Senate Bill S5800

2019-2020 Legislative Session

Relates to standards for for-profit higher education institutions

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Archive: Last Bill Status - In Senate Committee Higher Education Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to higher education
May 15, 2019	referred to higher education

co-Sponsors

2019-S5800 (ACTIVE) - Details

See Assembly Version of this Bill:: A7763
Current Committee:: Senate Higher Education
Law Section:: Education Law
Laws Affected:: Add §239-c, Ed L
Versions Introduced in Other Legislative Sessions:: 2021-2022: S776, A3295
2023-2024: S948

2019-S5800 (ACTIVE) - Summary

Requires for-profit higher education institutions to spend no less than fifty percent of such institution's annual revenues on expenditures in the areas of student instruction, academic support and advising, or career services.

2019-S5800 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S5800

SPONSOR: THOMAS
 
TITLE OF BILL:  An act to amend the education law, in relation to
standards for for-profit higher education institutions

 
PURPOSE OR GENERAL IDEA OF BILL:

Beginning in the 2019-2020 academic year, a for-profit school must spend
no less than 50% of school's annual revenue on student instruction,
academic support and advising and career services. If a school does not
meet this new requirement, they are not allowed to enroll new students
for at least two academic years following the year the school failed to
meet the 50% requirement. To be able to re-enroll students, the school
must show that they met the 50% requirement for two academic years
following the year in which they did not meet the 50% requirement.

 
SUMMARY OF PROVISIONS:

Section 1 amends the education law by adding a new section 239-c to:

- define terms

- require that all for-profit schools spend no less than 50% of their
revenues on student instruction, academic support and advising or career
services.

- make explicit that expenditures in the areas of student instruction,
academic support and advising or career services does not include
expenditures for marketing student recruitment or the expenses of staff
whose duties do not relate to student instruction, academic support and
advising, or career services

- describe a for-profit school's reporting requirement to the commis-
sioner to determine whether the school is meeting the guidelines estab-
lished by the section

- outline penalties for failure to meet the provisions of the section

- authorize the commissioner to promulgate emergency rules and regu-
lations necessary to implement the provisions of the section

Section 2 provides the effective date

 
JUSTIFICATION:

For-profit colleges depend on students spending their state-funded aid
packages at their institutions like non-profit and public schools but
unlike those schools, for-profits spend far less of their students'
tuition dollars on services on which students rely while charging far
more in tuition. Analysis of for-profit schools' financial statements
has shown that on average these institutions spend $0.41 for every $1 of
tuition revenue received. Nonprofit schools spent more than double that
in 2015.

If for-profit students' employment outcomes were significantly better
than students at their nonprofit and public counterparts, perhaps the
higher tuition and the choice to spend relatively little on instruction
would be acceptable. Data show the opposite is true.  Close to 40
percent of for-profit schools leave degree-holders with earnings below
those of an average worker with a high school diploma, according to a
2018 report.

Spending a comparably small sum on student instruction leaves for-pro-
fits plenty of revenue to pay executives' salaries and implement aggres-
sive recruitment and marketing campaigns to target prospective students,
many of whom would be the first in their families to attend college.
According to New York City's Department of Consumer Affairs, some for-
profits' recruiters have engaged in misrepresentation to deceive
students into enrolling in a program that does not meet their career
goals or turns out to be more expensive than what the student had
initially understood. As a result of these practices, many of these
students wind up with suffocating student debt and lackluster job pros-
pects.

This bill would bring for-profits in line with the best practices of
nonprofit and public institutions by requiring them to spend more of
their annual revenues on resources that their students need to succeed
such as high quality classroom instruction, academic support and advis-
ing, and career services.

 
PRIOR LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

To be determined.

 
EFFECTIVE DATE:
Immediately after becoming law.

2019-S5800 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5800
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 15, 2019
                                ___________
 
 Introduced  by  Sen.  THOMAS -- 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 standards for for-pro-
   fit higher education institutions
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1. The education law is amended by adding a new section 239-c
 to read as follows:
   § 239-C. STANDARDS FOR FOR-PROFIT HIGHER  EDUCATION  INSTITUTIONS.  1.
 FOR  THE  PURPOSES  OF  THIS  SECTION THE FOLLOWING TERMS SHALL HAVE THE
 FOLLOWING MEANINGS:
   (A) "FOR-PROFIT INSTITUTION OF HIGHER EDUCATION" MEANS A SCHOOL THAT:
   (I) PROVIDES A PROGRAM  LEADING  TO  AN  ASSOCIATES  OR  BACCALAUREATE
 DEGREE;
   (II)  IS  LEGALLY AUTHORIZED IN NEW YORK STATE TO PROVIDE A PROGRAM OF
 EDUCATION BEYOND SECONDARY EDUCATION; AND
   (III) IS NEITHER A PUBLIC OR NON-PROFIT INSTITUTION.
   (B) "STUDENT INSTRUCTION"  MEANS  EXPENDITURES  FOR  SALARIES,  FRINGE
 BENEFITS,  PROFESSIONAL DEVELOPMENT EXPENSES, AND OTHER PAYMENTS MADE TO
 INSTRUCTORS RELATED TO CLASSROOM INSTRUCTION.
   (C) "ACADEMIC SUPPORT AND ADVISING" MEANS EXPENDITURES RELATED TO  THE
 ADVISEMENT OF STUDENTS ON COURSE SELECTION OR OUT OF CLASSROOM TUTORING.
   (D)  "CAREER SERVICES" MEANS EXPENDITURES IN ASSISTING STUDENTS IN THE
 AREAS OF RESUME AND COVER LETTER WRITING,  INTERVIEWING  AND  STRATEGIES
 FOR GETTING A JOB.
   2.  (A)  COMMENCING  IN THE TWO THOUSAND NINETEEN--TWO THOUSAND TWENTY
 ACADEMIC YEAR AND THEREAFTER, A FOR-PROFIT INSTITUTION OF HIGHER  EDUCA-
 TION SHALL SPEND NO LESS THAN FIFTY PERCENT OF SUCH INSTITUTION'S ANNUAL
 REVENUES  ON  EXPENDITURES IN THE AREAS OF STUDENT INSTRUCTION, ACADEMIC
 SUPPORT AND ADVISING, OR CAREER SERVICES.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10823-01-9

 S. 5800                             2
 
   (B) EXPENDITURES MADE FOR IN THE AREAS OF STUDENT INSTRUCTION, ACADEM-
 IC SUPPORT AND ADVISING, OR CAREER SERVICES SHALL NOT  INCLUDE  EXPENDI-
 TURES  FOR STUDENT RECRUITMENT, MARKETING, DIRECT MAILING OR EXPENSES OF
 NON-INSTRUCTIONAL STAFF WHOSE PRIMARY DUTIES ARE  NOT  STUDENT  INSTRUC-
 TION, ACADEMIC SUPPORT AND ADVISING, OR CAREER SERVICES.
   (C)  A  FOR-PROFIT  INSTITUTION OF HIGHER EDUCATION THAT FAILS TO MEET
 THE REQUIREMENT OF PARAGRAPH (A) OF THIS SUBDIVISION SHALL BE INELIGIBLE
 TO ENROLL NEW STUDENTS PARTICIPATING IN  ANY  PROGRAM  AUTHORIZED  UNDER
 THIS  CHAPTER FOR A PERIOD OF NOT LESS THAN TWO ACADEMIC YEARS, COMMENC-
 ING WITH THE ACADEMIC YEAR IMMEDIATELY FOLLOWING THE YEAR IN  WHICH  THE
 INSTITUTION'S  FINANCIAL  STATEMENT  DEMONSTRATING  FAILURE  TO MEET THE
 REQUIREMENT FOR THE ACADEMIC  YEAR  IS  SUBMITTED  TO  THE  COMMISSIONER
 PURSUANT  TO SUBDIVISION THREE OF THIS SECTION. TO REGAIN ELIGIBILITY TO
 ENROLL NEW STUDENTS PARTICIPATING IN THE PROGRAMS AUTHORIZED UNDER  THIS
 CHAPTER,  A FOR-PROFIT INSTITUTION OF HIGHER EDUCATION SHALL DEMONSTRATE
 COMPLIANCE WITH PARAGRAPH (A) OF THIS SUBDIVISION FOR A MINIMUM  OF  TWO
 CONSECUTIVE ACADEMIC YEARS AFTER THE ACADEMIC YEAR IN WHICH THE INSTITU-
 TION BECAME INELIGIBLE.
   3.  ON  OR  BEFORE SEPTEMBER FIRST, A FOR-PROFIT INSTITUTION OF HIGHER
 EDUCATION SHALL ANNUALLY SUBMIT TO THE COMMISSIONER A DETAILED FINANCIAL
 STATEMENT DISCLOSING THE INSTITUTION'S REVENUES AND EXPENDITURES FOR THE
 PRIOR ACADEMIC YEAR AND SHALL DISCLOSE THE SOURCES OF REVENUE BY TYPE AS
 WELL AS TYPES OF EXPENDITURES. SUCH STATEMENT SHALL ALSO INCLUDE A LIST-
 ING OF THE TOTAL INDIVIDUAL COMPENSATION FROM  THE  INSTITUTION  TO  ALL
 OFFICERS,  DIRECTORS,  BOARD  MEMBERS,  TRUSTEES, SHAREHOLDERS, MEMBERS,
 OWNERS, AND SENIOR ADMINISTRATORS, INCLUDING ALL FRINGE BENEFITS, BONUS-
 ES, AND PERFORMANCE INCENTIVES PAID IN THE  PRIOR  ACADEMIC  YEAR.  SUCH
 STATEMENT  SHALL  ADHERE TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND
 SHALL BE CERTIFIED BY AN INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANT  AND
 CERTIFIED  BY  THE PRESIDENT OF THE INSTITUTION. SUCH STATEMENT SHALL BE
 SUBMITTED IN A FORM AND MANNER AS DETERMINED BY THE COMMISSIONER.
   4. THE COMMISSIONER IS AUTHORIZED TO PROMULGATE RULES AND REGULATIONS,
 AND MAY PROMULGATE EMERGENCY REGULATIONS, NECESSARY FOR THE  IMPLEMENTA-
 TION OF THE PROVISIONS OF THIS SECTION.
   § 2. This act shall take effect immediately.

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Senate Bill S5800

Sponsored By

Archive: Last Bill Status - In Senate Committee Higher Education Committee

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co-Sponsors

2019-S5800 (ACTIVE) - Details

2019-S5800 (ACTIVE) - Summary

2019-S5800 (ACTIVE) - Sponsor Memo

2019-S5800 (ACTIVE) - Bill Text download pdf

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Sponsored By

Kevin Thomas

Archive: Last Bill Status - In Senate Committee Higher Education Committee

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co-Sponsors

Robert Jackson

Kevin S. Parker

James Skoufis

2019-S5800 (ACTIVE) - Details

2019-S5800 (ACTIVE) - Summary

2019-S5800 (ACTIVE) - Sponsor Memo

2019-S5800 (ACTIVE) - Bill Text download pdf

Comments