  considered  for
approval  by the commissioner. Initial applications shall be accompanied
by financial reports as required by the commissioner. [The  commissioner
shall act on an initial application for a license or registration within
one  hundred  twenty  days  of  receipt  of a complete application.] The
applicant shall receive a written approval or denial together  with  the
reasons for a denial of such application.
  b.  (i)  An  initial  license [or registration] issued pursuant to the
provisions of this article shall be valid for a period of two  years.  A
renewal  of  license [or registration] issued pursuant to the provisions
of this article shall be valid for a period of four years. [All  license
and  registration  fees for a renewal shall be double the amounts listed
in paragraph g of this subdivision.]
  (ii) EVERY APPLICANT AND RENEWAL APPLICANT SHALL PAY TO THE DEPARTMENT
A NONREFUNDABLE, NONTRANSFERABLE APPLICATION FEE. THE  INITIAL  APPLICA-
TION  FEE FOR NEW SCHOOLS SHALL BE FIVE THOUSAND DOLLARS, OF WHICH THREE
THOUSAND DOLLARS SHALL ACCRUE TO THE CREDIT  OF  THE  PROPRIETARY  VOCA-
TIONAL  SCHOOL SUPERVISION ACCOUNT AND TWO THOUSAND DOLLARS SHALL ACCRUE
TO THE TUITION REIMBURSEMENT ACCOUNT. FOR ADDITIONAL LICENSED  LOCATIONS
OF  CURRENTLY  OPERATING SCHOOLS, THE APPLICATION FEE SHALL BE TWO THOU-
SAND FIVE HUNDRED DOLLARS, WHICH SHALL  ACCRUE  TO  THE  CREDIT  OF  THE
PROPRIETARY  VOCATIONAL SCHOOL SUPERVISION ACCOUNT. FOR RENEWAL APPLICA-
TIONS, THE FEE SHALL BE BASED ON GROSS ANNUAL TUITION INCOME  AS  DETER-
MINED BY THE ANNUAL FINANCIAL STATEMENTS REQUIRED IN PARAGRAPH A OF THIS
SUBDIVISION  FOR  THE  MOST  RECENT SCHOOL FISCAL YEAR, ACCORDING TO THE
FOLLOWING SCHEDULE:

     GROSS ANNUAL TUITION INCOME           FEE

     0-$199,999                            $   750.00
     $200,000-$499,999                     $ 1,500.00
     $500,000-$999,999                     $ 2,225.00
     $1,000,000-$4,999,999                 $ 4,500.00
     $5,000,000-$9,999,999                 $ 9,000.00
     $10,000,000 OR ABOVE                  $18,000.00

S. 4268--A                          6

  SUCH RENEWAL FEES SHALL ACCRUE TO THE CREDIT OF THE PROPRIETARY  VOCA-
TIONAL  SCHOOL  SUPERVISION  ACCOUNT.  IF THE EVALUATION OF A PARTICULAR
COURSE OR FACILITY REQUIRES THE SERVICES OF AN EXPERT  NOT  EMPLOYED  BY
THE  DEPARTMENT,  THE DEPARTMENT SHALL RETAIN SUCH EXPERT AND THE SCHOOL
SHALL REIMBURSE THE DEPARTMENT FOR THE REASONABLE COST OF SUCH SERVICES.
  (III)  Each school shall display, near the entrance to the school [and
under glass], the license [or registration] which has been issued to it.
Such authorization shall be displayed only  during  the  period  of  its
validity.
  (IV)  A  SCHOOL  WHICH HAS APPLIED FOR A PRIVATE CAREER SCHOOL LICENSE
MAY REQUEST CANDIDACY STATUS FOR ONE TIME ONLY. CANDIDACY  STATUS  SHALL
NOT  BE  ISSUED  TO  SCHOOLS OFFERING PROGRAMS TO TRAIN STUDENTS TO PASS
LICENSURE EXAMINATIONS SUCH AS  APPEARANCE  ENHANCEMENT  TESTS,  ACHIEVE
NURSE  AIDE OR NURSE ASSISTANT CERTIFICATION, OR PASS EXAMINATIONS LEAD-
ING TO LICENSURE IN ANY OTHER PROFESSION OR OCCUPATION DETERMINED BY THE
COMMISSIONER TO REQUIRE FULL LICENSURE STATUS.   CANDIDACY STATUS  SHALL
ALLOW  A  SCHOOL  TO  OPERATE UNLICENSED FOR AN INITIAL PERIOD OF TWELVE
MONTHS DURING THE LICENSURE APPLICATION PROCESS, WHICH MAY  BE  EXTENDED
TO A MAXIMUM, NON-RENEWABLE PERIOD OF EIGHTEEN MONTHS, UNDER THE FOLLOW-
ING CONDITIONS:
  (1) THE PROSPECTIVE SCHOOL SUBMITS A CANDIDATE SCHOOL APPLICATION FEE,
SEPARATE FROM THE SCHOOL APPLICATION FEE, OF FIVE THOUSAND DOLLARS WHICH
SHALL  ACCRUE  TO THE CREDIT OF THE PROPRIETARY VOCATIONAL SCHOOL SUPER-
VISION ACCOUNT;
  (2) THE SCHOOL SHALL NOT REPRESENT THAT IT IS  LICENSED  OR  THAT  ITS
PROGRAMS ARE APPROVED THROUGH THE DEPARTMENT;
  (3)  TO  EVERY  PROSPECTIVE  STUDENT,  THE  SCHOOL SHALL DISSEMINATE A
STATEMENT, PROVIDED BY THE DEPARTMENT, THAT THE FACILITIES, INSTRUCTORS,
AND PROGRAMS BEING PROVIDED HAVE NOT BEEN APPROVED AND ARE NOT UNDER THE
DEPARTMENT'S JURISDICTION DURING THE CANDIDACY  PERIOD.  SUCH  STATEMENT
SHALL  INDICATE  THAT STUDENTS ATTENDING CANDIDATE SCHOOLS SHALL HAVE NO
RECOURSE THROUGH THE DEPARTMENT'S STUDENT COMPLAINT PROCESS NOR HAVE ANY
RESTITUTION AVAILABLE FROM THE TUITION REIMBURSEMENT  ACCOUNT.  STUDENTS
SHALL  SIGN  AN ATTESTATION TO THE RECEIPT OF THIS STATEMENT. THE SCHOOL
SHALL RETAIN THE SIGNED ATTESTATION AND PROVIDE THE STUDENT WITH A  COPY
OF SUCH SIGNED STATEMENT;
  (4)  THE  SCHOOL  SHALL  DEMONSTRATE FINANCIAL VIABILITY THROUGH MEANS
DEEMED APPROPRIATE BY THE COMMISSIONER. SUCH MEANS MAY  INCLUDE  SUBMIT-
TING AN AUDITED FINANCIAL STATEMENT BASED ON THE MOST RECENTLY COMPLETED
FISCAL YEAR; SECURING AND MAINTAINING A PERFORMANCE BOND, PAYABLE TO THE
COMMISSIONER, IN AN AMOUNT APPROPRIATE TO ELIMINATE ANY LIABILITY TO THE
TUITION  REIMBURSEMENT ACCOUNT IN THE EVENT THE SCHOOL CEASES OPERATION;
LIMITING THE COLLECTION OF TUITION FUNDS UNTIL  EACH  STUDENT  COMPLETES
THE PROGRAM OF STUDY; OR OTHER MEANS ACCEPTABLE TO THE COMMISSIONER; AND
  (5) ANY BREACH OF THE ABOVE CONDITIONS SHALL RESULT IN THE DISAPPROVAL
OF  THE  SCHOOL'S  LICENSURE APPLICATION AND THE FORFEITURE OF CANDIDATE
STATUS. CONTINUED OPERATION AFTER THIS  DISAPPROVAL  SHALL  SUBJECT  THE
SCHOOL TO THE DISCIPLINARY ACTION PRESCRIBED UNDER PARAGRAPH B OF SUBDI-
VISION SIX OF SECTION FIVE THOUSAND THREE OF THIS ARTICLE.
  (6)  ON OR BEFORE THE END OF THE INITIAL TWELVE-MONTH PERIOD OF CANDI-
DACY STATUS, THE COMMISSIONER SHALL REVIEW THE SCHOOL'S APPLICATION  FOR
LICENSURE  AND  DOCUMENTATION  RELATING TO THE SCHOOL'S CANDIDACY STATUS
AND SHALL DETERMINE WHETHER SUCH CANDIDACY STATUS SHOULD BE EXTENDED  TO
THE  FULL  EIGHTEEN MONTHS AND WHETHER THE SCHOOL MAY CONTINUE TO ENROLL
STUDENTS BEYOND THE EIGHTEEN-MONTH PERIOD OR  THE  SCHOOL'S  APPLICATION

S. 4268--A                          7

FOR LICENSURE WILL BE INITIALLY DISAPPROVED FOR FAILURE TO MEET REQUIRED
STANDARDS.
  c.  An  application for renewal of any license [or registration] shall
be submitted at least one hundred twenty days prior  to  the  expiration
date  of  the current authorization to operate accompanied by the nonre-
fundable application fee and  such  certified  statistical  reports  and
annual financial statements required pursuant to this subdivision.
  d.  When  complete and timely application has been made for renewal of
any license [or  registration],  the  school  shall  receive  a  written
approval  or  denial,  together  with the reasons for denial of renewal,
from the commissioner no less than thirty days prior to  the  date  such
license [or registration] expires.
  e.  Financial statements and statistical reports. (i) Licensed private
CAREER schools and [registered business] CANDIDATE schools shall  submit
such  certified  statistical  reports and annual financial statements as
required by the  commissioner.  The  commissioner  may  require  audited
statistical  reports  upon  a  determination  that a school has provided
false or inaccurate certified statistical reports. The financial  state-
ments  shall  be  based  on the fiscal year of the school and shall also
include an itemized account of tuition refunds due and owing to past  or
presently  enrolled students. Statistical reports shall include, but not
be limited to, enrollment, completion and placement  data.  The  commis-
sioner  shall  use  such  financial  statements  and statistical reports
submitted for the purposes of licensure [and registration]  of  schools,
establishing  fees or assessments pursuant to this article and determin-
ing standards pursuant to paragraph b of  subdivision  five  of  section
five thousand two of this article. The attorney general, the comptroller
and  the  president  of  the higher education services corporation shall
have access to this information when it is necessary  to  perform  their
duties as required by state law.
  (ii)  Any  school which received [in excess of two hundred fifty] FIVE
HUNDRED thousand dollars OR MORE in gross tuition  in  a  school  fiscal
year  shall  be required to submit TO THE COMMISSIONER an annual audited
financial statement [to the commissioner] PREPARED  IN  ACCORDANCE  WITH
GENERALLY  ACCEPTED ACCOUNTING PRINCIPLES for that fiscal year. In addi-
tion, any school which has a gross tuition of [two hundred  fifty]  LESS
THAN FIVE HUNDRED thousand dollars [or less] in a school fiscal year but
whose  combined  state  and  federal  student financial aid in such year
[exceeds] EQUALS one hundred thousand dollars OR MORE shall also  submit
an  annual  audited  financial  statement  to  the commissioner for that
fiscal year.
  (iii) Schools whose gross tuition is [two  hundred  fifty]  LESS  THAN
FIVE  HUNDRED  thousand  dollars  [or  less] in a school fiscal year and
which receive less than one hundred thousand dollars in state and feder-
al student financial aid in a school fiscal year  shall  file  with  the
commissioner  an unaudited financial statement in a format prescribed by
the commissioner, provided, however, that any such  school  [with  gross
tuition  in  excess  of fifty thousand dollars shall have filed at least
one audited financial statement after the first year of  its  operation.
The  statement shall be signed by the president or chief executive offi-
cer and the chief fiscal officer of the school who  shall  certify  that
the  statements  are  true and accurate] SHALL FILE AN AUDITED FINANCIAL
STATEMENT THE FISCAL  YEAR  AFTER  A  REVIEWED  FINANCIAL  STATEMENT  IS
SUBMITTED.  FOR  SUCH SCHOOLS, AUDITED FINANCIAL STATEMENTS ARE REQUIRED
EVERY TWO YEARS, AT MINIMUM, WITH REVIEWED FINANCIAL STATEMENTS  ALLOWED
DURING THE ALTERNATE YEAR. Upon a determination by the commissioner that

S. 4268--A                          8

a  school has submitted false or inaccurate statements or that a signif-
icant, unsubstantiated  decline  in  gross  tuition  has  occurred,  the
commissioner  may  require  any such school to file an audited financial
statement  pursuant  to  this paragraph EVEN DURING ALTERNATE YEARS WHEN
REVIEWED STATEMENTS WOULD ORDINARILY BE ALLOWED.
  f. Alternate licensing provision. The commissioner shall  issue  regu-
lations  which  define alternate licensing OR CERTIFICATION requirements
for the following:
  (1) correspondence schools in which all approved programs and  courses
are under three hundred hours;
  (2)  schools  which  are eligible for exemption under this section but
which elect to be licensed;
  (3) non-profit schools exempt from taxation under section 501(c)(3) of
the internal revenue code whose programs  are  funded  entirely  through
donations  from  individuals  or  philanthropic organizations, or endow-
ments, and interest accrued thereon; and
  (4) language schools conducted for-profit which provide instruction in
English as a second language and which accept no public funds.
  [g. Application fee. Every applicant and renewal applicant  shall  pay
to  the  department  a nonrefundable, nontransferable fee based on gross
annual tuition income as determined by the annual  financial  statements
required  in  paragraph a of this subdivision for the most recent school
fiscal year, according to the following schedule:

     GROSS ANNUAL TUITION INCOME            FEE

     0-$199,999                             $ 250.00
     $200,000-$499,999                      $ 500.00
     $500,000-$999,999                      $ 750.00
     $1,000,000-$4,999,999                 $1,500.00
     $5,000,000-$9,999,999                 $3,000.00
     $10,000,000 or above                  $6,000.00

  Such fees shall accrue to the credit  of  the  proprietary  vocational
school  supervision account. If the evaluation of a particular course or
facility requires the services of an expert not employed by the  depart-
ment, the department shall retain such expert and the school shall reim-
burse the department for the reasonable cost of such services.]
  5.  Required  disclosure  for  licensure.  a.  The  commissioner shall
require that each applicant for a license for the operation of a private
[vocational or business] CAREER school disclose the  following  informa-
tion:
  (1)  Whether  the  applicant, or any corporation, partnership, associ-
ation or organization or person holding an ownership or control interest
in such school, or any employee responsible in  a  supervisory  capacity
for  the administration of student funds or governmental funds, has been
convicted of a crime defined in this article, or any other crime involv-
ing the operation  of  any  educational  or  training  program,  or,  in
connection with the operation of any such program, a crime involving the
unlawful  acquisition,  use,  payment  or  expenditure of educational or
training program funds; and
  (2) Whether the applicant, or any  corporation,  partnership,  associ-
ation or organization or person holding an ownership or control interest
in  such  school,  or any employee responsible in a supervisory capacity
for the administration of student funds or governmental funds  has  been
convicted:

S. 4268--A                          9

  (A)  in  this  state  of  any of the following felonies defined in the
penal law: bribery involving public servants; commercial bribery; perju-
ry in the second degree;  rewarding  official  misconduct;  larceny,  in
connection  with  the  provision  of  services or involving the theft of
governmental  funds;  offering a false instrument for filing, falsifying
business records; tampering with public records; criminal usury;  scheme
to defraud; or defrauding the government; or
  (B)  in  any  other  jurisdiction of an offense which is substantially
similar to any of the felonies defined in clause (A)  of  this  subpara-
graph  and  for  which a sentence to a term of imprisonment in excess of
one year was authorized and is authorized in this  state  regardless  of
whether such sentence was imposed; and
  (3)  Whether  the  applicant, or any corporation, partnership, associ-
ation or organization or person holding an ownership or control interest
in such school, or any employee responsible in  a  supervisory  capacity
for  the administration of student funds or governmental funds, has been
finally determined in any administrative or  civil  proceeding  to  have
committed  a violation of any provision of this article or any rules and
regulations promulgated pursuant thereto, or any related order or deter-
mination of the commissioner, or of any  similar  statute,  rule,  regu-
lation, order or determination of another jurisdiction pertaining to the
licensure and operation of any educational or training program; and
  (4)  Whether  any  school owned or operated by the applicant closed or
ceased operation and, if so, whether at the  time  of  the  closing  the
applicant  was  subject  to a pending disciplinary action, disallowance,
fine or other penalty and whether it  owed  refunds  to  any  government
agency or students.
  b.  No  application  for any license pursuant to this article shall be
denied by reason of disclosure  pursuant  to  this  subdivision  of  the
applicant,  or any corporation, partnership, association or organization
or person holding an ownership or control interest in  such  school,  or
any  employee  responsible  in  a  supervisory capacity for the adminis-
tration of student funds or governmental funds unless  the  commissioner
makes  a  written  determination  that  there  is  a direct relationship
between one or more of such previous offenses and the license sought, or
that issuance of the license would create an unreasonable risk to  prop-
erty  or  to the safety, education or welfare of specific individuals or
the general public. In making such determination, the commissioner shall
be guided by the factors set forth in section seven hundred  fifty-three
of  the  correction law. For purposes of this subdivision, "ownership or
control interest" means: with respect to a school that is  organized  as
or  owned by a corporation, a position as an officer or director of such
corporation; or, with respect to a school that is organized as or  owned
by  a partnership, a position as a partner; or any other interest total-
ing ten percent or more, whether direct or indirect, in the total equity
or assets of such school.
  c. The commissioner may deny, suspend, revoke or decline to renew  any
license:  (1)  if  the significance of the convictions or administrative
violations warrant such action [or]; (2) if the commissioner  determines
that  a school did not make any disclosure required by this subdivision;
OR (3) IF THE COMMISSIONER DETERMINES THAT A SCHOOL'S  FINANCIAL  CONDI-
TION MAY RESULT IN THE INTERRUPTION OR CESSATION OF INSTRUCTION OR JEOP-
ARDIZE STUDENT TUITION FUNDS.
  6.  If, during the [two year] period for which a license [or registra-
tion] is granted, the commissioner determines that a school's  financial
condition  may result in the interruption or cessation of instruction or

S. 4268--A                         10

jeopardize student tuition funds, the commissioner may, upon  notice  to
the  school,  place the school on probation for a period of no more than
[thirty days] ONE YEAR, during which time the school and the  department
must  make  efforts  to  resolve the problems at the school.  THE SCHOOL
SHALL SUBMIT A REPORT ON ITS FINANCIAL  CONDITION  TO  THE  COMMISSIONER
WITHIN  THE TIME PRESCRIBED BY THE COMMISSIONER. SUCH REPORT SHALL BE IN
THE FORM AND SHALL INCLUDE CONTENT PRESCRIBED BY  THE  COMMISSIONER  AND
SHALL  BE  REVIEWED BY THE COMMISSIONER TO DETERMINE THE SCHOOL'S FINAN-
CIAL VIABILITY. THE COMMISSIONER MAY  SUSPEND  OR  REVOKE  THE  SCHOOL'S
LICENSE,  AS WELL AS REQUIRE THE CESSATION OF STUDENT ENROLLMENT, UPON A
DETERMINATION THAT THE SCHOOL'S FINANCIAL CONDITION CONTINUES TO THREAT-
EN ITS ABILITY TO EDUCATE STUDENTS AND/OR  THE  STUDENT  TUITION  FUNDS.
ALTERNATIVES  FOR  THE  SCHOOL TO DEMONSTRATE A FISCALLY SOUND OPERATION
MAY INCLUDE SECURING AND MAINTAINING A PERFORMANCE BOND, PAYABLE TO  THE
COMMISSIONER, IN AN APPROPRIATE AMOUNT TO ELIMINATE ANY LIABILITY TO THE
TUITION  REIMBURSEMENT ACCOUNT SHOULD THE SCHOOL CEASE OPERATION, LIMIT-
ING THE COLLECTION OF TUITION FUNDS UNTIL  EACH  STUDENT  COMPLETES  THE
PROGRAM  OF  STUDY, OR OTHER MEANS ACCEPTABLE TO THE COMMISSIONER. If no
resolution can be attained, a hearing, pursuant to subdivisions two  and
three  of section five thousand three of this article will be scheduled.
Such probation may include additional monitoring,  inspections,  limita-
tions  on  enrollment,  teaching  out  some or all of a school's present
students or temporary cessation of instruction.
  7. No license [or registration] granted under this  section  shall  be
transferable  or  assignable  without  the approval of the commissioner.
[Any] UPON transfer or assignment of any interest totaling  [ten]  TWEN-
TY-FIVE percent or more, whether direct or indirect, in the total equity
or  assets  of a school, SUCH SCHOOL shall be deemed a [transfer of such
school's license or registration. The commissioner shall approve or deny
a transfer or assignment based on the requirements set forth in subdivi-
sions three and four of this section.  Such approval or denial, together
with the reasons for denial, shall  be  transmitted  in  writing  within
ninety  days  of  the receipt of the complete application by the commis-
sioner. Upon a showing of good cause as to why the applicant  could  not
obtain  the  commissioner's  approval prior to a transfer or assignment,
the commissioner shall temporarily approve the  transfer  or  assignment
for a period not to exceed forty-five days and for such additional peri-
ods  as  the  commissioner  may deem appropriate] NEW SCHOOL REQUIRED TO
SUBMIT A NEW SCHOOL APPLICATION AND OBTAIN A  NEW  LICENSE  PURSUANT  TO
THIS  ARTICLE. PROVIDED, HOWEVER, THAT UPON SUCH A SUBSTANTIAL CHANGE IN
INTEREST, THE PREVIOUS SCHOOL LICENSE SHALL REMAIN IN EFFECT  UNTIL  THE
NEW  LICENSE  IS  ISSUED OR DENIED OR THE PREVIOUS LICENSE EXPIRES OR IS
REVOKED, WHICHEVER OCCURS FIRST.
  8. No licensed [or registered] school shall discontinue  operation  or
surrender  its  license  [or  registration]  unless  thirty days written
notice of its intention to do so and a  plan  for  maintenance  of  safe
keeping  of  the  records of the school is provided to the commissioner.
However, upon good cause shown, the commissioner may  waive  the  thirty
days notice requirement.
  9.  Annual  supervision  fund and tuition reimbursement [fund] ACCOUNT
assessment.  a. The commissioner shall annually  assess  each  school  a
total  percentage of that school's gross tuition pursuant to subdivision
three of section five thousand two of this article, as determined by the
annual [financial  statement  or  annual]  audited  financial  statement
required  by  this  article.  This  assessment  shall be based upon each
school's gross tuition from the previous year, and shall be  payable  to

S. 4268--A                         11

the  commissioner  in equal quarterly installments which shall be due on
June first, September first, December first and March first.
  b. (i) [Beginning April first, nineteen hundred ninety-one, such] SUCH
annualized  assessment shall be one percent  FOR SCHOOLS WHICH HAVE PAID
LESS THAN SIXTEEN QUARTERS OF ASSESSMENTS, BUT  SUCH  ANNUAL  ASSESSMENT
SHALL NOT FALL BELOW FIVE HUNDRED DOLLARS.
  (ii)  [Beginning  July first, nineteen hundred ninety-four, such] SUCH
annualized assessment shall be [nine-tenths] EIGHT-TENTHS of one percent
FOR SCHOOLS WHICH HAVE PAID SIXTEEN OR MORE QUARTERS OF ASSESSMENTS, BUT
SUCH ANNUAL ASSESSMENT SHALL NOT FALL BELOW FIVE HUNDRED DOLLARS.
  [(iii) Beginning April first, nineteen  hundred  ninety-five,  and  in
each  succeeding  year, such annualized assessment shall be eight-tenths
of one percent.]
  c. (i) Of the total assessment provided for herein, FIVE-TENTHS OF ONE
PERCENT SHALL ACCRUE TO THE CREDIT OF THE TUITION REIMBURSEMENT  ACCOUNT
PURSUANT  TO  SECTION  FIVE  THOUSAND  SEVEN  OF  THIS ARTICLE FOR THOSE
SCHOOLS WHICH HAVE PAID LESS THAN SIXTEEN QUARTERS  OF  ASSESSMENTS.  OF
THE  TOTAL  ASSESSMENT  PROVIDED  FOR SCHOOLS WHICH HAVE PAID SIXTEEN OR
MORE QUARTERS OF ASSESSMENTS, three-tenths of one percent  shall  accrue
to  the  credit  of the tuition reimbursement [fund] ACCOUNT pursuant to
section five thousand seven of this article.   FOR  SCHOOLS  PAYING  THE
MINIMUM FIVE HUNDRED DOLLARS ANNUAL ASSESSMENT, NONE SHALL ACCRUE TO THE
TUITION REIMBURSEMENT ACCOUNT.
  (ii)  The balance of the total assessment provided for herein shall be
dedicated  to  fund  the  department's  supervision  and  regulation  of
licensed  private  schools [and registered business schools] pursuant to
an annual appropriation and an annual plan of  expenditure  prepared  by
the  commissioner and approved by the director of the budget. [Following
the close of each fiscal year, the commissioner,  in  consultation  with
the  director  of  the  budget,  shall  determine  if the balance in the
proprietary vocational school supervision  fund  for  such  fiscal  year
exceeded  the amount required for the support of the department's super-
visory activities taking into account projected  revenues  and  expendi-
tures  for  the  subsequent fiscal year. To the extent that a surplus is
identified, the commissioner, with the approval of the director  of  the
budget,  shall  direct  the  transfer  of  such  surplus  to the tuition
reimbursement fund.]
  d. Payments made within thirty days following the due  date  shall  be
subject  to  interest  at  one  percent above the prevailing prime rate.
Thereafter, late payments may result in suspension of licensure  by  the
commissioner.  Payments required by this subdivision shall be considered
a condition of licensure [or registration].
  S 4. Section 5002 of the education law, as added by chapter 887 of the
laws of 1990, subparagraph 3 of paragraph b and paragraph d of  subdivi-
sion 1, subparagraph 2 of paragraph g of subdivision 3 and subdivision 6
as  amended and paragraph c of subdivision 1 and paragraph d of subdivi-
sion 2 as added by chapter 604 of the  laws  of  1993,  paragraph  c  of
subdivision 2, paragraph a of subdivision 4 and subdivision 7 as amended
and  paragraph  e  of  subdivision 4 and paragraph c of subdivision 6 as
added by chapter 434 of the laws of 1999, paragraph f of  subdivision  4
as  added by chapter 457 of the laws of 2003 and subparagraph 2 of para-
graph b of subdivision 5 as amended by chapter 301 of the laws of  1996,
is amended to read as follows:
  S 5002. Standards  for licensed private CAREER schools [and registered
business schools]. Any  school  licensed  [or  registered]  pursuant  to
section  five  thousand  one  of  this  article  shall  be organized and

S. 4268--A                         12

conducted only as a school and shall be subject to the  jurisdiction  of
the  department  exclusively,  or  in  conjunction with such other state
agency or department or district attorney upon  which  jurisdiction  has
also  been conferred by law. Such schools shall be subject to and comply
with the provisions of this section.
  1. Standards. a. No program of such schools shall be  conducted  in  a
factory  or commercial establishment, except where the use of facilities
or equipment of such factory or commercial  establishment  is  permitted
for necessary or desirable educational purposes and objectives.
  b.  For  every  such school, the commissioner shall set forth in regu-
lation standards governing all of the following:
  (1) criteria for admission, which shall provide that students at least
possess a high school diploma or its equivalent or demonstrate the abil-
ity to benefit from the instruction, except that in the case of students
who do not possess a high school  diploma  or  its  equivalent,  certif-
ication  of  the  students' ability to benefit from instruction shall be
provided to the commissioner as provided in paragraph c of this subdivi-
sion;
  (2) the standards and the methods of instruction;
  (3) the equipment available for instruction with the  maximum  enroll-
ment that such equipment and physical plant will accommodate;
  (4)  the  qualifications  and  experience  of  teaching and management
personnel;
  (5) the form and  content  of  the  student  enrollment  agreement  or
contract,  provided  that such agreement or contract shall be written in
the same language as that principally used in the sales presentation;
  (6) the methods of collecting tuition;
  (7) eligibility criteria for programs that will require licensure;
  (8) the sufficiency and suitability of the resources available for the
support of such school; and
  (9) counseling provided to students.
  B-1. (1) STUDENT LOANS OR OTHER  FINANCIAL  AID  FUNDS  RECEIVED  FROM
FEDERAL,  STATE,  OR LOCAL GOVERNMENTS OR ADMINISTERED UNDER THE FEDERAL
STUDENT FINANCIAL ASSISTANCE PROGRAMS GOVERNED BY TITLE IV OF THE HIGHER
EDUCATION ACT OF NINETEEN HUNDRED SIXTY-FIVE, 20 U.S.C.  SECTION 1070 ET
SEQ., AS AMENDED, MUST  BE  COLLECTED  AND  APPLIED  IN  THE  MANNER  AS
CONTROLLED BY THE APPLICABLE FEDERAL, STATE OR LOCAL REGULATIONS.
  (2)  STUDENT  LOANS OR OTHER FINANCIAL AID FUNDS RECEIVED FROM PRIVATE
ENTITIES, INCLUDING, BUT NOT LIMITED TO, BANKS, FINANCING COMPANIES, AND
OTHER LENDING SOURCES MUST BE COLLECTED OR DISBURSED  IN  THE  FOLLOWING
MANNER:
  (A) LOANS OR OTHER FINANCIAL AID PAYMENTS FOR AMOUNTS OF FIVE THOUSAND
DOLLARS OR LESS MAY BE DISBURSED AS A SINGLE DISBURSEMENT, REGARDLESS OF
COURSE LENGTH.
  (B)  LOANS  OR  OTHER  FINANCIAL AID PAYMENTS FOR AMOUNTS GREATER THAN
FIVE THOUSAND DOLLARS THAT REFLECT A CLASS TERM OF LESS THAN SIX  MONTHS
SHALL  HAVE  TWO EQUAL DISBURSEMENTS. THE DISBURSEMENT SCHEDULE FOR SUCH
LOANS OR PAYMENTS SHALL BE AS FOLLOWS: ONE-HALF OF  THE  TUITION  AMOUNT
RELEASED  INITIALLY,  AND  THE  REMAINDER  RELEASED  HALFWAY THROUGH THE
COURSE TERM.
  (C) LOANS OR OTHER FINANCIAL AID PAYMENTS  FOR  AMOUNTS  GREATER  THAN
FIVE  THOUSAND  DOLLARS  THAT  REFLECT  A CLASS TERM OF GREATER THAN SIX
MONTHS, BUT LESS THAN TWELVE MONTHS MUST HAVE THREE EQUAL DISBURSEMENTS.
THE DISBURSEMENT SCHEDULE  FOR  SUCH  LOANS  OR  PAYMENTS  SHALL  BE  AS
FOLLOWS:  ONE-THIRD OF THE TUITION AMOUNT RELEASED INITIALLY, THE SECOND
DISBURSEMENT  SHALL  BE RELEASED ONE-THIRD OF THE WAY THROUGH THE LENGTH

S. 4268--A                         13

OF THE TRAINING, AND  THE  REMAINDER  RELEASED  TWO-THIRDS  OF  THE  WAY
THROUGH THE COURSE TERM.
  (D)  LOANS  OF  OTHER  FINANCIAL AID PAYMENTS FOR AMOUNTS GREATER THAN
FIVE THOUSAND DOLLARS THAT REFLECT A  CLASS  TERM  GREATER  THAN  TWELVE
MONTHS  SHALL  HAVE  FOUR EQUAL DISBURSEMENTS. THE DISBURSEMENT SCHEDULE
FOR SUCH LOANS OR PAYMENTS SHALL  BE  AS  FOLLOWS:  ONE-QUARTER  OF  THE
TUITION  AMOUNT  RELEASED  INITIALLY,  THE  SECOND DISBURSEMENT SHALL BE
RELEASED ONE QUARTER OF THE WAY THROUGH THE LENGTH OF THE TRAINING;  THE
THIRD  DISBURSEMENT  SHALL BE RELEASED HALFWAY THROUGH THE LENGTH OF THE
TRAINING, AND THE REMAINDER SHALL BE RELEASED THREE-QUARTERS OF THE  WAY
THROUGH THE TRAINING.
  (3) NO SCHOOL MAY ENTER INTO ANY CONTRACT OR AGREEMENT WITH OR RECEIVE
ANY  STUDENTS LOAN OR FINANCIAL AID FUNDS FROM PRIVATE ENTITIES, INCLUD-
ING, BUT NOT LIMITED TO,  BANKS,  FINANCING  COMPANIES,  AND  ANY  OTHER
PRIVATE  LENDING  SOURCES  UNLESS  THE PRIVATE ENTITY HAS A DISBURSEMENT
POLICY THAT, AT A MINIMUM, MEETS THE REQUIREMENTS OF SUBPARAGRAPH TWO OF
THIS PARAGRAPH.
  (4) THE TERM PRIVATE ENTITY REFERENCED IN SUBPARAGRAPHS TWO AND  THREE
OF  THIS  PARAGRAPH SHALL NOT BE CONSTRUED TO INCLUDE A FRIEND OR FAMILY
MEMBER OF THE STUDENT WHO IS NOT IN THE ROUTINE  BUSINESS  OF  PROVIDING
STUDENT  LOANS  OR  FINANCIAL AID FUNDS. THE PROVISION OF SUCH A LOAN OR
FUND BY A PRIVATE ENTITY SHALL ALSO  NOT  INCLUDE  THE  PAYMENT  OF  THE
STUDENT'S TUITION OR FEES BY USE OF A CREDIT CARD.
  c. Notwithstanding any other provisions of this article to the contra-
ry, the commissioner shall define alternative educational and curriculum
standards  for any program of less than forty hours designed exclusively
for non-occupational, personal enrichment purposes.
  d. Admission of students under the ability to benefit provision.
  (1) Certification. Each school admitting students who do  not  possess
at  least  a  high school diploma or its equivalent shall certify to the
satisfaction of the commissioner that  such  prospective  students  have
been  administered  and passed an examination which has been approved by
the commissioner to determine their ability to benefit from  the  chosen
curriculum prior to admission to the curriculum or course of study. Such
examination  shall,  whenever  possible, be a nationally recognized test
appropriate for the course of instruction which has been approved by the
commissioner. The examination results of each such student who is admit-
ted shall be made available to the commissioner at a time prescribed  by
the commissioner and, together with the student's original answer sheet,
shall be maintained by the school in the student's permanent record. For
any  student  failing to achieve the necessary score on such examination
for enrollment, the school shall be required  to  provide  such  student
with  a  listing of appropriate counseling and educational opportunities
available to the student at no cost, as determined by the  commissioner.
WHERE  APPROPRIATE,  THE  COMMISSIONER  MAY  ACCEPT  SUCH OTHER ENTRANCE
REQUIREMENT DOCUMENTATION SUCH AS PREREQUISITE COURSEWORK,  PROFESSIONAL
OR  VENDOR  CERTIFICATIONS,  PERSONAL INTERVIEWS, AND/OR ATTESTATIONS OF
EQUIVALENT KNOWLEDGE IN LIEU OF THE EXAMINATION REQUIREMENT.
  (2) Counseling. Each school [admitting] OFFERING CURRICULA WHICH ADMIT
students who do not possess a high  school  diploma  or  its  equivalent
shall  develop  a  plan to be approved by the commissioner for the coun-
seling of such students on an individual basis on matters including  but
not  limited to the student's ability to progress in the curriculum, the
student's financial aid rights and responsibilities, the availability of
programs to earn a high school equivalency diploma,  including  programs
provided at no cost to the student, and the potential of the training to

S. 4268--A                         14

prepare  the  student  for available employment opportunities within the
region.
  (3)  Compliance.  (A)  The  commissioner shall monitor compliance with
this paragraph and verify the examination  and  counseling  process  and
student  examination  scores.  Such  procedures  may  include but not be
limited to an annual, statistically significant, random sampling of  the
examinations  taken by prospective students of each school administering
such examinations.
  (B) [Such procedures shall  provide  that  the  examinations  of  each
school be inspected on site at least once annually.
  (C)]  In the event that the commissioner determines that the school is
out of compliance with  the  examination  process  and  counseling,  the
commissioner shall require that examinations and counseling for students
admitted  under  the  ability  to  benefit  provision and the counseling
required by subparagraph two of this  paragraph  be  conducted  off  the
premises  of  the  school  by an entity approved by the commissioner for
such period of time as the commissioner deems appropriate, the  cost  of
which shall be incurred by the school.
  2.  Inspections.  a.  Every  school  licensed pursuant to this article
shall maintain adequate and accurate records for a period  of  not  less
than  [six]  SEVEN  years at its principal place of business within this
state. Such records shall be maintained in a manner and form  prescribed
by  the  commissioner  and shall be made available to the department and
the higher education services corporation upon request.
  b. In addition to other requirements in this article, the  information
to be made a part of the record shall include, but not be limited to:
  (1) names and addresses of each enrolled student;
  (2) the course of study offered by the institution;
  (3) the name and address of its faculty, together with a record of the
educational qualifications of each;
  (4) the graduation date of each student; and
  (5)  for  each  student  who fails to complete his or her program, the
student's last date of attendance and, if applicable, the amount of  any
refund paid to, or on behalf of, the student and the date the refund was
made.
  c.  The commissioner shall conduct periodic unscheduled inspections of
licensed private CAREER schools [and  registered  business  schools]  to
monitor  compliance  with the provisions of this article or the rules or
regulations promulgated thereunder or any final order or decision of the
commissioner made pursuant to this article. The department shall conduct
an inspection of each school at  least  once  every  [three  years.  The
department  shall annually inspect schools: (1) having a high percentage
of students admitted under ability to benefit criteria as determined  by
the  commissioner; (2) having a high student loan default rate as deter-
mined by the commissioner in a manner consistent with federal standards;
or (3) which are the subject of a high volume of complaints by  students
or  other  parties]  LICENSURE  PERIOD.  All  schools shall provide upon
request of the department, any  and  all  records  necessary  to  review
compliance with the provisions of this article.
  d.  Student  permanent  records,  as defined in the regulations of the
commissioner, shall be maintained for a period of twenty years.
  3. Tuition liability. a. The tuition charge for programs approved  for
participation  in  student financial aid general award programs pursuant
to articles thirteen and fourteen of this chapter shall  be  apportioned
on  the  basis of terms, quarters or semesters. For the purposes of this

S. 4268--A                         15

section, the terms "term", "quarter" and "semester" shall be defined  in
regulations by the commissioner.
  b.  The  tuition  refund  policy  for the first term or quarter of any
program at schools licensed [or registered]  pursuant  to  section  five
thousand one of this article shall be as follows:
  (1)  For  programs  which  are divided into quarters of up to fourteen
weeks, the school shall evenly divide the total  tuition  charges  among
the  number  of  quarters.  After instruction is begun in a school, if a
student withdraws or is discontinued, the  school  may  retain  no  more
than:
  (i) zero percent of the quarter's tuition if the termination is during
the first week of instruction; or
  (ii)  twenty-five  percent of the quarter's tuition if the termination
is during the second week of instruction; or
  (iii) fifty percent of the quarter's tuition  if  the  termination  is
during the third week of instruction; or
  (iv)  seventy-five percent of the quarter's tuition if the termination
is during the fourth week of instruction; or
  (v) one hundred percent of the quarter's tuition  if  the  termination
occurs after the fourth week of instruction.
  (2)  For programs organized by terms of fifteen, sixteen, seventeen or
eighteen weeks apiece, the school shall evenly divide the total  tuition
charges  among  the  number  of  terms.  After instruction is begun in a
school, if a student withdraws or is discontinued, the school may retain
no more than:
  (i) zero percent of the term's tuition if the  termination  is  during
the first week of instruction; or
  (ii) twenty percent of the term's tuition if the termination is during
the second week of instruction; or
  (iii)  thirty-five percent of the term's tuition if the termination is
during the third week of instruction; or
  (iv) fifty percent of the term's tuition if the termination is  during
the fourth week of instruction; or
  (v) seventy percent of the term's tuition if the termination is during
the fifth week of instruction; or
  (vi)  one  hundred  percent  of  the term's tuition if the termination
occurs after the completion of the fifth week of instruction.
  c. (1) The tuition refund policy for the second term or quarter of any
program at schools licensed [or registered]  pursuant  to  section  five
thousand one of this article shall be as follows:
  (A)  For  programs  which  are divided into quarters of up to fourteen
weeks, the school shall evenly divide the total  tuition  charges  among
the  number  of  quarters.  After instruction is begun in a school, if a
student withdraws or is discontinued, the  school  may  retain  no  more
than:
  (i) twenty-five percent of the quarter's tuition if the termination is
during the first week of instruction; or
  (ii)  fifty  percent  of  the  quarter's tuition if the termination is
during the second week of instruction; or
  (iii) seventy-five percent of the quarter's tuition if the termination
is during the third week of instruction; or [.]
  (iv) one hundred percent of the quarter's tuition if  the  termination
occurs after the third week of instruction.
  (B)  For programs organized by terms of fifteen, sixteen, seventeen or
eighteen weeks apiece, the school shall evenly divide the total  tuition
charges  among  the  number  of  terms.  After instruction is begun in a

S. 4268--A                         16

school, if a student withdraws or is discontinued, the school may retain
no more than:
  (i)  twenty percent of the term's tuition if the termination is during
the first week of instruction; or
  (ii) thirty-five percent of the term's tuition if the  termination  is
during the second week of instruction; or
  (iii) fifty percent of the term's tuition if the termination is during
the third week of instruction; or
  (iv)  seventy  percent  of  the  term's  tuition if the termination is
during the fourth week of instruction; or
  (v) one hundred percent of  the  term's  tuition  if  the  termination
occurs after the completion of the fourth week of instruction.
  (2)  Notwithstanding  the provisions of subparagraph one of this para-
graph, the tuition refund policy set forth in paragraph b of this subdi-
vision shall apply unless the school  demonstrates  that  there  are  no
significant  educational  changes  in  the  educational  program  of the
student, such changes as defined in regulations of the commissioner.
  d. The tuition refund policy for the third and any subsequent term  or
quarter of any program licensed [or registered] pursuant to section five
thousand  one  of this article shall be the policy set forth in subpara-
graph one of paragraph c of this subdivision.
  e. No program shall have a term in excess of eighteen weeks.
  f. The amount of the refund shall be calculated based on the last  day
of student attendance.
  g.  (1) Any refund due to a student shall be paid by the school within
forty-five days of the date on which  the  student  withdraws  from  the
program. For the purposes of this article, such date shall be the earli-
est  of  (i)  the  date on which the student gives written notice to the
school or (ii) the date on which the student is deemed to have withdrawn
pursuant to subparagraph two of this paragraph.
  (2) If a student has failed to attend classes for a period  of  thirty
calendar  days,  the  school  shall send by regular mail a notice to the
student that the student shall be deemed  to  have  withdrawn  from  the
program if the student does not notify the school to the contrary within
twelve  days  from  the date on which the letter is sent. If the student
fails to respond within such twelve-day period,  the  student  shall  be
deemed  to  have withdrawn and the school shall notify the higher educa-
tion services corporation that the student has withdrawn and the date of
the withdrawal.
  h. SCHOOLS SHALL SUBMIT, FOR APPROVAL BY THE COMMISSIONER, THE  SCHOOL
CATALOG  WITH  A  WEEKLY  TUITION  LIABILITY CHART FOR EACH PROGRAM THAT
INDICATES THE AMOUNT OF REFUND DUE THE STUDENT IN  THE  EVENT  OF  WITH-
DRAWAL.
  I.  Upon  payment  of a refund to a lender, the school shall forthwith
send a notice to a person designated by  the  president  of  the  higher
education  services  corporation  upon  a form approved by the president
that such refund was made.
  [i.] J. If the higher education services corporation fails to  receive
the  notice  required  by  paragraph [h] I of this subdivision, it shall
forthwith notify the student of his or her right to  a  refund  and  the
commissioner  of  such  failure.  Upon receipt of such notification, the
commissioner shall take appropriate action against the school.
  4. Curriculum approval. a. An application AND FEE shall  be  made  for
the  initial  approval  of a curriculum or course and shall include such
information as the commissioner  may  require  by  regulation.  Approval
shall  be  valid for a period not to exceed four years.  THE APPLICATION

S. 4268--A                         17

FEE FOR ANY CURRICULUM OF ONE HUNDRED CLOCK HOURS OR MORE SHALL  BE  TWO
HUNDRED  FIFTY  DOLLARS. THE APPLICATION FEE FOR ANY COURSE OF LESS THAN
ONE HUNDRED CLOCK HOURS SHALL BE ONE HUNDRED DOLLARS.  SUCH  APPLICATION
FEES  SHALL  ACCRUE  TO  THE CREDIT OF THE PROPRIETARY VOCATIONAL SCHOOL
SUPERVISION ACCOUNT.
  b. In approving curriculum, the commissioner shall take into consider-
ation the following:
  (1) that the entrance requirements demonstrate that  students  possess
the  skills,  competencies and prerequisite knowledge needed to progress
in the curriculum;
  (2) that the content will enable the student to develop  those  skills
and  competencies  required  for employment in the occupational area for
which the curriculum was developed;
  (3) that the school will utilize  appropriate  instructional  methods;
[and]
  (4)  that  the  instructional  equipment used within the curriculum is
comparable to the equipment currently used by business  or  industry  in
the occupational area for which the curriculum was developed; AND
  (5)  THAT  A CURRICULUM MAY INCLUDE INSTRUCTION IN ENGLISH AS A SECOND
LANGUAGE AT A BEGINNING OR BASIC LEVEL, PROVIDED SUCH INSTRUCTION  SHALL
NOT CONSTITUTE MORE THAN FIFTY PERCENT OF SUCH PROGRAM.
  c.  (1)  If the evaluation of a particular course or facility requires
the services of an expert not employed by the department, the department
shall retain such expert [and the school shall reimburse the  department
for  the  reasonable  cost  of such services] AT THE SCHOOL'S EXPENSE IN
ADDITION TO THE APPLICATION FEES  PRESCRIBED  IN  PARAGRAPH  A  OF  THIS
SUBDIVISION.
  (2) If, in the interest of expediting the approvals, a school requests
the  department to employ an outside consultant, the school shall [reim-
burse the department for] PAY the [reasonable] cost of such services  IN
ADDITION  TO  THE  APPLICATION  FEES  PRESCRIBED  IN PARAGRAPH A OF THIS
SUBDIVISION.
  d. The commissioner shall act on applications for approval of a course
or curriculum within one hundred twenty days of receipt  of  a  complete
application and, in the case of a denial, shall set forth in writing the
reasons for such denial.
  e.  Notwithstanding paragraphs b, c and d of this subdivision, curric-
ulum certified by a nationally recognized vendor as defined  in  commis-
sioner's regulations shall be recognized by the department in lieu of an
expert  evaluation  when  such  curriculum is adopted by a school in the
original format provided by the vendor as long as the  proposed  curric-
ulum  is  a  stand  alone program and not part of a larger comprehensive
course.
  f. Notwithstanding any other provision of the law,  a  [not-for-profit
registered  business] school[, that is eligible for participation in the
tuition assistance program and] which has national  accreditation,  may,
for  the  purpose  of calculation of federal financial aid amounts only,
measure students' academic progress in an approved curriculum in non-de-
gree granting credit hours, based upon a national  accrediting  agency's
conversion  and  approval of clock hours to non-degree credit hours. For
the purposes of this  paragraph,  "national  accreditation"  shall  mean
accreditation by a national accrediting agency as defined in the commis-
sioner's regulations.
  5. Application for reapproval. a. An application AND FEE shall be made
for  reapproval  of  a  curriculum  or course. Such application shall be
considered timely if submitted at least one hundred twenty days prior to

S. 4268--A                         18

the expiration of the current approval.  THE  APPLICATION  FEE  FOR  ANY
CURRICULUM OF ONE HUNDRED CLOCK HOURS OR MORE SHALL BE TWO HUNDRED FIFTY
DOLLARS.  THE  APPLICATION  FEE  FOR ANY COURSE OF LESS THAN ONE HUNDRED
CLOCK  HOURS SHALL BE ONE HUNDRED DOLLARS, PROVIDED THAT NO FEE SHALL BE
ASSESSED FOR THE SUBMISSION OF A REAPPROVAL APPLICATION WITHOUT  CHANGE.
SUCH APPLICATION FEE SHALL ACCRUE TO THE CREDIT OF THE PROPRIETARY VOCA-
TIONAL SCHOOL SUPERVISION ACCOUNT.
  b. Curriculum  reapproval  standards.  (1) The commissioner shall pre-
scribe by regulation, standards for reapproval after the first  year  of
licensure,  of any curriculum or course based upon factors including but
not limited to the following, as appropriate:
  (i) for each curriculum or course, the percentage of students who have
dropped out;
  (ii) the acquisition of a specified minimum level  of  skills  by  the
students; and
  (iii) for each curriculum or course, the percentage of students placed
in occupations related to the instruction, where applicable.
  (2)  Such standards shall be consistent with those applied to all non-
degree career education programs.
  c. Reapproval contingency. Reapproval of a curriculum or course  shall
be  contingent upon a demonstration by the applicant that the curriculum
or course has met the curriculum reapproval standards set forth in  this
subdivision.  Except as otherwise provided in paragraph d of this subdi-
vision, no such curriculum or course or substantially similar curriculum
or course may be given without reapproval by the commissioner.
  d. When timely and complete application is made for the reapproval  of
a  curriculum or course, and no written denial is made thirty days prior
to the date of expiration of the existing approval,  the  curriculum  or
course  shall be deemed to be approved for the period of the curriculum.
If the application is denied, the commissioner shall set forth in  writ-
ing the reasons for such denial.
  e.  The  commissioner may provide in regulations for reapproval proce-
dures, consistent with this subdivision, for applications submitted less
than one hundred twenty days from the expiration date.
  f. The commissioner shall act upon enrollment agreements and  catalogs
within  ninety  days  of  receipt, and, in the case of denial, shall set
forth in writing the reasons for such denial. If the commissioner  fails
to  act  within  ninety days, a catalog shall be deemed approved for one
year and an enrollment agreement shall  be  deemed  approved  until  the
commissioner acts upon it.
  6. a. Teachers and directors. No person shall be employed by a private
CAREER  school  as  a  director  or  teacher who is not licensed in such
capacity by the department pursuant to regulations of the  commissioner,
which  shall  take  into  consideration such factors as moral character,
educational qualifications and  practical  experience.  The  application
shall  include  a  statement, signed by the president or chief executive
officer of the school, certifying that to the best of his or  her  know-
ledge,  the applicant is able to meet the educational qualifications and
practical experience set forth in the commissioner's  regulations.  Such
application shall be considered timely if mailed to the commissioner and
postmarked  four  days  prior  to  employment  at the school and must be
completed within twenty days thereafter;  provided,  however,  that  the
commissioner  may, for good cause shown, extend the time within which to
complete the application. When  a  complete  application  is  made,  the
commissioner  shall  act upon such application within thirty days. If no
written denial is made within the thirty days, the application shall  be

S. 4268--A                         19

deemed  to  be approved until the commissioner acts upon it or until the
end of the term or semester, whichever occurs first. If a written denial
is made after the thirty day period,  the  commissioner  may  allow  the
applicant to teach at the school for the remainder of the term or semes-
ter if the commissioner determines that the removal of the teacher would
not  be  in the best educational interest of the students. This subdivi-
sion shall not apply to directors or teachers employed on or before July
first, nineteen hundred seventy-two. Teachers'  licenses  issued  on  or
after  [January first, nineteen hundred eighty-seven] THE EFFECTIVE DATE
OF THE CHAPTER OF THE LAWS OF TWO THOUSAND  ELEVEN  WHICH  AMENDED  THIS
PARAGRAPH  shall  be valid at all [registered business] LICENSED PRIVATE
CAREER schools for the courses, curricula, or occupations  indicated  on
the  license.  TEACHERS  HOLDING  VALID  PRIVATE SCHOOL TEACHER LICENSES
VALID AT ONLY ONE SCHOOL LOCATION SHALL HAVE THEM REPLACED, AT NO  COST,
WITH  LICENSES  VALID  AT  ANY  LICENSED  SCHOOL  IN THE SAME SUBJECT OR
SUBJECTS AND WITH THE SAME EXPIRATION DATE AS WAS LISTED ON THE PREVIOUS
TEACHING LICENSE.
  b. A school director shall have  access  to  all  student  and  school
records  which  shall  be maintained in accordance with this article and
the regulations of the commissioner and shall make such  records  avail-
able  to  the  commissioner  or the commissioner's designee upon request
during an on-site school inspection.
  c. Notwithstanding paragraph a of this subdivision, a teacher who  has
been  certified  as  an  instructor by a nationally recognized vendor as
defined in commissioner's regulations may  be  deemed  qualified  as  an
instructor  by  the department, provided such teacher shall only provide
instruction in the course or courses for which he or she holds  vendor's
certification. A teacher authorized by this paragraph will be subject to
all licensing fees required by the department for licensed teachers.
  7. Advertising. a. The commissioner is authorized to commence a disci-
plinary  proceeding  pursuant  to  this  article  for false, misleading,
deceptive or fraudulent advertising pursuant to regulations  promulgated
by  the commissioner which shall be consistent with article twenty-two-A
of the general business law. The department shall issue guidelines as to
appropriate advertising content.  In  developing  such  guidelines,  the
department  shall  consider  advertising for similar programs offered by
various educational institutions. In  a  disciplinary  action  or  other
proceeding,  such  guidelines  shall  not  be  presumptive evidence that
particular advertising is appropriate.
  b. Beginning on January first, two thousand, all schools shall include
in their advertising, promotional material, or letterhead the  statement
"Licensed  by the State of New York" [or "Registered by the State of New
York", as appropriate], and an  accompanying  symbol  to  indicate  such
status,  issued  by  the  commissioner pursuant to section five thousand
nine of this article.
  8. The higher education services corporation  shall  adopt  rules  and
regulations  to  effectuate  the  cessation  of collection activities by
lenders or by the corporation in  cases  in  which  a  licensed  private
[vocational]  CAREER  school  [or a registered business school] at which
the student enrolled has closed or ceased its teaching activities during
the academic period for which the loan was made or guaranteed.
  S 5. Section 5003 of the education law, as added by chapter 887 of the
laws of 1990, subparagraph 1 of paragraph c of subdivision 1  and  para-
graphs d and e of subdivision 6 as amended by chapter 604 of the laws of
1993,  paragraph   d of subdivision 1 as added and paragraphs b and f of

S. 4268--A                         20

subdivision 6 as amended by chapter 434 of the laws of 1999, is  amended
to read as follows:
  S 5003. Disciplinary actions, hearings and penalties.  1. Disciplinary
action.  a. The commissioner for good cause, after affording a school an
opportunity for a hearing, may take disciplinary action  as  hereinafter
provided against any school authorized to operate under this article.
  b. Good cause shall include, but not be limited to, any of the follow-
ing:
  (1)  fraudulent  statements  or representations to the department, the
public or any student in connection with any activity of the school;
  (2) violation of any provision of this article or  regulation  of  the
commissioner;
  (3) conviction or a plea of no contest on the part of any owner, oper-
ator, director or teacher:
  (A) of any of the following felonies defined in the penal law: bribery
involving  public  servants;  commercial  bribery; perjury in the second
degree; rewarding official misconduct; larceny, in connection  with  the
provision  of  services  or  involving  the theft of governmental funds;
offering a false instrument for  filing,  falsifying  business  records;
tampering  with  public  records;  criminal usury; scheme to defraud; or
defrauding the government; or
  (B) in any other jurisdiction of an  offense  which  is  substantially
similar  to  any  of the felonies defined in clause (A) of this subpara-
graph and for which a sentence to a term of imprisonment  in  excess  of
one  year  was  authorized and is authorized in this state regardless of
whether such sentence was imposed; or
  (4) incompetence of any owner or operator to operate a school.
  c. (1) Any person who believes he or  she  has  been  aggrieved  by  a
violation  of  this section, EXCEPT A PERSON AGGRIEVED BY THE ACTIONS OR
OMISSIONS OF A CANDIDATE SCHOOL, shall have the right to file a  written
complaint  within:  (A)  two  years of the alleged violation; or (B) one
year of receiving notification from the higher education services corpo-
ration or any other guarantee agency that the student has defaulted on a
student loan payment; provided, however, that no complaint may be  filed
after  three  years  from the date of the alleged violation. The commis-
sioner shall maintain a written record of each complaint that  is  made.
The commissioner shall also send to the complainant a form acknowledging
the  complaint and requesting further information if necessary and shall
advise the director of the school that a complaint has  been  made  and,
where appropriate the nature of the complaint.
  (2) The commissioner shall within twenty days of receipt of such writ-
ten  complaint  commence  an  investigation of the alleged violation and
shall within ninety days of the receipt of such written complaint, issue
a written finding. The commissioner shall furnish such findings  to  the
person who filed the complaint and to the chief operating officer of the
school  cited in the complaint. If the commissioner finds that there has
been a violation of this section, the commissioner shall take  appropri-
ate action.
  (3)   The   commissioner  may  initiate  an  investigation  without  a
complaint.
  [d. During the initial two year licensing period, before  the  commis-
sioner  may bring enforcement proceedings against a licensed entity, the
following shall be taken into consideration:
  (1) whether such entity has demonstrated that the regulations  promul-
gated  under  this chapter are unduly burdensome given the nature of the
instruction provided by such entity;

S. 4268--A                         21

  (2) whether such entity has identified potential areas  of  noncompli-
ance  with this chapter and any such regulation within sixty days of the
licensing or registration date of such entity;
  (3) whether such entity has engaged in good faith discussions with the
department  to  resolve  such  violations  and/or promulgate regulations
which further the goals of this chapter.]
  (4) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH ONE OF  THIS  PARA-
GRAPH  OR ANY OTHER PROVISION OF THIS ARTICLE TO THE CONTRARY, A STUDENT
AT A CANDIDATE SCHOOL SHALL HAVE THE RIGHT TO FILE A  WRITTEN  COMPLAINT
FROM  AN ALLEGED VIOLATION OF THE PROVISIONS OF CLAUSE THREE OF SUBPARA-
GRAPH (IV) OF PARAGRAPH B OF SUBDIVISION FOUR OF SECTION  FIVE  THOUSAND
ONE  OF THIS ARTICLE THAT REQUIRE DISCLOSURE OF CANDIDACY STATUS AND ITS
IMPLICATIONS AND A SIGNED ATTESTATION BY THE STUDENT, WITHIN  TWO  YEARS
OF  SUCH  VIOLATION.  UPON A FINDING THAT SUCH A VIOLATION HAS OCCURRED,
THE CANDIDATE SCHOOL SHALL BE REQUIRED TO PROVIDE A REFUND OF ALL MONIES
AND FEES RECEIVED FROM OR ON BEHALF OF THE STUDENT.  APPROPRIATE  ACTION
SHALL  ALSO  BE  TAKEN  AGAINST  THE  CANDIDATE  SCHOOL  PURSUANT TO THE
PROVISIONS OF SUBPARAGRAPH (IV) OF PARAGRAPH B OF  SUBDIVISION  FOUR  OF
SECTION FIVE THOUSAND ONE OF THIS ARTICLE.
  2.  Hearing  procedures. a. Upon a finding that there is good cause to
believe that a CANDIDATE SCHOOL UNDER  THE  PROVISIONS  OF  SUBPARAGRAPH
(IV)  OF PARAGRAPH B OF SUBDIVISION FOUR OF SECTION FIVE THOUSAND ONE OF
THIS ARTICLE, OR A LICENSED school,  or  an  officer,  agent,  employee,
partner  or  teacher,  has  committed  a  violation of this article, the
commissioner shall initiate proceedings by serving a notice  of  hearing
upon each and every such party subject to the administrative action. The
school  or  such  party  shall  be  given  reasonable notice of hearing,
including the time, place, and nature of the  hearing  and  a  statement
sufficiently  particular  to  give  notice of the transactions or occur-
rences intended to be proved, the material elements  of  each  cause  of
action and the civil penalties and/or administrative sanctions sought.
  b.  Opportunity  shall be afforded to the party to respond and present
evidence and argument on the issues involved in  the  hearing  including
the  right  of cross examination. In a hearing, the school or such party
shall be accorded the right to have its representative appear in  person
or  by  or with counsel or other representative. Disposition may be made
in any hearing by stipulation, agreed settlement, consent order, default
or other informal method.
  c. (1) The commissioner shall designate an impartial  hearing  officer
to conduct the hearing, who shall be empowered to:
  (A) administer oaths and affirmations; and
  (B)  regulate  the  course of the hearings, set the time and place for
continued hearings, and fix the time for  filing  of  briefs  and  other
documents; and
  (C)  direct  the school or such party to appear and confer to consider
the simplification of the issues by consent; and
  (D) grant a request for an adjournment of the hearing only  upon  good
cause shown.
  (2)  The strict legal rules of evidence shall not apply, but the deci-
sion shall be supported by substantial evidence in the record.
  3. Decision after hearing. The  hearing  officer  shall  make  written
findings  of  fact  and  conclusions of law, and shall also recommend in
writing to the commissioner a final decision  including  penalties.  The
hearing  officer  shall  mail  a  copy  of  his OR HER findings of fact,
conclusions of law and recommended penalty to the party and his  or  her
attorney,  or  representative.    The  commissioner shall make the final

S. 4268--A                         22

decision, which shall be based exclusively on evidence and other materi-
als introduced at the hearing. If it is  determined  that  a  party  has
committed  a  violation,  the commissioner shall issue a final order and
shall impose penalties in accordance with this section. The commissioner
shall  send  by  certified mail, return receipt requested, a copy of the
final order to the party and his or her attorney, or representative. The
commissioner shall, at the request of the school or such party,  furnish
a  copy  of  the transcript or any part thereof upon payment of the cost
thereof.
  4. Judicial review. Any order imposed  under  this  section  shall  be
subject  to  judicial  review  under  article seventy-eight of the civil
practice law and rules, but no such determination  shall  be  stayed  or
enjoined  except  upon  application  to  the  court  after notice to the
commissioner.
  5. Enforcement proceedings. The attorney general, in his  or  her  own
capacity,  or at the request of the commissioner, may bring an appropri-
ate action or proceeding in  any  court  of  competent  jurisdiction  to
recover a fine or otherwise enforce any provision of this article.
  6.  Civil penalties and administrative sanctions. a. A hearing officer
may recommend, and the commissioner may impose, a civil penalty  not  to
exceed  [two]  THREE  thousand five hundred dollars for any violation of
this article. In the case of a second  or  further  violation  committed
within  [the previous] five years OF THE PREVIOUS VIOLATION, the liabil-
ity shall be a civil penalty not to exceed [five]  SEVEN  thousand  FIVE
HUNDRED dollars for each such violation.
  b.  Notwithstanding the provisions of paragraph a of this subdivision,
a hearing officer may recommend, and the commissioner may impose a civil
penalty not to exceed [fifty] SEVENTY-FIVE thousand  dollars  OR  DOUBLE
THE  DOCUMENTED  AMOUNT  FROM  WHICH  THE SCHOOL BENEFITED, WHICHEVER IS
GREATER, for any of the following violations: (1) operation of a  school
without  a  license  in  violation  of section five thousand one of this
article; (2) operation of a school knowing that the school's license has
been suspended or revoked; (3) use of false,  misleading,  deceptive  or
fraudulent  advertising;  (4) employment of recruiters on the basis of a
commission, bonus or quota, except as authorized  by  the  commissioner;
(5) directing or authorizing recruiters to offer guarantees of jobs upon
completion  of  a course; (6) failure to make a tuition refund when such
failure is part of a pattern of misconduct; (7) the offering of a course
or program that has not been approved by the commissioner;  (8)  FAILURE
TO OFFER A COURSE OR PROGRAM AS APPROVED BY THE COMMISSIONER; (9) admit-
ting students, who subsequently drop out, who were admitted in violation
of  the  admission standards established by the commissioner, where such
admissions constitute a pattern of misconduct and  where  the  drop  out
resulted  at  least  in  part from such violation; [(9)] (10) failure to
provide the notice of discontinuance and the plan required  by  subdivi-
sion  seven of section five thousand one of this article; or [(10)] (11)
violation of any other provision of this article, or any rule  or  regu-
lation  promulgated  pursuant  thereto,  when such violation constitutes
part of a pattern of misconduct which significantly impairs  the  educa-
tional  quality  of the program or programs being offered by the school.
For each enumerated offense, a second  or  further  violation  committed
within  [the  previous]  five years, shall be subject to a civil penalty
not to exceed [seventy-five thousand dollars] ONE AND ONE-HALF TIMES THE
AMOUNT OF THE PREVIOUS VIOLATION for each such violation.
  c. In addition to the penalties authorized in paragraphs a  and  b  of
this  subdivision,  a hearing officer may recommend and the commissioner

S. 4268--A                         23

may impose any of the following administrative sanctions:  (1)  a  cease
and desist order; (2) a mandatory direction; (3) a suspension or revoca-
tion  of  a  license; (4) a probation order; or (5) an order of restitu-
tion.
  d.  Penalty  factors.  In the recommendation of any penalty, a hearing
officer shall, at a minimum, give due consideration,  where  applicable,
to  the  good faith of the violator[; the performance of the school with
respect to student placement and retention rates, and students' acquisi-
tion of skills;] AND the gravity of the violation[; and the harm  caused
to the student].
  e.  The  commissioner may suspend a license [or registration] upon the
failure of a school to pay any fee, fine, penalty, settlement or assess-
ment as required by this article unless such failure  is  determined  by
the commissioner to be for good cause.
  f.  All  civil  penalties,  fines and settlements received after April
first, nineteen hundred ninety shall accrue to the credit of the tuition
reimbursement account established pursuant to section ninety-seven-hh of
the state finance law.
  7. Criminal penalties. In addition to any  other  penalties  elsewhere
prescribed:
  a.  Any  person  who  knowingly violates any of the provisions of this
article shall be guilty of a class B misdemeanor punishable  in  accord-
ance  with  the  penal  law.  If  the conviction is for a second offense
committed within five years of the first  conviction  under  this  para-
graph,  such  person shall be guilty of a class A misdemeanor punishable
in accordance with the penal law.
  b. Any person who knowingly (1) falsifies or destroys school or  other
business  records relating to the operation of the school with intent to
defraud; (2) fails to make a tuition refund as required by section  five
thousand  two  of  this article with the intent to defraud more than one
person; or (3) operates a school without a  valid  license  required  by
section  five  thousand one of this article shall be guilty of a class A
misdemeanor punishable in accordance with the penal law.
  c. Any person who, having been convicted within the past five years of
failing to make a tuition refund in violation  of  subparagraph  two  of
paragraph  b of this subdivision, knowingly and intentionally engages in
a scheme constituting a systematic ongoing course of  conduct  involving
the  wrongful  withholding of refunds in violation of section five thou-
sand two of this article with the intent to defraud ten or more persons,
and so withholds tuition refunds in  excess  of  one  thousand  dollars,
shall  be  guilty  of a class E felony punishable in accordance with the
penal law.
  d. Upon a determination that there exist reasonable grounds to believe
that a violation of this article has been committed, or that  any  other
crime  has  been  committed in connection with the operation of a school
required to be licensed pursuant to this article, the commissioner shall
refer such determination, and the information upon which it is based, to
the attorney general or to the appropriate district attorney. The attor-
ney general or a district attorney may bring an action on his or her own
initiative.
  8. Private right of action. A student injured by a violation  of  this
article  may bring an action against the owner or operator of a licensed
private CAREER school [or registered business school] for actual damages
or one hundred dollars, whichever  is  greater.  A  court  may,  in  its
discretion, award reasonable attorney's fees to a prevailing plaintiff.

S. 4268--A                         24

  S  6.  Subdivisions  3  and 4 of section 5004 of the education law, as
amended by chapter 604 of the laws of 1993, are amended and a new subdi-
vision 4-a is added to read as follows:
  3.  Exempted  from the requirements of this section are persons acting
solely for schools which are not required to be licensed or are  specif-
ically  exempted  from  the  licensing [or registration] requirements of
this article. Persons  who  are  paid  to  procure,  solicit  or  enroll
students  on  the premises of schools required to be licensed [or regis-
tered] shall not be exempt from the provisions of  this  section.    The
certification  requirements  of  this section shall not apply to persons
receiving gifts or other non-monetary considerations valued at not  more
than  [twenty-five]  SEVENTY-FIVE  dollars from a school from which they
have graduated or are currently enrolled for each student  referred  for
enrollment at the school.
  4.  Application  and  renewal application for a private school agent's
certificate shall be filed on forms to be prescribed and provided by the
commissioner. Said certificate shall be valid for [two] THREE years from
the date of issuance. Certificates which  have  been  renewed  shall  be
valid  for a period of [two] THREE years from the expiration date of the
certificate which has been renewed. Every applicant and  renewal  appli-
cant shall pay to the department a fee of [one] TWO hundred dollars.
  4-A.  NOTWITHSTANDING  THE  PROVISIONS  OF  SUBDIVISION  FOUR  OF THIS
SECTION, THE SCHOOL DIRECTOR MAY APPLY  FOR  A  PRIVATE  SCHOOL  AGENT'S
CERTIFICATE  ON  FORMS TO BE PRESCRIBED AND PROVIDED BY THE COMMISSIONER
WITHOUT INCURRING THE AGENT APPLICATION FEE.
  S 7. Section 5006 of the education law, as added by chapter 887 of the
laws of 1990, is amended to read as follows:
  S 5006. Teachout plans.  1. A school may submit a teachout plan to the
commissioner for approval pursuant to  regulations  established  by  the
commissioner.  A  teachout  plan  shall  consist of a contract between a
[registered business or] licensed private CAREER  school,  with  another
school,  hereinafter  called  the  teachout school, so that in the event
that the [registered business or] licensed private CAREER school  ceases
instruction,  the teachout school will provide the necessary instruction
specified in a student's original enrollment agreement with  the  school
ceasing  instruction.  A teachout plan may employ more than one teachout
school to provide instruction to students in the school ceasing instruc-
tion. Schools under common ownership but having  separate  licenses  [or
registrations]  may,  subject to the approval of the commissioner, enter
into teachout agreements. A TEACHOUT PLAN MAY BE CONTRACTED BETWEEN  THE
COMMISSIONER  AND  ONE  OR  MORE  TEACHOUT SCHOOLS IN THE EVENT THAT THE
CLOSING SCHOOL IS UNABLE OR UNWILLING TO DO SO.
  2. A teachout plan shall include the following provisions:    (a)  the
teachout school must offer courses of study that are substantially simi-
lar to those offered in the school ceasing instruction;
  (b)  teachout  schools must be located in the geographic area in which
the school ceasing instruction was located  UNLESS  THE  SCHOOL  CEASING
INSTRUCTION PROVIDED DISTANCE LEARNING OR ONLINE TRAINING;
  (c) all provisions for a teachout plan must be included in the enroll-
ment agreement signed by the student; and
  (d)  the  teachout school shall agree to fulfill the enrollment agree-
ment signed by the student at the school ceasing instruction.
  3. The [registered business or] licensed school shall provide  to  the
teachout  school  and  to  the department [immediately upon closure] the
following information PRIOR TO CLOSURE:

S. 4268--A                         25

  (a) Copies of the academic and financial records for all  students  in
attendance at the school at the projected time of closure;
  (b)  A  listing of all such students presently in attendance including
their names, addresses, social security numbers,  curriculum  that  each
student  is  enrolled  in and the number of hours the students will have
completed at the time of the school closure.
  4. The department will provide to  the  teachout  school,  immediately
upon  notification  of a school closing, a copy of each approved curric-
ulum that the closing school is presently offering.
  5. The commissioner shall require all teachout schools to address  the
following issues:
  (a)  Integration  of students into a curriculum which may be different
from the curriculum in which they are currently receiving instruction;
  (b) Assessments of students' progress so that they may be placed  into
an appropriate course;
  (c)  Provision of remedial instruction to students who are found to be
deficient in one or more course areas upon their initial assessment;
  (d) Provision by  the  teachout  school  to  adhere  to  the  required
student/teacher ratios and room capacities; and
  (e)  Compliance  with statutory and regulatory requirements during the
teachout.
  6. The student shall not be subject to  any  costs  beyond  the  total
costs identified in the original enrollment agreement.
  7.  A student may decline to pursue instruction at the teachout school
and may instead seek a refund pursuant to section five thousand seven of
this article.
  S 8. Section 5007 of the education law, as added by chapter 887 of the
laws of 1990, the section heading, subdivision 1 and subdivision  10  as
amended  by  chapter 434 of the laws of 1999, paragraph a of subdivision
3, paragraphs c and d of subdivision 4, subparagraphs 1 and 3  of  para-
graph  a  and paragraph b of subdivision 5, paragraph b of subdivision 9
as amended and paragraphs e and f of subdivision 4 as added  by  chapter
604 of the laws of 1993, is amended to read as follows:
  S 5007. Tuition reimbursement account. 1. Except as otherwise provided
in subdivision six of this section, the portion of the annual assessment
of  schools  [registered and] licensed pursuant to section five thousand
one of this article as prescribed in subdivision [eight]  NINE  of  such
section  and  all  fines, penalties and settlements received pursuant to
this  article  shall  be  transferred  upon  receipt  into  the  tuition
reimbursement account.
  3. a. The commissioner shall develop a complaint form and provide such
form  to  students. In order to claim a refund, a student shall apply to
the fund with a complaint form pursuant to the requirements  of  section
five  thousand  three  of  this article. Except as otherwise provided in
this article, the commissioner shall compute the refund, if  any,  using
the  refund  formula  established  by  subdivision three of section five
thousand two of this article.
  b. Claimants who had been enrolled in schools which have not closed or
ceased operation shall be required to show in a manner determined by the
commissioner that:
  (1) the student is eligible for a refund;
  (2) the student has made a request to the school for a refund; and
  (3) the school has failed to make the refund within  the  time  period
required by this article.
  c.  The  commissioner  shall  act on each refund request within thirty
business days of such request.

S. 4268--A                         26

  4. Students may be eligible for refunds under this section as follows:
  a.  A  student  who  is  offered a teachout plan for the curriculum in
which the student was enrolled at the time the school closed  or  ceased
operation,  which  has  been  approved  by  the department, may elect to
continue instruction pursuant to the teachout plan  or  may  decline  to
continue  instruction and may instead apply for a full refund under this
section. The option to apply for a refund shall extend to the end of the
first week of instruction at the teachout school.
  b. A student who was enrolled in a school  which  has  not  closed  or
ceased operation is entitled to a refund computed in accordance with the
refund  policy established by subdivision three of section five thousand
two of this article.
  c. A student who was enrolled in a school at the time the school clos-
es or ceases operation is entitled to a refund of  the  full  amount  of
prepaid  tuition.  In  addition,  commencing  September  first, nineteen
hundred ninety-three, a student who drops out of a  school,  where  such
school closes within [fourteen] THIRTY days of the student's termination
and  prior  to  completion of such student's program as specified in the
enrollment agreement, shall be entitled to a FULL refund  of  [the  full
amount  of  prepaid tuition] ALL TUITION, FEES AND BOOK CHARGES PAID FOR
BY OR ON BEHALF OF THE STUDENT IN CASH OR IN  LOANS,  EXCLUDING  FUNDING
PROVIDED BY ANY GOVERNMENT AGENCIES.
  d.  A  student  who  was  enrolled in a school which has not closed or
ceased operation, and who has dropped out, is entitled to a full  refund
of all tuition, fees and other required costs paid by the student if the
student  has  submitted  a  complaint  form  to the commissioner and the
commissioner has  determined  that  a  violation  of  this  article  has
occurred  which  warrants  a  refund.  The commissioner shall promulgate
regulations identifying those violations that warrant a refund.
  e.  Commencing  September  first,  nineteen  hundred  ninety-three,  a
student who drops out of a school, which subsequently closes, and who is
owed  a  refund  for the failure of such school to follow the provisions
enumerated in subdivision three of section five  thousand  two  of  this
article  shall  be  eligible for a refund from the tuition reimbursement
fund according to the provisions of subdivision three  of  section  five
thousand two of this article.
  f.  Commencing  September  first,  nineteen  hundred ninety-three, any
student enrolled in a school based upon an ability to  benefit  examina-
tion  shall  be  eligible  for  a full refund, regardless of whether the
student is currently enrolled, graduated or dropped out, if  the  school
enrolled the student contrary to the provisions of the approved entrance
requirements  and the student complies with the requirements of subdivi-
sion one of section five thousand three of this article.
  5. a. For a student who had been enrolled in a  school  that  has  not
closed or ceased operation, the refund shall be paid as follows:
  (1)  guaranteed  student loans, if any, in which case the commissioner
shall notify the student of such payment and shall be paid  directly  to
the lender or guarantee agency where appropriate;
  (2) actual personal tuition expenditures, if any; and
  (3) tuition assistance program awards and other governmental aid.
  b.  For schools that have closed or ceased operation, the commissioner
shall refund actual personal tuition, FEES AND BOOK expenditures to  the
student.  The  repayment of any loans incurred by the student as part of
the actual personal tuition, FEES AND BOOK expenditures  shall  be  paid
directly to the lender or the guarantee agency where appropriate.

S. 4268--A                         27

  6.  a.  Where a claim is paid to a student of an operating school, the
commissioner shall immediately notify the school.
  b.  Within  ten  days  of  the receipt of the notice, the school shall
either request a hearing to challenge the  commissioner's  determination
that  a  refund was owed to the student or reimburse the fund the amount
paid to the claimant plus a penalty up to two times  such  amount.  This
payment  shall  also incur interest for each day it remains unpaid at an
annual interest rate of one percent above the prime  rate.  The  commis-
sioner  may  promulgate  streamlined  procedures for conducting hearings
pursuant to this paragraph. Any penalty assessed  under  this  paragraph
shall  be  in  addition to any other penalties assessed pursuant to this
article.   Notwithstanding any other provision  of  law,  penalties  and
interest  paid  pursuant to this paragraph shall accrue to the credit of
the proprietary vocational school supervision  account  to  support  the
costs associated with the hearings authorized in this subdivision.
  7.  Notwithstanding  the  notice  procedures  described in subdivision
three of this section, in the event of a school closing, the commission-
er on his or her own initiative may take appropriate action  in  accord-
ance  with this section to process refund claims on behalf of all of the
students of the closed school.
  8. Assignment of rights. Persons and entities receiving refunds  under
this  section  shall  be  deemed  to  have  assigned or subrogated their
tuition reimbursement rights  to  the  commissioner  on  behalf  of  the
tuition  reimbursement  fund only for the amount refunded by the tuition
reimbursement fund. Within [thirty]  NINETY  days  of  any  refund  made
pursuant to this section, the commissioner or the attorney general shall
take appropriate action to recover the total amount of the refunds made,
plus administrative costs, from the school.
  9.  a.  A  student whose loan liability is exempted pursuant to FORMER
section six hundred eighty-three of this chapter and is entitled  to  or
owed  a  refund  shall  transfer to the higher education services corpo-
ration the right to claim the refund  owed  and  due  from  the  tuition
reimbursement  fund. In such event, the corporation shall be entitled to
receive a refund for that portion of the claim not paid  to  the  corpo-
ration  by  the  United  States  Secretary  of Education pursuant to the
federal guaranteed loan program.
  b. Any amounts remaining in the tuition reimbursement fund as of  June
first,  nineteen  hundred  ninety-three  and on every March thirty-first
thereafter, shall be made available to  the  higher  education  services
corporation  for  payment  of student loans on which collection activity
has ceased pursuant to the  provisions  of  subdivision  six  of  FORMER
section  six  hundred  eighty-three of this chapter. No amounts shall be
paid to the higher education services corporation  for  loans  on  which
collection  activity  has ceased because of the operation of section 437
of the Higher Education Act of 1965, as amended.
  10. Management of the tuition reimbursement account.  a.  As  used  in
this  subdivision,  net balance is defined as the actual cash balance of
the account as determined by the commissioner on June  thirtieth,  nine-
teen  hundred  ninety-three  and  every three months thereafter. For the
purpose of calculating the net balance, the commissioner shall not  take
into  consideration  any refunds made from the account pursuant to para-
graphs d and f of subdivision four of this section for  the  year  imme-
diately preceding the date on which the calculation is made.
  b.  In  the  event  that  the account has accumulated a net balance in
excess of one million eight hundred thousand dollars,  the  commissioner
shall,  with the approval of the director of the budget, waive an amount

S. 4268--A                         28

not to exceed the amount due for the next quarterly assessment  pursuant
to  this  section  and  subdivision nine of section five thousand one of
this article FOR SCHOOLS WHICH HAVE PAID SIXTEEN  QUARTERS  OR  MORE  OF
ASSESSMENTS ONLY. In such event, payment of future quarterly assessments
shall  be suspended FOR SCHOOLS WHICH HAVE PAID SIXTEEN QUARTERS OR MORE
OF ASSESSMENTS until the net balance of  the  account  falls  below  one
million three hundred thousand dollars.
  c. In the event the net balance of the account falls below one million
three  hundred  thousand  dollars,  if the quarterly assessment has been
suspended FOR SCHOOLS WHICH  HAVE  PAID  SIXTEEN  QUARTERS  OR  MORE  OF
ASSESSMENTS  pursuant  to  paragraph  b of this subdivision, it shall be
reinstated for the next quarterly assessment and all subsequent quarter-
ly assessments until the account has accumulated a net balance in excess
of one million eight hundred thousand dollars.
  d. [Notwithstanding the provisions of paragraph b of this subdivision,
in the event that the balance of the account is in excess of one million
three hundred thousand dollars, all schools licensed after June  thirti-
eth,  nineteen  hundred  ninety-nine  shall  be required to pay into the
account the equivalence of three years of annual assessments over a five
year period.
  e. Notwithstanding the provisions of paragraph b of  this  subdivision
all schools licensed after June thirtieth, nineteen hundred ninety-three
and  before July first, nineteen hundred ninety-nine will be required to
pay into the account the equivalence of three years  of  annual  assess-
ments  within  four  years of the effective date of this paragraph. This
amount to be assessed shall be determined based upon the school's  gross
tuition in its first three years of licensure.
  g.  In the event that the balance of the tuition reimbursement account
is equal to or in excess of one million five hundred  thousand  dollars,
the  amounts  assessed  the schools in accordance with the provisions of
paragraphs d and e of this subdivision shall be  deposited  directly  to
the proprietary vocational school supervision account.] IN THE EVENT THE
ACCOUNT  HAS ACCUMULATED A NET BALANCE IN EXCESS OF TWO MILLION DOLLARS,
ANY FUNDS IN THE TUITION REIMBURSEMENT FUND IN  EXCESS  OF  TWO  MILLION
DOLLARS  SHALL  BE  TRANSFERRED  TO  THE  PROPRIETARY SCHOOL SUPERVISION
ACCOUNT.
  E. THE COMMISSIONER MAY ANNUALLY APPORTION FROM THE ACCOUNT AN  AMOUNT
UP TO TWO HUNDRED THOUSAND DOLLARS FOR THE PURPOSE OF SECURING, SCANNING
AND  OTHERWISE  MAKING  STUDENT RECORDS FROM CLOSED SCHOOLS AVAILABLE TO
STUDENTS WHO ATTENDED SUCH SCHOOLS. PROVIDED, HOWEVER, THAT IN  NO  CASE
SHALL SUCH APPORTIONMENT CAUSE THE ACCOUNT TO FALL BELOW THE BALANCE SET
FORTH  IN  PARAGRAPH C OF THIS SUBDIVISION, NOR SHALL SUCH APPORTIONMENT
CAUSE SCHOOLS WHOSE QUARTERLY ASSESSMENTS HAVE  BEEN  SUSPENDED  TO  PAY
ADDITIONAL QUARTERLY ASSESSMENTS.
  11.  Fund audit. The state comptroller shall [annually] audit or cause
to be audited the tuition reimbursement fund ONCE EVERY  TWO  YEARS  and
produce  an  [annual] AUDITED financial statement according to generally
accepted accounting principles.
  12. New schools. Within the first [six  months]  YEAR  that  a  school
begins  LICENSED operation, the commissioner shall assess such school an
amount to be deposited into the fund in an amount to  be  determined  by
the commissioner.
  S  9.    Section 5008 of the education law, as added by chapter 887 of
the laws of 1990, is amended to read as follows:
  S 5008. Trust accounts.   1. If the  commissioner  determines  that  a
school has demonstrated a pattern or practice of failing to make tuition

S. 4268--A                         29

refunds  in  a  timely  manner  consistent  with this article AND/OR THE
SCHOOL'S FINANCIAL CONDITION MAY RESULT IN THE INTERRUPTION OR CESSATION
OF INSTRUCTION OR JEOPARDIZE STUDENT  TUITION  FUNDS,  the  commissioner
shall  require a school to establish a trust account in a form or manner
which the commissioner[, after consultation with the advisory  council,]
shall [prescribe in regulations] DETERMINE TO BE APPROPRIATE. The assets
or funds contained in the trust account shall be maintained for the sole
and exclusive benefit of the students.
  2.  In  making this determination, the commissioner shall consider the
following factors: the number of refunds not paid by  the  school  in  a
timely  manner;  the  number  of claims made to, or paid by, the tuition
reimbursement [fund]  ACCOUNT;  [and]  a  pattern  of  misconduct  which
substantially  affects the financial interests of students or the state,
POTENTIAL LIABILITY TO THE TUITION REIMBURSEMENT ACCOUNT, CURRENT ASSETS
AS OPPOSED TO CURRENT LIABILITIES, AND SUCH OTHER  MEASURES  AS  MAY  BE
APPROPRIATE.
  S  10. Section 5009 of the education law, as amended by chapter 434 of
the laws of 1999, is amended to read as follows:
  S 5009. Duties of the commissioner.  In addition to all  other  duties
assigned  in this article, the duties of the commissioner shall include,
but not be limited to:
  [(a) submitting a report to the governor, the temporary  president  of
the  senate,  the  speaker  of  the assembly, the minority leader of the
senate and the minority leader of the assembly beginning  the  fifteenth
day of January after this section shall have become effective, and annu-
ally  thereafter  on that date, on the implementation and enforcement of
this article, which shall include but not be limited to  (i)  curriculum
approval  and  reapproval  standards, (ii) student complaints, (iii) the
resolution of disciplinary actions brought by the  department  or  other
appropriate  state agency, (iv) the audited financial statements submit-
ted by the schools, (v) tuition  reimbursement  account  activity,  (vi)
data  regarding  retention and completion rates for students enrolled in
nondegree, appropriate degree or certificate programs of  two  years  or
less  at registered business schools, licensed private schools, proprie-
tary degree-granting schools and independent and public colleges,  (vii)
the  extent  to  which  the department has met the timelines mandated by
this article, (viii) entrance standards,  (ix)  the  number  of  schools
inspected annually, and (x) the number of trust accounts imposed.
  (b)] 1. ensuring that up-to-date, accurate information is available to
the  public,  via  the  internet  and other appropriate media, regarding
every duly licensed proprietary school in this state, as well as  disci-
plinary actions decided by the state.
  [(c)]  2.  developing  and  issuing  to duly licensed [and registered]
proprietary schools a symbol to indicate such status; provided that such
symbol shall be developed and made available to such  schools  no  later
than September thirtieth, nineteen hundred ninety-nine.
  [(d)] 3. administering a public information campaign aimed at increas-
ing awareness about the importance of attending licensed [or registered]
proprietary vocational schools. Such campaign shall be targeted to popu-
lations  at  risk  of enrolling in unlicensed [or unregistered] schools,
and shall be conducted using means including, but not limited to, public
service announcements  on  commercial  radio  and  television  stations,
public access television, and print media.
  [(e)]  4. providing for the orderly maintenance of any student records
which may be transferred to the department pursuant to any school's plan
developed pursuant to subdivision eight of section five thousand one  of

S. 4268--A                         30

this  article;  including responding to student requests for transcripts
and records within twenty days of receiving a request. The  commissioner
is  hereby  authorized to impose an appropriate fee for such transcripts
pursuant to a schedule approved by the director of the budget.
  S  11.  Section  5010 of the education law, as added by chapter 887 of
the laws of 1990, subdivision 1 as amended by section 23 of  part  A  of
chapter 62 of the laws of 2011, subdivision 4 as added by chapter 604 of
the  laws of 1993, and subdivision 5 as added by chapter 434 of the laws
of 1999, is amended to read as follows:
  S 5010. Advisory council. 1. An advisory council for [registered busi-
ness and] licensed [trade] PRIVATE CAREER schools is hereby created  for
the  purpose  of  advising  the board of regents and the commissioner as
provided herein.  The  council  shall  be  composed  of  eleven  members
appointed  by the governor, two of whom shall be upon the recommendation
of the temporary president of the senate, two of whom shall be upon  the
recommendation of the speaker of the assembly, one of whom shall be upon
the  recommendation of the minority leader of the senate and one of whom
shall be upon the recommendation of the minority leader of the assembly.
Of the five remaining members, one shall be an owner or  director  of  a
school  regulated  pursuant  to  this article, [one shall be a currently
enrolled student at the time of appointment or  a  graduate  of  such  a
school who graduated within three years of appointment] and one shall be
a student advocate. The governor shall designate a chairperson from such
members.    The commissioner [of education], the president of the higher
education services corporation, the secretary of state, the comptroller,
the director of the division of the budget, and the  executive  director
of the job training partnership council, or their designees, shall serve
as ex-officio, non-voting members of the council.
  2.  The  council shall meet no less than four times a year. Members of
the council shall receive no compensation for their services  but  shall
be  reimbursed for reasonable expenses actually and necessarily incurred
by them in the performance of their  duties.  COUNCIL  MEMBER  TERMS  OF
OFFICE  SHALL  BE  LIMITED  TO THREE YEARS, PROVIDED THAT MEMBERS MAY BE
REAPPOINTED. ALL APPOINTMENTS TO THE COUNCIL TO FILL VACANCIES IN EXIST-
ENCE ON THE EFFECTIVE DATE OF THE CHAPTER OF THE LAWS  OF  TWO  THOUSAND
ELEVEN  WHICH  AMENDED THIS SUBDIVISION SHALL BE MADE WITHIN NINETY DAYS
OF SUCH EFFECTIVE DATE.
  3. The council shall advise the commissioner on [the  following]  SUCH
matters[:
  (a) trust accounts;
  (b) performance standards;
  (c)  the  effectiveness  and  utilization of the tuition reimbursement
fund;
  (d) the efficacy of instituting a fee-for-service system;
  (e) the effectivesness of the timelines mandated by this article;
  (f) the impact of assessments on schools;
  (g) recruitment bonuses; and
  (h) such other matters] as the council determines are appropriate.
  [4. The proprietary school advisory  council  shall  conduct  a  study
concerning  the  methodologies  used  to determine student refunds. Such
study shall include, but not be limited to, refund policies  promulgated
pursuant  to  federal statute or regulation, state statute or regulation
and the policies of national accrediting organizations as they relate to
term-based and clock hour-based programs. Not  later  than  July  first,
nineteen  hundred ninety-four, the advisory council shall make recommen-
dations to the commissioner and the board of regents for any changes  in

S. 4268--A                         31

legislation,  regulations,  policy  or  practice  needed  to improve and
simplify the student refund process. The  commissioner  shall  submit  a
report  of the findings of the advisory council together with the recom-
mendations  of  the  department  to the legislature and the governor not
later than the first day of October, nineteen hundred ninety-four.
  5. The advisory council shall report to the  governor,  the  temporary
president  of  the  senate, the speaker of the assembly, and the commis-
sioner on the status of unlicensed proprietary schools  in  this  state.
The  report  shall  also contain a statement on the effectiveness of the
change in the tuition reimbursement fund and any recommendations for  an
extension  of the changes or the consideration of different changes when
such changes are repealed. Such report  is  to  be  delivered  on  April
first, two thousand two.]
  S  12.  This  act  shall  take effect on the one hundred twentieth day
after it shall have become a law; provided, however,  that  subparagraph
(iv)  of  paragraph  b of subdivision 4 of section 5001 of the education
law, as added by section three of this act, shall expire and  be  deemed
repealed  three  years after such effective date; and provided, further,
that effective immediately, the commissioner of education is  authorized
and  directed  to  promulgate  any  regulations  needed to implement the
provisions of this act on such effective date.

S4268B - Bill Details

See Assembly Version of this Bill:
A7859A
Law Section:
Education Law
Laws Affected:
Amd Art 101 Art head, §§5001, 5002, 5003, 5004, 5006, 5007, 5008, 5009 & 5010, Ed L

S4268B - Bill Texts

view summary

Relates to the licensure of private proprietary schools; provides for increased competition among schools to improve the quality of training provided at private proprietary schools and the quality of student performance in the workplace.

view sponsor memo
BILL NUMBER:S4268B

TITLE OF BILL:

An act
to amend the education law, in relation to the licensure of private
proprietary schools; and providing for the repeal of certain provisions
upon the expiration thereof

PURPOSE OF THE BILL:

The purpose of this bill is to ensure that non-degree granting
proprietary institutions in New York State comply with current best
practices for this sector and to provide the New York State Education
Department (NYSED) with the resources to effectively oversee
compliance with law and to preserve the tuition reimbursement
account. Additionally, this bill would allow a new category of
candidate schools: those that are in the application process and have
not yet perfected their license.

SUMMARY OF THE PROVISIONS OF THE BILL:

This bill would amend Article 101 of the Education Law (sections 5001
through 5010) to eliminate the distinction between licensed private
schools and registered business schools, replace the phrase "licensed
private schools" with the more descriptive "licensed private career
schools", adjust fees, which have not changed since 1990, and
establish a candidate school category that would allow a school to
operate legally while it is in the process of obtaining a
non-degree-granting proprietary school license.

Section 5001 would be amended to provide for the consolidation of
registered business schools and licensed private schools into one
designation, eliminating the artificial distinction between these
types of schools and reflecting the current heterogeneous nature of
training programs offered at these schools. Section 5001(2)(f),
exempting certain schools from licensure requirements, which was
recently amended by Chapter 13 of the Laws of 2010 to include yoga
and martial arts as subjects exempt from such licensure
requirements, would be further amended to include Pilates as an
additional subject exempt from such requirements. Section 5001(2)(t)
would also be amended to exclude schools conducted for the purpose of
teaching personal trainers from the list of schools exempt from
such licensure requirements.

For greater clarity, §5001(2), exempting conferences, trade shows,
workshops and such other courses of study from such licensing
requirements, would also be divided into two separate paragraphs l
and m without substantive change. Subdivision 2-b of §5001, exempting
programs for private businesses with no tuition liability, would be
amended to clarify that the exemption would apply to employees of a
person or organization that has contracted with another person or
organization to provide instruction at no cost.
Candidate school status would be established by adding a new §5001(4)
(b) (iii) to allow a practical means for prospective schools to
operate legally prior to meeting all the requirements of full


licensure. For further clarity, §5001(4)(b), which addresses the
period of licensure as a private career school, would be amended to
include the specific
fees for initial and renewal applications for such licensure. The
renewal fees would be increased to reflect NYSED's current cost of
supervising these schools and to meet the prospective costs for
reimbursing tuition for a significant number of students when these
students' schools close due to fiscal failure or non-compliance.
Initial application fees would be set at certain amounts and fees for
renewal would be based on the school's gross annual tuition income.

Procedures in §5001(6) for working with schools that are not
financially viable would be formalized to protect the tuition
reimbursement account. School transfer requirements in §5001(7) would
be adjusted to be more consistent with how other states handle school
transfers. The method of assessing schools in §5001(9) would be
changed from more complicated regular and special assessment formulas
to one based on the number of quarterly assessments paid, whereby
newer schools with the potential to fail would pay a higher
assessment than schools with a history of satisfactory licensed
operation. Section 5001(4)(e), relating to annual audited
financial statements, would be amended to change the gross tuition
criteria for submission of such statements to the commissioner and
the filing schedule for such statements to bring the non-degree
sector into parity with schools in the degree-granting and public
school sectors.

Section 5002 would be amended by adding a new paragraph b-1 to
subdivision 1 to restrict the amount of private loan payments that a
school could receive on behalf of a student prior to their completing
a program, thereby limiting students' loan liability as well as the
tuition reimbursement account's liability for payment of loan funds.
This would formally recognize that the tuition reimbursement account
is to be used for student protection and not as a substitute for
guaranteed student loans. Section 5002(1)(d)(1) on admission of
students under the ability to benefit provision would be amended to
authorize the Commissioner to accept other entrance requirement
documentation, such as prerequisite coursework, professional or
vendor certifications, personal interviews and/or attestations of
equivalent knowledge in lieu of the examination requirement. Section
5002(3)(h) would be amended to require schools to submit for
approval a school catalog that contains a weekly tuition liability
chart for each program that indicates the amount of refund due a
student upon withdrawal. Section 5002(4)(c)(1) and (2) would be
amended to emphasize that in addition to paying the curriculum
application fee, provided in section 5002(4)(a), schools would
be required to pay the cost of an outside evaluation of a
particular course or facility of the school. Section 5002(5) would
also be amended to establish a curriculum/course application fee to
fund the NYSED's curriculum unit. Fees from school and personnel
license applications do not cover the cost of curriculum review, as
some schools have only a handful of courses or curricula that require
approval while others have between 400 and 700. Schools requiring the
most evaluation would pay more, those with few programs would pay
less. Section 5002(6) would be amended so that all teacher licenses
would no longer be restricted to a single school location, as private
career school teacher licenses currently are. This would result in a


more mobile and efficient teacher pool for schools to draw from for
faculty members, reduced expense for processing teacher applications
and a reduced workload for the State Education Department's Bureau of
Proprietary School Supervision ("the Bureau").

Section 5003 would be amended to establish more practical timeframes
for disciplinary proceedings. A new subparagraph (4) would be added
to §5003(1)(c) to establish procedures for handling written
complaints by students attending candidacy schools alleging failure
of the school to disclose its candidacy status and the implications
and to obtain the required attestation from the student. If such a
violation is found, the school would be required to provide the
student a full refund of all monies received from the student.
Section 5003(6) would be amended to increase the fines established in
1990 so they reflect NYSED's current cost of school oversight.
Section 5003(6) would be amended to expand the list of violations
that may result in the imposition of a civil penalty, including
failure to offer an approved course or program.

Subdivision 3 of section 5004 would be amended to increase the amount
of gifts and other non-monetary consideration a school may provide to
students or former students from $25 to $75. Subdivision 4 of section
5004 would be amended to increase private school agent fees from $100
to $200, while extending the term of a private school agent's
certificate from 2 years to 3 years.

Section 5005 would not be amended.

Section 5006 on teachout plans would be amended to allow NYSED to
intervene more effectively when a private career education school
ceases instruction. Currently, schools that are closing are required
to develop teachout plans that arrange to have students continue to
receive instruction from other private career schools upon closure of
the school. NYSED's experience is that schools that must close have
little incentive to establish teachouts, so authorizing NYSED to
arrange for a teachout plan would provide greater protection for
students.

Section 5007 on refunds to students enrolled in schools that are
closing would be amended to expand expenses eligible for
reimbursement. Section 5007(4)(a) and (c) on refunds to students
would be amended to provide for refunds of tuition, fees and book
charges paid by or on behalf of the students in cash or through
loans, excluding funding obtained through government agencies.
Section 5007(5)(b) would be amended to authorize the Commissioner to
refund expenditures for fees, books and tuition to students of
schools that have closed. Section 5007(8) would be amended to protect
the interests of students in restitution from the tuition
reimbursement account by extending the time within which the
Commissioner or the Attorney General may seek recovery of a refund
from a school from 30 days to 90 days tram payment of the refund by
the tuition reimbursement account. The provisions for special
assessments for new schools in section 5007(10) would be amended to
be consistent with the assessment changes in section 5001, and to
reflect NYSED's experience with assessing schools that have not been
in operation for an entire year. The requirement in section 5007(11)


for an annual fund audit of the tuition reimbursement account would
be changed to mandate a two-year audit.

Section 5008 would be amended to provide details regarding trust
accounts for schools determined to be in financial jeopardy.

Section 5009 would be amended to remove the annual reporting
requirement.

Section 5010 would be amended to remove the requirement to have a
student representative on the advisory council. NYSED has been unable
to find a student willing to serve in this capacity. Term limits for
members would be mandated, although members could be reappointed.
This would ensure that members of the advisory council continue to be
affiliated with schools in the non-degree proprietary sector.
Provisions that are no longer relevant to the council, including
limiting the scope of its advisory responsibilities, would be deleted.

STATEMENT IN SUPPORT OF THE BILL:

The law pertaining to non-degree proprietary schools was last amended
substantially in 1990. Since then, the number of these schools has
increased and their nature has changed. Only one-tenth of licensed
schools currently receive federal Title IV funds for students in
strictly business or trade programs. Schools today offer hybrid
programs such as medical office assisting, where coding and
recordkeeping are combined with clinical service such as phlebotomy.
Most schools have ceased to rely on Title IV, state TAP or other
similar funding sources and have turned to private sources such as
Sallie Mae, banks, etc.

The law needs to be updated to reflect and conform to the current
needs of this area of higher education and of this vital business
industry, and to provide the Bureau of Proprietary School Supervision
of the State Education Department the flexibility it needs to
adequately continue to supervise proprietary schools, protect
students and taxpayers, and preserve and strengthen this important
educational and economic industry.

Currently, there are more than 450 licensed, registered, or certified
schools. In addition, approximately 200 schools are pending
licensure. Furthermore, more than 1,000 schools currently operating
in New York State are unlicensed (although some may be operating
under a legal exemption, the vast majority of these unlicensed
schools are operating illegally).

NYSED needs to maintain its ability to regulate the industry and to
strengthen schools that provide a quality education to some of this
state's most vulnerable adult learners while enforcing health,
safety, financial and other regulatory safeguards against those
schools who, either inadvertently or intentionally do not adhere to
the industry's standards and their legal obligations. Consistent,
fair and assured enforcement will even the playing field for all
non-degree schools subject to regulation, which will in turn
increases competition among such schools and increase the quality of
each school's training programs.


In addition, more stability is absolutely crucial to maintain the
tuition reimbursement account (TRA), which is used to repay students
when their school refuses to issue a refund to them for overpayments
or in those dire cases when schools close their
doors, sometimes overnight, and either are unable or unwilling to meet
their contractual commitments for training the students. Students in
these situations are left out in the cold, sometimes after they have
made significant investments of time and money into their training,
with nothing to show for it. In these situations, NYSED must have the
resources to step in, make these students financially whole and work
to provide alternative educational opportunities for them almost
immediately.

In the past decade, the TRA faced near bankruptcy when a chain of
schools on Long Island closed, leaving students stranded without
either a quality education nor access to refunds of their substantial
investment in the form of tuition, fees and book charges. The law
pertaining to the TRA has not been updated or reinforced since 1993.
The amendments pertaining to financial probation, financial viability,
and trust accounts are intended to prevent future situations where at
risk students nearly lose all of their investment of time and money.

Current law limits private career school teachers to teaching a
particular subject only at a single school location. Removing that
limitation would allow these teachers to teach that subject at any
licensed school in the state. The state's schools would greatly
benefit by being able to transfer teachers from one location of a
school chain to another without the unnecessary requirement that
these teachers need to be dually licensed.
Schools would also have a larger supply of substitute teachers. With
teachers given the freedom to move from school to school, salary
schedules could become more competitive within this sector. Also,
students would have the same access to teachers previously licensed
at only one school and teachers with a record of successful student
course completion and high placement rates could become more in
demand from other schools.

BUDGETARY IMPLICATIONS OF THE BILL:

This bill would generate some additional funds necessary for NYSED to
adequately oversee, investigate, discipline and help make this
important higher education sector stronger. Current tuition levels
generate approximately $3.0 million in revenue.
The proposed changes in the first year the legislation is implemented
would generate approximately $800,000 (based on current school
figures and estimates). This increase is over the 2008-09 year, the
last completed fiscal year for which figures are available.

PRIOR LEGISLATIVE HISTORY:

In 2009, this bill was introduced in the Senate as S.6013, referred to
the Senate Rules Committee, and no further action was taken.
Subsequently, this bill was introduced in the Senate as S.6043 and in
the Assembly as A.8773. S.6043 was referred to the Senate Rules
Committee and no further action was taken. A.8773 was referred to the
Assembly Higher Education Committee and no further action was taken.


In 2010, it was again referred to both the Senate and Assembly's
Committee on Higher Education, but no further action was taken.

In 2008, this bill was introduced in the Senate as S.7592, referred to
the Senate Education Committee, discharged and committed to the
Senate Higher Education Committee, and then reported and committed to
the Senate Finance Committee. No further action was taken.


EFFECTIVE DATE:

This bill would take effect on the one hundred twentieth day after it
shall have become a law; provided that subparagraph (iv) of
paragraph b of subdivision 4 of section 5001 of the Education Law,
which relates to candidacy status, would expire and be deemed
repealed three years after such effective date; and provided,
further, that the amendments made to paragraph g of subdivision 10 of
section 5007 of the Education Law, which relate to the Tuition
Reimbursement Account, would not affect the repeal of such paragraph
and would be deemed repealed therewith, and provided, further,
however, that effective immediately, the Commissioner of Education
would be authorized and directed to promulgate any rules or
regulations deemed necessary to implement the provisions of this act
on such effective date.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 4268--B
    Cal. No. 512

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             March 25, 2011
                               ___________

Introduced by Sen. LAVALLE -- (at request of the State Education Depart-
  ment)  --  read  twice  and  ordered  printed,  and when printed to be
  committed to the Committee on Higher Education --  reported  favorably
  from  said committee, ordered to first and second report, ordered to a
  third reading -- reported favorably from said committee and  committed
  to  the  Committee  on  Finance -- committee discharged, bill amended,
  ordered reprinted as amended and  recommitted  to  said  committee  --
  committee  discharged,  bill amended, ordered reprinted as amended and
  recommitted to said committee

AN ACT to amend the education law,  in  relation  to  the  licensure  of
  private  proprietary  schools; and providing for the repeal of certain
  provisions upon the expiration thereof

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. The article heading of article 101 of the education law is
amended to read as follows:
                       LICENSED PRIVATE [TRADE AND
              CORRESPONDENCE] CAREER SCHOOLS AND CERTIFIED
                  ENGLISH AS A SECOND LANGUAGE SCHOOLS
  S 2. Legislative intent. The Legislature  hereby  finds  and  declares
that  there  is  a  growing need to protect students enrolled in certain
non-degree granting proprietary schools from inadequate job training and
school closure, which disrupts the academic progress of  these  students
and jeopardizes their tuition funds. Given the growing needs and demands
of  business and industry, the legislature further finds and declares it
necessary to align the state education department's current oversight of
these schools with these significantly increasing needs. The legislature
finds it necessary for the department to review these  schools'  curric-
ulums  and instruction to help ensure students receive adequate training
to obtain employment and to successfully perform their occupation in the
workplace. It also finds it necessary for the department to intervene in

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08579-09-1

S. 4268--B                          2

certain school closures where teach out plans  may  not  be  efficiently
implemented and students may not complete training.
  The  legislature  also finds it necessary for the department to review
these schools for financial viability to prevent school  closure,  which
will,  in  turn,  preserve  tuition  funds and federal and state funding
sources. This act is also necessary to increase the  accountability  and
transparency of these schools by allowing students to check on whether a
school is approved or whether a teacher at such school is licensed.
  The  legislature  intends  for  this act to increase competition among
these schools, which will, in turn,  improve  the  quality  of  training
offered  at  these schools and the quality of student performance in the
workplace.  This act will provide the  department  with  the  tools  and
resources  necessary  to effectively supervise these schools for compli-
ance and to reimburse students for tuition and other related costs  when
these  schools  close  as  a  result of fiscal failure or noncompliance,
which will overall strengthen student protection.
  S 3. Section 5001 of the education law, as added by chapter 817 of the
laws of 1972, the section heading, subdivision 1, paragraph h of  subdi-
vision  2  and paragraph b of subdivision 4 as amended and paragraphs i,
j, k, l and m of subdivision 2 and subdivisions 2-a and 2-b as added  by
chapter 434 of the laws of 1999, paragraph b of subdivision 2 as amended
and subdivisions 5, 6, 7, 8 and 9 as added by chapter 887 of the laws of
1990,  paragraph  d of subdivision 2 and subdivision 4 as amended, para-
graphs a, b, c and d of subdivision 9 as added and subdivisions 5, 6, 7,
8 and 9 as renumbered by chapter 604 of the laws of 1993, paragraph e of
subdivision 2 as amended by chapter 439 of the laws of 1980,  and  para-
graph  f  of subdivision 2 as amended by chapter 13 of the laws of 2010,
is amended to read as follows:
  S 5001. Licensed  private  CAREER  schools  [and  registered  business
schools/computer   training  facilities].  1.  Schools  required  to  be
licensed [or registered]. No private school [or computer training facil-
ity] which charges tuition or fees  [for]  RELATED  TO  instruction  and
which  is  not  exempted  hereunder  shall  be operated by any person or
persons, firm, corporation, or private organization for the  purpose  of
teaching  or giving instruction in any subject or subjects, unless it is
licensed [or registered] by the department. As used  in  this  article[,
the following terms shall have the following meanings]:
  a.  ["Licensed]  "LICENSED private CAREER school" OR "LICENSED PRIVATE
SCHOOL" shall mean any entity offering to instruct or teach any  subject
by  any  plan  or method including written, visual or audio-visual meth-
ods[.], AND SHALL INCLUDE ANY INSTITUTION LICENSED OR  REGISTERED  AS  A
REGISTERED  BUSINESS  SCHOOL OR COMPUTER TRAINING FACILITY ON THE EFFEC-
TIVE DATE OF THE CHAPTER OF  THE  LAWS  OF  TWO  THOUSAND  ELEVEN  WHICH
AMENDED  THIS SUBDIVISION. FOLLOWING SUCH EFFECTIVE DATE, THERE SHALL BE
NO DISTINCTION BETWEEN INSTITUTIONS PREVIOUSLY  DEFINED  AS  "REGISTERED
BUSINESS  SCHOOLS"  OR "COMPUTER TRAINING FACILITIES" AND OTHER LICENSED
PRIVATE SCHOOLS, AND ANY REFERENCE  IN  LAW  TO  A  REGISTERED  BUSINESS
SCHOOL  OR  COMPUTER  TRAINING FACILITY SHALL BE DEEMED A REFERENCE TO A
LICENSED PRIVATE CAREER SCHOOL. INSTITUTIONS HOLDING  A  VALID  BUSINESS
SCHOOL  REGISTRATION ON SUCH EFFECTIVE DATE, INCLUDING COMPUTER-TRAINING
FACILITIES, SHALL HAVE SUCH REGISTRATIONS REPLACED BY THE  COMMISSIONER,
AT NO COST, WITH LICENSES VALID UNTIL THE EXPIRATION DATE LISTED ON SUCH
PREVIOUS REGISTRATION; AND
  b.  ["Registered  business  school"  shall  mean  a  school in which a
curriculum primarily provides a sequence of  courses  that  may  include
accounting or bookkeeping, marketing, business arithmetic, business law,

S. 4268--B                          3

business     English,     shorthand,     typing,    computer    business
applications/programming, or substantially all  said  courses,  for  the
purpose  of  preparing  an  individual  to pursue a business occupation;
provided, however, that a registered business school program may include
instruction  in  English  as  a  second language at a beginning or basic
level, provided such instruction shall not constitute  more  than  fifty
percent  of such program. Such authorization shall apply to all students
who commence instruction in a registered business school  program  prior
to July first, nineteen hundred ninety-one. A business school registered
under  this  section  shall employ only teachers licensed by the depart-
ment,  whose  qualifications  are  substantially  equivalent  to   those
required of teachers of equivalent subjects in public secondary schools.
  c.  "Computer  training  facility"  shall  mean  any  entity primarily
engaged in providing training on the use, language,  programs,  applica-
tion,  networking  and technical repair of computers] "CERTIFIED ENGLISH
AS A SECOND LANGUAGE SCHOOL" OR "CERTIFIED  ESL  SCHOOL"  SHALL  MEAN  A
LANGUAGE  SCHOOL  CONDUCTED  FOR-PROFIT  WHICH  PROVIDES  INSTRUCTION IN
ENGLISH AS A SECOND LANGUAGE AND WHICH ACCEPTS NO PUBLIC  FUNDS  AND  IS
CERTIFIED PURSUANT TO PARAGRAPH F OF SUBDIVISION FOUR OF THIS SECTION.
  2. Exempt schools. The following schools are exempted from the licens-
ing requirement of this section:
  a. institutions authorized to confer degrees in this state;
  b.  schools[, other than correspondence schools,] providing kindergar-
ten,  nursery,  elementary  or  secondary  education,   except   schools
conducted  for  profit  which provide instruction in English as a second
language or preparation for  high  school  equivalency  examinations  to
out-of-school youth or adults;
  c. schools operated by governmental agencies or authorities;
  d. schools which engage exclusively in training of students with disa-
bilities as defined in section forty-four hundred one of this chapter;
  e.  schools  conducted on a not-for-profit basis by firms or organiza-
tions for the training of their own employees only, provided  that  such
instruction is offered at no charge to such employees, or by a fraternal
society or benevolent order for its members or their immediate relatives
only;
  f.  schools  which provide instruction in the following subjects only:
religion, dancing, music, painting, drawing, sculpture, poetry, dramatic
art, languages, reading comprehension,  mathematics,  recreation,  yoga,
martial  arts, PILATES and athletics, including the training of students
to teach such subjects, PROVIDED, HOWEVER, THAT  SCHOOLS  CONDUCTED  FOR
THE  PURPOSE  OF  TRAINING PERSONAL TRAINERS SHALL BE EXCLUDED FROM THIS
EXEMPTION AND SHALL BE REQUIRED TO OBTAIN LICENSURE;
  g. schools in which the course of instruction is licensed,  registered
or  approved  under  any  other  section of this chapter or by any other
department or agency of the state;
  h. schools which provide instruction designed solely for giving flight
training and/or related ground school instruction;
  i. schools in which instruction designed solely to prepare  applicants
for admission to professional licensing examinations administered by the
department  pursuant  to title eight of this chapter, and applicants for
examination for admission to the practice of law;
  j. schools which offer continuing education  courses  exclusively  for
individuals  licensed  by the department pursuant to title eight of this
chapter and for individuals admitted to the practice of law;

S. 4268--B                          4

  k. schools which provide instruction given exclusively to employees of
a person or organization which has contracted  with  another  person  or
organization to provide such instruction at no cost to the employees;
  l. conferences, trade shows, workshops, seminars, institutes or cours-
es  of  study  offered  and  sponsored either jointly or individually by
recognized trade, business or professional organizations for the benefit
of their membership; [or those offered to the general public by individ-
uals, firms or organizations which neither conduct such activities for a
duration of more than five consecutive days  nor  more  frequently  than
twice in any one calendar year;]
  m. SCHOOLS THAT LIMIT THEIR TOTAL CONFERENCES, TRADE SHOWS, WORKSHOPS,
SEMINARS,  INSTITUTES OR OTHER COURSE OFFERINGS TO NO MORE THAN TWICE IN
ONE CALENDAR YEAR WITH EACH OF THOSE OFFERINGS FOR  NO  MORE  THAN  FIVE
DAYS;
  N.  schools  which provide instruction exclusively to persons employed
full-time or part-time in  the  field  in  which  instruction  is  being
offered,  where the instruction is provided to meet continuing education
standards required for professional licensure as defined by law in  this
state; AND
  O.  SCHOOLS IN CANDIDACY STATUS PURSUANT TO SUBPARAGRAPH (IV) OF PARA-
GRAPH B OF SUBDIVISION FOUR OF THIS SECTION.
  2-a. Schools exempted pursuant to subdivision two of this section  may
waive  such  exemption  and  apply  for  a  license  [or  registration];
provided, however, that the review of such applications shall be left to
the discretion of the commissioner.
  2-b. Programs offered by licensed private CAREER  schools  [or  regis-
tered  business  schools to private businesses where there is no tuition
liability] TO EMPLOYEES OF A PERSON OR ORGANIZATION WHICH HAS CONTRACTED
WITH ANOTHER PERSON OR ORGANIZATION TO PROVIDE SUCH  INSTRUCTION  AT  NO
COST  to  the  employees  shall  be exempt from the requirements of this
article, provided that the following requirements are met:
  a. Only employees of the [private business]  EMPLOYER  for  which  the
program is being offered may enroll in classes that make up the program.
  b. Certificates or diplomas awarded to students in the program may not
reference in any way the department.
  c. Prior to the commencement of the program, such schools shall submit
to  the  department  a  disclosure form, prescribed by the commissioner,
copies of which shall  be  provided  to  all  students  in  such  exempt
program,  which shall include but not be limited to the following infor-
mation:
  (i) a description of the location and time period in which the program
will be offered;
  (ii) a statement that the students enrolled in the program  shall  not
be  subject  to  any  tuition  liability  for  the program, even if such
students do not complete the program;
  (iii) a statement that the program  being  provided  to  the  [private
business]  EMPLOYER  has  not been approved by the department and is not
under the department's jurisdiction and that the students in the program
have been advised of the fact; and
  (iv) the signatures of the school director or owner of the school  and
the  representative  of  the  [private  business] EMPLOYER for which the
program is being offered certifying the accuracy of  the  statements  on
the form.
  d.  Any  additional student openings in a program deemed exempt by the
department may be made available to students  not  affiliated  with  the
[private  business] EMPLOYER on the condition that such students execute

S. 4268--B                          5

a disclosure form as prescribed in paragraph c of this subdivision. Such
admitted students shall only constitute up to ten percent of the  exempt
program's total capacity.
  4.  Application, renewal application and application fees. a. Applica-
tion and renewal application for a license as a  private  CAREER  school
[or  registration  as  a  business  school] required by the commissioner
shall be filed on forms  prescribed  and  provided  by  the  department.
Except as provided in subparagraph (iii) of paragraph e of this subdivi-
sion, each renewal application for [a private business school registered
pursuant to this section or for] a private CAREER school licensed pursu-
ant to this section shall include an audited financial statement audited
according  to  generally  accepted  auditing standards by an independent
certified public accountant or  an  independent  public  accountant  and
statistical reports certified by the owner or operator of the school, as
required  by  the commissioner; provided, however, that the commissioner
shall accept a copy of a current financial statement previously filed by
a school with any other  governmental  agency  in  compliance  with  the
provisions of any federal or state laws, or rules or regulations if such
statement  contains  all of the information required under this subdivi-
sion and conforms to this subdivision's requirements of auditing, review
and certification. Any required audit of the financial  statement  shall
be  a  condition of licensure [or registration] and shall be paid for by
the school, and the results of the  audit  shall  be  forwarded  to  the
commissioner.  Applications  not  accompanied  by the audits and reports
required pursuant to  this  subdivision  shall  not  be  considered  for
approval  by the commissioner. Initial applications shall be accompanied
by financial reports as required by the commissioner. [The  commissioner
shall act on an initial application for a license or registration within
one  hundred  twenty  days  of  receipt  of a complete application.] The
applicant shall receive a written approval or denial together  with  the
reasons for a denial of such application.
  b.  (i)  An  initial  license [or registration] issued pursuant to the
provisions of this article shall be valid for a period of two  years.  A
renewal  of  license [or registration] issued pursuant to the provisions
of this article shall be valid for a period of four years. [All  license
and  registration  fees for a renewal shall be double the amounts listed
in paragraph g of this subdivision.]
  (ii) EVERY APPLICANT AND RENEWAL APPLICANT SHALL PAY TO THE DEPARTMENT
A NONREFUNDABLE, NONTRANSFERABLE APPLICATION FEE. THE  INITIAL  APPLICA-
TION  FEE FOR NEW SCHOOLS SHALL BE FIVE THOUSAND DOLLARS, OF WHICH THREE
THOUSAND DOLLARS SHALL ACCRUE TO THE CREDIT  OF  THE  PROPRIETARY  VOCA-
TIONAL  SCHOOL SUPERVISION ACCOUNT AND TWO THOUSAND DOLLARS SHALL ACCRUE
TO THE TUITION REIMBURSEMENT ACCOUNT. FOR ADDITIONAL LICENSED  LOCATIONS
OF  CURRENTLY  OPERATING SCHOOLS, THE APPLICATION FEE SHALL BE TWO THOU-
SAND FIVE HUNDRED DOLLARS, WHICH SHALL  ACCRUE  TO  THE  CREDIT  OF  THE
PROPRIETARY  VOCATIONAL SCHOOL SUPERVISION ACCOUNT. FOR RENEWAL APPLICA-
TIONS, THE FEE SHALL BE BASED ON GROSS ANNUAL TUITION INCOME  AS  DETER-
MINED BY THE ANNUAL FINANCIAL STATEMENTS REQUIRED IN PARAGRAPH A OF THIS
SUBDIVISION  FOR  THE  MOST  RECENT SCHOOL FISCAL YEAR, ACCORDING TO THE
FOLLOWING SCHEDULE:

     GROSS ANNUAL TUITION INCOME           FEE

     0-$199,999                            $   750.00
     $200,000-$499,999                     $ 1,500.00
     $500,000-$999,999                     $ 2,225.00

S. 4268--B                          6

     $1,000,000-$4,999,999                 $ 4,500.00
     $5,000,000-$9,999,999                 $ 9,000.00
     $10,000,000 OR ABOVE                  $18,000.00

  SUCH  RENEWAL FEES SHALL ACCRUE TO THE CREDIT OF THE PROPRIETARY VOCA-
TIONAL SCHOOL SUPERVISION ACCOUNT. IF THE  EVALUATION  OF  A  PARTICULAR
COURSE  OR  FACILITY  REQUIRES THE SERVICES OF AN EXPERT NOT EMPLOYED BY
THE DEPARTMENT, THE DEPARTMENT SHALL RETAIN SUCH EXPERT AND  THE  SCHOOL
SHALL REIMBURSE THE DEPARTMENT FOR THE REASONABLE COST OF SUCH SERVICES.
  (III)  Each school shall display, near the entrance to the school [and
under glass], the license [or registration] which has been issued to it.
Such authorization shall be displayed only  during  the  period  of  its
validity.
  (IV)  A  SCHOOL  WHICH HAS APPLIED FOR A PRIVATE CAREER SCHOOL LICENSE
MAY REQUEST CANDIDACY STATUS FOR ONE TIME ONLY. CANDIDACY  STATUS  SHALL
NOT  BE  ISSUED  TO  SCHOOLS OFFERING PROGRAMS TO TRAIN STUDENTS TO PASS
LICENSURE EXAMINATIONS SUCH AS  APPEARANCE  ENHANCEMENT  TESTS,  ACHIEVE
NURSE  AIDE OR NURSE ASSISTANT CERTIFICATION, OR PASS EXAMINATIONS LEAD-
ING TO LICENSURE IN ANY OTHER PROFESSION OR OCCUPATION DETERMINED BY THE
COMMISSIONER TO REQUIRE FULL LICENSURE STATUS.   CANDIDACY STATUS  SHALL
ALLOW  A  SCHOOL  TO  OPERATE UNLICENSED FOR AN INITIAL PERIOD OF TWELVE
MONTHS DURING THE LICENSURE APPLICATION PROCESS, WHICH MAY  BE  EXTENDED
TO A MAXIMUM, NON-RENEWABLE PERIOD OF EIGHTEEN MONTHS, UNDER THE FOLLOW-
ING CONDITIONS:
  (1) THE PROSPECTIVE SCHOOL SUBMITS A CANDIDATE SCHOOL APPLICATION FEE,
SEPARATE FROM THE SCHOOL APPLICATION FEE, OF FIVE THOUSAND DOLLARS WHICH
SHALL  ACCRUE  TO THE CREDIT OF THE PROPRIETARY VOCATIONAL SCHOOL SUPER-
VISION ACCOUNT;
  (2) THE SCHOOL SHALL NOT REPRESENT THAT IT IS  LICENSED  OR  THAT  ITS
PROGRAMS ARE APPROVED THROUGH THE DEPARTMENT;
  (3)  TO  EVERY  PROSPECTIVE  STUDENT,  THE  SCHOOL SHALL DISSEMINATE A
STATEMENT, PROVIDED BY THE DEPARTMENT, THAT THE FACILITIES, INSTRUCTORS,
AND PROGRAMS BEING PROVIDED HAVE NOT BEEN APPROVED AND ARE NOT UNDER THE
DEPARTMENT'S JURISDICTION DURING THE CANDIDACY  PERIOD.  SUCH  STATEMENT
SHALL  INDICATE  THAT STUDENTS ATTENDING CANDIDATE SCHOOLS SHALL HAVE NO
RECOURSE THROUGH THE DEPARTMENT'S STUDENT COMPLAINT PROCESS NOR HAVE ANY
RESTITUTION AVAILABLE FROM THE TUITION REIMBURSEMENT  ACCOUNT.  STUDENTS
SHALL  SIGN  AN ATTESTATION TO THE RECEIPT OF THIS STATEMENT. THE SCHOOL
SHALL RETAIN THE SIGNED ATTESTATION AND PROVIDE THE STUDENT WITH A  COPY
OF SUCH SIGNED STATEMENT;
  (4)  THE  SCHOOL  SHALL  DEMONSTRATE FINANCIAL VIABILITY THROUGH MEANS
DEEMED APPROPRIATE BY THE COMMISSIONER. SUCH MEANS MAY  INCLUDE  SUBMIT-
TING AN AUDITED FINANCIAL STATEMENT BASED ON THE MOST RECENTLY COMPLETED
FISCAL YEAR; SECURING AND MAINTAINING A PERFORMANCE BOND, PAYABLE TO THE
COMMISSIONER, IN AN AMOUNT APPROPRIATE TO ELIMINATE ANY LIABILITY TO THE
TUITION  REIMBURSEMENT ACCOUNT IN THE EVENT THE SCHOOL CEASES OPERATION;
LIMITING THE COLLECTION OF TUITION FUNDS UNTIL  EACH  STUDENT  COMPLETES
THE PROGRAM OF STUDY; OR OTHER MEANS ACCEPTABLE TO THE COMMISSIONER; AND
  (5) ANY BREACH OF THE ABOVE CONDITIONS SHALL RESULT IN THE DISAPPROVAL
OF  THE  SCHOOL'S  LICENSURE APPLICATION AND THE FORFEITURE OF CANDIDATE
STATUS. CONTINUED OPERATION AFTER THIS  DISAPPROVAL  SHALL  SUBJECT  THE
SCHOOL TO THE DISCIPLINARY ACTION PRESCRIBED UNDER PARAGRAPH B OF SUBDI-
VISION SIX OF SECTION FIVE THOUSAND THREE OF THIS ARTICLE.
  (6)  ON OR BEFORE THE END OF THE INITIAL TWELVE-MONTH PERIOD OF CANDI-
DACY STATUS, THE COMMISSIONER SHALL REVIEW THE SCHOOL'S APPLICATION  FOR
LICENSURE  AND  DOCUMENTATION  RELATING TO THE SCHOOL'S CANDIDACY STATUS

S. 4268--B                          7

AND SHALL DETERMINE WHETHER SUCH CANDIDACY STATUS SHOULD BE EXTENDED  TO
THE  FULL  EIGHTEEN MONTHS AND WHETHER THE SCHOOL MAY CONTINUE TO ENROLL
STUDENTS BEYOND THE EIGHTEEN-MONTH PERIOD OR  THE  SCHOOL'S  APPLICATION
FOR LICENSURE WILL BE INITIALLY DISAPPROVED FOR FAILURE TO MEET REQUIRED
STANDARDS.
  c.  An  application for renewal of any license [or registration] shall
be submitted at least one hundred twenty days prior  to  the  expiration
date  of  the current authorization to operate accompanied by the nonre-
fundable application fee and  such  certified  statistical  reports  and
annual financial statements required pursuant to this subdivision.
  d.  When  complete and timely application has been made for renewal of
any license [or  registration],  the  school  shall  receive  a  written
approval  or  denial,  together  with the reasons for denial of renewal,
from the commissioner no less than thirty days prior to  the  date  such
license [or registration] expires.
  e.  Financial statements and statistical reports. (i) Licensed private
CAREER schools and [registered business] CANDIDATE schools shall  submit
such  certified  statistical  reports and annual financial statements as
required by the  commissioner.  The  commissioner  may  require  audited
statistical  reports  upon  a  determination  that a school has provided
false or inaccurate certified statistical reports. The financial  state-
ments  shall  be  based  on the fiscal year of the school and shall also
include an itemized account of tuition refunds due and owing to past  or
presently  enrolled students. Statistical reports shall include, but not
be limited to, enrollment, completion and placement  data.  The  commis-
sioner  shall  use  such  financial  statements  and statistical reports
submitted for the purposes of licensure [and registration]  of  schools,
establishing  fees or assessments pursuant to this article and determin-
ing standards pursuant to paragraph b of  subdivision  five  of  section
five thousand two of this article. The attorney general, the comptroller
and  the  president  of  the higher education services corporation shall
have access to this information when it is necessary  to  perform  their
duties as required by state law.
  (ii)  Any  school which received [in excess of two hundred fifty] FIVE
HUNDRED thousand dollars OR MORE in gross tuition  in  a  school  fiscal
year  shall  be required to submit TO THE COMMISSIONER an annual audited
financial statement [to the commissioner] PREPARED  IN  ACCORDANCE  WITH
GENERALLY  ACCEPTED ACCOUNTING PRINCIPLES for that fiscal year. In addi-
tion, any school which has a gross tuition of [two hundred  fifty]  LESS
THAN FIVE HUNDRED thousand dollars [or less] in a school fiscal year but
whose  combined  state  and  federal  student financial aid in such year
[exceeds] EQUALS one hundred thousand dollars OR MORE shall also  submit
an  annual  audited  financial  statement  to  the commissioner for that
fiscal year.
  (iii) Schools whose gross tuition is [two  hundred  fifty]  LESS  THAN
FIVE  HUNDRED  thousand  dollars  [or  less] in a school fiscal year and
which receive less than one hundred thousand dollars in state and feder-
al student financial aid in a school fiscal year  shall  file  with  the
commissioner  an unaudited financial statement in a format prescribed by
the commissioner, provided, however, that any such  school  [with  gross
tuition  in  excess  of fifty thousand dollars shall have filed at least
one audited financial statement after the first year of  its  operation.
The  statement shall be signed by the president or chief executive offi-
cer and the chief fiscal officer of the school who  shall  certify  that
the  statements  are  true and accurate] SHALL FILE AN AUDITED FINANCIAL
STATEMENT THE FISCAL  YEAR  AFTER  A  REVIEWED  FINANCIAL  STATEMENT  IS

S. 4268--B                          8

SUBMITTED.  FOR  SUCH SCHOOLS, AUDITED FINANCIAL STATEMENTS ARE REQUIRED
EVERY TWO YEARS, AT MINIMUM, WITH REVIEWED FINANCIAL STATEMENTS  ALLOWED
DURING THE ALTERNATE YEAR. Upon a determination by the commissioner that
a  school has submitted false or inaccurate statements or that a signif-
icant, unsubstantiated  decline  in  gross  tuition  has  occurred,  the
commissioner  may  require  any such school to file an audited financial
statement pursuant to this paragraph EVEN DURING  ALTERNATE  YEARS  WHEN
REVIEWED STATEMENTS WOULD ORDINARILY BE ALLOWED.
  f.  Alternate  licensing provision. The commissioner shall issue regu-
lations which define alternate licensing OR  CERTIFICATION  requirements
for the following:
  (1)  correspondence schools in which all approved programs and courses
are under three hundred hours;
  (2) schools which are eligible for exemption under  this  section  but
which elect to be licensed;
  (3) non-profit schools exempt from taxation under section 501(c)(3) of
the  internal  revenue  code  whose programs are funded entirely through
donations from individuals or  philanthropic  organizations,  or  endow-
ments, and interest accrued thereon; and
  (4) language schools conducted for-profit which provide instruction in
English as a second language and which accept no public funds.
  [g.  Application  fee. Every applicant and renewal applicant shall pay
to the department a nonrefundable, nontransferable fee  based  on  gross
annual  tuition  income as determined by the annual financial statements
required in paragraph a of this subdivision for the most  recent  school
fiscal year, according to the following schedule:

     GROSS ANNUAL TUITION INCOME            FEE

     0-$199,999                             $ 250.00
     $200,000-$499,999                      $ 500.00
     $500,000-$999,999                      $ 750.00
     $1,000,000-$4,999,999                 $1,500.00
     $5,000,000-$9,999,999                 $3,000.00
     $10,000,000 or above                  $6,000.00

  Such  fees  shall  accrue  to the credit of the proprietary vocational
school supervision account. If the evaluation of a particular course  or
facility  requires the services of an expert not employed by the depart-
ment, the department shall retain such expert and the school shall reim-
burse the department for the reasonable cost of such services.]
  5. Required  disclosure  for  licensure.  a.  The  commissioner  shall
require that each applicant for a license for the operation of a private
[vocational  or  business] CAREER school disclose the following informa-
tion:
  (1) Whether the applicant, or any  corporation,  partnership,  associ-
ation or organization or person holding an ownership or control interest
in  such  school,  or any employee responsible in a supervisory capacity
for the administration of student funds or governmental funds, has  been
convicted of a crime defined in this article, or any other crime involv-
ing  the  operation  of  any  educational  or  training  program, or, in
connection with the operation of any such program, a crime involving the
unlawful acquisition, use, payment  or  expenditure  of  educational  or
training program funds; and
  (2)  Whether  the  applicant, or any corporation, partnership, associ-
ation or organization or person holding an ownership or control interest

S. 4268--B                          9

in such school, or any employee responsible in  a  supervisory  capacity
for  the  administration of student funds or governmental funds has been
convicted:
  (A)  in  this  state  of  any of the following felonies defined in the
penal law: bribery involving public servants; commercial bribery; perju-
ry in the second degree;  rewarding  official  misconduct;  larceny,  in
connection  with  the  provision  of  services or involving the theft of
governmental funds; offering a false instrument for  filing,  falsifying
business  records; tampering with public records; criminal usury; scheme
to defraud; or defrauding the government; or
  (B) in any other jurisdiction of an  offense  which  is  substantially
similar  to  any  of the felonies defined in clause (A) of this subpara-
graph and for which a sentence to a term of imprisonment  in  excess  of
one  year  was  authorized and is authorized in this state regardless of
whether such sentence was imposed; and
  (3) Whether the applicant, or any  corporation,  partnership,  associ-
ation or organization or person holding an ownership or control interest
in  such  school,  or any employee responsible in a supervisory capacity
for the administration of student funds or governmental funds, has  been
finally  determined  in  any  administrative or civil proceeding to have
committed a violation of any provision of this article or any rules  and
regulations promulgated pursuant thereto, or any related order or deter-
mination  of  the  commissioner,  or of any similar statute, rule, regu-
lation, order or determination of another jurisdiction pertaining to the
licensure and operation of any educational or training program; and
  (4) Whether any school owned or operated by the  applicant  closed  or
ceased  operation  and,  if  so,  whether at the time of the closing the
applicant was subject to a pending  disciplinary  action,  disallowance,
fine  or  other  penalty  and  whether it owed refunds to any government
agency or students.
  b. No application for any license pursuant to this  article  shall  be
denied  by  reason  of  disclosure  pursuant  to this subdivision of the
applicant, or any corporation, partnership, association or  organization
or  person  holding  an ownership or control interest in such school, or
any employee responsible in a  supervisory  capacity  for  the  adminis-
tration  of  student funds or governmental funds unless the commissioner
makes a written  determination  that  there  is  a  direct  relationship
between one or more of such previous offenses and the license sought, or
that  issuance of the license would create an unreasonable risk to prop-
erty or to the safety, education or welfare of specific  individuals  or
the general public. In making such determination, the commissioner shall
be  guided by the factors set forth in section seven hundred fifty-three
of the correction law. For purposes of this subdivision,  "ownership  or
control  interest"  means: with respect to a school that is organized as
or owned by a corporation, a position as an officer or director of  such
corporation;  or, with respect to a school that is organized as or owned
by a partnership, a position as a partner; or any other interest  total-
ing ten percent or more, whether direct or indirect, in the total equity
or assets of such school.
  c.  The commissioner may deny, suspend, revoke or decline to renew any
license: (1) if the significance of the  convictions  or  administrative
violations  warrant such action [or]; (2) if the commissioner determines
that a school did not make any disclosure required by this  subdivision;
OR  (3)  IF THE COMMISSIONER DETERMINES THAT A SCHOOL'S FINANCIAL CONDI-
TION MAY RESULT IN THE INTERRUPTION OR CESSATION OF INSTRUCTION OR JEOP-
ARDIZE STUDENT TUITION FUNDS.

S. 4268--B                         10

  6. If, during the [two year] period for which a license [or  registra-
tion]  is granted, the commissioner determines that a school's financial
condition may result in the interruption or cessation of instruction  or
jeopardize  student  tuition funds, the commissioner may, upon notice to
the  school,  place the school on probation for a period of no more than
[thirty days] ONE YEAR, during which time the school and the  department
must  make  efforts  to  resolve the problems at the school.  THE SCHOOL
SHALL SUBMIT A REPORT ON ITS FINANCIAL  CONDITION  TO  THE  COMMISSIONER
WITHIN  THE TIME PRESCRIBED BY THE COMMISSIONER. SUCH REPORT SHALL BE IN
THE FORM AND SHALL INCLUDE CONTENT PRESCRIBED BY  THE  COMMISSIONER  AND
SHALL  BE  REVIEWED BY THE COMMISSIONER TO DETERMINE THE SCHOOL'S FINAN-
CIAL VIABILITY. THE COMMISSIONER MAY  SUSPEND  OR  REVOKE  THE  SCHOOL'S
LICENSE,  AS WELL AS REQUIRE THE CESSATION OF STUDENT ENROLLMENT, UPON A
DETERMINATION THAT THE SCHOOL'S FINANCIAL CONDITION CONTINUES TO THREAT-
EN ITS ABILITY TO EDUCATE STUDENTS AND/OR  THE  STUDENT  TUITION  FUNDS.
ALTERNATIVES  FOR  THE  SCHOOL TO DEMONSTRATE A FISCALLY SOUND OPERATION
MAY INCLUDE SECURING AND MAINTAINING A PERFORMANCE BOND, PAYABLE TO  THE
COMMISSIONER, IN AN APPROPRIATE AMOUNT TO ELIMINATE ANY LIABILITY TO THE
TUITION  REIMBURSEMENT ACCOUNT SHOULD THE SCHOOL CEASE OPERATION, LIMIT-
ING THE COLLECTION OF TUITION FUNDS UNTIL  EACH  STUDENT  COMPLETES  THE
PROGRAM  OF  STUDY, OR OTHER MEANS ACCEPTABLE TO THE COMMISSIONER. If no
resolution can be attained, a hearing, pursuant to subdivisions two  and
three  of section five thousand three of this article will be scheduled.
Such probation may include additional monitoring,  inspections,  limita-
tions  on  enrollment,  teaching  out  some or all of a school's present
students or temporary cessation of instruction.
  7. No license [or registration] granted under this  section  shall  be
transferable  or  assignable  without  the approval of the commissioner.
[Any] UPON transfer or assignment of any interest totaling  [ten]  TWEN-
TY-FIVE percent or more, whether direct or indirect, in the total equity
or  assets  of a school, SUCH SCHOOL shall be deemed a [transfer of such
school's license or registration. The commissioner shall approve or deny
a transfer or assignment based on the requirements set forth in subdivi-
sions three and four of this section.  Such approval or denial, together
with the reasons for denial, shall  be  transmitted  in  writing  within
ninety  days  of  the receipt of the complete application by the commis-
sioner. Upon a showing of good cause as to why the applicant  could  not
obtain  the  commissioner's  approval prior to a transfer or assignment,
the commissioner shall temporarily approve the  transfer  or  assignment
for a period not to exceed forty-five days and for such additional peri-
ods  as  the  commissioner  may deem appropriate] NEW SCHOOL REQUIRED TO
SUBMIT A NEW SCHOOL APPLICATION AND OBTAIN A  NEW  LICENSE  PURSUANT  TO
THIS  ARTICLE. PROVIDED, HOWEVER, THAT UPON SUCH A SUBSTANTIAL CHANGE IN
INTEREST, THE PREVIOUS SCHOOL LICENSE SHALL REMAIN IN EFFECT  UNTIL  THE
NEW  LICENSE  IS  ISSUED OR DENIED OR THE PREVIOUS LICENSE EXPIRES OR IS
REVOKED, WHICHEVER OCCURS FIRST.
  8. No licensed [or registered] school shall discontinue  operation  or
surrender  its  license  [or  registration]  unless  thirty days written
notice of its intention to do so and a  plan  for  maintenance  of  safe
keeping  of  the  records of the school is provided to the commissioner.
However, upon good cause shown, the commissioner may  waive  the  thirty
days notice requirement.
  9.  Annual  supervision  fund and tuition reimbursement [fund] ACCOUNT
assessment.  a. The commissioner shall annually  assess  each  school  a
total  percentage of that school's gross tuition pursuant to subdivision
three of section five thousand two of this article, as determined by the

S. 4268--B                         11

annual [financial  statement  or  annual]  audited  financial  statement
required  by  this  article.  This  assessment  shall be based upon each
school's gross tuition from the previous year, and shall be  payable  to
the  commissioner  in equal quarterly installments which shall be due on
June first, September first, December first and March first.
  b. (i) [Beginning April first, nineteen hundred ninety-one, such] SUCH
annualized assessment shall be one percent  FOR SCHOOLS WHICH HAVE  PAID
LESS  THAN  SIXTEEN  QUARTERS OF ASSESSMENTS, BUT SUCH ANNUAL ASSESSMENT
SHALL NOT FALL BELOW FIVE HUNDRED DOLLARS.
  (ii) [Beginning July first, nineteen hundred ninety-four,  such]  SUCH
annualized assessment shall be [nine-tenths] EIGHT-TENTHS of one percent
FOR SCHOOLS WHICH HAVE PAID SIXTEEN OR MORE QUARTERS OF ASSESSMENTS, BUT
SUCH ANNUAL ASSESSMENT SHALL NOT FALL BELOW FIVE HUNDRED DOLLARS.
  [(iii)  Beginning  April  first,  nineteen hundred ninety-five, and in
each succeeding year, such annualized assessment shall  be  eight-tenths
of one percent.]
  c. (i) Of the total assessment provided for herein, FIVE-TENTHS OF ONE
PERCENT  SHALL ACCRUE TO THE CREDIT OF THE TUITION REIMBURSEMENT ACCOUNT
PURSUANT TO SECTION FIVE  THOUSAND  SEVEN  OF  THIS  ARTICLE  FOR  THOSE
SCHOOLS  WHICH  HAVE  PAID LESS THAN SIXTEEN QUARTERS OF ASSESSMENTS. OF
THE TOTAL ASSESSMENT PROVIDED FOR SCHOOLS WHICH  HAVE  PAID  SIXTEEN  OR
MORE  QUARTERS  OF ASSESSMENTS, three-tenths of one percent shall accrue
to the credit of the tuition reimbursement [fund]  ACCOUNT  pursuant  to
section  five  thousand  seven of this article.   FOR SCHOOLS PAYING THE
MINIMUM FIVE HUNDRED DOLLARS ANNUAL ASSESSMENT, NONE SHALL ACCRUE TO THE
TUITION REIMBURSEMENT ACCOUNT.
  (ii) The balance of the total assessment provided for herein shall  be
dedicated  to  fund  the  department's  supervision  and  regulation  of
licensed private schools [and registered business schools]  pursuant  to
an  annual  appropriation  and an annual plan of expenditure prepared by
the commissioner and approved by the director of the budget.  [Following
the  close  of  each fiscal year, the commissioner, in consultation with
the director of the budget,  shall  determine  if  the  balance  in  the
proprietary  vocational  school  supervision  fund  for such fiscal year
exceeded the amount required for the support of the department's  super-
visory  activities  taking  into account projected revenues and expendi-
tures for the subsequent fiscal year. To the extent that  a  surplus  is
identified,  the  commissioner, with the approval of the director of the
budget, shall direct  the  transfer  of  such  surplus  to  the  tuition
reimbursement fund.]
  d.  Payments  made  within thirty days following the due date shall be
subject to interest at one percent  above  the  prevailing  prime  rate.
Thereafter,  late  payments may result in suspension of licensure by the
commissioner. Payments required by this subdivision shall be  considered
a condition of licensure [or registration].
  S 4. Section 5002 of the education law, as added by chapter 887 of the
laws  of 1990, subparagraph 3 of paragraph b and paragraph d of subdivi-
sion 1, subparagraph 2 of paragraph g of subdivision 3 and subdivision 6
as amended and paragraph c of subdivision 1 and paragraph d of  subdivi-
sion  2  as  added  by  chapter  604 of the laws of 1993, paragraph c of
subdivision 2, paragraph a of subdivision 4 and subdivision 7 as amended
and paragraph e of subdivision 4 and paragraph c  of  subdivision  6  as
added  by  chapter 434 of the laws of 1999, paragraph f of subdivision 4
as added by chapter 457 of the laws of 2003 and subparagraph 2 of  para-
graph  b of subdivision 5 as amended by chapter 301 of the laws of 1996,
is amended to read as follows:

S. 4268--B                         12

  S 5002. Standards for licensed private CAREER schools [and  registered
business  schools].  Any  school  licensed  [or  registered] pursuant to
section five thousand  one  of  this  article  shall  be  organized  and
conducted  only  as a school and shall be subject to the jurisdiction of
the  department  exclusively,  or  in  conjunction with such other state
agency or department or district attorney upon  which  jurisdiction  has
also  been conferred by law. Such schools shall be subject to and comply
with the provisions of this section.
  1. Standards. a. No program of such schools shall be  conducted  in  a
factory  or commercial establishment, except where the use of facilities
or equipment of such factory or commercial  establishment  is  permitted
for necessary or desirable educational purposes and objectives.
  b.  For  every  such school, the commissioner shall set forth in regu-
lation standards governing all of the following:
  (1) criteria for admission, which shall provide that students at least
possess a high school diploma or its equivalent or demonstrate the abil-
ity to benefit from the instruction, except that in the case of students
who do not possess a high school  diploma  or  its  equivalent,  certif-
ication  of  the  students' ability to benefit from instruction shall be
provided to the commissioner as provided in paragraph c of this subdivi-
sion;
  (2) the standards and the methods of instruction;
  (3) the equipment available for instruction with the  maximum  enroll-
ment that such equipment and physical plant will accommodate;
  (4)  the  qualifications  and  experience  of  teaching and management
personnel;
  (5) the form and  content  of  the  student  enrollment  agreement  or
contract,  provided  that such agreement or contract shall be written in
the same language as that principally used in the sales presentation;
  (6) the methods of collecting tuition;
  (7) eligibility criteria for programs that will require licensure;
  (8) the sufficiency and suitability of the resources available for the
support of such school; and
  (9) counseling provided to students.
  B-1. (1) STUDENT LOANS OR OTHER  FINANCIAL  AID  FUNDS  RECEIVED  FROM
FEDERAL,  STATE,  OR LOCAL GOVERNMENTS OR ADMINISTERED UNDER THE FEDERAL
STUDENT FINANCIAL ASSISTANCE PROGRAMS GOVERNED BY TITLE IV OF THE HIGHER
EDUCATION ACT OF NINETEEN HUNDRED SIXTY-FIVE, 20 U.S.C.  SECTION 1070 ET
SEQ., AS AMENDED, MUST  BE  COLLECTED  AND  APPLIED  IN  THE  MANNER  AS
CONTROLLED BY THE APPLICABLE FEDERAL, STATE OR LOCAL REGULATIONS.
  (2)  STUDENT  LOANS OR OTHER FINANCIAL AID FUNDS RECEIVED FROM PRIVATE
ENTITIES, INCLUDING, BUT NOT LIMITED TO, BANKS, FINANCING COMPANIES, AND
OTHER LENDING SOURCES MUST BE COLLECTED OR DISBURSED  IN  THE  FOLLOWING
MANNER:
  (A) LOANS OR OTHER FINANCIAL AID PAYMENTS FOR AMOUNTS OF FIVE THOUSAND
DOLLARS OR LESS MAY BE DISBURSED AS A SINGLE DISBURSEMENT, REGARDLESS OF
COURSE LENGTH.
  (B)  LOANS  OR  OTHER  FINANCIAL AID PAYMENTS FOR AMOUNTS GREATER THAN
FIVE THOUSAND DOLLARS THAT REFLECT A CLASS TERM OF LESS THAN SIX  MONTHS
SHALL  HAVE  TWO EQUAL DISBURSEMENTS. THE DISBURSEMENT SCHEDULE FOR SUCH
LOANS OR PAYMENTS SHALL BE AS FOLLOWS: ONE-HALF OF  THE  TUITION  AMOUNT
RELEASED  INITIALLY,  AND  THE  REMAINDER  RELEASED  HALFWAY THROUGH THE
COURSE TERM.
  (C) LOANS OR OTHER FINANCIAL AID PAYMENTS  FOR  AMOUNTS  GREATER  THAN
FIVE  THOUSAND  DOLLARS  THAT  REFLECT  A CLASS TERM OF GREATER THAN SIX
MONTHS, BUT LESS THAN TWELVE MONTHS MUST HAVE THREE EQUAL DISBURSEMENTS.

S. 4268--B                         13

THE DISBURSEMENT SCHEDULE  FOR  SUCH  LOANS  OR  PAYMENTS  SHALL  BE  AS
FOLLOWS:  ONE-THIRD OF THE TUITION AMOUNT RELEASED INITIALLY, THE SECOND
DISBURSEMENT  SHALL  BE RELEASED ONE-THIRD OF THE WAY THROUGH THE LENGTH
OF  THE  TRAINING,  AND  THE  REMAINDER  RELEASED  TWO-THIRDS OF THE WAY
THROUGH THE COURSE TERM.
  (D) LOANS OF OTHER FINANCIAL AID PAYMENTS  FOR  AMOUNTS  GREATER  THAN
FIVE  THOUSAND  DOLLARS  THAT  REFLECT  A CLASS TERM GREATER THAN TWELVE
MONTHS SHALL HAVE FOUR EQUAL DISBURSEMENTS.  THE  DISBURSEMENT  SCHEDULE
FOR  SUCH  LOANS  OR  PAYMENTS  SHALL  BE AS FOLLOWS: ONE-QUARTER OF THE
TUITION AMOUNT RELEASED INITIALLY,  THE  SECOND  DISBURSEMENT  SHALL  BE
RELEASED  ONE QUARTER OF THE WAY THROUGH THE LENGTH OF THE TRAINING; THE
THIRD DISBURSEMENT SHALL BE RELEASED HALFWAY THROUGH THE LENGTH  OF  THE
TRAINING,  AND THE REMAINDER SHALL BE RELEASED THREE-QUARTERS OF THE WAY
THROUGH THE TRAINING.
  (3) NO SCHOOL MAY ENTER INTO ANY CONTRACT OR AGREEMENT WITH OR RECEIVE
ANY STUDENTS LOAN OR FINANCIAL AID FUNDS FROM PRIVATE ENTITIES,  INCLUD-
ING,  BUT  NOT  LIMITED  TO,  BANKS,  FINANCING COMPANIES, AND ANY OTHER
PRIVATE LENDING SOURCES UNLESS THE PRIVATE  ENTITY  HAS  A  DISBURSEMENT
POLICY THAT, AT A MINIMUM, MEETS THE REQUIREMENTS OF SUBPARAGRAPH TWO OF
THIS PARAGRAPH.
  (4)  THE TERM PRIVATE ENTITY REFERENCED IN SUBPARAGRAPHS TWO AND THREE
OF THIS PARAGRAPH SHALL NOT BE CONSTRUED TO INCLUDE A FRIEND  OR  FAMILY
MEMBER  OF  THE  STUDENT WHO IS NOT IN THE ROUTINE BUSINESS OF PROVIDING
STUDENT LOANS OR FINANCIAL AID FUNDS. THE PROVISION OF SUCH  A  LOAN  OR
FUND  BY  A  PRIVATE  ENTITY  SHALL  ALSO NOT INCLUDE THE PAYMENT OF THE
STUDENT'S TUITION OR FEES BY USE OF A CREDIT CARD.
  c. Notwithstanding any other provisions of this article to the contra-
ry, the commissioner shall define alternative educational and curriculum
standards for any program of less than forty hours designed  exclusively
for non-occupational, personal enrichment purposes.
  d. Admission of students under the ability to benefit provision.
  (1)  Certification.  Each school admitting students who do not possess
at least a high school diploma or its equivalent shall  certify  to  the
satisfaction  of  the  commissioner  that such prospective students have
been administered and passed an examination which has been  approved  by
the  commissioner  to determine their ability to benefit from the chosen
curriculum prior to admission to the curriculum or course of study. Such
examination shall, whenever possible, be a  nationally  recognized  test
appropriate for the course of instruction which has been approved by the
commissioner. The examination results of each such student who is admit-
ted  shall be made available to the commissioner at a time prescribed by
the commissioner and, together with the student's original answer sheet,
shall be maintained by the school in the student's permanent record. For
any student failing to achieve the necessary score on  such  examination
for  enrollment,  the  school  shall be required to provide such student
with a listing of appropriate counseling and  educational  opportunities
available  to the student at no cost, as determined by the commissioner.
WHERE APPROPRIATE, THE  COMMISSIONER  MAY  ACCEPT  SUCH  OTHER  ENTRANCE
REQUIREMENT  DOCUMENTATION SUCH AS PREREQUISITE COURSEWORK, PROFESSIONAL
OR VENDOR CERTIFICATIONS, PERSONAL INTERVIEWS,  AND/OR  ATTESTATIONS  OF
EQUIVALENT KNOWLEDGE IN LIEU OF THE EXAMINATION REQUIREMENT.
  (2) Counseling. Each school [admitting] OFFERING CURRICULA WHICH ADMIT
students  who  do  not  possess  a high school diploma or its equivalent
shall develop a plan to be approved by the commissioner  for  the  coun-
seling  of such students on an individual basis on matters including but
not limited to the student's ability to progress in the curriculum,  the

S. 4268--B                         14

student's financial aid rights and responsibilities, the availability of
programs  to  earn a high school equivalency diploma, including programs
provided at no cost to the student, and the potential of the training to
prepare  the  student  for available employment opportunities within the
region.
  (3) Compliance. (A) The commissioner  shall  monitor  compliance  with
this  paragraph  and  verify  the examination and counseling process and
student examination scores. Such  procedures  may  include  but  not  be
limited  to an annual, statistically significant, random sampling of the
examinations taken by prospective students of each school  administering
such examinations.
  (B)  [Such  procedures  shall  provide  that  the examinations of each
school be inspected on site at least once annually.
  (C)] In the event that the commissioner determines that the school  is
out  of  compliance  with  the  examination  process and counseling, the
commissioner shall require that examinations and counseling for students
admitted under the ability  to  benefit  provision  and  the  counseling
required  by  subparagraph  two  of  this paragraph be conducted off the
premises of the school by an entity approved  by  the  commissioner  for
such  period  of time as the commissioner deems appropriate, the cost of
which shall be incurred by the school.
  2. Inspections. a. Every school  licensed  pursuant  to  this  article
shall  maintain  adequate  and accurate records for a period of not less
than [six] SEVEN years at its principal place of  business  within  this
state.  Such records shall be maintained in a manner and form prescribed
by the commissioner and shall be made available to  the  department  and
the higher education services corporation upon request.
  b.  In addition to other requirements in this article, the information
to be made a part of the record shall include, but not be limited to:
  (1) names and addresses of each enrolled student;
  (2) the course of study offered by the institution;
  (3) the name and address of its faculty, together with a record of the
educational qualifications of each;
  (4) the graduation date of each student; and
  (5) for each student who fails to complete his  or  her  program,  the
student's  last date of attendance and, if applicable, the amount of any
refund paid to, or on behalf of, the student and the date the refund was
made.
  c. The commissioner shall conduct periodic unscheduled inspections  of
licensed  private  CAREER  schools  [and registered business schools] to
monitor compliance with the provisions of this article or the  rules  or
regulations promulgated thereunder or any final order or decision of the
commissioner made pursuant to this article. The department shall conduct
an  inspection  of  each  school  at  least once every [three years. The
department shall annually inspect schools: (1) having a high  percentage
of  students admitted under ability to benefit criteria as determined by
the commissioner; (2) having a high student loan default rate as  deter-
mined by the commissioner in a manner consistent with federal standards;
or  (3) which are the subject of a high volume of complaints by students
or other parties] LICENSURE  PERIOD.  All  schools  shall  provide  upon
request  of  the  department,  any  and  all records necessary to review
compliance with the provisions of this article.
  d. Student permanent records, as defined in  the  regulations  of  the
commissioner, shall be maintained for a period of twenty years.
  3.  Tuition liability. a. The tuition charge for programs approved for
participation in student financial aid general award  programs  pursuant

S. 4268--B                         15

to  articles  thirteen and fourteen of this chapter shall be apportioned
on the basis of terms, quarters or semesters. For the purposes  of  this
section,  the terms "term", "quarter" and "semester" shall be defined in
regulations by the commissioner.
  b.  The  tuition  refund  policy  for the first term or quarter of any
program at schools licensed [or registered]  pursuant  to  section  five
thousand one of this article shall be as follows:
  (1)  For  programs  which  are divided into quarters of up to fourteen
weeks, the school shall evenly divide the total  tuition  charges  among
the  number  of  quarters.  After instruction is begun in a school, if a
student withdraws or is discontinued, the  school  may  retain  no  more
than:
  (i) zero percent of the quarter's tuition if the termination is during
the first week of instruction; or
  (ii)  twenty-five  percent of the quarter's tuition if the termination
is during the second week of instruction; or
  (iii) fifty percent of the quarter's tuition  if  the  termination  is
during the third week of instruction; or
  (iv)  seventy-five percent of the quarter's tuition if the termination
is during the fourth week of instruction; or
  (v) one hundred percent of the quarter's tuition  if  the  termination
occurs after the fourth week of instruction.
  (2)  For programs organized by terms of fifteen, sixteen, seventeen or
eighteen weeks apiece, the school shall evenly divide the total  tuition
charges  among  the  number  of  terms.  After instruction is begun in a
school, if a student withdraws or is discontinued, the school may retain
no more than:
  (i) zero percent of the term's tuition if the  termination  is  during
the first week of instruction; or
  (ii) twenty percent of the term's tuition if the termination is during
the second week of instruction; or
  (iii)  thirty-five percent of the term's tuition if the termination is
during the third week of instruction; or
  (iv) fifty percent of the term's tuition if the termination is  during
the fourth week of instruction; or
  (v) seventy percent of the term's tuition if the termination is during
the fifth week of instruction; or
  (vi)  one  hundred  percent  of  the term's tuition if the termination
occurs after the completion of the fifth week of instruction.
  c. (1) The tuition refund policy for the second term or quarter of any
program at schools licensed [or registered]  pursuant  to  section  five
thousand one of this article shall be as follows:
  (A)  For  programs  which  are divided into quarters of up to fourteen
weeks, the school shall evenly divide the total  tuition  charges  among
the  number  of  quarters.  After instruction is begun in a school, if a
student withdraws or is discontinued, the  school  may  retain  no  more
than:
  (i) twenty-five percent of the quarter's tuition if the termination is
during the first week of instruction; or
  (ii)  fifty  percent  of  the  quarter's tuition if the termination is
during the second week of instruction; or
  (iii) seventy-five percent of the quarter's tuition if the termination
is during the third week of instruction; or [.]
  (iv) one hundred percent of the quarter's tuition if  the  termination
occurs after the third week of instruction.

S. 4268--B                         16

  (B)  For programs organized by terms of fifteen, sixteen, seventeen or
eighteen weeks apiece, the school shall evenly divide the total  tuition
charges  among  the  number  of  terms.  After instruction is begun in a
school, if a student withdraws or is discontinued, the school may retain
no more than:
  (i)  twenty percent of the term's tuition if the termination is during
the first week of instruction; or
  (ii) thirty-five percent of the term's tuition if the  termination  is
during the second week of instruction; or
  (iii) fifty percent of the term's tuition if the termination is during
the third week of instruction; or
  (iv)  seventy  percent  of  the  term's  tuition if the termination is
during the fourth week of instruction; or
  (v) one hundred percent of  the  term's  tuition  if  the  termination
occurs after the completion of the fourth week of instruction.
  (2)  Notwithstanding  the provisions of subparagraph one of this para-
graph, the tuition refund policy set forth in paragraph b of this subdi-
vision shall apply unless the school  demonstrates  that  there  are  no
significant  educational  changes  in  the  educational  program  of the
student, such changes as defined in regulations of the commissioner.
  d. The tuition refund policy for the third and any subsequent term  or
quarter of any program licensed [or registered] pursuant to section five
thousand  one  of this article shall be the policy set forth in subpara-
graph one of paragraph c of this subdivision.
  e. No program shall have a term in excess of eighteen weeks.
  f. The amount of the refund shall be calculated based on the last  day
of student attendance.
  g.  (1) Any refund due to a student shall be paid by the school within
forty-five days of the date on which  the  student  withdraws  from  the
program. For the purposes of this article, such date shall be the earli-
est  of  (i)  the  date on which the student gives written notice to the
school or (ii) the date on which the student is deemed to have withdrawn
pursuant to subparagraph two of this paragraph.
  (2) If a student has failed to attend classes for a period  of  thirty
calendar  days,  the  school  shall send by regular mail a notice to the
student that the student shall be deemed  to  have  withdrawn  from  the
program if the student does not notify the school to the contrary within
twelve  days  from  the date on which the letter is sent. If the student
fails to respond within such twelve-day period,  the  student  shall  be
deemed  to  have withdrawn and the school shall notify the higher educa-
tion services corporation that the student has withdrawn and the date of
the withdrawal.
  h. SCHOOLS SHALL SUBMIT, FOR APPROVAL BY THE COMMISSIONER, THE  SCHOOL
CATALOG  WITH  A  WEEKLY  TUITION  LIABILITY CHART FOR EACH PROGRAM THAT
INDICATES THE AMOUNT OF REFUND DUE THE STUDENT IN  THE  EVENT  OF  WITH-
DRAWAL.
  I.  Upon  payment  of a refund to a lender, the school shall forthwith
send a notice to a person designated by  the  president  of  the  higher
education  services  corporation  upon  a form approved by the president
that such refund was made.
  [i.] J. If the higher education services corporation fails to  receive
the  notice  required  by  paragraph [h] I of this subdivision, it shall
forthwith notify the student of his or her right to  a  refund  and  the
commissioner  of  such  failure.  Upon receipt of such notification, the
commissioner shall take appropriate action against the school.

S. 4268--B                         17

  4. Curriculum approval. a. An application AND FEE shall  be  made  for
the  initial  approval  of a curriculum or course and shall include such
information as the commissioner  may  require  by  regulation.  Approval
shall  be  valid for a period not to exceed four years.  THE APPLICATION
FEE  FOR  ANY CURRICULUM OF ONE HUNDRED CLOCK HOURS OR MORE SHALL BE TWO
HUNDRED FIFTY DOLLARS. THE APPLICATION FEE FOR ANY COURSE OF  LESS  THAN
ONE  HUNDRED  CLOCK HOURS SHALL BE ONE HUNDRED DOLLARS. SUCH APPLICATION
FEES SHALL ACCRUE TO THE CREDIT OF  THE  PROPRIETARY  VOCATIONAL  SCHOOL
SUPERVISION ACCOUNT.
  b. In approving curriculum, the commissioner shall take into consider-
ation the following:
  (1)  that  the entrance requirements demonstrate that students possess
the skills, competencies and prerequisite knowledge needed  to  progress
in the curriculum;
  (2)  that  the content will enable the student to develop those skills
and competencies required for employment in the  occupational  area  for
which the curriculum was developed;
  (3)  that  the  school will utilize appropriate instructional methods;
[and]
  (4) that the instructional equipment used  within  the  curriculum  is
comparable  to  the  equipment currently used by business or industry in
the occupational area for which the curriculum was developed; AND
  (5) THAT A CURRICULUM MAY INCLUDE INSTRUCTION IN ENGLISH AS  A  SECOND
LANGUAGE  AT A BEGINNING OR BASIC LEVEL, PROVIDED SUCH INSTRUCTION SHALL
NOT CONSTITUTE MORE THAN FIFTY PERCENT OF SUCH PROGRAM.
  c. (1) If the evaluation of a particular course or  facility  requires
the services of an expert not employed by the department, the department
shall  retain such expert [and the school shall reimburse the department
for the reasonable cost of such services] AT  THE  SCHOOL'S  EXPENSE  IN
ADDITION  TO  THE  APPLICATION  FEES  PRESCRIBED  IN PARAGRAPH A OF THIS
SUBDIVISION.
  (2) If, in the interest of expediting the approvals, a school requests
the department to employ an outside consultant, the school shall  [reim-
burse  the department for] PAY the [reasonable] cost of such services IN
ADDITION TO THE APPLICATION FEES  PRESCRIBED  IN  PARAGRAPH  A  OF  THIS
SUBDIVISION.
  d. The commissioner shall act on applications for approval of a course
or  curriculum  within  one hundred twenty days of receipt of a complete
application and, in the case of a denial, shall set forth in writing the
reasons for such denial.
  e. Notwithstanding paragraphs b, c and d of this subdivision,  curric-
ulum  certified  by a nationally recognized vendor as defined in commis-
sioner's regulations shall be recognized by the department in lieu of an
expert evaluation when such curriculum is adopted by  a  school  in  the
original  format  provided by the vendor as long as the proposed curric-
ulum is a stand alone program and not part  of  a  larger  comprehensive
course.
  f.  Notwithstanding  any  other provision of the law, a not-for-profit
[registered business] LICENSED  CAREER  school,  that  is  eligible  for
participation  in  the tuition assistance program and which has national
accreditation, may, for the purpose of calculation of federal  financial
aid  amounts  only,  measure  students' academic progress in an approved
curriculum in non-degree granting credit hours, based  upon  a  national
accrediting  agency's  conversion and approval of clock hours to non-de-
gree credit hours. For the purposes of this paragraph, "national accred-

S. 4268--B                         18

itation" shall mean accreditation by a national  accrediting  agency  as
defined in the commissioner's regulations.
  5. Application for reapproval. a. An application AND FEE shall be made
for  reapproval  of  a  curriculum  or course. Such application shall be
considered timely if submitted at least one hundred twenty days prior to
the expiration of the current approval.  THE  APPLICATION  FEE  FOR  ANY
CURRICULUM OF ONE HUNDRED CLOCK HOURS OR MORE SHALL BE TWO HUNDRED FIFTY
DOLLARS.  THE  APPLICATION  FEE  FOR ANY COURSE OF LESS THAN ONE HUNDRED
CLOCK HOURS SHALL BE ONE HUNDRED DOLLARS, PROVIDED THAT NO FEE SHALL  BE
ASSESSED  FOR THE SUBMISSION OF A REAPPROVAL APPLICATION WITHOUT CHANGE.
SUCH APPLICATION FEE SHALL ACCRUE TO THE CREDIT OF THE PROPRIETARY VOCA-
TIONAL SCHOOL SUPERVISION ACCOUNT.
  b. Curriculum reapproval standards. (1) The  commissioner  shall  pre-
scribe  by  regulation, standards for reapproval after the first year of
licensure, of any curriculum or course based upon factors including  but
not limited to the following, as appropriate:
  (i) for each curriculum or course, the percentage of students who have
dropped out;
  (ii)  the  acquisition  of  a specified minimum level of skills by the
students; and
  (iii) for each curriculum or course, the percentage of students placed
in occupations related to the instruction, where applicable.
  (2) Such standards shall be consistent with those applied to all  non-
degree career education programs.
  c.  Reapproval contingency. Reapproval of a curriculum or course shall
be contingent upon a demonstration by the applicant that the  curriculum
or  course has met the curriculum reapproval standards set forth in this
subdivision. Except as otherwise provided in paragraph d of this  subdi-
vision, no such curriculum or course or substantially similar curriculum
or course may be given without reapproval by the commissioner.
  d.  When timely and complete application is made for the reapproval of
a curriculum or course, and no written denial is made thirty days  prior
to  the  date  of expiration of the existing approval, the curriculum or
course shall be deemed to be approved for the period of the  curriculum.
If  the application is denied, the commissioner shall set forth in writ-
ing the reasons for such denial.
  e. The commissioner may provide in regulations for  reapproval  proce-
dures, consistent with this subdivision, for applications submitted less
than one hundred twenty days from the expiration date.
  f.  The commissioner shall act upon enrollment agreements and catalogs
within ninety days of receipt, and, in the case  of  denial,  shall  set
forth  in writing the reasons for such denial. If the commissioner fails
to act within ninety days, a catalog shall be deemed  approved  for  one
year  and  an  enrollment  agreement  shall be deemed approved until the
commissioner acts upon it.
  6. a. Teachers and directors. No person shall be employed by a private
CAREER school as a director or teacher  who  is  not  licensed  in  such
capacity  by the department pursuant to regulations of the commissioner,
which shall take into consideration such  factors  as  moral  character,
educational  qualifications  and  practical  experience. The application
shall include a statement, signed by the president  or  chief  executive
officer  of  the school, certifying that to the best of his or her know-
ledge, the applicant is able to meet the educational qualifications  and
practical  experience  set forth in the commissioner's regulations. Such
application shall be considered timely if mailed to the commissioner and
postmarked four days prior to employment  at  the  school  and  must  be

S. 4268--B                         19

completed  within  twenty  days  thereafter; provided, however, that the
commissioner may, for good cause shown, extend the time within which  to
complete  the  application.  When  a  complete  application is made, the
commissioner  shall  act upon such application within thirty days. If no
written denial is made within the thirty days, the application shall  be
deemed  to  be approved until the commissioner acts upon it or until the
end of the term or semester, whichever occurs first. If a written denial
is made after the thirty day period,  the  commissioner  may  allow  the
applicant to teach at the school for the remainder of the term or semes-
ter if the commissioner determines that the removal of the teacher would
not  be  in the best educational interest of the students. This subdivi-
sion shall not apply to directors or teachers employed on or before July
first, nineteen hundred seventy-two. Teachers'  licenses  issued  on  or
after  [January first, nineteen hundred eighty-seven] THE EFFECTIVE DATE
OF THE CHAPTER OF THE LAWS OF TWO THOUSAND  ELEVEN  WHICH  AMENDED  THIS
PARAGRAPH  shall  be valid at all [registered business] LICENSED PRIVATE
CAREER schools for the courses, curricula, or occupations  indicated  on
the  license.  TEACHERS  HOLDING  VALID  PRIVATE SCHOOL TEACHER LICENSES
VALID AT ONLY ONE SCHOOL LOCATION SHALL HAVE THEM REPLACED, AT NO  COST,
WITH  LICENSES  VALID  AT  ANY  LICENSED  SCHOOL  IN THE SAME SUBJECT OR
SUBJECTS AND WITH THE SAME EXPIRATION DATE AS WAS LISTED ON THE PREVIOUS
TEACHING LICENSE.
  b. A school director shall have  access  to  all  student  and  school
records  which  shall  be maintained in accordance with this article and
the regulations of the commissioner and shall make such  records  avail-
able  to  the  commissioner  or the commissioner's designee upon request
during an on-site school inspection.
  c. Notwithstanding paragraph a of this subdivision, a teacher who  has
been  certified  as  an  instructor by a nationally recognized vendor as
defined in commissioner's regulations may  be  deemed  qualified  as  an
instructor  by  the department, provided such teacher shall only provide
instruction in the course or courses for which he or she holds  vendor's
certification. A teacher authorized by this paragraph will be subject to
all licensing fees required by the department for licensed teachers.
  7. Advertising. a. The commissioner is authorized to commence a disci-
plinary  proceeding  pursuant  to  this  article  for false, misleading,
deceptive or fraudulent advertising pursuant to regulations  promulgated
by  the commissioner which shall be consistent with article twenty-two-A
of the general business law. The department shall issue guidelines as to
appropriate advertising content.  In  developing  such  guidelines,  the
department  shall  consider  advertising for similar programs offered by
various educational institutions. In  a  disciplinary  action  or  other
proceeding,  such  guidelines  shall  not  be  presumptive evidence that
particular advertising is appropriate.
  b. Beginning on January first, two thousand, all schools shall include
in their advertising, promotional material, or letterhead the  statement
"Licensed  by the State of New York" [or "Registered by the State of New
York", as appropriate], and an  accompanying  symbol  to  indicate  such
status,  issued  by  the  commissioner pursuant to section five thousand
nine of this article.
  8. The higher education services corporation  shall  adopt  rules  and
regulations  to  effectuate  the  cessation  of collection activities by
lenders or by the corporation in  cases  in  which  a  licensed  private
[vocational]  CAREER  school  [or a registered business school] at which
the student enrolled has closed or ceased its teaching activities during
the academic period for which the loan was made or guaranteed.

S. 4268--B                         20

  S 5. Section 5003 of the education law, as added by chapter 887 of the
laws of 1990, subparagraph 1 of paragraph c of subdivision 1  and  para-
graphs d and e of subdivision 6 as amended by chapter 604 of the laws of
1993,  paragraph   d of subdivision 1 as added and paragraphs b and f of
subdivision  6 as amended by chapter 434 of the laws of 1999, is amended
to read as follows:
  S 5003. Disciplinary actions, hearings and penalties.  1. Disciplinary
action. a. The commissioner for good cause, after affording a school  an
opportunity  for  a hearing, may take disciplinary action as hereinafter
provided against any school authorized to operate under this article.
  b. Good cause shall include, but not be limited to, any of the follow-
ing:
  (1) fraudulent statements or representations to  the  department,  the
public or any student in connection with any activity of the school;
  (2)  violation  of  any provision of this article or regulation of the
commissioner;
  (3) conviction or a plea of no contest on the part of any owner, oper-
ator, director or teacher:
  (A) of any of the following felonies defined in the penal law: bribery
involving public servants; commercial bribery;  perjury  in  the  second
degree;  rewarding  official misconduct; larceny, in connection with the
provision of services or involving  the  theft  of  governmental  funds;
offering  a  false  instrument  for filing, falsifying business records;
tampering with public records; criminal usury;  scheme  to  defraud;  or
defrauding the government; or
  (B)  in  any  other  jurisdiction of an offense which is substantially
similar to any of the felonies defined in clause (A)  of  this  subpara-
graph  and  for  which a sentence to a term of imprisonment in excess of
one year was authorized and is authorized in this  state  regardless  of
whether such sentence was imposed; or
  (4) incompetence of any owner or operator to operate a school.
  c.  (1)  Any  person  who  believes  he or she has been aggrieved by a
violation of this section, EXCEPT A PERSON AGGRIEVED BY THE  ACTIONS  OR
OMISSIONS  OF A CANDIDATE SCHOOL, shall have the right to file a written
complaint within: (A) two years of the alleged  violation;  or  (B)  one
year of receiving notification from the higher education services corpo-
ration or any other guarantee agency that the student has defaulted on a
student  loan payment; provided, however, that no complaint may be filed
after three years from the date of the alleged  violation.  The  commis-
sioner  shall  maintain a written record of each complaint that is made.
The commissioner shall also send to the complainant a form acknowledging
the complaint and requesting further information if necessary and  shall
advise  the  director  of the school that a complaint has been made and,
where appropriate the nature of the complaint.
  (2) The commissioner shall within twenty days of receipt of such writ-
ten complaint commence an investigation of  the  alleged  violation  and
shall within ninety days of the receipt of such written complaint, issue
a  written  finding. The commissioner shall furnish such findings to the
person who filed the complaint and to the chief operating officer of the
school cited in the complaint. If the commissioner finds that there  has
been  a violation of this section, the commissioner shall take appropri-
ate action.
  (3)  The  commissioner  may  initiate  an  investigation   without   a
complaint.

S. 4268--B                         21

  [d.  During  the initial two year licensing period, before the commis-
sioner may bring enforcement proceedings against a licensed entity,  the
following shall be taken into consideration:
  (1)  whether such entity has demonstrated that the regulations promul-
gated under this chapter are unduly burdensome given the nature  of  the
instruction provided by such entity;
  (2)  whether  such entity has identified potential areas of noncompli-
ance with this chapter and any such regulation within sixty days of  the
licensing or registration date of such entity;
  (3) whether such entity has engaged in good faith discussions with the
department  to  resolve  such  violations  and/or promulgate regulations
which further the goals of this chapter.]
  (4) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH ONE OF  THIS  PARA-
GRAPH  OR ANY OTHER PROVISION OF THIS ARTICLE TO THE CONTRARY, A STUDENT
AT A CANDIDATE SCHOOL SHALL HAVE THE RIGHT TO FILE A  WRITTEN  COMPLAINT
FROM  AN ALLEGED VIOLATION OF THE PROVISIONS OF CLAUSE THREE OF SUBPARA-
GRAPH (IV) OF PARAGRAPH B OF SUBDIVISION FOUR OF SECTION  FIVE  THOUSAND
ONE  OF THIS ARTICLE THAT REQUIRE DISCLOSURE OF CANDIDACY STATUS AND ITS
IMPLICATIONS AND A SIGNED ATTESTATION BY THE STUDENT, WITHIN  TWO  YEARS
OF  SUCH  VIOLATION.  UPON A FINDING THAT SUCH A VIOLATION HAS OCCURRED,
THE CANDIDATE SCHOOL SHALL BE REQUIRED TO PROVIDE A REFUND OF ALL MONIES
AND FEES RECEIVED FROM OR ON BEHALF OF THE STUDENT.  APPROPRIATE  ACTION
SHALL  ALSO  BE  TAKEN  AGAINST  THE  CANDIDATE  SCHOOL  PURSUANT TO THE
PROVISIONS OF SUBPARAGRAPH (IV) OF PARAGRAPH B OF  SUBDIVISION  FOUR  OF
SECTION FIVE THOUSAND ONE OF THIS ARTICLE.
  2.  Hearing  procedures. a. Upon a finding that there is good cause to
believe that a CANDIDATE SCHOOL UNDER  THE  PROVISIONS  OF  SUBPARAGRAPH
(IV)  OF PARAGRAPH B OF SUBDIVISION FOUR OF SECTION FIVE THOUSAND ONE OF
THIS ARTICLE, OR A LICENSED school,  or  an  officer,  agent,  employee,
partner  or  teacher,  has  committed  a  violation of this article, the
commissioner shall initiate proceedings by serving a notice  of  hearing
upon each and every such party subject to the administrative action. The
school  or  such  party  shall  be  given  reasonable notice of hearing,
including the time, place, and nature of the  hearing  and  a  statement
sufficiently  particular  to  give  notice of the transactions or occur-
rences intended to be proved, the material elements  of  each  cause  of
action and the civil penalties and/or administrative sanctions sought.
  b.  Opportunity  shall be afforded to the party to respond and present
evidence and argument on the issues involved in  the  hearing  including
the  right  of cross examination. In a hearing, the school or such party
shall be accorded the right to have its representative appear in  person
or  by  or with counsel or other representative. Disposition may be made
in any hearing by stipulation, agreed settlement, consent order, default
or other informal method.
  c. (1) The commissioner shall designate an impartial  hearing  officer
to conduct the hearing, who shall be empowered to:
  (A) administer oaths and affirmations; and
  (B)  regulate  the  course of the hearings, set the time and place for
continued hearings, and fix the time for  filing  of  briefs  and  other
documents; and
  (C)  direct  the school or such party to appear and confer to consider
the simplification of the issues by consent; and
  (D) grant a request for an adjournment of the hearing only  upon  good
cause shown.
  (2)  The strict legal rules of evidence shall not apply, but the deci-
sion shall be supported by substantial evidence in the record.

S. 4268--B                         22

  3. Decision after hearing. The  hearing  officer  shall  make  written
findings  of  fact  and  conclusions of law, and shall also recommend in
writing to the commissioner a final decision  including  penalties.  The
hearing  officer  shall  mail  a  copy  of  his OR HER findings of fact,
conclusions  of  law and recommended penalty to the party and his or her
attorney, or representative.   The commissioner  shall  make  the  final
decision, which shall be based exclusively on evidence and other materi-
als  introduced  at  the  hearing.  If it is determined that a party has
committed a violation, the commissioner shall issue a  final  order  and
shall impose penalties in accordance with this section. The commissioner
shall  send  by  certified mail, return receipt requested, a copy of the
final order to the party and his or her attorney, or representative. The
commissioner shall, at the request of the school or such party,  furnish
a  copy  of  the transcript or any part thereof upon payment of the cost
thereof.
  4. Judicial review. Any order imposed  under  this  section  shall  be
subject  to  judicial  review  under  article seventy-eight of the civil
practice law and rules, but no such determination  shall  be  stayed  or
enjoined  except  upon  application  to  the  court  after notice to the
commissioner.
  5. Enforcement proceedings. The attorney general, in his  or  her  own
capacity,  or at the request of the commissioner, may bring an appropri-
ate action or proceeding in  any  court  of  competent  jurisdiction  to
recover a fine or otherwise enforce any provision of this article.
  6.  Civil penalties and administrative sanctions. a. A hearing officer
may recommend, and the commissioner may impose, a civil penalty  not  to
exceed  [two]  THREE  thousand five hundred dollars for any violation of
this article, INCLUDING A SCHOOL'S FAILURE TO OFFER A COURSE OR  PROGRAM
AS  APPROVED  BY  THE COMMISSIONER.   In the case of a second or further
violation committed within [the previous] five  years  OF  THE  PREVIOUS
VIOLATION,  the  liability shall be a civil penalty not to exceed [five]
SEVEN thousand FIVE HUNDRED dollars for each such violation.
  b. Notwithstanding the provisions of paragraph a of this  subdivision,
a hearing officer may recommend, and the commissioner may impose a civil
penalty  not  to  exceed [fifty] SEVENTY-FIVE thousand dollars OR DOUBLE
THE DOCUMENTED AMOUNT FROM WHICH  THE  SCHOOL  BENEFITED,  WHICHEVER  IS
GREATER,  for any of the following violations: (1) operation of a school
without a license in violation of section  five  thousand  one  of  this
article; (2) operation of a school knowing that the school's license has
been  suspended  or  revoked; (3) use of false, misleading, deceptive or
fraudulent advertising; (4) employment of recruiters on the basis  of  a
commission,  bonus  or  quota, except as authorized by the commissioner;
(5) directing or authorizing recruiters to offer guarantees of jobs upon
completion of a course; (6) failure to make a tuition refund  when  such
failure is part of a pattern of misconduct; (7) the offering of a course
or program that has not been approved by the commissioner; (8) admitting
students,  who  subsequently drop out, who were admitted in violation of
the admission standards established  by  the  commissioner,  where  such
admissions  constitute  a  pattern  of misconduct and where the drop out
resulted at least in part from such violation; (9)  failure  to  provide
the  notice of discontinuance and the plan required by subdivision seven
of section five thousand one of this article; or (10) violation  of  any
other  provision  of this article, or any rule or regulation promulgated
pursuant thereto, when such violation constitutes part of a  pattern  of
misconduct  which  significantly  impairs the educational quality of the
program or programs being offered by the school.   For  each  enumerated

S. 4268--B                         23

offense,  a  second or further violation committed within [the previous]
five years, shall be subject to a civil penalty not to exceed  [seventy-
five thousand dollars] ONE AND ONE-HALF TIMES THE AMOUNT OF THE PREVIOUS
VIOLATION for each such violation.
  c.  In  addition  to the penalties authorized in paragraphs a and b of
this subdivision, a hearing officer may recommend and  the  commissioner
may  impose  any  of the following administrative sanctions: (1) a cease
and desist order; (2) a mandatory direction; (3) a suspension or revoca-
tion of a license; (4) a probation order; or (5) an  order  of  restitu-
tion.
  d.  Penalty  factors.  In the recommendation of any penalty, a hearing
officer shall, at a minimum, give due consideration,  where  applicable,
to  the  good faith of the violator[; the performance of the school with
respect to student placement and retention rates, and students' acquisi-
tion of skills;] AND the gravity of the violation[; and the harm  caused
to the student].
  e.  The  commissioner may suspend a license [or registration] upon the
failure of a school to pay any fee, fine, penalty, settlement or assess-
ment as required by this article unless such failure  is  determined  by
the commissioner to be for good cause.
  f.  All  civil  penalties,  fines and settlements received after April
first, nineteen hundred ninety shall accrue to the credit of the tuition
reimbursement account established pursuant to section ninety-seven-hh of
the state finance law.
  7. Criminal penalties. In addition to any  other  penalties  elsewhere
prescribed:
  a.  Any  person  who  knowingly violates any of the provisions of this
article shall be guilty of a class B misdemeanor punishable  in  accord-
ance  with  the  penal  law.  If  the conviction is for a second offense
committed within five years of the first  conviction  under  this  para-
graph,  such  person shall be guilty of a class A misdemeanor punishable
in accordance with the penal law.
  b. Any person who knowingly (1) falsifies or destroys school or  other
business  records relating to the operation of the school with intent to
defraud; (2) fails to make a tuition refund as required by section  five
thousand  two  of  this article with the intent to defraud more than one
person; or (3) operates a school without a  valid  license  required  by
section  five  thousand one of this article shall be guilty of a class A
misdemeanor punishable in accordance with the penal law.
  c. Any person who, having been convicted within the past five years of
failing to make a tuition refund in violation  of  subparagraph  two  of
paragraph  b of this subdivision, knowingly and intentionally engages in
a scheme constituting a systematic ongoing course of  conduct  involving
the  wrongful  withholding of refunds in violation of section five thou-
sand two of this article with the intent to defraud ten or more persons,
and so withholds tuition refunds in  excess  of  one  thousand  dollars,
shall  be  guilty  of a class E felony punishable in accordance with the
penal law.
  d. Upon a determination that there exist reasonable grounds to believe
that a violation of this article has been committed, or that  any  other
crime  has  been  committed in connection with the operation of a school
required to be licensed pursuant to this article, the commissioner shall
refer such determination, and the information upon which it is based, to
the attorney general or to the appropriate district attorney. The attor-
ney general or a district attorney may bring an action on his or her own
initiative.

S. 4268--B                         24

  8. Private right of action. A student injured by a violation  of  this
article  may bring an action against the owner or operator of a licensed
private CAREER school [or registered business school] for actual damages
or one hundred dollars, whichever  is  greater.  A  court  may,  in  its
discretion, award reasonable attorney's fees to a prevailing plaintiff.
  S  6.  Subdivisions  3  and 4 of section 5004 of the education law, as
amended by chapter 604 of the laws of 1993, are amended and a new subdi-
vision 4-a is added to read as follows:
  3. Exempted from the requirements of this section are  persons  acting
solely  for schools which are not required to be licensed or are specif-
ically exempted from the licensing  [or  registration]  requirements  of
this  article.  Persons  who  are  paid  to  procure,  solicit or enroll
students on the premises of schools required to be licensed  [or  regis-
tered]  shall  not  be  exempt from the provisions of this section.  The
certification requirements of this section shall not  apply  to  persons
receiving  gifts or other non-monetary considerations valued at not more
than [twenty-five] SEVENTY-FIVE dollars from a school  from  which  they
have  graduated  or are currently enrolled for each student referred for
enrollment at the school.
  4. Application and renewal application for a  private  school  agent's
certificate shall be filed on forms to be prescribed and provided by the
commissioner. Said certificate shall be valid for [two] THREE years from
the  date  of  issuance.  Certificates  which have been renewed shall be
valid for a period of [two] THREE years from the expiration date of  the
certificate  which  has been renewed. Every applicant and renewal appli-
cant shall pay to the department a fee of [one] TWO hundred dollars.
  4-A. NOTWITHSTANDING  THE  PROVISIONS  OF  SUBDIVISION  FOUR  OF  THIS
SECTION,  THE  SCHOOL  DIRECTOR  MAY  APPLY FOR A PRIVATE SCHOOL AGENT'S
CERTIFICATE ON FORMS TO BE PRESCRIBED AND PROVIDED BY  THE  COMMISSIONER
WITHOUT INCURRING THE AGENT APPLICATION FEE.
  S 7. Section 5006 of the education law, as added by chapter 887 of the
laws of 1990, is amended to read as follows:
  S 5006. Teachout plans.  1. A school may submit a teachout plan to the
commissioner  for  approval  pursuant  to regulations established by the
commissioner. A teachout plan shall consist  of  a  contract  between  a
[registered  business  or]  licensed private CAREER school, with another
school, hereinafter called the teachout school, so  that  in  the  event
that  the [registered business or] licensed private CAREER school ceases
instruction, the teachout school will provide the necessary  instruction
specified  in  a student's original enrollment agreement with the school
ceasing instruction. A teachout plan may employ more than  one  teachout
school to provide instruction to students in the school ceasing instruc-
tion.  Schools  under  common ownership but having separate licenses [or
registrations] may, subject to the approval of the  commissioner,  enter
into  teachout agreements. A TEACHOUT PLAN MAY BE CONTRACTED BETWEEN THE
COMMISSIONER AND ONE OR MORE TEACHOUT SCHOOLS  IN  THE  EVENT  THAT  THE
CLOSING SCHOOL IS UNABLE OR UNWILLING TO DO SO.
  2.  A  teachout  plan shall include the following provisions:  (a) the
teachout school must offer courses of study that are substantially simi-
lar to those offered in the school ceasing instruction;
  (b) teachout schools must be located in the geographic area  in  which
the  school  ceasing  instruction  was located UNLESS THE SCHOOL CEASING
INSTRUCTION PROVIDED DISTANCE LEARNING OR ONLINE TRAINING;
  (c) all provisions for a teachout plan must be included in the enroll-
ment agreement signed by the student; and

S. 4268--B                         25

  (d) the teachout school shall agree to fulfill the  enrollment  agree-
ment signed by the student at the school ceasing instruction.
  3.  The  [registered business or] licensed school shall provide to the
teachout school and to the department  [immediately  upon  closure]  the
following information PRIOR TO CLOSURE:
  (a)  Copies  of the academic and financial records for all students in
attendance at the school at the projected time of closure;
  (b) A listing of all such students presently in  attendance  including
their  names,  addresses,  social security numbers, curriculum that each
student is enrolled in and the number of hours the  students  will  have
completed at the time of the school closure.
  4.  The  department  will  provide to the teachout school, immediately
upon notification of a school closing, a copy of each  approved  curric-
ulum that the closing school is presently offering.
  5.  The commissioner shall require all teachout schools to address the
following issues:
  (a) Integration of students into a curriculum which may  be  different
from the curriculum in which they are currently receiving instruction;
  (b)  Assessments of students' progress so that they may be placed into
an appropriate course;
  (c) Provision of remedial instruction to students who are found to  be
deficient in one or more course areas upon their initial assessment;
  (d)  Provision  by  the  teachout  school  to  adhere  to the required
student/teacher ratios and room capacities; and
  (e) Compliance with statutory and regulatory requirements  during  the
teachout.
  6.  The  student  shall  not  be subject to any costs beyond the total
costs identified in the original enrollment agreement.
  7. A student may decline to pursue instruction at the teachout  school
and may instead seek a refund pursuant to section five thousand seven of
this article.
  S 8. Section 5007 of the education law, as added by chapter 887 of the
laws  of  1990, the section heading, subdivision 1 and subdivision 10 as
amended by chapter 434 of the laws of 1999, paragraph a  of  subdivision
3,  paragraphs  c and d of subdivision 4, subparagraphs 1 and 3 of para-
graph a and paragraph b of subdivision 5, paragraph b of  subdivision  9
as  amended  and paragraphs e and f of subdivision 4 as added by chapter
604 of the laws of 1993, is amended to read as follows:
  S 5007. Tuition reimbursement account. 1. Except as otherwise provided
in subdivision six of this section, the portion of the annual assessment
of schools [registered and] licensed pursuant to section  five  thousand
one  of  this  article as prescribed in subdivision [eight] NINE of such
section and all fines, penalties and settlements  received  pursuant  to
this  article  shall  be  transferred  upon  receipt  into  the  tuition
reimbursement account.
  3. a. The commissioner shall develop a complaint form and provide such
form to students. In order to claim a refund, a student shall  apply  to
the  fund  with a complaint form pursuant to the requirements of section
five thousand three of this article. Except  as  otherwise  provided  in
this  article,  the commissioner shall compute the refund, if any, using
the refund formula established by  subdivision  three  of  section  five
thousand two of this article.
  b. Claimants who had been enrolled in schools which have not closed or
ceased operation shall be required to show in a manner determined by the
commissioner that:
  (1) the student is eligible for a refund;

S. 4268--B                         26

  (2) the student has made a request to the school for a refund; and
  (3)  the  school  has failed to make the refund within the time period
required by this article.
  c. The commissioner shall act on each  refund  request  within  thirty
business days of such request.
  4. Students may be eligible for refunds under this section as follows:
  a.  A  student  who  is  offered a teachout plan for the curriculum in
which the student was enrolled at the time the school closed  or  ceased
operation,  which  has  been  approved  by  the department, may elect to
continue instruction pursuant to the teachout plan  or  may  decline  to
continue  instruction and may instead apply for a full refund under this
section. The option to apply for a refund shall extend to the end of the
first week of instruction at the teachout school.
  b. A student who was enrolled in a school  which  has  not  closed  or
ceased operation is entitled to a refund computed in accordance with the
refund  policy established by subdivision three of section five thousand
two of this article.
  c. A student who was enrolled in a school at the time the school clos-
es or ceases operation is entitled to a refund of  the  full  amount  of
prepaid  tuition.  In  addition,  commencing  September  first, nineteen
hundred ninety-three, a student who drops out of a  school,  where  such
school closes within [fourteen] THIRTY days of the student's termination
and  prior  to  completion of such student's program as specified in the
enrollment agreement, shall be entitled to a FULL refund  of  [the  full
amount  of  prepaid tuition] ALL TUITION, FEES AND BOOK CHARGES PAID FOR
BY OR ON BEHALF OF THE STUDENT IN CASH OR IN  LOANS,  EXCLUDING  FUNDING
PROVIDED BY ANY GOVERNMENT AGENCIES.
  d.  A  student  who  was  enrolled in a school which has not closed or
ceased operation, and who has dropped out, is entitled to a full  refund
of all tuition, fees and other required costs paid by the student if the
student  has  submitted  a  complaint  form  to the commissioner and the
commissioner has  determined  that  a  violation  of  this  article  has
occurred  which  warrants  a  refund.  The commissioner shall promulgate
regulations identifying those violations that warrant a refund.
  e.  Commencing  September  first,  nineteen  hundred  ninety-three,  a
student who drops out of a school, which subsequently closes, and who is
owed  a  refund  for the failure of such school to follow the provisions
enumerated in subdivision three of section five  thousand  two  of  this
article  shall  be  eligible for a refund from the tuition reimbursement
fund according to the provisions of subdivision three  of  section  five
thousand two of this article.
  f.  Commencing  September  first,  nineteen  hundred ninety-three, any
student enrolled in a school based upon an ability to  benefit  examina-
tion  shall  be  eligible  for  a full refund, regardless of whether the
student is currently enrolled, graduated or dropped out, if  the  school
enrolled the student contrary to the provisions of the approved entrance
requirements  and the student complies with the requirements of subdivi-
sion one of section five thousand three of this article.
  5. a. For a student who had been enrolled in a  school  that  has  not
closed or ceased operation, the refund shall be paid as follows:
  (1)  guaranteed  student loans, if any, in which case the commissioner
shall notify the student of such payment and shall be paid  directly  to
the lender or guarantee agency where appropriate;
  (2) actual personal tuition expenditures, if any; and
  (3) tuition assistance program awards and other governmental aid.

S. 4268--B                         27

  b.  For schools that have closed or ceased operation, the commissioner
shall refund actual personal tuition, FEES AND BOOK expenditures to  the
student.  The  repayment of any loans incurred by the student as part of
the actual personal tuition, FEES AND BOOK expenditures  shall  be  paid
directly to the lender or the guarantee agency where appropriate.
  6.  a.  Where a claim is paid to a student of an operating school, the
commissioner shall immediately notify the school.
  b. Within ten days of the receipt of  the  notice,  the  school  shall
either  request  a hearing to challenge the commissioner's determination
that a refund was owed to the student or reimburse the fund  the  amount
paid  to  the  claimant plus a penalty up to two times such amount. This
payment shall also incur interest for each day it remains unpaid  at  an
annual  interest  rate  of one percent above the prime rate. The commis-
sioner may promulgate streamlined  procedures  for  conducting  hearings
pursuant  to  this  paragraph. Any penalty assessed under this paragraph
shall be in addition to any other penalties assessed  pursuant  to  this
article.    Notwithstanding  any  other  provision of law, penalties and
interest paid pursuant to this paragraph shall accrue to the  credit  of
the  proprietary  vocational  school  supervision account to support the
costs associated with the hearings authorized in this subdivision.
  7. Notwithstanding the  notice  procedures  described  in  subdivision
three of this section, in the event of a school closing, the commission-
er  on  his or her own initiative may take appropriate action in accord-
ance with this section to process refund claims on behalf of all of  the
students of the closed school.
  8.  Assignment of rights. Persons and entities receiving refunds under
this section shall be  deemed  to  have  assigned  or  subrogated  their
tuition  reimbursement  rights  to  the  commissioner  on  behalf of the
tuition reimbursement fund only for the amount refunded by  the  tuition
reimbursement  fund.  Within  [thirty]  NINETY  days  of any refund made
pursuant to this section, the commissioner or the attorney general shall
take appropriate action to recover the total amount of the refunds made,
plus administrative costs, from the school.
  9. a. A student whose loan liability is exempted  pursuant  to  FORMER
section  six  hundred eighty-three of this chapter and is entitled to or
owed a refund shall transfer to the  higher  education  services  corpo-
ration  the  right  to  claim  the  refund owed and due from the tuition
reimbursement fund. In such event, the corporation shall be entitled  to
receive  a  refund  for that portion of the claim not paid to the corpo-
ration by the United States  Secretary  of  Education  pursuant  to  the
federal guaranteed loan program.
  b.  Any amounts remaining in the tuition reimbursement fund as of June
first, nineteen hundred ninety-three and  on  every  March  thirty-first
thereafter,  shall  be  made  available to the higher education services
corporation for payment of student loans on  which  collection  activity
has  ceased  pursuant  to  the  provisions  of subdivision six of FORMER
section six hundred eighty-three of this chapter. No  amounts  shall  be
paid  to  the  higher  education services corporation for loans on which
collection activity has ceased because of the operation of  section  437
of the Higher Education Act of 1965, as amended.
  10.  Management  of  the  tuition reimbursement account. a. As used in
this subdivision, net balance is defined as the actual cash  balance  of
the  account  as determined by the commissioner on June thirtieth, nine-
teen hundred ninety-three and every three  months  thereafter.  For  the
purpose  of calculating the net balance, the commissioner shall not take
into consideration any refunds made from the account pursuant  to  para-

S. 4268--B                         28

graphs  d  and  f of subdivision four of this section for the year imme-
diately preceding the date on which the calculation is made.
  b.  In  the  event  that  the account has accumulated a net balance in
excess of one million eight hundred thousand dollars,  the  commissioner
shall,  with the approval of the director of the budget, waive an amount
not to exceed the amount due for the next quarterly assessment  pursuant
to  this  section  and  subdivision nine of section five thousand one of
this article FOR SCHOOLS WHICH HAVE PAID SIXTEEN  QUARTERS  OR  MORE  OF
ASSESSMENTS ONLY. In such event, payment of future quarterly assessments
shall  be suspended FOR SCHOOLS WHICH HAVE PAID SIXTEEN QUARTERS OR MORE
OF ASSESSMENTS until the net balance of  the  account  falls  below  one
million three hundred thousand dollars.
  c. In the event the net balance of the account falls below one million
three  hundred  thousand  dollars,  if the quarterly assessment has been
suspended FOR SCHOOLS WHICH  HAVE  PAID  SIXTEEN  QUARTERS  OR  MORE  OF
ASSESSMENTS  pursuant  to  paragraph  b of this subdivision, it shall be
reinstated for the next quarterly assessment and all subsequent quarter-
ly assessments until the account has accumulated a net balance in excess
of one million eight hundred thousand dollars.
  d. Notwithstanding the provisions of paragraph b of this  subdivision,
in the event that the balance of the account is in excess of one million
three  hundred thousand dollars, all schools licensed after June thirti-
eth, nineteen hundred ninety-nine shall be  required  to  pay  into  the
account the equivalence of three years of annual assessments over a five
year period.
  e.  Notwithstanding  the provisions of paragraph b of this subdivision
all schools licensed after June thirtieth, nineteen hundred ninety-three
and before July first, nineteen hundred ninety-nine will be required  to
pay  into  the  account the equivalence of three years of annual assess-
ments within four years of the effective date of  this  paragraph.  This
amount  to be assessed shall be determined based upon the school's gross
tuition in its first three years of licensure.
  g. In the event that the balance of the tuition reimbursement  account
is  equal  to  or in excess of [one] TWO million [five hundred thousand]
dollars, the  amounts  assessed  the  schools  in  accordance  with  the
provisions  of paragraphs d and e of this subdivision shall be deposited
directly to the proprietary vocational school supervision account.
  H. THE COMMISSIONER MAY ANNUALLY APPORTION FROM THE ACCOUNT AN  AMOUNT
UP TO TWO HUNDRED THOUSAND DOLLARS FOR THE PURPOSE OF SECURING, SCANNING
AND  OTHERWISE  MAKING  STUDENT RECORDS FROM CLOSED SCHOOLS AVAILABLE TO
STUDENTS WHO ATTENDED SUCH SCHOOLS.  PROVIDED, HOWEVER, THAT IN NO  CASE
SHALL SUCH APPORTIONMENT CAUSE THE ACCOUNT TO FALL BELOW THE BALANCE SET
FORTH  IN  PARAGRAPH C OF THIS SUBDIVISION, NOR SHALL SUCH APPORTIONMENT
CAUSE SCHOOLS WHOSE QUARTERLY ASSESSMENTS HAVE  BEEN  SUSPENDED  TO  PAY
ADDITIONAL QUARTERLY ASSESSMENTS.
  11.  Fund audit. The state comptroller shall [annually] audit or cause
to be audited the tuition reimbursement fund ONCE EVERY  TWO  YEARS  and
produce  an  [annual] AUDITED financial statement according to generally
accepted accounting principles.
  12. New schools. Within the first [six  months]  YEAR  that  a  school
begins  LICENSED operation, the commissioner shall assess such school an
amount to be deposited into the fund in an amount to  be  determined  by
the commissioner.
  S  9.    Section 5008 of the education law, as added by chapter 887 of
the laws of 1990, is amended to read as follows:

S. 4268--B                         29

  S 5008. Trust accounts.   1. If the  commissioner  determines  that  a
school has demonstrated a pattern or practice of failing to make tuition
refunds  in  a  timely  manner  consistent  with this article AND/OR THE
SCHOOL'S FINANCIAL CONDITION MAY RESULT IN THE INTERRUPTION OR CESSATION
OF  INSTRUCTION  OR  JEOPARDIZE  STUDENT TUITION FUNDS, the commissioner
shall require a school to establish a trust account in a form or  manner
which  the commissioner[, after consultation with the advisory council,]
shall [prescribe in regulations] DETERMINE TO BE APPROPRIATE. The assets
or funds contained in the trust account shall be maintained for the sole
and exclusive benefit of the students.
  2. In making this determination, the commissioner shall  consider  the
following  factors:  the  number  of refunds not paid by the school in a
timely manner; the number of claims made to, or  paid  by,  the  tuition
reimbursement  [fund]  ACCOUNT;  [and]  a  pattern  of  misconduct which
substantially affects the financial interests of students or the  state,
POTENTIAL LIABILITY TO THE TUITION REIMBURSEMENT ACCOUNT, CURRENT ASSETS
AS  OPPOSED  TO  CURRENT  LIABILITIES, AND SUCH OTHER MEASURES AS MAY BE
APPROPRIATE.
  S 10. Section 5009 of the education law, as amended by chapter 434  of
the laws of 1999, is amended to read as follows:
  S 5009. Duties  of  the commissioner.  In addition to all other duties
assigned in this article, the duties of the commissioner shall  include,
but not be limited to:
  [(a)  submitting  a report to the governor, the temporary president of
the senate, the speaker of the assembly,  the  minority  leader  of  the
senate  and  the minority leader of the assembly beginning the fifteenth
day of January after this section shall have become effective, and annu-
ally thereafter on that date, on the implementation and  enforcement  of
this  article,  which shall include but not be limited to (i) curriculum
approval and reapproval standards, (ii) student  complaints,  (iii)  the
resolution  of  disciplinary  actions brought by the department or other
appropriate state agency, (iv) the audited financial statements  submit-
ted  by  the  schools,  (v) tuition reimbursement account activity, (vi)
data regarding retention and completion rates for students  enrolled  in
nondegree,  appropriate  degree  or certificate programs of two years or
less at registered business schools, licensed private schools,  proprie-
tary  degree-granting schools and independent and public colleges, (vii)
the extent to which the department has met  the  timelines  mandated  by
this  article,  (viii)  entrance  standards,  (ix) the number of schools
inspected annually, and (x) the number of trust accounts imposed.
  (b)] 1. ensuring that up-to-date, accurate information is available to
the public, via the internet  and  other  appropriate  media,  regarding
every  duly licensed proprietary school in this state, as well as disci-
plinary actions decided by the state.
  [(c)] 2. developing and issuing  to  duly  licensed  [and  registered]
proprietary schools a symbol to indicate such status; provided that such
symbol  shall  be  developed and made available to such schools no later
than September thirtieth, nineteen hundred ninety-nine.
  [(d)] 3. administering a public information campaign aimed at increas-
ing awareness about the importance of attending licensed [or registered]
proprietary vocational schools. Such campaign shall be targeted to popu-
lations at risk of enrolling in unlicensed  [or  unregistered]  schools,
and shall be conducted using means including, but not limited to, public
service  announcements  on  commercial  radio  and  television stations,
public access television, and print media.

S. 4268--B                         30

  [(e)] 4. providing for the orderly maintenance of any student  records
which may be transferred to the department pursuant to any school's plan
developed  pursuant to subdivision eight of section five thousand one of
this article; including responding to student requests  for  transcripts
and  records within twenty days of receiving a request. The commissioner
is hereby authorized to impose an appropriate fee for  such  transcripts
pursuant to a schedule approved by the director of the budget.
  S  11.  Section  5010 of the education law, as added by chapter 887 of
the laws of 1990, subdivision 1 as amended by section 23 of  part  A  of
chapter 62 of the laws of 2011, subdivision 4 as added by chapter 604 of
the  laws of 1993, and subdivision 5 as added by chapter 434 of the laws
of 1999, is amended to read as follows:
  S 5010. Advisory council. 1. An advisory council for [registered busi-
ness and] licensed [trade] PRIVATE CAREER schools is hereby created  for
the  purpose  of  advising  the board of regents and the commissioner as
provided herein.  The  council  shall  be  composed  of  eleven  members
appointed  by the governor, two of whom shall be upon the recommendation
of the temporary president of the senate, two of whom shall be upon  the
recommendation of the speaker of the assembly, one of whom shall be upon
the  recommendation of the minority leader of the senate and one of whom
shall be upon the recommendation of the minority leader of the assembly.
Of the five remaining members, one shall be an owner or  director  of  a
school  regulated  pursuant  to  this article, [one shall be a currently
enrolled student at the time of appointment or  a  graduate  of  such  a
school who graduated within three years of appointment] and one shall be
a student advocate. The governor shall designate a chairperson from such
members.    The commissioner [of education], the president of the higher
education services corporation, the secretary of state, the comptroller,
the director of the division of the budget, and the  executive  director
of the job training partnership council, or their designees, shall serve
as ex-officio, non-voting members of the council.
  2.  The  council shall meet no less than four times a year. Members of
the council shall receive no compensation for their services  but  shall
be  reimbursed for reasonable expenses actually and necessarily incurred
by them in the performance of their  duties.  COUNCIL  MEMBER  TERMS  OF
OFFICE  SHALL  BE  LIMITED  TO THREE YEARS, PROVIDED THAT MEMBERS MAY BE
REAPPOINTED. ALL APPOINTMENTS TO THE COUNCIL TO FILL VACANCIES IN EXIST-
ENCE ON THE EFFECTIVE DATE OF THE CHAPTER OF THE LAWS  OF  TWO  THOUSAND
ELEVEN  WHICH  AMENDED THIS SUBDIVISION SHALL BE MADE WITHIN NINETY DAYS
OF SUCH EFFECTIVE DATE.
  3. The council shall advise the commissioner on [the  following]  SUCH
matters[:
  (a) trust accounts;
  (b) performance standards;
  (c)  the  effectiveness  and  utilization of the tuition reimbursement
fund;
  (d) the efficacy of instituting a fee-for-service system;
  (e) the effectivesness of the timelines mandated by this article;
  (f) the impact of assessments on schools;
  (g) recruitment bonuses; and
  (h) such other matters] as the council determines are appropriate.
  [4. The proprietary school advisory  council  shall  conduct  a  study
concerning  the  methodologies  used  to determine student refunds. Such
study shall include, but not be limited to, refund policies  promulgated
pursuant  to  federal statute or regulation, state statute or regulation
and the policies of national accrediting organizations as they relate to

S. 4268--B                         31

term-based and clock hour-based programs. Not  later  than  July  first,
nineteen  hundred ninety-four, the advisory council shall make recommen-
dations to the commissioner and the board of regents for any changes  in
legislation,  regulations,  policy  or  practice  needed  to improve and
simplify the student refund process. The  commissioner  shall  submit  a
report  of the findings of the advisory council together with the recom-
mendations of the department to the legislature  and  the  governor  not
later than the first day of October, nineteen hundred ninety-four.
  5.  The  advisory  council shall report to the governor, the temporary
president of the senate, the speaker of the assembly,  and  the  commis-
sioner  on  the  status of unlicensed proprietary schools in this state.
The report shall also contain a statement on the  effectiveness  of  the
change  in the tuition reimbursement fund and any recommendations for an
extension of the changes or the consideration of different changes  when
such  changes  are  repealed.  Such  report  is to be delivered on April
first, two thousand two.]
  S 12. This act shall take effect on  the  one  hundred  twentieth  day
after  it  shall have become a law; provided, however, that subparagraph
(iv) of paragraph b of subdivision 4 of section 5001  of  the  education
law,  as  added by section three of this act, shall expire and be deemed
repealed three years after such effective date; and  provided,  further,
that paragraph g of subdivision 10 of section 5007 of the education law,
as  amended  by section eight of this act shall not affect the repeal of
such paragraph and shall be deemed  repealed  therewith;  and  provided,
further,  that  effective  immediately, the commissioner of education is
authorized and directed to promulgate any regulations needed  to  imple-
ment the provisions of this act on such effective date.

Co-Sponsors

S4268C (ACTIVE) - Bill Details

See Assembly Version of this Bill:
A7859A
Law Section:
Education Law
Laws Affected:
Amd Art 101 Art head, §§5001, 5002, 5003, 5004, 5006, 5007, 5008, 5009 & 5010, Ed L

S4268C (ACTIVE) - Bill Texts

view summary

Relates to the licensure of private proprietary schools; provides for increased competition among schools to improve the quality of training provided at private proprietary schools and the quality of student performance in the workplace.

view sponsor memo
BILL NUMBER:S4268C REVISED 01/26/12

TITLE OF BILL:

An act to amend the education law, in relation to the licensure of
private proprietary schools; and providing for the repeal of certain
provisions upon the expiration thereof

PURPOSE OF THE BILL:

The purpose of this bill is to ensure that non-degree granting
proprietary institutions in New York State comply with current best
practices for this sector and to provide the New York State Education
Department (NYSED) with the resources to effectively oversee
compliance with law and to preserve the tuition reimbursement account.
Additionally, this bill would allow a new category of candidate
schools: those that are in the application process and have not yet
perfected their license.

SUMMARY OF THE PROVISIONS OF THE BILL:

This bill would amend Article 101 of the Education Law (sections 5001
through 5010) to eliminate the distinction between licensed private
schools and registered business schools, replace the phrase "licensed
private schools" with the more descriptive "licensed private career
schools", adjust fees, which have not changed since 1990, and
establish a candidate school category that would allow a school to
operate legally while it is in the process of obtaining a
non-degree-granting proprietary school license.

Section 5001 would be amended to provide for the consolidation of
registered business schools and licensed private schools into one
designation, eliminating the artificial distinction between these
types of schools and reflecting the current heterogeneous nature of
training programs offered at these schools. Section 5001(2)(f),
exempting certain schools from licensure requirements, which was
recently amended by Chapter 13 of the Laws of 2010 to include yoga and
martial arts as subjects exempt from such licensure requirements,
would be further amended to include Pilates as an additional subject
exempt from such requirements. Section 5001(2)(f) would also be
amended to exclude schools conducted for the purpose of teaching
personal trainers from the list of schools exempt from such licensure
requirements.

For greater clarity, §5001(2), exempting conferences, trade shows,
workshops and such other courses of study from such licensing
requirements, would also be divided into two separate paragraphs l and
m without substantive change. Subdivision 2-b of §5001, exempting
programs for private businesses with no tuition liability, would be
amended to clarify that the exemption would apply to employees of a
person or organization that has contracted with another person or
organization to provide instruction at no cost. Candidate school
status would be established by adding a new §5001(4) (b) (iii) to
allow a practical means for prospective schools to operate legally
prior to meeting all the requirements of full licensure. For further


clarity, §5001(4)(b), which addresses the period of licensure as a
private career school, would be amended to include the specific fees
for initial and renewal applications for such licensure. The renewal
fees would be increased to reflect NYSED's current cost of supervising
these schools and to meet the prospective costs for reimbursing
tuition for a significant number of students when these students'
schools close due to fiscal failure or non-compliance. Initial
application fees would be set at certain amounts and fees for renewal
would be based on the school's gross annual tuition income.

Procedures in §5001(6) for working with schools that are not
financially viable would be formalized to protect the tuition
reimbursement account. School transfer requirements in §5001(7) would
be adjusted to be more consistent with how other states handle school
transfers. The method of assessing schools in §5001 (9) would be
changed from more complicated regular and special assessment formulas
to one based on the number of quarterly assessments paid, whereby
newer schools with the potential to fail would pay a higher assessment
than schools with a history of satisfactory licensed operation.
Section 5001(4)(e), relating to annual audited financial statements,
would be amended to change the gross tuition criteria for submission
of such statements to the commissioner and the filing schedule for
such statements to bring the non-degree sector into parity with
schools in the degree-granting and public school sectors.

Section 5002 would be amended by adding a new paragraph b-1 to
subdivision 1 to restrict the amount of private loan payments for
tuition that a school could receive on behalf of a student prior to
their completing a program, thereby limiting students' loan liability
as well as the tuition reimbursement account's liability for payment
of loan funds for tuition payments, which is the most significant
portion of the loan. Section 5002(1)(d)(1) on admission of students
under the ability to benefit provision would be amended to authorize
the Commissioner to accept other entrance requirement documentation,
such as prerequisite coursework, professional or vendor
certifications, personal interviews and/or attestations of equivalent
knowledge in lieu of the examination requirement. Section 5002(3)(h)
would be amended to require schools to submit for approval a school
catalog that contains a weekly tuition liability chart for each
program that indicates the amount of refund due a student upon
withdrawal. Section 5002(4)(c)(1) and (2) would be amended to
emphasize that in addition to paying the curriculum application fee,
provided in section 5002(4)(a), schools would be required to pay the
cost of an outside evaluation of a particular course or facility of
the school. Section 5002(5) would also be amended to establish a
curriculum/course application fee to fund the NYSED's curriculum unit.
Fees from school and personnel license applications do not cover the
cost of curriculum review, as some schools have only a handful of
courses or curricula that require approval while others have between
400 and 700. Schools requiring the most evaluation would pay more,
those with few programs would pay less. Section 5002(6) would be
amended so that all teacher licenses would no longer be restricted to
a single school location, as private career school teacher licenses
currently are. This would result in a more mobile and efficient
teacher pool for schools to draw from for faculty members, reduced
expense for processing teacher applications and a reduced workload for


the State Education Department's Bureau of Proprietary School
Supervision ("the Bureau").

Section 5003 would be amended to establish more practical timeframes
for disciplinary proceedings. A new subparagraph (4) would be added to
§5003(1)(c) to establish procedures for handling written complaints by
students attending candidacy schools alleging failure of the school to
disclose its candidacy status and the implications and to obtain the
required attestation from the student. If such a violation is found,
the school would be required to provide the student a full refund of
all monies received from the student. Section 5003(6) would be
amended to increase the fines established in 1990 so they reflect
NYSED's current cost of school oversight. Section 5003(6) would be
amended to expand the list of violations that may result in the
imposition of a civil penalty, including failure to offer an approved
course or program.

Subdivision 3 of section 5004 would be amended to increase the amount
of gifts and other non-monetary consideration a school may provide to
students or former students from $25 to $75. Subdivision 4 of section
5004 would be amended to increase private school agent fees from $100
to $200, while extending the term of a private school agent's
certificate from 2 years to 3 years.

Section 5005 would not be amended.

Section 5006 on teachout plans would be amended to allow NYSED to
intervene more effectively when a private career education school
ceases instruction. Currently, schools that are closing are required
to develop teachout plans that arrange to have students continue to
receive instruction from other private career schools upon closure of
the school. NYSED's experience is that schools that must close have
little incentive to establish teachouts, so authorizing NYSED to
arrange for a teachout plan would provide greater protection for
students.

Section 5007 on refunds to students enrolled in schools that are
closing would be amended to expand expenses eligible for
reimbursement. Section 5007(4)(a) and (c) on refunds to students would
be amended to provide for refunds of tuition, fees and book charges
paid by or on behalf of the students in cash or through loans,
excluding funding obtained through government agencies. Section
5007(5)(b) would be amended to authorize the Commissioner to refund
expenditures for fees, books and tuition to students of schools that
have closed. Section 5007(8) would be amended to protect the interests
of students in restitution from the tuition reimbursement account by
extending the time within which the Commissioner or the Attorney
General may seek recovery of a refund from a school from 30 days to 90
days from payment of the refund by the tuition reimbursement account.
The provisions for special assessments for new schools in section
5007(10) would be amended to be consistent with the assessment changes
in section 5001, and to reflect NYSED's experience with assessing
schools that have not been in operation for an entire year. The
requirement in section 5007(11) for an annual fund audit of the
tuition reimbursement account would be changed to mandate a two-year
audit.


Section 5008 would be amended to provide details regarding trust
accounts for schools determined to be in financial jeopardy.

Section 5009 would be amended to remove the annual reporting
requirement.

Section 5010 would be amended to remove the requirement to have a
student representative on the advisory council. NYSED has been unable
to find a student willing to serve in this capacity. Term limits for
members would be mandated, although members could be reappointed.
This would ensure that members of the advisory council continue to be
affiliated with schools in the non-degree proprietary sector.
Provisions that are no longer relevant to the council, including
limiting the scope of its advisory responsibilities, would be deleted.

STATEMENT IN SUPPORT OF THE BILL:

The law pertaining to non-degree proprietary schools was last amended
substantially in 1990. Since then, the number of these schools has
increased and their nature has changed. Only one-tenth of licensed
schools currently receive federal Title IV funds for students in
strictly business or trade programs. Schools today offer hybrid
programs such as medical office assisting, where coding and
recordkeeping are combined with clinical service such as phlebotomy.
Most schools have ceased to rely on Title IV, state TAP or other
similar funding sources and have turned to private sources such as
Sallie Mae, banks, etc.

The law needs to be updated to reflect and conform to the current
needs of this area of higher education and of this vital business
industry, and to provide the Bureau of Proprietary School Supervision
of the State Education Department the flexibility it needs to
adequately continue to supervise proprietary schools, protect students
and taxpayers, and preserve and strengthen this important educational
and economic industry.

Currently, there are more than 450 licensed, registered, or certified
schools. In addition, approximately 200 schools are pending licensure.
Furthermore, more than 1,000 schools currently operating in New York
State are unlicensed (although some may be operating under a legal
exemption, the vast majority of these unlicensed schools are operating
illegally).

NYSED needs to maintain its ability to regulate the industry and to
strengthen schools that provide a quality education to some of this
state's most vulnerable adult learners while enforcing health, safety,
financial and other regulatory safeguards against those schools who,
either inadvertently or intentionally do not adhere to the industry's
standards and their legal obligations. Consistent, fair and assured
enforcement will even the playing field for all non-degree schools
subject to regulation, which will in turn increases competition among
such schools and increase the quality of each school's training
programs.

In addition, more stability is absolutely crucial to maintain the
tuition reimbursement account (TRA), which is used to repay students
when their school refuses to issue a refund to them for overpayments


or in those dire cases when schools close their doors, sometimes
overnight, and either are unable or unwilling to meet their
contractual commitments for training the students. Students in these
situations are left out in the cold, sometimes after they have made
significant investments of time and money into their training, with
nothing to show for it. In these situations, NYSED must have the
resources to step in, make these students financially whole and work
to provide alternative educational opportunities for them almost
immediately.

In the past decade, the TRA faced near bankruptcy when a chain of
schools on Long Island closed, leaving students stranded without
either a quality education nor access to refunds of their substantial
investment in the form of tuition, fees and book charges. The law
pertaining to the TRA has not been updated or reinforced since 1993.
The amendments pertaining to financial probation, financial viability,
and trust accounts are intended to prevent future situations where at
risk students nearly lose all of their investment of time and money.
The amendment also creates a private loan disbursement schedule to
prevent lenders from disbursing loan payments greater than five
thousand dollars in one disbursement. The disbursement schedules apply
to the tuition portion of the loan, and not to the rest of the loan,
which the student would need to use for books, fees and living
expenses. This guarantees that the tuition reimbursement account is to
be used for student protection and not as a substitute for guaranteed
student loans.

Current law limits private career school teachers to teaching a
particular subject only at a single school location. Removing that
limitation would allow these teachers to teach that subject at any
licensed school in the state. The state's schools would greatly
benefit by being able to transfer teachers from one location of a
school chain to another without the unnecessary requirement that these
teachers need to be dually licensed. Schools would also have a larger
supply of substitute teachers. With teachers given the freedom to move
from school to school, salary schedules could become more competitive
within this sector. Also, students would have the same access to
teachers previously licensed at only one school and teachers with a
record of successful student course completion and high placement
rates could become more in demand from other schools.

BUDGETARY IMPLICATIONS OF THE BILL:

This bill would generate some additional funds necessary for NYSED to
adequately oversee, investigate, discipline and help make this
important higher education sector stronger. Current tuition levels
generate approximately $3.0 million in revenue. The proposed changes
in the first year the legislation is implemented would generate
approximately $800,000 (based on current school figures and
estimates). This increase is over the 2008-09 year, the last completed
fiscal year for which figures are available.

PRIOR LEGISLATIVE HISTORY:

In 2009, this bill was introduced in the Senate as S.6013, referred to
the Senate Rules Committee, and no further action was taken.
Subsequently, this bill was introduced in the Senate as S.6043 and in


the Assembly as A.8773. S.6043 was referred to the Senate Rules
Committee and no further action was taken. A.8773 was referred to the
Assembly Higher Education Committee and no further action was taken.
In 2010, it was again referred to both the Senate and Assembly's
Committee on Higher Education, but no further action was taken.

In 2008, this bill was introduced in the Senate as S.7592, referred to
the Senate Education Committee, discharged and committed to the Senate
Higher Education Committee, and then reported and committed to the
Senate Finance Committee. No further action was taken.

EFFECTIVE DATE:

This bill would take effect on the one hundred twentieth day after it
shall have become a law; provided that subparagraph (iii) of paragraph
b of subdivision 4 of section 5001 of the Education Law, which relates
to candidacy. status, would expire and be deemed repealed three years
after such effective date; and provided, further, that the amendments
made to paragraph g of subdivision 10 of section 5007 of the Education
Law, which relate to the Tuition Reimbursement Account, would not
affect the repeal of such paragraph and would be deemed repealed
therewith, and provided, further, however, that effective immediately,
the Commissioner of Education would be authorized and directed to
promulgate any rules or regulations deemed necessary to implement the
provisions of this act on such effective date.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 4268--C
    Cal. No. 512

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             March 25, 2011
                               ___________

Introduced by Sen. LAVALLE -- (at request of the State Education Depart-
  ment)  --  read  twice  and  ordered  printed,  and when printed to be
  committed to the Committee on Higher Education --  reported  favorably
  from  said committee, ordered to first and second report, ordered to a
  third reading -- reported favorably from said committee and  committed
  to  the  Committee  on  Finance -- committee discharged, bill amended,
  ordered reprinted as amended and  recommitted  to  said  committee  --
  committee  discharged,  bill amended, ordered reprinted as amended and
  recommitted to said committee -- committee discharged,  bill  amended,
  ordered reprinted as amended and recommitted to said committee

AN  ACT  to  amend  the  education  law, in relation to the licensure of
  private proprietary schools; and providing for the repeal  of  certain
  provisions upon the expiration thereof

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The article heading of article 101 of the education law  is
amended to read as follows:
                       LICENSED PRIVATE [TRADE AND
              CORRESPONDENCE] CAREER SCHOOLS AND CERTIFIED
                  ENGLISH AS A SECOND LANGUAGE SCHOOLS
  S  2.  Legislative  intent.  The legislature hereby finds and declares
that there is a growing need to protect  students  enrolled  in  certain
non-degree granting proprietary schools from inadequate job training and
school  closure,  which disrupts the academic progress of these students
and jeopardizes their tuition funds. Given the growing needs and demands
of business and industry, the legislature further finds and declares  it
necessary to align the state education department's current oversight of
these schools with these significantly increasing needs. The legislature
finds  it  necessary for the department to review these schools' curric-
ulums and instruction to help ensure students receive adequate  training
to obtain employment and to successfully perform their occupation in the

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08579-14-1

S. 4268--C                          2

workplace. It also finds it necessary for the department to intervene in
certain  school  closures  where  teach out plans may not be efficiently
implemented and students may not complete training.
  The  legislature  also finds it necessary for the department to review
these schools for financial viability to prevent school  closure,  which
will,  in  turn,  preserve  tuition  funds and federal and state funding
sources. This act is also necessary to increase the  accountability  and
transparency of these schools by allowing students to check on whether a
school is approved or whether a teacher at such school is licensed.
  The  legislature  intends  for  this act to increase competition among
these schools, which will, in turn,  improve  the  quality  of  training
offered  at  these schools and the quality of student performance in the
workplace.  This act will provide the  department  with  the  tools  and
resources  necessary  to effectively supervise these schools for compli-
ance and to reimburse students for tuition and other related costs  when
these  schools  close  as  a  result of fiscal failure or noncompliance,
which will overall strengthen student protection.
  S 3. Section 5001 of the education law, as added by chapter 817 of the
laws of 1972, the section heading, subdivision 1, paragraph h of  subdi-
vision  2  and paragraph b of subdivision 4 as amended and paragraphs i,
j, k, l and m of subdivision 2 and subdivisions 2-a and 2-b as added  by
chapter 434 of the laws of 1999, paragraph b of subdivision 2 as amended
and subdivisions 5, 6, 7, 8 and 9 as added by chapter 887 of the laws of
1990,  paragraph  d of subdivision 2 and subdivision 4 as amended, para-
graphs a, b, c and d of subdivision 9 as added and subdivisions 5, 6, 7,
8 and 9 as renumbered by chapter 604 of the laws of 1993, paragraph e of
subdivision 2 as amended by chapter 439 of the laws of 1980,  and  para-
graph  f  of subdivision 2 as amended by chapter 13 of the laws of 2010,
is amended to read as follows:
  S 5001. Licensed  private  CAREER  schools  [and  registered  business
schools/computer   training  facilities].  1.  Schools  required  to  be
licensed [or registered]. No private school [or computer training facil-
ity] which charges tuition or fees  [for]  RELATED  TO  instruction  and
which  is  not  exempted  hereunder  shall  be operated by any person or
persons, firm, corporation, or private organization for the  purpose  of
teaching  or giving instruction in any subject or subjects, unless it is
licensed [or registered] by the department. As used  in  this  article[,
the following terms shall have the following meanings]:
  a.  ["Licensed]  "LICENSED private CAREER school" OR "LICENSED PRIVATE
SCHOOL" shall mean any entity offering to instruct or teach any  subject
by  any  plan  or method including written, visual or audio-visual meth-
ods[.], AND SHALL INCLUDE ANY INSTITUTION LICENSED OR  REGISTERED  AS  A
REGISTERED  BUSINESS  SCHOOL OR COMPUTER TRAINING FACILITY ON THE EFFEC-
TIVE DATE OF THE CHAPTER OF  THE  LAWS  OF  TWO  THOUSAND  TWELVE  WHICH
AMENDED  THIS SUBDIVISION. FOLLOWING SUCH EFFECTIVE DATE, THERE SHALL BE
NO DISTINCTION BETWEEN INSTITUTIONS PREVIOUSLY  DEFINED  AS  "REGISTERED
BUSINESS  SCHOOLS"  OR "COMPUTER TRAINING FACILITIES" AND OTHER LICENSED
PRIVATE SCHOOLS, AND ANY REFERENCE  IN  LAW  TO  A  REGISTERED  BUSINESS
SCHOOL  OR  COMPUTER  TRAINING FACILITY SHALL BE DEEMED A REFERENCE TO A
LICENSED PRIVATE CAREER SCHOOL. INSTITUTIONS HOLDING  A  VALID  BUSINESS
SCHOOL  REGISTRATION ON SUCH EFFECTIVE DATE, INCLUDING COMPUTER-TRAINING
FACILITIES, SHALL HAVE SUCH REGISTRATIONS REPLACED BY THE  COMMISSIONER,
AT NO COST, WITH LICENSES VALID UNTIL THE EXPIRATION DATE LISTED ON SUCH
PREVIOUS REGISTRATION; AND
  b.  ["Registered  business  school"  shall  mean  a  school in which a
curriculum primarily provides a sequence of  courses  that  may  include

S. 4268--C                          3

accounting or bookkeeping, marketing, business arithmetic, business law,
business     English,     shorthand,     typing,    computer    business
applications/programming, or substantially all  said  courses,  for  the
purpose  of  preparing  an  individual  to pursue a business occupation;
provided, however, that a registered business school program may include
instruction in English as a second language  at  a  beginning  or  basic
level,  provided  such  instruction shall not constitute more than fifty
percent of such program. Such authorization shall apply to all  students
who  commence  instruction in a registered business school program prior
to July first, nineteen hundred ninety-one. A business school registered
under this section shall employ only teachers licensed  by  the  depart-
ment,   whose  qualifications  are  substantially  equivalent  to  those
required of teachers of equivalent subjects in public secondary schools.
  c. "Computer  training  facility"  shall  mean  any  entity  primarily
engaged  in  providing training on the use, language, programs, applica-
tion, networking and technical repair of computers]  "CERTIFIED  ENGLISH
AS  A  SECOND  LANGUAGE  SCHOOL"  OR "CERTIFIED ESL SCHOOL" SHALL MEAN A
LANGUAGE SCHOOL  CONDUCTED  FOR-PROFIT  WHICH  PROVIDES  INSTRUCTION  IN
ENGLISH  AS  A  SECOND LANGUAGE AND WHICH ACCEPTS NO PUBLIC FUNDS AND IS
CERTIFIED PURSUANT TO PARAGRAPH F OF SUBDIVISION FOUR OF THIS SECTION.
  2. Exempt schools. The following schools are exempted from the licens-
ing requirement of this section:
  a. institutions authorized to confer degrees in this state;
  b. schools[, other than correspondence schools,] providing  kindergar-
ten,   nursery,   elementary  or  secondary  education,  except  schools
conducted for profit which provide instruction in English  as  a  second
language  or  preparation  for  high  school equivalency examinations to
out-of-school youth or adults;
  c. schools operated by governmental agencies or authorities;
  d. schools which engage exclusively in training of students with disa-
bilities as defined in section forty-four hundred one of this chapter;
  e. schools conducted on a not-for-profit basis by firms  or  organiza-
tions  for  the training of their own employees only, provided that such
instruction is offered at no charge to such employees, or by a fraternal
society or benevolent order for its members or their immediate relatives
only;
  f. schools which provide instruction in the following  subjects  only:
religion, dancing, music, painting, drawing, sculpture, poetry, dramatic
art,  languages,  reading  comprehension, mathematics, recreation, yoga,
martial arts, PILATES and athletics, including the training of  students
to  teach  such  subjects, PROVIDED, HOWEVER, THAT SCHOOLS CONDUCTED FOR
THE PURPOSE OF TRAINING PERSONAL TRAINERS SHALL BE  EXCLUDED  FROM  THIS
EXEMPTION AND SHALL BE REQUIRED TO OBTAIN LICENSURE;
  g.  schools in which the course of instruction is licensed, registered
or approved under any other section of this  chapter  or  by  any  other
department or agency of the state;
  h. schools which provide instruction designed solely for giving flight
training and/or related ground school instruction;
  i.  schools in which instruction designed solely to prepare applicants
for admission to professional licensing examinations administered by the
department pursuant to title eight of this chapter, and  applicants  for
examination for admission to the practice of law;
  j.  schools  which  offer continuing education courses exclusively for
individuals licensed by the department pursuant to title eight  of  this
chapter and for individuals admitted to the practice of law;

S. 4268--C                          4

  k. schools which provide instruction given exclusively to employees of
a  person  or  organization  which has contracted with another person or
organization to provide such instruction at no cost to the employees;
  l. conferences, trade shows, workshops, seminars, institutes or cours-
es  of  study  offered  and  sponsored either jointly or individually by
recognized trade, business or professional organizations for the benefit
of their membership; [or those offered to the general public by individ-
uals, firms or organizations which neither conduct such activities for a
duration of more than five consecutive days  nor  more  frequently  than
twice in any one calendar year;]
  m. SCHOOLS THAT LIMIT THEIR TOTAL CONFERENCES, TRADE SHOWS, WORKSHOPS,
SEMINARS,  INSTITUTES OR OTHER COURSE OFFERINGS TO NO MORE THAN TWICE IN
ONE CALENDAR YEAR WITH EACH OF THOSE OFFERINGS FOR  NO  MORE  THAN  FIVE
DAYS;
  N.  schools  which provide instruction exclusively to persons employed
full-time or part-time in  the  field  in  which  instruction  is  being
offered,  where the instruction is provided to meet continuing education
standards required for professional licensure as defined by law in  this
state; AND
  O.  SCHOOLS IN CANDIDACY STATUS PURSUANT TO SUBPARAGRAPH (IV) OF PARA-
GRAPH B OF SUBDIVISION FOUR OF THIS SECTION.
  2-a. Schools exempted pursuant to subdivision two of this section  may
waive  such  exemption  and  apply  for  a  license  [or  registration];
provided, however, that the review of such applications shall be left to
the discretion of the commissioner.
  2-b. Programs offered by licensed private CAREER  schools  [or  regis-
tered  business  schools to private businesses where there is no tuition
liability] TO EMPLOYEES OF A PERSON OR ORGANIZATION WHICH HAS CONTRACTED
WITH ANOTHER PERSON OR ORGANIZATION TO PROVIDE SUCH  INSTRUCTION  AT  NO
COST  to  the  employees  shall  be exempt from the requirements of this
article, provided that the following requirements are met:
  a. Only employees of the [private business]  EMPLOYER  for  which  the
program is being offered may enroll in classes that make up the program.
  b. Certificates or diplomas awarded to students in the program may not
reference in any way the department.
  c. Prior to the commencement of the program, such schools shall submit
to  the  department  a  disclosure form, prescribed by the commissioner,
copies of which shall  be  provided  to  all  students  in  such  exempt
program,  which shall include but not be limited to the following infor-
mation:
  (i) a description of the location and time period in which the program
will be offered;
  (ii) a statement that the students enrolled in the program  shall  not
be  subject  to  any  tuition  liability  for  the program, even if such
students do not complete the program;
  (iii) a statement that the program  being  provided  to  the  [private
business]  EMPLOYER  has  not been approved by the department and is not
under the department's jurisdiction and that the students in the program
have been advised of the fact; and
  (iv) the signatures of the school director or owner of the school  and
the  representative  of  the  [private  business] EMPLOYER for which the
program is being offered certifying the accuracy of  the  statements  on
the form.
  d.  Any  additional student openings in a program deemed exempt by the
department may be made available to students  not  affiliated  with  the
[private  business] EMPLOYER on the condition that such students execute

S. 4268--C                          5

a disclosure form as prescribed in paragraph c of this subdivision. Such
admitted students shall only constitute up to ten percent of the  exempt
program's total capacity.
  4.  Application, renewal application and application fees. a. Applica-
tion and renewal application for a license as a  private  CAREER  school
[or  registration  as  a  business  school] required by the commissioner
shall be filed on forms  prescribed  and  provided  by  the  department.
Except as provided in subparagraph (iii) of paragraph e of this subdivi-
sion, each renewal application for [a private business school registered
pursuant to this section or for] a private CAREER school licensed pursu-
ant to this section shall include an audited financial statement audited
according  to  generally  accepted  auditing standards by an independent
certified public accountant or  an  independent  public  accountant  and
statistical reports certified by the owner or operator of the school, as
required  by  the commissioner; provided, however, that the commissioner
shall accept a copy of a current financial statement previously filed by
a school with any other  governmental  agency  in  compliance  with  the
provisions of any federal or state laws, or rules or regulations if such
statement  contains  all of the information required under this subdivi-
sion and conforms to this subdivision's requirements of auditing, review
and certification. Any required audit of the financial  statement  shall
be  a  condition of licensure [or registration] and shall be paid for by
the school, and the results of the  audit  shall  be  forwarded  to  the
commissioner.  Applications  not  accompanied  by the audits and reports
required pursuant to  this  subdivision  shall  not  be  considered  for
approval  by the commissioner. Initial applications shall be accompanied
by financial reports as required by the commissioner. [The  commissioner
shall act on an initial application for a license or registration within
one  hundred  twenty  days  of  receipt  of a complete application.] The
applicant shall receive a written approval or denial together  with  the
reasons for a denial of such application.
  b.  (i)  An  initial  license [or registration] issued pursuant to the
provisions of this article shall be valid for a period of two  years.  A
renewal  of  license [or registration] issued pursuant to the provisions
of this article shall be valid for a period of four years. [All  license
and  registration  fees for a renewal shall be double the amounts listed
in paragraph g of this subdivision.]
  (ii) EVERY APPLICANT AND RENEWAL APPLICANT SHALL PAY TO THE DEPARTMENT
A NONREFUNDABLE, NONTRANSFERABLE APPLICATION FEE. THE  INITIAL  APPLICA-
TION  FEE FOR NEW SCHOOLS SHALL BE FIVE THOUSAND DOLLARS, OF WHICH THREE
THOUSAND DOLLARS SHALL ACCRUE TO THE CREDIT  OF  THE  PROPRIETARY  VOCA-
TIONAL  SCHOOL SUPERVISION ACCOUNT AND TWO THOUSAND DOLLARS SHALL ACCRUE
TO THE TUITION REIMBURSEMENT ACCOUNT. FOR ADDITIONAL LICENSED  LOCATIONS
OF  CURRENTLY  OPERATING SCHOOLS, THE APPLICATION FEE SHALL BE TWO THOU-
SAND FIVE HUNDRED DOLLARS, WHICH SHALL  ACCRUE  TO  THE  CREDIT  OF  THE
PROPRIETARY  VOCATIONAL SCHOOL SUPERVISION ACCOUNT. FOR RENEWAL APPLICA-
TIONS, THE FEE SHALL BE BASED ON GROSS ANNUAL TUITION INCOME  AS  DETER-
MINED BY THE ANNUAL FINANCIAL STATEMENTS REQUIRED IN PARAGRAPH A OF THIS
SUBDIVISION  FOR  THE  MOST  RECENT SCHOOL FISCAL YEAR, ACCORDING TO THE
FOLLOWING SCHEDULE:

     GROSS ANNUAL TUITION INCOME           FEE

     0-$199,999                            $   750.00
     $200,000-$499,999                     $ 1,500.00
     $500,000-$999,999                     $ 2,225.00

S. 4268--C                          6

     $1,000,000-$4,999,999                 $ 4,500.00
     $5,000,000-$9,999,999                 $ 9,000.00
     $10,000,000 OR ABOVE                  $18,000.00

  SUCH  RENEWAL FEES SHALL ACCRUE TO THE CREDIT OF THE PROPRIETARY VOCA-
TIONAL SCHOOL SUPERVISION ACCOUNT. IF THE  EVALUATION  OF  A  PARTICULAR
COURSE  OR  FACILITY  REQUIRES THE SERVICES OF AN EXPERT NOT EMPLOYED BY
THE DEPARTMENT, THE DEPARTMENT SHALL RETAIN SUCH EXPERT AND  THE  SCHOOL
SHALL REIMBURSE THE DEPARTMENT FOR THE REASONABLE COST OF SUCH SERVICES.
  (III)  Each school shall display, near the entrance to the school [and
under glass], the license [or registration] which has been issued to it.
Such authorization shall be displayed only  during  the  period  of  its
validity.
  (IV)  A  SCHOOL  WHICH HAS APPLIED FOR A PRIVATE CAREER SCHOOL LICENSE
MAY REQUEST CANDIDACY STATUS FOR ONE TIME ONLY. CANDIDACY  STATUS  SHALL
NOT  BE  ISSUED  TO  SCHOOLS OFFERING PROGRAMS TO TRAIN STUDENTS TO PASS
LICENSURE EXAMINATIONS SUCH AS  APPEARANCE  ENHANCEMENT  TESTS,  ACHIEVE
NURSE  AIDE OR NURSE ASSISTANT CERTIFICATION, OR PASS EXAMINATIONS LEAD-
ING TO LICENSURE IN ANY OTHER PROFESSION OR OCCUPATION DETERMINED BY THE
COMMISSIONER TO REQUIRE FULL LICENSURE STATUS.   CANDIDACY STATUS  SHALL
ALLOW  A  SCHOOL  TO  OPERATE UNLICENSED FOR AN INITIAL PERIOD OF TWELVE
MONTHS DURING THE LICENSURE APPLICATION PROCESS, WHICH MAY  BE  EXTENDED
TO A MAXIMUM, NON-RENEWABLE PERIOD OF EIGHTEEN MONTHS, UNDER THE FOLLOW-
ING CONDITIONS:
  (1) THE PROSPECTIVE SCHOOL SUBMITS A CANDIDATE SCHOOL APPLICATION FEE,
SEPARATE FROM THE SCHOOL APPLICATION FEE, OF FIVE THOUSAND DOLLARS WHICH
SHALL  ACCRUE  TO THE CREDIT OF THE PROPRIETARY VOCATIONAL SCHOOL SUPER-
VISION ACCOUNT;
  (2) THE SCHOOL SHALL NOT REPRESENT THAT IT IS  LICENSED  OR  THAT  ITS
PROGRAMS ARE APPROVED THROUGH THE DEPARTMENT;
  (3)  TO  EVERY  PROSPECTIVE  STUDENT,  THE  SCHOOL SHALL DISSEMINATE A
STATEMENT, PROVIDED BY THE DEPARTMENT, THAT THE FACILITIES, INSTRUCTORS,
AND PROGRAMS BEING PROVIDED HAVE NOT BEEN APPROVED AND ARE NOT UNDER THE
DEPARTMENT'S JURISDICTION DURING THE CANDIDACY  PERIOD.  SUCH  STATEMENT
SHALL  INDICATE  THAT STUDENTS ATTENDING CANDIDATE SCHOOLS SHALL HAVE NO
RECOURSE THROUGH THE DEPARTMENT'S STUDENT COMPLAINT PROCESS NOR HAVE ANY
RESTITUTION AVAILABLE FROM THE TUITION REIMBURSEMENT  ACCOUNT.  STUDENTS
SHALL  SIGN  AN ATTESTATION TO THE RECEIPT OF THIS STATEMENT. THE SCHOOL
SHALL RETAIN THE SIGNED ATTESTATION AND PROVIDE THE STUDENT WITH A  COPY
OF SUCH SIGNED STATEMENT;
  (4)  THE  SCHOOL  SHALL  DEMONSTRATE FINANCIAL VIABILITY THROUGH MEANS
DEEMED APPROPRIATE BY THE COMMISSIONER. SUCH MEANS MAY  INCLUDE  SUBMIT-
TING AN AUDITED FINANCIAL STATEMENT BASED ON THE MOST RECENTLY COMPLETED
FISCAL YEAR; SECURING AND MAINTAINING A PERFORMANCE BOND, PAYABLE TO THE
COMMISSIONER, IN AN AMOUNT APPROPRIATE TO ELIMINATE ANY LIABILITY TO THE
TUITION  REIMBURSEMENT ACCOUNT IN THE EVENT THE SCHOOL CEASES OPERATION;
LIMITING THE COLLECTION OF TUITION FUNDS UNTIL  EACH  STUDENT  COMPLETES
THE PROGRAM OF STUDY; OR OTHER MEANS ACCEPTABLE TO THE COMMISSIONER; AND
  (5) ANY BREACH OF THE ABOVE CONDITIONS SHALL RESULT IN THE DISAPPROVAL
OF  THE  SCHOOL'S  LICENSURE APPLICATION AND THE FORFEITURE OF CANDIDATE
STATUS. CONTINUED OPERATION AFTER THIS  DISAPPROVAL  SHALL  SUBJECT  THE
SCHOOL TO THE DISCIPLINARY ACTION PRESCRIBED UNDER PARAGRAPH B OF SUBDI-
VISION SIX OF SECTION FIVE THOUSAND THREE OF THIS ARTICLE.
  (6)  ON OR BEFORE THE END OF THE INITIAL TWELVE-MONTH PERIOD OF CANDI-
DACY STATUS, THE COMMISSIONER SHALL REVIEW THE SCHOOL'S APPLICATION  FOR
LICENSURE  AND  DOCUMENTATION  RELATING TO THE SCHOOL'S CANDIDACY STATUS

S. 4268--C                          7

AND SHALL DETERMINE WHETHER SUCH CANDIDACY STATUS SHOULD BE EXTENDED  TO
THE  FULL  EIGHTEEN MONTHS AND WHETHER THE SCHOOL MAY CONTINUE TO ENROLL
STUDENTS BEYOND THE EIGHTEEN-MONTH PERIOD OR  THE  SCHOOL'S  APPLICATION
FOR LICENSURE WILL BE INITIALLY DISAPPROVED FOR FAILURE TO MEET REQUIRED
STANDARDS.
  c.  An  application for renewal of any license [or registration] shall
be submitted at least one hundred twenty days prior  to  the  expiration
date  of  the current authorization to operate accompanied by the nonre-
fundable application fee and  such  certified  statistical  reports  and
annual financial statements required pursuant to this subdivision.
  d.  When  complete and timely application has been made for renewal of
any license [or  registration],  the  school  shall  receive  a  written
approval  or  denial,  together  with the reasons for denial of renewal,
from the commissioner no less than thirty days prior to  the  date  such
license [or registration] expires.
  e.  Financial statements and statistical reports. (i) Licensed private
CAREER schools and [registered business] CANDIDATE schools shall  submit
such  certified  statistical  reports and annual financial statements as
required by the  commissioner.  The  commissioner  may  require  audited
statistical  reports  upon  a  determination  that a school has provided
false or inaccurate certified statistical reports. The financial  state-
ments  shall  be  based  on the fiscal year of the school and shall also
include an itemized account of tuition refunds due and owing to past  or
presently  enrolled students. Statistical reports shall include, but not
be limited to, enrollment, completion and placement  data.  The  commis-
sioner  shall  use  such  financial  statements  and statistical reports
submitted for the purposes of licensure [and registration]  of  schools,
establishing  fees or assessments pursuant to this article and determin-
ing standards pursuant to paragraph b of  subdivision  five  of  section
five thousand two of this article. The attorney general, the comptroller
and  the  president  of  the higher education services corporation shall
have access to this information when it is necessary  to  perform  their
duties as required by state law.
  (ii)  Any  school which received [in excess of two hundred fifty] FIVE
HUNDRED thousand dollars OR MORE in gross tuition  in  a  school  fiscal
year  shall  be required to submit TO THE COMMISSIONER an annual audited
financial statement [to the commissioner] PREPARED  IN  ACCORDANCE  WITH
GENERALLY  ACCEPTED ACCOUNTING PRINCIPLES for that fiscal year. In addi-
tion, any school which has a gross tuition of [two hundred  fifty]  LESS
THAN FIVE HUNDRED thousand dollars [or less] in a school fiscal year but
whose  combined  state  and  federal  student financial aid in such year
[exceeds] EQUALS one hundred thousand dollars OR MORE shall also  submit
an  annual  audited  financial  statement  to  the commissioner for that
fiscal year.
  (iii) Schools whose gross tuition is [two  hundred  fifty]  LESS  THAN
FIVE  HUNDRED  thousand  dollars  [or  less] in a school fiscal year and
which receive less than one hundred thousand dollars in state and feder-
al student financial aid in a school fiscal year  shall  file  with  the
commissioner  an unaudited financial statement in a format prescribed by
the commissioner, provided, however, that any such  school  [with  gross
tuition  in  excess  of fifty thousand dollars shall have filed at least
one audited financial statement after the first year of  its  operation.
The  statement shall be signed by the president or chief executive offi-
cer and the chief fiscal officer of the school who  shall  certify  that
the  statements  are  true and accurate] SHALL FILE AN AUDITED FINANCIAL
STATEMENT THE FISCAL  YEAR  AFTER  A  REVIEWED  FINANCIAL  STATEMENT  IS

S. 4268--C                          8

SUBMITTED.  FOR  SUCH SCHOOLS, AUDITED FINANCIAL STATEMENTS ARE REQUIRED
EVERY TWO YEARS, AT MINIMUM, WITH REVIEWED FINANCIAL STATEMENTS  ALLOWED
DURING THE ALTERNATE YEAR. Upon a determination by the commissioner that
a  school has submitted false or inaccurate statements or that a signif-
icant, unsubstantiated  decline  in  gross  tuition  has  occurred,  the
commissioner  may  require  any such school to file an audited financial
statement pursuant to this paragraph EVEN DURING  ALTERNATE  YEARS  WHEN
REVIEWED STATEMENTS WOULD ORDINARILY BE ALLOWED.
  f.  Alternate  licensing provision. The commissioner shall issue regu-
lations which define alternate licensing OR  CERTIFICATION  requirements
for the following:
  (1)  correspondence schools in which all approved programs and courses
are under three hundred hours;
  (2) schools which are eligible for exemption under  this  section  but
which elect to be licensed;
  (3) non-profit schools exempt from taxation under section 501(c)(3) of
the  internal  revenue  code  whose programs are funded entirely through
donations from individuals or  philanthropic  organizations,  or  endow-
ments, and interest accrued thereon; and
  (4) language schools conducted for-profit which provide instruction in
English as a second language and which accept no public funds.
  [g.  Application  fee. Every applicant and renewal applicant shall pay
to the department a nonrefundable, nontransferable fee  based  on  gross
annual  tuition  income as determined by the annual financial statements
required in paragraph a of this subdivision for the most  recent  school
fiscal year, according to the following schedule:

     GROSS ANNUAL TUITION INCOME            FEE

     0-$199,999                             $ 250.00
     $200,000-$499,999                      $ 500.00
     $500,000-$999,999                      $ 750.00
     $1,000,000-$4,999,999                 $1,500.00
     $5,000,000-$9,999,999                 $3,000.00
     $10,000,000 or above                  $6,000.00

  Such  fees  shall  accrue  to the credit of the proprietary vocational
school supervision account. If the evaluation of a particular course  or
facility  requires the services of an expert not employed by the depart-
ment, the department shall retain such expert and the school shall reim-
burse the department for the reasonable cost of such services.]
  5. Required  disclosure  for  licensure.  a.  The  commissioner  shall
require that each applicant for a license for the operation of a private
[vocational  or  business] CAREER school disclose the following informa-
tion:
  (1) Whether the applicant, or any  corporation,  partnership,  associ-
ation or organization or person holding an ownership or control interest
in  such  school,  or any employee responsible in a supervisory capacity
for the administration of student funds or governmental funds, has  been
convicted of a crime defined in this article, or any other crime involv-
ing  the  operation  of  any  educational  or  training  program, or, in
connection with the operation of any such program, a crime involving the
unlawful acquisition, use, payment  or  expenditure  of  educational  or
training program funds; and
  (2)  Whether  the  applicant, or any corporation, partnership, associ-
ation or organization or person holding an ownership or control interest

S. 4268--C                          9

in such school, or any employee responsible in  a  supervisory  capacity
for  the  administration of student funds or governmental funds has been
convicted:
  (A)  in  this  state  of  any of the following felonies defined in the
penal law: bribery involving public servants; commercial bribery; perju-
ry in the second degree;  rewarding  official  misconduct;  larceny,  in
connection  with  the  provision  of  services or involving the theft of
governmental funds; offering a false instrument for  filing,  falsifying
business  records; tampering with public records; criminal usury; scheme
to defraud; or defrauding the government; or
  (B) in any other jurisdiction of an  offense  which  is  substantially
similar  to  any  of the felonies defined in clause (A) of this subpara-
graph and for which a sentence to a term of imprisonment  in  excess  of
one  year  was  authorized and is authorized in this state regardless of
whether such sentence was imposed; and
  (3) Whether the applicant, or any  corporation,  partnership,  associ-
ation or organization or person holding an ownership or control interest
in  such  school,  or any employee responsible in a supervisory capacity
for the administration of student funds or governmental funds, has  been
finally  determined  in  any  administrative or civil proceeding to have
committed a violation of any provision of this article or any rules  and
regulations promulgated pursuant thereto, or any related order or deter-
mination  of  the  commissioner,  or of any similar statute, rule, regu-
lation, order or determination of another jurisdiction pertaining to the
licensure and operation of any educational or training program; and
  (4) Whether any school owned or operated by the  applicant  closed  or
ceased  operation  and,  if  so,  whether at the time of the closing the
applicant was subject to a pending  disciplinary  action,  disallowance,
fine  or  other  penalty  and  whether it owed refunds to any government
agency or students.
  b. No application for any license pursuant to this  article  shall  be
denied  by  reason  of  disclosure  pursuant  to this subdivision of the
applicant, or any corporation, partnership, association or  organization
or  person  holding  an ownership or control interest in such school, or
any employee responsible in a  supervisory  capacity  for  the  adminis-
tration  of  student funds or governmental funds unless the commissioner
makes a written  determination  that  there  is  a  direct  relationship
between one or more of such previous offenses and the license sought, or
that  issuance of the license would create an unreasonable risk to prop-
erty or to the safety, education or welfare of specific  individuals  or
the general public. In making such determination, the commissioner shall
be  guided by the factors set forth in section seven hundred fifty-three
of the correction law. For purposes of this subdivision,  "ownership  or
control  interest"  means: with respect to a school that is organized as
or owned by a corporation, a position as an officer or director of  such
corporation;  or, with respect to a school that is organized as or owned
by a partnership, a position as a partner; or any other interest  total-
ing ten percent or more, whether direct or indirect, in the total equity
or assets of such school.
  c.  The commissioner may deny, suspend, revoke or decline to renew any
license: (1) if the significance of the  convictions  or  administrative
violations  warrant such action [or]; (2) if the commissioner determines
that a school did not make any disclosure required by this  subdivision;
OR  (3)  IF THE COMMISSIONER DETERMINES THAT A SCHOOL'S FINANCIAL CONDI-
TION MAY RESULT IN THE INTERRUPTION OR CESSATION OF INSTRUCTION OR JEOP-
ARDIZE STUDENT TUITION FUNDS.

S. 4268--C                         10

  6. If, during the [two year] period for which a license [or  registra-
tion]  is granted, the commissioner determines that a school's financial
condition may result in the interruption or cessation of instruction  or
jeopardize  student  tuition funds, the commissioner may, upon notice to
the  school,  place the school on probation for a period of no more than
[thirty days] ONE YEAR, during which time the school and the  department
must  make  efforts  to  resolve the problems at the school.  THE SCHOOL
SHALL SUBMIT A REPORT ON ITS FINANCIAL  CONDITION  TO  THE  COMMISSIONER
WITHIN  THE TIME PRESCRIBED BY THE COMMISSIONER. SUCH REPORT SHALL BE IN
THE FORM AND SHALL INCLUDE CONTENT PRESCRIBED BY  THE  COMMISSIONER  AND
SHALL  BE  REVIEWED BY THE COMMISSIONER TO DETERMINE THE SCHOOL'S FINAN-
CIAL VIABILITY. THE COMMISSIONER MAY  SUSPEND  OR  REVOKE  THE  SCHOOL'S
LICENSE,  AS WELL AS REQUIRE THE CESSATION OF STUDENT ENROLLMENT, UPON A
DETERMINATION THAT THE SCHOOL'S FINANCIAL CONDITION CONTINUES TO THREAT-
EN ITS ABILITY TO EDUCATE STUDENTS AND/OR  THE  STUDENT  TUITION  FUNDS.
ALTERNATIVES  FOR  THE  SCHOOL TO DEMONSTRATE A FISCALLY SOUND OPERATION
MAY INCLUDE SECURING AND MAINTAINING A PERFORMANCE BOND, PAYABLE TO  THE
COMMISSIONER, IN AN APPROPRIATE AMOUNT TO ELIMINATE ANY LIABILITY TO THE
TUITION  REIMBURSEMENT ACCOUNT SHOULD THE SCHOOL CEASE OPERATION, LIMIT-
ING THE COLLECTION OF TUITION FUNDS UNTIL  EACH  STUDENT  COMPLETES  THE
PROGRAM  OF  STUDY, OR OTHER MEANS ACCEPTABLE TO THE COMMISSIONER. If no
resolution can be attained, a hearing, pursuant to subdivisions two  and
three  of section five thousand three of this article will be scheduled.
Such probation may include additional monitoring,  inspections,  limita-
tions  on  enrollment,  teaching  out  some or all of a school's present
students or temporary cessation of instruction.
  7. No license [or registration] granted under this  section  shall  be
transferable  or  assignable  without  the approval of the commissioner.
[Any] UPON transfer or assignment of any interest totaling  [ten]  TWEN-
TY-FIVE percent or more, whether direct or indirect, in the total equity
or  assets  of a school, SUCH SCHOOL shall be deemed a [transfer of such
school's license or registration. The commissioner shall approve or deny
a transfer or assignment based on the requirements set forth in subdivi-
sions three and four of this section.  Such approval or denial, together
with the reasons for denial, shall  be  transmitted  in  writing  within
ninety  days  of  the receipt of the complete application by the commis-
sioner. Upon a showing of good cause as to why the applicant  could  not
obtain  the  commissioner's  approval prior to a transfer or assignment,
the commissioner shall temporarily approve the  transfer  or  assignment
for a period not to exceed forty-five days and for such additional peri-
ods  as  the  commissioner  may deem appropriate] NEW SCHOOL REQUIRED TO
SUBMIT A NEW SCHOOL APPLICATION AND OBTAIN A  NEW  LICENSE  PURSUANT  TO
THIS  ARTICLE. PROVIDED, HOWEVER, THAT UPON SUCH A SUBSTANTIAL CHANGE IN
INTEREST, THE PREVIOUS SCHOOL LICENSE SHALL REMAIN IN EFFECT  UNTIL  THE
NEW  LICENSE  IS  ISSUED OR DENIED OR THE PREVIOUS LICENSE EXPIRES OR IS
REVOKED, WHICHEVER OCCURS FIRST.
  8. No licensed [or registered] school shall discontinue  operation  or
surrender  its  license  [or  registration]  unless  thirty days written
notice of its intention to do so and a  plan  for  maintenance  of  safe
keeping  of  the  records of the school is provided to the commissioner.
However, upon good cause shown, the commissioner may  waive  the  thirty
days notice requirement.
  9.  Annual  supervision  fund and tuition reimbursement [fund] ACCOUNT
assessment.  a. The commissioner shall annually  assess  each  school  a
total  percentage of that school's gross tuition pursuant to subdivision
three of section five thousand two of this article, as determined by the

S. 4268--C                         11

annual [financial  statement  or  annual]  audited  financial  statement
required  by  this  article.  This  assessment  shall be based upon each
school's gross tuition from the previous year, and shall be  payable  to
the  commissioner  in equal quarterly installments which shall be due on
June first, September first, December first and March first.
  b. (i) [Beginning April first, nineteen hundred ninety-one, such] SUCH
annualized assessment shall be one percent  FOR SCHOOLS WHICH HAVE  PAID
LESS  THAN  SIXTEEN  QUARTERS OF ASSESSMENTS, BUT SUCH ANNUAL ASSESSMENT
SHALL NOT FALL BELOW FIVE HUNDRED DOLLARS.
  (ii) [Beginning July first, nineteen hundred ninety-four,  such]  SUCH
annualized assessment shall be [nine-tenths] EIGHT-TENTHS of one percent
FOR SCHOOLS WHICH HAVE PAID SIXTEEN OR MORE QUARTERS OF ASSESSMENTS, BUT
SUCH ANNUAL ASSESSMENT SHALL NOT FALL BELOW FIVE HUNDRED DOLLARS.
  [(iii)  Beginning  April  first,  nineteen hundred ninety-five, and in
each succeeding year, such annualized assessment shall  be  eight-tenths
of one percent.]
  c. (i) Of the total assessment provided for herein, FIVE-TENTHS OF ONE
PERCENT  SHALL ACCRUE TO THE CREDIT OF THE TUITION REIMBURSEMENT ACCOUNT
PURSUANT TO SECTION FIVE  THOUSAND  SEVEN  OF  THIS  ARTICLE  FOR  THOSE
SCHOOLS  WHICH  HAVE  PAID LESS THAN SIXTEEN QUARTERS OF ASSESSMENTS. OF
THE TOTAL ASSESSMENT PROVIDED FOR SCHOOLS WHICH  HAVE  PAID  SIXTEEN  OR
MORE  QUARTERS  OF ASSESSMENTS, three-tenths of one percent shall accrue
to the credit of the tuition reimbursement [fund]  ACCOUNT  pursuant  to
section  five  thousand  seven of this article.   FOR SCHOOLS PAYING THE
MINIMUM FIVE HUNDRED DOLLARS ANNUAL ASSESSMENT, NONE SHALL ACCRUE TO THE
TUITION REIMBURSEMENT ACCOUNT.
  (ii) The balance of the total assessment provided for herein shall  be
dedicated  to  fund  the  department's  supervision  and  regulation  of
licensed private schools [and registered business schools]  pursuant  to
an  annual  appropriation  and an annual plan of expenditure prepared by
the commissioner and approved by the director of the budget.  [Following
the  close  of  each fiscal year, the commissioner, in consultation with
the director of the budget,  shall  determine  if  the  balance  in  the
proprietary  vocational  school  supervision  fund  for such fiscal year
exceeded the amount required for the support of the department's  super-
visory  activities  taking  into account projected revenues and expendi-
tures for the subsequent fiscal year. To the extent that  a  surplus  is
identified,  the  commissioner, with the approval of the director of the
budget, shall direct  the  transfer  of  such  surplus  to  the  tuition
reimbursement fund.]
  d.  Payments  made  within thirty days following the due date shall be
subject to interest at one percent  above  the  prevailing  prime  rate.
Thereafter,  late  payments may result in suspension of licensure by the
commissioner. Payments required by this subdivision shall be  considered
a condition of licensure [or registration].
  S 4. Section 5002 of the education law, as added by chapter 887 of the
laws  of 1990, subparagraph 3 of paragraph b and paragraph d of subdivi-
sion 1, subparagraph 2 of paragraph g of subdivision 3 and subdivision 6
as amended and paragraph c of subdivision 1 and paragraph d of  subdivi-
sion  2  as  added  by  chapter  604 of the laws of 1993, paragraph c of
subdivision 2, paragraph a of subdivision 4 and subdivision 7 as amended
and paragraph e of subdivision 4 and paragraph c  of  subdivision  6  as
added  by  chapter 434 of the laws of 1999, paragraph f of subdivision 4
as added by chapter 457 of the laws of 2003 and subparagraph 2 of  para-
graph  b of subdivision 5 as amended by chapter 301 of the laws of 1996,
is amended to read as follows:

S. 4268--C                         12

  S 5002. Standards for licensed private CAREER schools [and  registered
business  schools].  Any  school  licensed  [or  registered] pursuant to
section five thousand  one  of  this  article  shall  be  organized  and
conducted  only  as a school and shall be subject to the jurisdiction of
the  department  exclusively,  or  in  conjunction with such other state
agency or department or district attorney upon  which  jurisdiction  has
also  been conferred by law. Such schools shall be subject to and comply
with the provisions of this section.
  1. Standards. a. No program of such schools shall be  conducted  in  a
factory  or commercial establishment, except where the use of facilities
or equipment of such factory or commercial  establishment  is  permitted
for necessary or desirable educational purposes and objectives.
  b.  For  every  such school, the commissioner shall set forth in regu-
lation standards governing all of the following:
  (1) criteria for admission, which shall provide that students at least
possess a high school diploma or its equivalent or demonstrate the abil-
ity to benefit from the instruction, except that in the case of students
who do not possess a high school  diploma  or  its  equivalent,  certif-
ication  of  the  students' ability to benefit from instruction shall be
provided to the commissioner as provided in paragraph c of this subdivi-
sion;
  (2) the standards and the methods of instruction;
  (3) the equipment available for instruction with the  maximum  enroll-
ment that such equipment and physical plant will accommodate;
  (4)  the  qualifications  and  experience  of  teaching and management
personnel;
  (5) the form and  content  of  the  student  enrollment  agreement  or
contract,  provided  that such agreement or contract shall be written in
the same language as that principally used in the sales presentation;
  (6) the methods of collecting tuition;
  (7) eligibility criteria for programs that will require licensure;
  (8) the sufficiency and suitability of the resources available for the
support of such school; and
  (9) counseling provided to students.
  B-1. (1) STUDENT LOANS OR OTHER  FINANCIAL  AID  FUNDS  RECEIVED  FROM
FEDERAL,  STATE,  OR LOCAL GOVERNMENTS OR ADMINISTERED UNDER THE FEDERAL
STUDENT FINANCIAL ASSISTANCE PROGRAMS GOVERNED BY TITLE IV OF THE HIGHER
EDUCATION ACT OF NINETEEN HUNDRED SIXTY-FIVE, 20 U.S.C.  SECTION 1070 ET
SEQ., AS AMENDED, MUST  BE  COLLECTED  AND  APPLIED  IN  THE  MANNER  AS
CONTROLLED BY THE APPLICABLE FEDERAL, STATE OR LOCAL REGULATIONS.
  (2)  STUDENT  LOANS OR OTHER FINANCIAL AID FUNDS RECEIVED FROM PRIVATE
ENTITIES, INCLUDING, BUT NOT LIMITED TO, BANKS, FINANCING COMPANIES, AND
OTHER LENDING SOURCES MUST BE COLLECTED OR DISBURSED  IN  THE  FOLLOWING
MANNER:
  (A) LOANS OR OTHER FINANCIAL AID PAYMENTS FOR AMOUNTS OF FIVE THOUSAND
DOLLARS OR LESS MAY BE DISBURSED AS A SINGLE DISBURSEMENT, REGARDLESS OF
COURSE LENGTH.
  (B)  LOANS  OR  OTHER  FINANCIAL AID PAYMENTS FOR AMOUNTS GREATER THAN
FIVE THOUSAND DOLLARS THAT REFLECT A CLASS TERM OF LESS THAN SIX  MONTHS
SHALL  HAVE  TWO EQUAL DISBURSEMENTS. THE DISBURSEMENT SCHEDULE FOR SUCH
LOANS OR PAYMENTS SHALL BE AS FOLLOWS: ONE-HALF OF  THE  TUITION  AMOUNT
RELEASED  INITIALLY,  AND  THE  REMAINDER  RELEASED  HALFWAY THROUGH THE
COURSE TERM.
  (C) LOANS OR OTHER FINANCIAL AID PAYMENTS  FOR  AMOUNTS  GREATER  THAN
FIVE  THOUSAND  DOLLARS  THAT  REFLECT  A CLASS TERM OF GREATER THAN SIX
MONTHS, BUT LESS THAN TWELVE MONTHS MUST HAVE THREE EQUAL DISBURSEMENTS.

S. 4268--C                         13

THE DISBURSEMENT SCHEDULE  FOR  SUCH  LOANS  OR  PAYMENTS  SHALL  BE  AS
FOLLOWS:  ONE-THIRD OF THE TUITION AMOUNT RELEASED INITIALLY, THE SECOND
DISBURSEMENT  SHALL  BE RELEASED ONE-THIRD OF THE WAY THROUGH THE LENGTH
OF  THE  TRAINING,  AND  THE  REMAINDER  RELEASED  TWO-THIRDS OF THE WAY
THROUGH THE COURSE TERM.
  (D) LOANS OF OTHER FINANCIAL AID PAYMENTS  FOR  AMOUNTS  GREATER  THAN
FIVE  THOUSAND  DOLLARS  THAT  REFLECT  A CLASS TERM GREATER THAN TWELVE
MONTHS SHALL HAVE FOUR EQUAL DISBURSEMENTS.  THE  DISBURSEMENT  SCHEDULE
FOR  SUCH  LOANS  OR  PAYMENTS  SHALL  BE AS FOLLOWS: ONE-QUARTER OF THE
TUITION AMOUNT RELEASED INITIALLY,  THE  SECOND  DISBURSEMENT  SHALL  BE
RELEASED  ONE QUARTER OF THE WAY THROUGH THE LENGTH OF THE TRAINING; THE
THIRD DISBURSEMENT SHALL BE RELEASED HALFWAY THROUGH THE LENGTH  OF  THE
TRAINING,  AND THE REMAINDER SHALL BE RELEASED THREE-QUARTERS OF THE WAY
THROUGH THE TRAINING.
  (3) NO SCHOOL MAY ENTER INTO ANY CONTRACT OR AGREEMENT WITH OR RECEIVE
ANY STUDENTS LOAN OR FINANCIAL AID FUNDS FROM PRIVATE ENTITIES,  INCLUD-
ING,  BUT  NOT  LIMITED  TO,  BANKS,  FINANCING COMPANIES, AND ANY OTHER
PRIVATE LENDING SOURCES UNLESS THE PRIVATE  ENTITY  HAS  A  DISBURSEMENT
POLICY THAT, AT A MINIMUM, MEETS THE REQUIREMENTS OF SUBPARAGRAPH TWO OF
THIS PARAGRAPH.
  (4)  THE TERM PRIVATE ENTITY REFERENCED IN SUBPARAGRAPHS TWO AND THREE
OF THIS PARAGRAPH SHALL NOT BE CONSTRUED TO INCLUDE A FRIEND  OR  FAMILY
MEMBER  OF  THE  STUDENT WHO IS NOT IN THE ROUTINE BUSINESS OF PROVIDING
STUDENT LOANS OR FINANCIAL AID FUNDS. THE PROVISION OF SUCH  A  LOAN  OR
FUND  BY  A  PRIVATE  ENTITY  SHALL  ALSO NOT INCLUDE THE PAYMENT OF THE
STUDENT'S TUITION OR FEES BY USE OF A CREDIT CARD.
  c. Notwithstanding any other provisions of this article to the contra-
ry, the commissioner shall define alternative educational and curriculum
standards for any program of less than forty hours designed  exclusively
for non-occupational, personal enrichment purposes.
  d. Admission of students under the ability to benefit provision.
  (1)  Certification.  Each school admitting students who do not possess
at least a high school diploma or its equivalent shall  certify  to  the
satisfaction  of  the  commissioner  that such prospective students have
been administered and passed an examination which has been  approved  by
the  commissioner  to determine their ability to benefit from the chosen
curriculum prior to admission to the curriculum or course of study. Such
examination shall, whenever possible, be a  nationally  recognized  test
appropriate for the course of instruction which has been approved by the
commissioner. The examination results of each such student who is admit-
ted  shall be made available to the commissioner at a time prescribed by
the commissioner and, together with the student's original answer sheet,
shall be maintained by the school in the student's permanent record. For
any student failing to achieve the necessary score on  such  examination
for  enrollment,  the  school  shall be required to provide such student
with a listing of appropriate counseling and  educational  opportunities
available  to the student at no cost, as determined by the commissioner.
WHERE APPROPRIATE, THE  COMMISSIONER  MAY  ACCEPT  SUCH  OTHER  ENTRANCE
REQUIREMENT  DOCUMENTATION SUCH AS PREREQUISITE COURSEWORK, PROFESSIONAL
OR VENDOR CERTIFICATIONS, PERSONAL INTERVIEWS,  AND/OR  ATTESTATIONS  OF
EQUIVALENT KNOWLEDGE IN LIEU OF THE EXAMINATION REQUIREMENT.
  (2) Counseling. Each school [admitting] OFFERING CURRICULA WHICH ADMIT
students  who  do  not  possess  a high school diploma or its equivalent
shall develop a plan to be approved by the commissioner  for  the  coun-
seling  of such students on an individual basis on matters including but
not limited to the student's ability to progress in the curriculum,  the

S. 4268--C                         14

student's financial aid rights and responsibilities, the availability of
programs  to  earn a high school equivalency diploma, including programs
provided at no cost to the student, and the potential of the training to
prepare  the  student  for available employment opportunities within the
region.
  (3) Compliance. (A) The commissioner  shall  monitor  compliance  with
this  paragraph  and  verify  the examination and counseling process and
student examination scores. Such  procedures  may  include  but  not  be
limited  to an annual, statistically significant, random sampling of the
examinations taken by prospective students of each school  administering
such examinations.
  (B)  [Such  procedures  shall  provide  that  the examinations of each
school be inspected on site at least once annually.
  (C)] In the event that the commissioner determines that the school  is
out  of  compliance  with  the  examination  process and counseling, the
commissioner shall require that examinations and counseling for students
admitted under the ability  to  benefit  provision  and  the  counseling
required  by  subparagraph  two  of  this paragraph be conducted off the
premises of the school by an entity approved  by  the  commissioner  for
such  period  of time as the commissioner deems appropriate, the cost of
which shall be incurred by the school.
  2. Inspections. a. Every school  licensed  pursuant  to  this  article
shall  maintain  adequate  and accurate records for a period of not less
than [six] SEVEN years at its principal place of  business  within  this
state.  Such records shall be maintained in a manner and form prescribed
by the commissioner and shall be made available to  the  department  and
the higher education services corporation upon request.
  b.  In addition to other requirements in this article, the information
to be made a part of the record shall include, but not be limited to:
  (1) names and addresses of each enrolled student;
  (2) the course of study offered by the institution;
  (3) the name and address of its faculty, together with a record of the
educational qualifications of each;
  (4) the graduation date of each student; and
  (5) for each student who fails to complete his  or  her  program,  the
student's  last date of attendance and, if applicable, the amount of any
refund paid to, or on behalf of, the student and the date the refund was
made.
  c. The commissioner shall conduct periodic unscheduled inspections  of
licensed  private  CAREER  schools  [and registered business schools] to
monitor compliance with the provisions of this article or the  rules  or
regulations promulgated thereunder or any final order or decision of the
commissioner made pursuant to this article. The department shall conduct
an  inspection  of  each  school  at  least once every [three years. The
department shall annually inspect schools: (1) having a high  percentage
of  students admitted under ability to benefit criteria as determined by
the commissioner; (2) having a high student loan default rate as  deter-
mined by the commissioner in a manner consistent with federal standards;
or  (3) which are the subject of a high volume of complaints by students
or other parties] LICENSURE  PERIOD.  All  schools  shall  provide  upon
request  of  the  department,  any  and  all records necessary to review
compliance with the provisions of this article.
  d. Student permanent records, as defined in  the  regulations  of  the
commissioner, shall be maintained for a period of twenty years.
  3.  Tuition liability. a. The tuition charge for programs approved for
participation in student financial aid general award  programs  pursuant

S. 4268--C                         15

to  articles  thirteen and fourteen of this chapter shall be apportioned
on the basis of terms, quarters or semesters. For the purposes  of  this
section,  the terms "term", "quarter" and "semester" shall be defined in
regulations by the commissioner.
  b.  The  tuition  refund  policy  for the first term or quarter of any
program at schools licensed [or registered]  pursuant  to  section  five
thousand one of this article shall be as follows:
  (1)  For  programs  which  are divided into quarters of up to fourteen
weeks, the school shall evenly divide the total  tuition  charges  among
the  number  of  quarters.  After instruction is begun in a school, if a
student withdraws or is discontinued, the  school  may  retain  no  more
than:
  (i) zero percent of the quarter's tuition if the termination is during
the first week of instruction; or
  (ii)  twenty-five  percent of the quarter's tuition if the termination
is during the second week of instruction; or
  (iii) fifty percent of the quarter's tuition  if  the  termination  is
during the third week of instruction; or
  (iv)  seventy-five percent of the quarter's tuition if the termination
is during the fourth week of instruction; or
  (v) one hundred percent of the quarter's tuition  if  the  termination
occurs after the fourth week of instruction.
  (2)  For programs organized by terms of fifteen, sixteen, seventeen or
eighteen weeks apiece, the school shall evenly divide the total  tuition
charges  among  the  number  of  terms.  After instruction is begun in a
school, if a student withdraws or is discontinued, the school may retain
no more than:
  (i) zero percent of the term's tuition if the  termination  is  during
the first week of instruction; or
  (ii) twenty percent of the term's tuition if the termination is during
the second week of instruction; or
  (iii)  thirty-five percent of the term's tuition if the termination is
during the third week of instruction; or
  (iv) fifty percent of the term's tuition if the termination is  during
the fourth week of instruction; or
  (v) seventy percent of the term's tuition if the termination is during
the fifth week of instruction; or
  (vi)  one  hundred  percent  of  the term's tuition if the termination
occurs after the completion of the fifth week of instruction.
  c. (1) The tuition refund policy for the second term or quarter of any
program at schools licensed [or registered]  pursuant  to  section  five
thousand one of this article shall be as follows:
  (A)  For  programs  which  are divided into quarters of up to fourteen
weeks, the school shall evenly divide the total  tuition  charges  among
the  number  of  quarters.  After instruction is begun in a school, if a
student withdraws or is discontinued, the  school  may  retain  no  more
than:
  (i) twenty-five percent of the quarter's tuition if the termination is
during the first week of instruction; or
  (ii)  fifty  percent  of  the  quarter's tuition if the termination is
during the second week of instruction; or
  (iii) seventy-five percent of the quarter's tuition if the termination
is during the third week of instruction; or [.]
  (iv) one hundred percent of the quarter's tuition if  the  termination
occurs after the third week of instruction.

S. 4268--C                         16

  (B)  For programs organized by terms of fifteen, sixteen, seventeen or
eighteen weeks apiece, the school shall evenly divide the total  tuition
charges  among  the  number  of  terms.  After instruction is begun in a
school, if a student withdraws or is discontinued, the school may retain
no more than:
  (i)  twenty percent of the term's tuition if the termination is during
the first week of instruction; or
  (ii) thirty-five percent of the term's tuition if the  termination  is
during the second week of instruction; or
  (iii) fifty percent of the term's tuition if the termination is during
the third week of instruction; or
  (iv)  seventy  percent  of  the  term's  tuition if the termination is
during the fourth week of instruction; or
  (v) one hundred percent of  the  term's  tuition  if  the  termination
occurs after the completion of the fourth week of instruction.
  (2)  Notwithstanding  the provisions of subparagraph one of this para-
graph, the tuition refund policy set forth in paragraph b of this subdi-
vision shall apply unless the school  demonstrates  that  there  are  no
significant  educational  changes  in  the  educational  program  of the
student, such changes as defined in regulations of the commissioner.
  d. The tuition refund policy for the third and any subsequent term  or
quarter of any program licensed [or registered] pursuant to section five
thousand  one  of this article shall be the policy set forth in subpara-
graph one of paragraph c of this subdivision.
  e. No program shall have a term in excess of eighteen weeks.
  f. The amount of the refund shall be calculated based on the last  day
of student attendance.
  g.  (1) Any refund due to a student shall be paid by the school within
forty-five days of the date on which  the  student  withdraws  from  the
program. For the purposes of this article, such date shall be the earli-
est  of  (i)  the  date on which the student gives written notice to the
school or (ii) the date on which the student is deemed to have withdrawn
pursuant to subparagraph two of this paragraph.
  (2) If a student has failed to attend classes for a period  of  thirty
calendar  days,  the  school  shall send by regular mail a notice to the
student that the student shall be deemed  to  have  withdrawn  from  the
program if the student does not notify the school to the contrary within
twelve  days  from  the date on which the letter is sent. If the student
fails to respond within such twelve-day period,  the  student  shall  be
deemed  to  have withdrawn and the school shall notify the higher educa-
tion services corporation that the student has withdrawn and the date of
the withdrawal.
  h. SCHOOLS SHALL SUBMIT, FOR APPROVAL BY THE COMMISSIONER, THE  SCHOOL
CATALOG  WITH  A  WEEKLY  TUITION  LIABILITY CHART FOR EACH PROGRAM THAT
INDICATES THE AMOUNT OF REFUND DUE THE STUDENT IN  THE  EVENT  OF  WITH-
DRAWAL.
  I.  Upon  payment  of a refund to a lender, the school shall forthwith
send a notice to a person designated by  the  president  of  the  higher
education  services  corporation  upon  a form approved by the president
that such refund was made.
  [i.] J. If the higher education services corporation fails to  receive
the  notice  required  by  paragraph [h] I of this subdivision, it shall
forthwith notify the student of his or her right to  a  refund  and  the
commissioner  of  such  failure.  Upon receipt of such notification, the
commissioner shall take appropriate action against the school.

S. 4268--C                         17

  4. Curriculum approval. a. An application AND FEE shall  be  made  for
the  initial  approval  of a curriculum or course and shall include such
information as the commissioner  may  require  by  regulation.  Approval
shall  be  valid for a period not to exceed four years.  THE APPLICATION
FEE  FOR  ANY CURRICULUM OF ONE HUNDRED CLOCK HOURS OR MORE SHALL BE TWO
HUNDRED FIFTY DOLLARS. THE APPLICATION FEE FOR ANY COURSE OF  LESS  THAN
ONE  HUNDRED  CLOCK HOURS SHALL BE ONE HUNDRED DOLLARS. SUCH APPLICATION
FEES SHALL ACCRUE TO THE CREDIT OF  THE  PROPRIETARY  VOCATIONAL  SCHOOL
SUPERVISION ACCOUNT.
  b. In approving curriculum, the commissioner shall take into consider-
ation the following:
  (1)  that  the entrance requirements demonstrate that students possess
the skills, competencies and prerequisite knowledge needed  to  progress
in the curriculum;
  (2)  that  the content will enable the student to develop those skills
and competencies required for employment in the  occupational  area  for
which the curriculum was developed;
  (3)  that  the  school will utilize appropriate instructional methods;
[and]
  (4) that the instructional equipment used  within  the  curriculum  is
comparable  to  the  equipment currently used by business or industry in
the occupational area for which the curriculum was developed; AND
  (5) THAT A CURRICULUM MAY INCLUDE INSTRUCTION IN ENGLISH AS  A  SECOND
LANGUAGE  AT A BEGINNING OR BASIC LEVEL, PROVIDED SUCH INSTRUCTION SHALL
NOT CONSTITUTE MORE THAN FIFTY PERCENT OF SUCH PROGRAM.
  c. (1) If the evaluation of a particular course or  facility  requires
the services of an expert not employed by the department, the department
shall  retain such expert [and the school shall reimburse the department
for the reasonable cost of such services] AT  THE  SCHOOL'S  EXPENSE  IN
ADDITION  TO  THE  APPLICATION  FEES  PRESCRIBED  IN PARAGRAPH A OF THIS
SUBDIVISION.
  (2) If, in the interest of expediting the approvals, a school requests
the department to employ an outside consultant, the school shall  [reim-
burse  the department for] PAY the [reasonable] cost of such services IN
ADDITION TO THE APPLICATION FEES  PRESCRIBED  IN  PARAGRAPH  A  OF  THIS
SUBDIVISION.
  d. The commissioner shall act on applications for approval of a course
or  curriculum  within  one hundred twenty days of receipt of a complete
application and, in the case of a denial, shall set forth in writing the
reasons for such denial.
  e. Notwithstanding paragraphs b, c and d of this subdivision,  curric-
ulum  certified  by a nationally recognized vendor as defined in commis-
sioner's regulations shall be recognized by the department in lieu of an
expert evaluation when such curriculum is adopted by  a  school  in  the
original  format  provided by the vendor as long as the proposed curric-
ulum is a stand alone program and not part  of  a  larger  comprehensive
course.
  f.  Notwithstanding  any  other provision of the law, a not-for-profit
[registered business] LICENSED  CAREER  school,  that  is  eligible  for
participation  in  the tuition assistance program and which has national
accreditation, may, for the purpose of calculation of federal  financial
aid  amounts  only,  measure  students' academic progress in an approved
curriculum in non-degree granting credit hours, based  upon  a  national
accrediting  agency's  conversion and approval of clock hours to non-de-
gree credit hours. For the purposes of this paragraph, "national accred-

S. 4268--C                         18

itation" shall mean accreditation by a national  accrediting  agency  as
defined in the commissioner's regulations.
  5. Application for reapproval. a. An application AND FEE shall be made
for  reapproval  of  a  curriculum  or course. Such application shall be
considered timely if submitted at least one hundred twenty days prior to
the expiration of the current approval.  THE  APPLICATION  FEE  FOR  ANY
CURRICULUM OF ONE HUNDRED CLOCK HOURS OR MORE SHALL BE TWO HUNDRED FIFTY
DOLLARS.  THE  APPLICATION  FEE  FOR ANY COURSE OF LESS THAN ONE HUNDRED
CLOCK HOURS SHALL BE ONE HUNDRED DOLLARS, PROVIDED THAT NO FEE SHALL  BE
ASSESSED  FOR THE SUBMISSION OF A REAPPROVAL APPLICATION WITHOUT CHANGE.
SUCH APPLICATION FEE SHALL ACCRUE TO THE CREDIT OF THE PROPRIETARY VOCA-
TIONAL SCHOOL SUPERVISION ACCOUNT.
  b. Curriculum reapproval standards. (1) The  commissioner  shall  pre-
scribe  by  regulation, standards for reapproval after the first year of
licensure, of any curriculum or course based upon factors including  but
not limited to the following, as appropriate:
  (i) for each curriculum or course, the percentage of students who have
dropped out;
  (ii)  the  acquisition  of  a specified minimum level of skills by the
students; and
  (iii) for each curriculum or course, the percentage of students placed
in occupations related to the instruction, where applicable.
  (2) Such standards shall be consistent with those applied to all  non-
degree career education programs.
  c.  Reapproval contingency. Reapproval of a curriculum or course shall
be contingent upon a demonstration by the applicant that the  curriculum
or  course has met the curriculum reapproval standards set forth in this
subdivision. Except as otherwise provided in paragraph d of this  subdi-
vision, no such curriculum or course or substantially similar curriculum
or course may be given without reapproval by the commissioner.
  d.  When timely and complete application is made for the reapproval of
a curriculum or course, and no written denial is made thirty days  prior
to  the  date  of expiration of the existing approval, the curriculum or
course shall be deemed to be approved for the period of the  curriculum.
If  the application is denied, the commissioner shall set forth in writ-
ing the reasons for such denial.
  e. The commissioner may provide in regulations for  reapproval  proce-
dures, consistent with this subdivision, for applications submitted less
than one hundred twenty days from the expiration date.
  f.  The commissioner shall act upon enrollment agreements and catalogs
within ninety days of receipt, and, in the case  of  denial,  shall  set
forth  in writing the reasons for such denial. If the commissioner fails
to act within ninety days, a catalog shall be deemed  approved  for  one
year  and  an  enrollment  agreement  shall be deemed approved until the
commissioner acts upon it.
  6. a. Teachers and directors. No person shall be employed by a private
CAREER school as a director or teacher  who  is  not  licensed  in  such
capacity  by the department pursuant to regulations of the commissioner,
which shall take into consideration such  factors  as  moral  character,
educational  qualifications  and  practical  experience. The application
shall include a statement, signed by the president  or  chief  executive
officer  of  the school, certifying that to the best of his or her know-
ledge, the applicant is able to meet the educational qualifications  and
practical  experience  set forth in the commissioner's regulations. Such
application shall be considered timely if mailed to the commissioner and
postmarked four days prior to employment  at  the  school  and  must  be

S. 4268--C                         19

completed  within  twenty  days  thereafter; provided, however, that the
commissioner may, for good cause shown, extend the time within which  to
complete  the  application.  When  a  complete  application is made, the
commissioner  shall  act upon such application within thirty days. If no
written denial is made within the thirty days, the application shall  be
deemed  to  be approved until the commissioner acts upon it or until the
end of the term or semester, whichever occurs first. If a written denial
is made after the thirty day period,  the  commissioner  may  allow  the
applicant to teach at the school for the remainder of the term or semes-
ter if the commissioner determines that the removal of the teacher would
not  be  in the best educational interest of the students. This subdivi-
sion shall not apply to directors or teachers employed on or before July
first, nineteen hundred seventy-two. Teachers'  licenses  issued  on  or
after  [January first, nineteen hundred eighty-seven] THE EFFECTIVE DATE
OF THE CHAPTER OF THE LAWS OF TWO THOUSAND  TWELVE  WHICH  AMENDED  THIS
PARAGRAPH  shall  be valid at all [registered business] LICENSED PRIVATE
CAREER schools for the courses, curricula, or occupations  indicated  on
the  license.  TEACHERS  HOLDING  VALID  PRIVATE SCHOOL TEACHER LICENSES
VALID AT ONLY ONE SCHOOL LOCATION SHALL HAVE THEM REPLACED, AT NO  COST,
WITH  LICENSES  VALID  AT  ANY  LICENSED  SCHOOL  IN THE SAME SUBJECT OR
SUBJECTS AND WITH THE SAME EXPIRATION DATE AS WAS LISTED ON THE PREVIOUS
TEACHING LICENSE.
  b. A school director shall have  access  to  all  student  and  school
records  which  shall  be maintained in accordance with this article and
the regulations of the commissioner and shall make such  records  avail-
able  to  the  commissioner  or the commissioner's designee upon request
during an on-site school inspection.
  c. Notwithstanding paragraph a of this subdivision, a teacher who  has
been  certified  as  an  instructor by a nationally recognized vendor as
defined in commissioner's regulations may  be  deemed  qualified  as  an
instructor  by  the department, provided such teacher shall only provide
instruction in the course or courses for which he or she holds  vendor's
certification. A teacher authorized by this paragraph will be subject to
all licensing fees required by the department for licensed teachers.
  7. Advertising. a. The commissioner is authorized to commence a disci-
plinary  proceeding  pursuant  to  this  article  for false, misleading,
deceptive or fraudulent advertising pursuant to regulations  promulgated
by  the commissioner which shall be consistent with article twenty-two-A
of the general business law. The department shall issue guidelines as to
appropriate advertising content.  In  developing  such  guidelines,  the
department  shall  consider  advertising for similar programs offered by
various educational institutions. In  a  disciplinary  action  or  other
proceeding,  such  guidelines  shall  not  be  presumptive evidence that
particular advertising is appropriate.
  b. Beginning on January first, two thousand, all schools shall include
in their advertising, promotional material, or letterhead the  statement
"Licensed  by the State of New York" [or "Registered by the State of New
York", as appropriate], and an  accompanying  symbol  to  indicate  such
status,  issued  by  the  commissioner pursuant to section five thousand
nine of this article.
  8. The higher education services corporation  shall  adopt  rules  and
regulations  to  effectuate  the  cessation  of collection activities by
lenders or by the corporation in  cases  in  which  a  licensed  private
[vocational]  CAREER  school  [or a registered business school] at which
the student enrolled has closed or ceased its teaching activities during
the academic period for which the loan was made or guaranteed.

S. 4268--C                         20

  S 5. Section 5003 of the education law, as added by chapter 887 of the
laws of 1990, subparagraph 1 of paragraph c of subdivision 1  and  para-
graphs d and e of subdivision 6 as amended by chapter 604 of the laws of
1993,  paragraph   d of subdivision 1 as added and paragraphs b and f of
subdivision  6 as amended by chapter 434 of the laws of 1999, is amended
to read as follows:
  S 5003. Disciplinary actions, hearings and penalties.  1. Disciplinary
action. a. The commissioner for good cause, after affording a school  an
opportunity  for  a hearing, may take disciplinary action as hereinafter
provided against any school authorized to operate under this article.
  b. Good cause shall include, but not be limited to, any of the follow-
ing:
  (1) fraudulent statements or representations to  the  department,  the
public or any student in connection with any activity of the school;
  (2)  violation  of  any provision of this article or regulation of the
commissioner;
  (3) conviction or a plea of no contest on the part of any owner, oper-
ator, director or teacher:
  (A) of any of the following felonies defined in the penal law: bribery
involving public servants; commercial bribery;  perjury  in  the  second
degree;  rewarding  official misconduct; larceny, in connection with the
provision of services or involving  the  theft  of  governmental  funds;
offering  a  false  instrument  for filing, falsifying business records;
tampering with public records; criminal usury;  scheme  to  defraud;  or
defrauding the government; or
  (B)  in  any  other  jurisdiction of an offense which is substantially
similar to any of the felonies defined in clause (A)  of  this  subpara-
graph  and  for  which a sentence to a term of imprisonment in excess of
one year was authorized and is authorized in this  state  regardless  of
whether such sentence was imposed; or
  (4) incompetence of any owner or operator to operate a school.
  c.  (1)  Any  person  who  believes  he or she has been aggrieved by a
violation of this section, EXCEPT A PERSON AGGRIEVED BY THE  ACTIONS  OR
OMISSIONS  OF A CANDIDATE SCHOOL, shall have the right to file a written
complaint within: (A) two years of the alleged  violation;  or  (B)  one
year of receiving notification from the higher education services corpo-
ration or any other guarantee agency that the student has defaulted on a
student  loan payment; provided, however, that no complaint may be filed
after three years from the date of the alleged  violation.  The  commis-
sioner  shall  maintain a written record of each complaint that is made.
The commissioner shall also send to the complainant a form acknowledging
the complaint and requesting further information if necessary and  shall
advise  the  director  of the school that a complaint has been made and,
where appropriate the nature of the complaint.
  (2) The commissioner shall within twenty days of receipt of such writ-
ten complaint commence an investigation of  the  alleged  violation  and
shall within ninety days of the receipt of such written complaint, issue
a  written  finding. The commissioner shall furnish such findings to the
person who filed the complaint and to the chief operating officer of the
school cited in the complaint. If the commissioner finds that there  has
been  a violation of this section, the commissioner shall take appropri-
ate action.
  (3)  The  commissioner  may  initiate  an  investigation   without   a
complaint.

S. 4268--C                         21

  [d.  During  the initial two year licensing period, before the commis-
sioner may bring enforcement proceedings against a licensed entity,  the
following shall be taken into consideration:
  (1)  whether such entity has demonstrated that the regulations promul-
gated under this chapter are unduly burdensome given the nature  of  the
instruction provided by such entity;
  (2)  whether  such entity has identified potential areas of noncompli-
ance with this chapter and any such regulation within sixty days of  the
licensing or registration date of such entity;
  (3) whether such entity has engaged in good faith discussions with the
department  to  resolve  such  violations  and/or promulgate regulations
which further the goals of this chapter.]
  (4) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH ONE OF  THIS  PARA-
GRAPH  OR ANY OTHER PROVISION OF THIS ARTICLE TO THE CONTRARY, A STUDENT
AT A CANDIDATE SCHOOL SHALL HAVE THE RIGHT TO FILE A  WRITTEN  COMPLAINT
FROM  AN ALLEGED VIOLATION OF THE PROVISIONS OF CLAUSE THREE OF SUBPARA-
GRAPH (IV) OF PARAGRAPH B OF SUBDIVISION FOUR OF SECTION  FIVE  THOUSAND
ONE  OF THIS ARTICLE THAT REQUIRE DISCLOSURE OF CANDIDACY STATUS AND ITS
IMPLICATIONS AND A SIGNED ATTESTATION BY THE STUDENT, WITHIN  TWO  YEARS
OF  SUCH  VIOLATION.  UPON A FINDING THAT SUCH A VIOLATION HAS OCCURRED,
THE CANDIDATE SCHOOL SHALL BE REQUIRED TO PROVIDE A REFUND OF ALL MONIES
AND FEES RECEIVED FROM OR ON BEHALF OF THE STUDENT.  APPROPRIATE  ACTION
SHALL  ALSO  BE  TAKEN  AGAINST  THE  CANDIDATE  SCHOOL  PURSUANT TO THE
PROVISIONS OF SUBPARAGRAPH (IV) OF PARAGRAPH B OF  SUBDIVISION  FOUR  OF
SECTION FIVE THOUSAND ONE OF THIS ARTICLE.
  2.  Hearing  procedures. a. Upon a finding that there is good cause to
believe that a CANDIDATE SCHOOL UNDER  THE  PROVISIONS  OF  SUBPARAGRAPH
(IV)  OF PARAGRAPH B OF SUBDIVISION FOUR OF SECTION FIVE THOUSAND ONE OF
THIS ARTICLE, OR A LICENSED school,  or  an  officer,  agent,  employee,
partner  or  teacher,  has  committed  a  violation of this article, the
commissioner shall initiate proceedings by serving a notice  of  hearing
upon each and every such party subject to the administrative action. The
school  or  such  party  shall  be  given  reasonable notice of hearing,
including the time, place, and nature of the  hearing  and  a  statement
sufficiently  particular  to  give  notice of the transactions or occur-
rences intended to be proved, the material elements  of  each  cause  of
action and the civil penalties and/or administrative sanctions sought.
  b.  Opportunity  shall be afforded to the party to respond and present
evidence and argument on the issues involved in  the  hearing  including
the  right  of cross examination. In a hearing, the school or such party
shall be accorded the right to have its representative appear in  person
or  by  or with counsel or other representative. Disposition may be made
in any hearing by stipulation, agreed settlement, consent order, default
or other informal method.
  c. (1) The commissioner shall designate an impartial  hearing  officer
to conduct the hearing, who shall be empowered to:
  (A) administer oaths and affirmations; and
  (B)  regulate  the  course of the hearings, set the time and place for
continued hearings, and fix the time for  filing  of  briefs  and  other
documents; and
  (C)  direct  the school or such party to appear and confer to consider
the simplification of the issues by consent; and
  (D) grant a request for an adjournment of the hearing only  upon  good
cause shown.
  (2)  The strict legal rules of evidence shall not apply, but the deci-
sion shall be supported by substantial evidence in the record.

S. 4268--C                         22

  3. Decision after hearing. The  hearing  officer  shall  make  written
findings  of  fact  and  conclusions of law, and shall also recommend in
writing to the commissioner a final decision  including  penalties.  The
hearing  officer  shall  mail  a  copy  of  his OR HER findings of fact,
conclusions  of  law and recommended penalty to the party and his or her
attorney, or representative.   The commissioner  shall  make  the  final
decision, which shall be based exclusively on evidence and other materi-
als  introduced  at  the  hearing.  If it is determined that a party has
committed a violation, the commissioner shall issue a  final  order  and
shall impose penalties in accordance with this section. The commissioner
shall  send  by  certified mail, return receipt requested, a copy of the
final order to the party and his or her attorney, or representative. The
commissioner shall, at the request of the school or such party,  furnish
a  copy  of  the transcript or any part thereof upon payment of the cost
thereof.
  4. Judicial review. Any order imposed  under  this  section  shall  be
subject  to  judicial  review  under  article seventy-eight of the civil
practice law and rules, but no such determination  shall  be  stayed  or
enjoined  except  upon  application  to  the  court  after notice to the
commissioner.
  5. Enforcement proceedings. The attorney general, in his  or  her  own
capacity,  or at the request of the commissioner, may bring an appropri-
ate action or proceeding in  any  court  of  competent  jurisdiction  to
recover a fine or otherwise enforce any provision of this article.
  6.  Civil penalties and administrative sanctions. a. A hearing officer
may recommend, and the commissioner may impose, a civil penalty  not  to
exceed  [two]  THREE  thousand five hundred dollars for any violation of
this article, INCLUDING A SCHOOL'S FAILURE TO OFFER A COURSE OR  PROGRAM
AS  APPROVED  BY  THE COMMISSIONER.   In the case of a second or further
violation committed within [the previous] five  years  OF  THE  PREVIOUS
VIOLATION,  the  liability shall be a civil penalty not to exceed [five]
SEVEN thousand FIVE HUNDRED dollars for each such violation.
  b. Notwithstanding the provisions of paragraph a of this  subdivision,
a hearing officer may recommend, and the commissioner may impose a civil
penalty  not  to  exceed [fifty] SEVENTY-FIVE thousand dollars OR DOUBLE
THE DOCUMENTED AMOUNT FROM WHICH  THE  SCHOOL  BENEFITED,  WHICHEVER  IS
GREATER,  for any of the following violations: (1) operation of a school
without a license in violation of section  five  thousand  one  of  this
article; (2) operation of a school knowing that the school's license has
been  suspended  or  revoked; (3) use of false, misleading, deceptive or
fraudulent advertising; (4) employment of recruiters on the basis  of  a
commission,  bonus  or  quota, except as authorized by the commissioner;
(5) directing or authorizing recruiters to offer guarantees of jobs upon
completion of a course; (6) failure to make a tuition refund  when  such
failure is part of a pattern of misconduct; (7) the offering of a course
or program that has not been approved by the commissioner; (8) admitting
students,  who  subsequently drop out, who were admitted in violation of
the admission standards established  by  the  commissioner,  where  such
admissions  constitute  a  pattern  of misconduct and where the drop out
resulted at least in part from such violation; (9)  failure  to  provide
the  notice of discontinuance and the plan required by subdivision seven
of section five thousand one of this article; or (10) violation  of  any
other  provision  of this article, or any rule or regulation promulgated
pursuant thereto, when such violation constitutes part of a  pattern  of
misconduct  which  significantly  impairs the educational quality of the
program or programs being offered by the school.   For  each  enumerated

S. 4268--C                         23

offense,  a  second or further violation committed within [the previous]
five years, shall be subject to a civil penalty not to exceed  [seventy-
five thousand dollars] ONE AND ONE-HALF TIMES THE AMOUNT OF THE PREVIOUS
VIOLATION for each such violation.
  c.  In  addition  to the penalties authorized in paragraphs a and b of
this subdivision, a hearing officer may recommend and  the  commissioner
may  impose  any  of the following administrative sanctions: (1) a cease
and desist order; (2) a mandatory direction; (3) a suspension or revoca-
tion of a license; (4) a probation order; or (5) an  order  of  restitu-
tion.
  d.  Penalty  factors.  In the recommendation of any penalty, a hearing
officer shall, at a minimum, give due consideration,  where  applicable,
to  the  good faith of the violator[; the performance of the school with
respect to student placement and retention rates, and students' acquisi-
tion of skills;] AND the gravity of the violation[; and the harm  caused
to the student].
  e.  The  commissioner may suspend a license [or registration] upon the
failure of a school to pay any fee, fine, penalty, settlement or assess-
ment as required by this article unless such failure  is  determined  by
the commissioner to be for good cause.
  f.  All  civil  penalties,  fines and settlements received after April
first, nineteen hundred ninety shall accrue to the credit of the tuition
reimbursement account established pursuant to section ninety-seven-hh of
the state finance law.
  7. Criminal penalties. In addition to any  other  penalties  elsewhere
prescribed:
  a.  Any  person  who  knowingly violates any of the provisions of this
article shall be guilty of a class B misdemeanor punishable  in  accord-
ance  with  the  penal  law.  If  the conviction is for a second offense
committed within five years of the first  conviction  under  this  para-
graph,  such  person shall be guilty of a class A misdemeanor punishable
in accordance with the penal law.
  b. Any person who knowingly (1) falsifies or destroys school or  other
business  records relating to the operation of the school with intent to
defraud; (2) fails to make a tuition refund as required by section  five
thousand  two  of  this article with the intent to defraud more than one
person; or (3) operates a school without a  valid  license  required  by
section  five  thousand one of this article shall be guilty of a class A
misdemeanor punishable in accordance with the penal law.
  c. Any person who, having been convicted within the past five years of
failing to make a tuition refund in violation  of  subparagraph  two  of
paragraph  b of this subdivision, knowingly and intentionally engages in
a scheme constituting a systematic ongoing course of  conduct  involving
the  wrongful  withholding of refunds in violation of section five thou-
sand two of this article with the intent to defraud ten or more persons,
and so withholds tuition refunds in  excess  of  one  thousand  dollars,
shall  be  guilty  of a class E felony punishable in accordance with the
penal law.
  d. Upon a determination that there exist reasonable grounds to believe
that a violation of this article has been committed, or that  any  other
crime  has  been  committed in connection with the operation of a school
required to be licensed pursuant to this article, the commissioner shall
refer such determination, and the information upon which it is based, to
the attorney general or to the appropriate district attorney. The attor-
ney general or a district attorney may bring an action on his or her own
initiative.

S. 4268--C                         24

  8. Private right of action. A student injured by a violation  of  this
article  may bring an action against the owner or operator of a licensed
private CAREER school [or registered business school] for actual damages
or one hundred dollars, whichever  is  greater.  A  court  may,  in  its
discretion, award reasonable attorney's fees to a prevailing plaintiff.
  S  6.  Subdivisions  3  and 4 of section 5004 of the education law, as
amended by chapter 604 of the laws of 1993, are amended and a new subdi-
vision 4-a is added to read as follows:
  3. Exempted from the requirements of this section are  persons  acting
solely  for schools which are not required to be licensed or are specif-
ically exempted from the licensing  [or  registration]  requirements  of
this  article.  Persons  who  are  paid  to  procure,  solicit or enroll
students on the premises of schools required to be licensed  [or  regis-
tered]  shall  not  be  exempt from the provisions of this section.  The
certification requirements of this section shall not  apply  to  persons
receiving  gifts or other non-monetary considerations valued at not more
than [twenty-five] SEVENTY-FIVE dollars from a school  from  which  they
have  graduated  or are currently enrolled for each student referred for
enrollment at the school.
  4. Application and renewal application for a  private  school  agent's
certificate shall be filed on forms to be prescribed and provided by the
commissioner. Said certificate shall be valid for [two] THREE years from
the  date  of  issuance.  Certificates  which have been renewed shall be
valid for a period of [two] THREE years from the expiration date of  the
certificate  which  has been renewed. Every applicant and renewal appli-
cant shall pay to the department a fee of [one] TWO hundred dollars.
  4-A. NOTWITHSTANDING  THE  PROVISIONS  OF  SUBDIVISION  FOUR  OF  THIS
SECTION,  THE  SCHOOL  DIRECTOR  MAY  APPLY FOR A PRIVATE SCHOOL AGENT'S
CERTIFICATE ON FORMS TO BE PRESCRIBED AND PROVIDED BY  THE  COMMISSIONER
WITHOUT INCURRING THE AGENT APPLICATION FEE.
  S 7. Section 5006 of the education law, as added by chapter 887 of the
laws of 1990, is amended to read as follows:
  S 5006. Teachout plans.  1. A school may submit a teachout plan to the
commissioner  for  approval  pursuant  to regulations established by the
commissioner. A teachout plan shall consist  of  a  contract  between  a
[registered  business  or]  licensed private CAREER school, with another
school, hereinafter called the teachout school, so  that  in  the  event
that  the [registered business or] licensed private CAREER school ceases
instruction, the teachout school will provide the necessary  instruction
specified  in  a student's original enrollment agreement with the school
ceasing instruction. A teachout plan may employ more than  one  teachout
school to provide instruction to students in the school ceasing instruc-
tion.  Schools  under  common ownership but having separate licenses [or
registrations] may, subject to the approval of the  commissioner,  enter
into  teachout agreements. A TEACHOUT PLAN MAY BE CONTRACTED BETWEEN THE
COMMISSIONER AND ONE OR MORE TEACHOUT SCHOOLS  IN  THE  EVENT  THAT  THE
CLOSING SCHOOL IS UNABLE OR UNWILLING TO DO SO.
  2.  A  teachout  plan shall include the following provisions:  (a) the
teachout school must offer courses of study that are substantially simi-
lar to those offered in the school ceasing instruction;
  (b) teachout schools must be located in the geographic area  in  which
the  school  ceasing  instruction  was located UNLESS THE SCHOOL CEASING
INSTRUCTION PROVIDED DISTANCE LEARNING OR ONLINE TRAINING;
  (c) all provisions for a teachout plan must be included in the enroll-
ment agreement signed by the student; and

S. 4268--C                         25

  (d) the teachout school shall agree to fulfill the  enrollment  agree-
ment signed by the student at the school ceasing instruction.
  3.  The  [registered business or] licensed school shall provide to the
teachout school and to the department  [immediately  upon  closure]  the
following information PRIOR TO CLOSURE:
  (a)  Copies  of the academic and financial records for all students in
attendance at the school at the projected time of closure;
  (b) A listing of all such students presently in  attendance  including
their  names,  addresses,  social security numbers, curriculum that each
student is enrolled in and the number of hours the  students  will  have
completed at the time of the school closure.
  4.  The  department  will  provide to the teachout school, immediately
upon notification of a school closing, a copy of each  approved  curric-
ulum that the closing school is presently offering.
  5.  The commissioner shall require all teachout schools to address the
following issues:
  (a) Integration of students into a curriculum which may  be  different
from the curriculum in which they are currently receiving instruction;
  (b)  Assessments of students' progress so that they may be placed into
an appropriate course;
  (c) Provision of remedial instruction to students who are found to  be
deficient in one or more course areas upon their initial assessment;
  (d)  Provision  by  the  teachout  school  to  adhere  to the required
student/teacher ratios and room capacities; and
  (e) Compliance with statutory and regulatory requirements  during  the
teachout.
  6.  The  student  shall  not  be subject to any costs beyond the total
costs identified in the original enrollment agreement.
  7. A student may decline to pursue instruction at the teachout  school
and may instead seek a refund pursuant to section five thousand seven of
this article.
  S 8. Section 5007 of the education law, as added by chapter 887 of the
laws  of  1990, the section heading, subdivision 1 and subdivision 10 as
amended by chapter 434 of the laws of 1999, paragraph a  of  subdivision
3,  paragraphs  c and d of subdivision 4, subparagraphs 1 and 3 of para-
graph a and paragraph b of subdivision 5, paragraph b of  subdivision  9
as  amended  and paragraphs e and f of subdivision 4 as added by chapter
604 of the laws of 1993, is amended to read as follows:
  S 5007. Tuition reimbursement account. 1. Except as otherwise provided
in subdivision six of this section, the portion of the annual assessment
of schools [registered and] licensed pursuant to section  five  thousand
one  of  this  article as prescribed in subdivision [eight] NINE of such
section and all fines, penalties and settlements  received  pursuant  to
this  article  shall  be  transferred  upon  receipt  into  the  tuition
reimbursement account.
  3. a. The commissioner shall develop a complaint form and provide such
form to students. In order to claim a refund, a student shall  apply  to
the  fund  with a complaint form pursuant to the requirements of section
five thousand three of this article. Except  as  otherwise  provided  in
this  article,  the commissioner shall compute the refund, if any, using
the refund formula established by  subdivision  three  of  section  five
thousand two of this article.
  b. Claimants who had been enrolled in schools which have not closed or
ceased operation shall be required to show in a manner determined by the
commissioner that:
  (1) the student is eligible for a refund;

S. 4268--C                         26

  (2) the student has made a request to the school for a refund; and
  (3)  the  school  has failed to make the refund within the time period
required by this article.
  c. The commissioner shall act on each  refund  request  within  thirty
business days of such request.
  4. Students may be eligible for refunds under this section as follows:
  a.  A  student  who  is  offered a teachout plan for the curriculum in
which the student was enrolled at the time the school closed  or  ceased
operation,  which  has  been  approved  by  the department, may elect to
continue instruction pursuant to the teachout plan  or  may  decline  to
continue  instruction and may instead apply for a full refund under this
section. The option to apply for a refund shall extend to the end of the
first week of instruction at the teachout school.
  b. A student who was enrolled in a school  which  has  not  closed  or
ceased operation is entitled to a refund computed in accordance with the
refund  policy established by subdivision three of section five thousand
two of this article.
  c. A student who was enrolled in a school at the time the school clos-
es or ceases operation is entitled to a refund of  the  full  amount  of
prepaid  tuition.  In  addition,  commencing  September  first, nineteen
hundred ninety-three, a student who drops out of a  school,  where  such
school closes within [fourteen] THIRTY days of the student's termination
and  prior  to  completion of such student's program as specified in the
enrollment agreement, shall be entitled to a FULL refund  of  [the  full
amount  of  prepaid tuition] ALL TUITION, FEES AND BOOK CHARGES PAID FOR
BY OR ON BEHALF OF THE STUDENT IN CASH OR IN  LOANS,  EXCLUDING  FUNDING
PROVIDED BY ANY GOVERNMENT AGENCIES.
  d.  A  student  who  was  enrolled in a school which has not closed or
ceased operation, and who has dropped out, is entitled to a full  refund
of all tuition, fees and other required costs paid by the student if the
student  has  submitted  a  complaint  form  to the commissioner and the
commissioner has  determined  that  a  violation  of  this  article  has
occurred  which  warrants  a  refund.  The commissioner shall promulgate
regulations identifying those violations that warrant a refund.
  e.  Commencing  September  first,  nineteen  hundred  ninety-three,  a
student who drops out of a school, which subsequently closes, and who is
owed  a  refund  for the failure of such school to follow the provisions
enumerated in subdivision three of section five  thousand  two  of  this
article  shall  be  eligible for a refund from the tuition reimbursement
fund according to the provisions of subdivision three  of  section  five
thousand two of this article.
  f.  Commencing  September  first,  nineteen  hundred ninety-three, any
student enrolled in a school based upon an ability to  benefit  examina-
tion  shall  be  eligible  for  a full refund, regardless of whether the
student is currently enrolled, graduated or dropped out, if  the  school
enrolled the student contrary to the provisions of the approved entrance
requirements  and the student complies with the requirements of subdivi-
sion one of section five thousand three of this article.
  5. a. For a student who had been enrolled in a  school  that  has  not
closed or ceased operation, the refund shall be paid as follows:
  (1)  guaranteed  student loans, if any, in which case the commissioner
shall notify the student of such payment and shall be paid  directly  to
the lender or guarantee agency where appropriate;
  (2) actual personal tuition expenditures, if any; and
  (3) tuition assistance program awards and other governmental aid.

S. 4268--C                         27

  b.  For schools that have closed or ceased operation, the commissioner
shall refund actual personal tuition, FEES AND BOOK expenditures to  the
student.  The  repayment of any loans incurred by the student as part of
the actual personal tuition, FEES AND BOOK expenditures  shall  be  paid
directly to the lender or the guarantee agency where appropriate.
  6.  a.  Where a claim is paid to a student of an operating school, the
commissioner shall immediately notify the school.
  b. Within ten days of the receipt of  the  notice,  the  school  shall
either  request  a hearing to challenge the commissioner's determination
that a refund was owed to the student or reimburse the fund  the  amount
paid  to  the  claimant plus a penalty up to two times such amount. This
payment shall also incur interest for each day it remains unpaid  at  an
annual  interest  rate  of one percent above the prime rate. The commis-
sioner may promulgate streamlined  procedures  for  conducting  hearings
pursuant  to  this  paragraph. Any penalty assessed under this paragraph
shall be in addition to any other penalties assessed  pursuant  to  this
article.    Notwithstanding  any  other  provision of law, penalties and
interest paid pursuant to this paragraph shall accrue to the  credit  of
the  proprietary  vocational  school  supervision account to support the
costs associated with the hearings authorized in this subdivision.
  7. Notwithstanding the  notice  procedures  described  in  subdivision
three of this section, in the event of a school closing, the commission-
er  on  his or her own initiative may take appropriate action in accord-
ance with this section to process refund claims on behalf of all of  the
students of the closed school.
  8.  Assignment of rights. Persons and entities receiving refunds under
this section shall be  deemed  to  have  assigned  or  subrogated  their
tuition  reimbursement  rights  to  the  commissioner  on  behalf of the
tuition reimbursement fund only for the amount refunded by  the  tuition
reimbursement  fund.  Within  [thirty]  NINETY  days  of any refund made
pursuant to this section, the commissioner or the attorney general shall
take appropriate action to recover the total amount of the refunds made,
plus administrative costs, from the school.
  9. a. A student whose loan liability is exempted  pursuant  to  FORMER
section  six  hundred eighty-three of this chapter and is entitled to or
owed a refund shall transfer to the  higher  education  services  corpo-
ration  the  right  to  claim  the  refund owed and due from the tuition
reimbursement fund. In such event, the corporation shall be entitled  to
receive  a  refund  for that portion of the claim not paid to the corpo-
ration by the United States  Secretary  of  Education  pursuant  to  the
federal guaranteed loan program.
  b.  Any amounts remaining in the tuition reimbursement fund as of June
first, nineteen hundred ninety-three and  on  every  March  thirty-first
thereafter,  shall  be  made  available to the higher education services
corporation for payment of student loans on  which  collection  activity
has  ceased  pursuant  to  the  provisions  of subdivision six of FORMER
section six hundred eighty-three of this chapter. No  amounts  shall  be
paid  to  the  higher  education services corporation for loans on which
collection activity has ceased because of the operation of  section  437
of the Higher Education Act of 1965, as amended.
  10.  Management  of  the  tuition reimbursement account. a. As used in
this subdivision, net balance is defined as the actual cash  balance  of
the  account  as determined by the commissioner on June thirtieth, nine-
teen hundred ninety-three and every three  months  thereafter.  For  the
purpose  of calculating the net balance, the commissioner shall not take
into consideration any refunds made from the account pursuant  to  para-

S. 4268--C                         28

graphs  d  and  f of subdivision four of this section for the year imme-
diately preceding the date on which the calculation is made.
  b.  In  the  event  that  the account has accumulated a net balance in
excess of one million eight hundred thousand dollars,  the  commissioner
shall,  with the approval of the director of the budget, waive an amount
not to exceed the amount due for the next quarterly assessment  pursuant
to  this  section  and  subdivision nine of section five thousand one of
this article FOR SCHOOLS WHICH HAVE PAID SIXTEEN  QUARTERS  OR  MORE  OF
ASSESSMENTS ONLY. In such event, payment of future quarterly assessments
shall  be suspended FOR SCHOOLS WHICH HAVE PAID SIXTEEN QUARTERS OR MORE
OF ASSESSMENTS until the net balance of  the  account  falls  below  one
million three hundred thousand dollars.
  c. In the event the net balance of the account falls below one million
three  hundred  thousand  dollars,  if the quarterly assessment has been
suspended FOR SCHOOLS WHICH  HAVE  PAID  SIXTEEN  QUARTERS  OR  MORE  OF
ASSESSMENTS  pursuant  to  paragraph  b of this subdivision, it shall be
reinstated for the next quarterly assessment and all subsequent quarter-
ly assessments until the account has accumulated a net balance in excess
of one million eight hundred thousand dollars.
  d. Notwithstanding the provisions of paragraph b of this  subdivision,
in the event that the balance of the account is in excess of one million
three  hundred thousand dollars, all schools licensed after June thirti-
eth, nineteen hundred ninety-nine shall be  required  to  pay  into  the
account the equivalence of three years of annual assessments over a five
year period.
  e.  Notwithstanding  the provisions of paragraph b of this subdivision
all schools licensed after June thirtieth, nineteen hundred ninety-three
and before July first, nineteen hundred ninety-nine will be required  to
pay  into  the  account the equivalence of three years of annual assess-
ments within four years of the effective date of  this  paragraph.  This
amount  to be assessed shall be determined based upon the school's gross
tuition in its first three years of licensure.
  g. In the event that the balance of the tuition reimbursement  account
is  equal  to  or in excess of [one] TWO million [five hundred thousand]
dollars, the  amounts  assessed  the  schools  in  accordance  with  the
provisions  of paragraphs d and e of this subdivision shall be deposited
directly to the proprietary vocational school supervision account.
  H. THE COMMISSIONER MAY ANNUALLY APPORTION FROM THE ACCOUNT AN  AMOUNT
UP TO TWO HUNDRED THOUSAND DOLLARS FOR THE PURPOSE OF SECURING, SCANNING
AND  OTHERWISE  MAKING  STUDENT RECORDS FROM CLOSED SCHOOLS AVAILABLE TO
STUDENTS WHO ATTENDED SUCH SCHOOLS.  PROVIDED, HOWEVER, THAT IN NO  CASE
SHALL SUCH APPORTIONMENT CAUSE THE ACCOUNT TO FALL BELOW THE BALANCE SET
FORTH  IN  PARAGRAPH C OF THIS SUBDIVISION, NOR SHALL SUCH APPORTIONMENT
CAUSE SCHOOLS WHOSE QUARTERLY ASSESSMENTS HAVE  BEEN  SUSPENDED  TO  PAY
ADDITIONAL QUARTERLY ASSESSMENTS.
  11.  Fund audit. The state comptroller shall [annually] audit or cause
to be audited the tuition reimbursement fund ONCE EVERY  TWO  YEARS  and
produce  an  [annual] AUDITED financial statement according to generally
accepted accounting principles.
  12. New schools. Within the first [six  months]  YEAR  that  a  school
begins  LICENSED operation, the commissioner shall assess such school an
amount to be deposited into the fund in an amount to  be  determined  by
the commissioner.
  S  9.    Section 5008 of the education law, as added by chapter 887 of
the laws of 1990, is amended to read as follows:

S. 4268--C                         29

  S 5008. Trust accounts.   1. If the  commissioner  determines  that  a
school has demonstrated a pattern or practice of failing to make tuition
refunds  in  a  timely  manner  consistent  with this article AND/OR THE
SCHOOL'S FINANCIAL CONDITION MAY RESULT IN THE INTERRUPTION OR CESSATION
OF  INSTRUCTION  OR  JEOPARDIZE  STUDENT TUITION FUNDS, the commissioner
shall require a school to establish a trust account in a form or  manner
which  the commissioner[, after consultation with the advisory council,]
shall [prescribe in regulations] DETERMINE TO BE APPROPRIATE. The assets
or funds contained in the trust account shall be maintained for the sole
and exclusive benefit of the students.
  2. In making this determination, the commissioner shall  consider  the
following  factors:  the  number  of refunds not paid by the school in a
timely manner; the number of claims made to, or  paid  by,  the  tuition
reimbursement  [fund]  ACCOUNT;  [and]  a  pattern  of  misconduct which
substantially affects the financial interests of students or the  state,
POTENTIAL LIABILITY TO THE TUITION REIMBURSEMENT ACCOUNT, CURRENT ASSETS
AS  OPPOSED  TO  CURRENT  LIABILITIES, AND SUCH OTHER MEASURES AS MAY BE
APPROPRIATE.
  S 10. Section 5009 of the education law, as amended by chapter 434  of
the laws of 1999, is amended to read as follows:
  S 5009. Duties  of  the commissioner.  In addition to all other duties
assigned in this article, the duties of the commissioner shall  include,
but not be limited to:
  [(a)  submitting  a report to the governor, the temporary president of
the senate, the speaker of the assembly,  the  minority  leader  of  the
senate  and  the minority leader of the assembly beginning the fifteenth
day of January after this section shall have become effective, and annu-
ally thereafter on that date, on the implementation and  enforcement  of
this  article,  which shall include but not be limited to (i) curriculum
approval and reapproval standards, (ii) student  complaints,  (iii)  the
resolution  of  disciplinary  actions brought by the department or other
appropriate state agency, (iv) the audited financial statements  submit-
ted  by  the  schools,  (v) tuition reimbursement account activity, (vi)
data regarding retention and completion rates for students  enrolled  in
nondegree,  appropriate  degree  or certificate programs of two years or
less at registered business schools, licensed private schools,  proprie-
tary  degree-granting schools and independent and public colleges, (vii)
the extent to which the department has met  the  timelines  mandated  by
this  article,  (viii)  entrance  standards,  (ix) the number of schools
inspected annually, and (x) the number of trust accounts imposed.
  (b)] 1. ensuring that up-to-date, accurate information is available to
the public, via the internet  and  other  appropriate  media,  regarding
every  duly licensed proprietary school in this state, as well as disci-
plinary actions decided by the state.
  [(c)] 2. developing and issuing  to  duly  licensed  [and  registered]
proprietary schools a symbol to indicate such status; provided that such
symbol  shall  be  developed and made available to such schools no later
than September thirtieth, nineteen hundred ninety-nine.
  [(d)] 3. administering a public information campaign aimed at increas-
ing awareness about the importance of attending licensed [or registered]
proprietary vocational schools. Such campaign shall be targeted to popu-
lations at risk of enrolling in unlicensed  [or  unregistered]  schools,
and shall be conducted using means including, but not limited to, public
service  announcements  on  commercial  radio  and  television stations,
public access television, and print media.

S. 4268--C                         30

  [(e)] 4. providing for the orderly maintenance of any student  records
which may be transferred to the department pursuant to any school's plan
developed  pursuant to subdivision eight of section five thousand one of
this article; including responding to student requests  for  transcripts
and  records within twenty days of receiving a request. The commissioner
is hereby authorized to impose an appropriate fee for  such  transcripts
pursuant to a schedule approved by the director of the budget.
  S  11.  Section  5010 of the education law, as added by chapter 887 of
the laws of 1990, subdivision 1 as amended by section 23 of  part  A  of
chapter 62 of the laws of 2011, subdivision 4 as added by chapter 604 of
the  laws of 1993, and subdivision 5 as added by chapter 434 of the laws
of 1999, is amended to read as follows:
  S 5010. Advisory council. 1. An advisory council for [registered busi-
ness and] licensed [trade] PRIVATE CAREER schools is hereby created  for
the  purpose  of  advising  the board of regents and the commissioner as
provided herein.  The  council  shall  be  composed  of  eleven  members
appointed  by the governor, two of whom shall be upon the recommendation
of the temporary president of the senate, two of whom shall be upon  the
recommendation of the speaker of the assembly, one of whom shall be upon
the  recommendation of the minority leader of the senate and one of whom
shall be upon the recommendation of the minority leader of the assembly.
Of the five remaining members, one shall be an owner or  director  of  a
school  regulated  pursuant  to  this article, [one shall be a currently
enrolled student at the time of appointment or  a  graduate  of  such  a
school who graduated within three years of appointment] and one shall be
a student advocate. The governor shall designate a chairperson from such
members.    The commissioner [of education], the president of the higher
education services corporation, the secretary of state, the comptroller,
the director of the division of the budget, and the  executive  director
of the job training partnership council, or their designees, shall serve
as ex-officio, non-voting members of the council.
  2.  The  council shall meet no less than four times a year. Members of
the council shall receive no compensation for their services  but  shall
be  reimbursed for reasonable expenses actually and necessarily incurred
by them in the performance of their  duties.  COUNCIL  MEMBER  TERMS  OF
OFFICE  SHALL  BE  LIMITED  TO THREE YEARS, PROVIDED THAT MEMBERS MAY BE
REAPPOINTED. ALL APPOINTMENTS TO THE COUNCIL TO FILL VACANCIES IN EXIST-
ENCE ON THE EFFECTIVE DATE OF THE CHAPTER OF THE LAWS  OF  TWO  THOUSAND
TWELVE  WHICH  AMENDED THIS SUBDIVISION SHALL BE MADE WITHIN NINETY DAYS
OF SUCH EFFECTIVE DATE.
  3. The council shall advise the commissioner on [the  following]  SUCH
matters[:
  (a) trust accounts;
  (b) performance standards;
  (c)  the  effectiveness  and  utilization of the tuition reimbursement
fund;
  (d) the efficacy of instituting a fee-for-service system;
  (e) the effectivesness of the timelines mandated by this article;
  (f) the impact of assessments on schools;
  (g) recruitment bonuses; and
  (h) such other matters] as the council determines are appropriate.
  [4. The proprietary school advisory  council  shall  conduct  a  study
concerning  the  methodologies  used  to determine student refunds. Such
study shall include, but not be limited to, refund policies  promulgated
pursuant  to  federal statute or regulation, state statute or regulation
and the policies of national accrediting organizations as they relate to

S. 4268--C                         31

term-based and clock hour-based programs. Not  later  than  July  first,
nineteen  hundred ninety-four, the advisory council shall make recommen-
dations to the commissioner and the board of regents for any changes  in
legislation,  regulations,  policy  or  practice  needed  to improve and
simplify the student refund process. The  commissioner  shall  submit  a
report  of the findings of the advisory council together with the recom-
mendations of the department to the legislature  and  the  governor  not
later than the first day of October, nineteen hundred ninety-four.
  5.  The  advisory  council shall report to the governor, the temporary
president of the senate, the speaker of the assembly,  and  the  commis-
sioner  on  the  status of unlicensed proprietary schools in this state.
The report shall also contain a statement on the  effectiveness  of  the
change  in the tuition reimbursement fund and any recommendations for an
extension of the changes or the consideration of different changes  when
such  changes  are  repealed.  Such  report  is to be delivered on April
first, two thousand two.]
  S 12. This act shall take effect on  the  one  hundred  twentieth  day
after  it  shall have become a law; provided, however, that subparagraph
(iv) of paragraph b of subdivision 4 of section 5001  of  the  education
law,  as  added by section three of this act, shall expire and be deemed
repealed three years after such effective date; and  provided,  further,
that paragraph g of subdivision 10 of section 5007 of the education law,
as  amended  by section eight of this act shall not affect the repeal of
such paragraph and shall be deemed  repealed  therewith;  and  provided,
further,  that  effective  immediately, the commissioner of education is
authorized and directed to promulgate any regulations needed  to  imple-
ment the provisions of this act on such effective date.

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