NY State Senate Bill 2009-S1042

Senate Bill S1042

2009-2010 Legislative Session

Authorizes on-site inspections of degree granting proprietary institutions by the commissioner of education for compliance with applicable laws and regulations

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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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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to higher education
Jan 22, 2009	referred to higher education

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2009-S1042 (ACTIVE) - Details

Current Committee:: Senate Higher Education
Law Section:: Education Law
Laws Affected:: Add §6456, Ed L; add §97-ii, St Fin L
Versions Introduced in 2011-2012 Legislative Session:: S1810

2009-S1042 (ACTIVE) - Summary

Authorizes on-site inspections of degree granting proprietary institutions by the commissioner of education for compliance with applicable laws and regulations; establishes an advisory council for degree-granting proprietary institutions.

2009-S1042 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S1042

 TITLE OF BILL :

An act to amend the education law, in relation to authorizing on-site
inspections at degree-granting proprietary institutions and
establishing an advisory council for degree-granting proprietary
institutions; and to amend the state finance law, in relation to
creating the degree-granting proprietary institution supervision
account


 PURPOSE :

This bill authorizes the collection of fees and fines from degree
granting, for-profit proprietary institutions that are found to be in
violation of state law or commissioner regulations. The bill also
requires the department to perform a risk analysis process and to
perform at least one site visit within one year of any institution
coming under new management, the costs of which shall be paid for by
the institution. This legislation also creates an advisory council.

 SUMMARY OF PROVISIONS :

This bill adds a new section 6456 to the education law to require the
commissioner to conduct risk analysis; inspection and oversight review

of proprietary schools to insure that they are complying with all
state laws and regulations and to charge fees in support of these
requirements and to impose fines when violations occur.

The amendment reflects an addition of an advisory council which will
advise the Board of Regents and the commissioner on various issues.

Section 2 of the bill defines degree granting proprietary institutions
of higher education.

Section 3. The commissioner shall employ a risk analysis in
determining the need for on-site inspections and reviews of
degree-granting proprietary institutions. The risk analysis shall
assess the risk that the institution is out of compliance with law
and/or operating in an educationally unsound manner through analysis
of the following data: information on student complaints, state and
federal audits of an institution's student financial aid, percentage
of students in remedial/development classes, changes in enrollment
patterns the number of students enrolled at institution requires a
site visit based on the risk analysis, all costs related to such visit
shall be paid by the institution, including a fee to be paid to the
department. The commissioner shall establish in regulations a
reasonable fee to be charged for such a site visit based on the cost
of such visit to the state. The commissioner shall provide the
affected degree-granting proprietary institution reasonable prior
notice before the on-site visit.

Section 4. Authorizes the commissioner to impose a progressive fine on
proprietary institutions who fail to comply with all laws and
regulations. In addition, continued failure to comply after a third
site visit requires the commissioner to begin a process that can
result in the de-registration of the institution or specific programs
within the institution that no longer meet requirements.

Section 5. Authorizes the department to conduct unannounced visits and
to employ student operatives to test for institutional compliance with
the law. If violations are found during such unannounced visit, the
department may impose fines on the institution if the violations are
not corrected within a reasonable period of time.

Section 6. Establishes that the proprietary institution shall be
liable for a civil penalty of up to $1,000 for each violation and an
additional penalty of not more than $1,000 for each day during which
the violation continues after the department has provided written
notification and the institution has had an opportunity to be heard by
the department or in a court of competent jurisdiction. It also
provides that the institution, through a similar process, will be
legally enjoined from continuing such practices that are found to be
in violation.

Section 7. Authorizes the commissioner to implement regulations
necessary to implement the provisions of this bill.

A new section 97(ii) establishes, in the joint custody of the state
comptroller and the Commissioner of tax and finance, an account to be
known as the degree-granting proprietary institution account. This
account will be used by the State Education Department for all
expenses related to the supervision and oversight of for-profit degree
granting proprietary schools.

Finally, the bill requires the department to visit, within one year of
acquisition, any proprietary institution that has been purchased or
whose ownership has been transferred to a new entity.  Such costs
associated with such visit shall be paid for by the new entity as well
as any subsequent visits necessary to ensure that the new entity is in
compliance with all state laws and regulations.

 JUSTIFICATION :

Over the last several decades our state has continued to make
substantial investments in the education of young adults seeking the
skills necessary to be successful in our increasingly competitive and
technologically based society. One important and very effective means
to achieve that goal is fulfilled by proprietary institutions,
authorized to offer educational course and college degrees in New York
by the Regents. They provide focused practical education and training
to thousands of students who are otherwise not able to access
traditional higher education institutions. These proprietary
institutions have a.long and successful record of accomplishment in
serving individuals who have had earlier educational training and who
have limited economic resources.

However, it is extremely important to the state and in the public's
interest to ensure that when these individuals enroll in a program
offered by for-profit schools, that they have the ability to benefit
from the education offered and equally important, that the institution
have the ability and resources to provide the education they claim is
available to these students.

The provisions of the legislation provide the state education
department with the means necessary to ensure that both of these
factors, the student's ability to benefit and the college's ability to
offer services, are being achieved to the standards established by the
state education department.

This bill avoids placing additional financial burdens on those
institutions that have been and continue to invest in their
facilities, maintain performance standards and comply with state laws
and regulations. Alternatively, for these schools who refuse to comply
or fail to make the necessary investments, this bill allows for
significant fees and fines to be imposed, and also requires the
eventual de-registration of programs and the school itself, in order
to ensure that students and the public are protected from unauthorized
or illegal actions.

 LEGISLATIVE HISTORY :
S.5421, 2007-08; S.8129-A, 2005-06.

 FISCAL IMPLICATIONS :

None.

 LOCAL FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
Immediately.

2009-S1042 (ACTIVE) - Bill Text download pdf

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

                                  1042

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            January 22, 2009
                               ___________

Introduced  by  Sens. LAVALLE, PARKER, SAMPSON, VOLKER -- 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 authorizing on-site
  inspections at degree-granting proprietary institutions and establish-
  ing an advisory council for degree-granting proprietary  institutions;
  and  to  amend  the  state  finance  law,  in relation to creating the
  degree-granting proprietary institution supervision account

  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 6456
to read as follows:
  S 6456. ON-SITE  INSPECTIONS  AT  DEGREE-GRANTING  PROPRIETARY  INSTI-
TUTIONS.  1. THE COMMISSIONER SHALL CONDUCT INSPECTIONS AND EXAMINATIONS
OF DEGREE-GRANTING PROPRIETARY INSTITUTIONS PURSUANT TO  THE  PROVISIONS
OF THIS SECTION.
  2.  AS  USED  IN  THIS  SECTION, THE TERM "DEGREE-GRANTING PROPRIETARY
INSTITUTION" MEANS AN INSTITUTION THAT HAS BEEN AUTHORIZED BY THE  BOARD
OF  REGENTS  TO  ISSUE A COLLEGE DEGREE IN NEW YORK AND IS OPERATED ON A
FOR PROFIT BASIS.
  3. THE COMMISSIONER SHALL EMPLOY A RISK ANALYSIS  IN  DETERMINING  THE
NEED  FOR ON-SITE INSPECTIONS AND REVIEWS OF DEGREE-GRANTING PROPRIETARY
INSTITUTIONS. THE RISK ANALYSIS SHALL ASSESS THE RISK THAT THE  INSTITU-
TION  IS OUT OF COMPLIANCE WITH LAW AND/OR OPERATING IN AN EDUCATIONALLY
UNSOUND MANNER THROUGH ANALYSIS OF THE FOLLOWING DATA:   INFORMATION  ON
STUDENT COMPLAINTS, STATE AND FEDERAL AUDITS OF AN INSTITUTION'S STUDENT
FINANCIAL  AID,  PERCENTAGE OF STUDENTS IN REMEDIAL/DEVELOPMENT CLASSES,
CHANGES IN ENROLLMENT PATTERNS, THE NUMBER OF STUDENTS ENROLLED  AT  THE
INSTITUTION  WHO ARE ABLE TO BENEFIT FROM THE INSTRUCTION OFFERED BY THE
INSTITUTION, DATA ON PERSISTENCE AND GRADUATION  RATES,  AND  ANY  OTHER
DATA  BEARING  ON  THE SCHOOL'S PERFORMANCE AS DETERMINED BY THE COMMIS-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD05390-01-9

S. 1042                             2

SIONER. IF THE DEPARTMENT DETERMINES THAT A DEGREE-GRANTING  PROPRIETARY
INSTITUTION  REQUIRES A SITE VISIT BASED ON THE RISK ANALYSIS, ALL COSTS
RELATED TO SUCH VISIT SHALL BE PAID BY THE INSTITUTION, TO  THE  DEPART-
MENT.   THE COMMISSIONER SHALL ESTABLISH IN REGULATIONS A REASONABLE FEE
TO BE CHARGED FOR SUCH A SITE VISIT BASED ON THE COST OF SUCH  VISIT  TO
THE  STATE.  THE COMMISSIONER SHALL PROVIDE THE AFFECTED DEGREE-GRANTING
PROPRIETARY INSTITUTION  REASONABLE  PRIOR  NOTICE  BEFORE  THE  ON-SITE
VISIT.
  4.  A.  IF  THE  DEPARTMENT  DETERMINES  THAT MULTIPLE SITE VISITS ARE
NECESSARY, THE DEPARTMENT SHALL IMPOSE, IN ACCORDANCE  WITH  REGULATIONS
OF  THE COMMISSIONER, A PROGRESSIVE FEE TO ENSURE THAT INSTITUTIONS THAT
ARE OUT OF COMPLIANCE WITH THIS  CHAPTER  OR  THE  COMMISSIONER'S  REGU-
LATIONS  FOR  EXTENDED  PERIODS  ARE ASSESSED THE ADDITIONAL COST TO THE
STATE FOR THE OVERSIGHT OF SUCH INSTITUTIONS.
  B. IF THREE SITE VISITS OCCUR  WITHIN  A  THREE-YEAR  PERIOD  AND  THE
INSTITUTION  HAS  FAILED  TO  COME  INTO SUBSTANTIAL COMPLIANCE WITH THE
APPLICABLE PROVISIONS OF THIS CHAPTER AND THE COMMISSIONER'S REGULATIONS
BY THE THIRD SITE VISIT, THE COMMISSIONER SHALL TAKE APPROPRIATE  ACTION
TO DE-REGISTER ALL OF THE INSTITUTION'S REGISTERED PROGRAMS THAT ARE OUT
OF  COMPLIANCE  WITH LAW OR REGULATIONS AND MAY, IN HIS DISCRETION, TAKE
ACTION TO DE-REGISTER ALL OF THE INSTITUTION'S  PROGRAMS.  IN  ADDITION,
WHEN  THE  COMMISSIONER BEGINS A PROCESS TO DE-REGISTER SUCH PROGRAMS OR
INSTITUTIONS, HE OR SHE SHALL NOTIFY THE PRESIDENT OF THE HIGHER  EDUCA-
TION  SERVICES  CORPORATION  IN  WRITING  OF  THIS ACTION AND THE HIGHER
EDUCATION SERVICES CORPORATION SHALL NO LONGER AUTHORIZE  FINANCIAL  AID
TO PAY FOR NEW STUDENTS ADMITTED TO THE INSTITUTIONS.
  5.  NOTWITHSTANDING  THE  PROVISIONS OF SUBDIVISIONS THREE AND FOUR OF
THIS SECTION, THE DEPARTMENT MAY CONDUCT UNANNOUNCED  VISITS  OR  EMPLOY
STUDENT  OPERATIVES TO TEST FOR COMPLIANCE WITH APPLICABLE PROVISIONS OF
THIS CHAPTER AND THE COMMISSIONER'S REGULATIONS. THERE SHALL BE  NO  FEE
CHARGED  FOR  SUCH  UNANNOUNCED  VISITS  UNLESS  SUCH  UNANNOUNCED VISIT
RESULTS IN FINDINGS THAT THE  INSTITUTION  IS  OUT  OF  COMPLIANCE  WITH
PREVIOUSLY IDENTIFIED VIOLATIONS.
  6. A. ANY DEGREE-GRANTING PROPRIETARY INSTITUTION THAT VIOLATES ANY OF
THE  PROVISIONS  OF THIS CHAPTER OR THE COMMISSIONER'S REGULATIONS SHALL
BE LIABLE FOR A CIVIL PENALTY NOT TO EXCEED  ONE  THOUSAND  DOLLARS  FOR
EACH SUCH VIOLATION AND AN ADDITIONAL PENALTY OF NOT MORE THAN ONE THOU-
SAND  DOLLARS  FOR  EACH DAY DURING WHICH SUCH VIOLATION CONTINUES AFTER
WRITTEN NOTICE BY THE DEPARTMENT TO BE PAID AFTER AN OPPORTUNITY  TO  BE
HEARD  BY THE DEPARTMENT OR BY A COURT OF COMPETENT JURISDICTION AND, IN
ADDITION, SUCH INSTITUTION MAY  BY  SIMILAR  PROCESS  BE  ENJOINED  FROM
CONTINUING SUCH VIOLATION OR VIOLATIONS. IN ADDITION, SUCH VIOLATIONS OF
THE  INSTITUTION  WHICH CONSTITUTE A CRIME SHALL RESULT IN A FINE EQUIV-
ALENT TO ALL MONEY RECEIVED FROM SUCH CRIME.
  B. THE PENALTY PROVIDED FOR IN PARAGRAPH A OF THIS SUBDIVISION MAY  BE
RECOVERABLE IN AN ACTION BROUGHT BY THE ATTORNEY GENERAL.
  C.  ANY  FINES  COLLECTED  FOR VIOLATIONS OF THIS CHAPTER OR THE REGU-
LATIONS OF THE COMMISSIONER SHALL BE DEPOSITED  IN  THE  DEGREE-GRANTING
PROPRIETARY  INSTITUTION  SUPERVISION  ACCOUNT,  IN  ACCORDANCE WITH THE
PROVISIONS OF SECTION NINETY-SEVEN-II OF THE STATE FINANCE LAW.
  7. IN THE EVENT THAT  A  DEGREE-GRANTING  PROPRIETARY  INSTITUTION  OF
HIGHER  EDUCATION  IS  PURCHASED OR IN ANY OTHER WAY OWNERSHIP IS TRANS-
FERRED, SUCH NEW ENTITY SHALL BE ON A ONE-YEAR PROBATIONARY PERIOD.  THE
DEPARTMENT  SHALL,  WITHIN  THIS  FIRST  YEAR, MAKE AT LEAST ONE ON-SITE
VISIT, DURING WHICH THEY SHALL AUDIT FINANCIAL STATEMENTS AND ALL  OTHER
DOCUMENTS AS NECESSARY TO ENSURE THAT THE INSTITUTION IS MAINTAINING AND

S. 1042                             3

IS  CAPABLE OF SUSTAINING ALL ACADEMIC PROGRAMS AND STANDARDS CONSISTENT
WITH THIS CHAPTER AND THE  COMMISSIONER'S  REGULATIONS.  THE  DEPARTMENT
SHALL ESTABLISH A FEE FOR SUCH ON-SITE VISITS AND ANY SUBSEQUENT VISITS,
OR  OTHER  DEPARTMENTAL ACTIVITY RELATED TO THE ORIGINAL SITE VISIT THAT
IS NECESSARY TO ENSURE THAT SUCH INSTITUTIONS ARE PROVIDING  ALL  EDUCA-
TIONAL  AND  DEVELOPMENTAL  SERVICES AS REQUIRED BY THIS CHAPTER AND THE
COMMISSIONER'S REGULATIONS. A FAILURE TO PAY SUCH FEES SHALL BE  GROUNDS
FOR THE COMMISSIONER TO DE-REGISTER SUCH INSTITUTIONS.
  8. A. AN ADVISORY COUNCIL FOR DEGREE-GRANTING PROPRIETARY INSTITUTIONS
IS  HEREBY  CREATED FOR THE PURPOSE OF ADVISING THE BOARD OF REGENTS AND
THE COMMISSIONER ON LEGISLATION, REGULATIONS, POLICY OR PRACTICES  WHICH
THE COUNCIL DETERMINES ARE APPROPRIATE.
  B.  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 RECOMMENDA-
TION OF THE MINORITY LEADER OF THE SENATE AND ONE OF WHOM SHALL BE  UPON
THE  RECOMMENDATION  OF  THE  MINORITY LEADER OF THE ASSEMBLY.   MEMBERS
SHALL SERVE AT THE PLEASURE OF THE  GOVERNOR  AND  VACANCIES  IN  OFFICE
SHALL BE FILLED IN THE SAME MANNER AS THE ORIGINAL APPOINTMENT.
  C. 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,  THE  PRESIDENT  OF  THE  HIGHER  EDUCATION
SERVICES  CORPORATION,  THE  CHAIR OF THE CONSUMER PROTECTION BOARD, THE
COMPTROLLER, AND THE DIRECTOR OF THE DIVISION OF THE  BUDGET,  OR  THEIR
DESIGNEES, SHALL SERVE AS EX-OFFICIO, NON-VOTING MEMBERS OF THE COUNCIL.
  D.  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.
  9. THE COMMISSIONER SHALL BE AUTHORIZED TO PROMULGATE ANY  REGULATIONS
NECESSARY TO IMPLEMENT THE PROVISIONS OF THIS SECTION.
  S 2. The state finance law is amended by adding a new section 97-ii to
read as follows:
  S  97-II. DEGREE-GRANTING PROPRIETARY INSTITUTION SUPERVISION ACCOUNT.
1. THERE IS HEREBY ESTABLISHED IN THE JOINT CUSTODY OF THE  STATE  COMP-
TROLLER  AND  THE COMMISSIONER OF TAXATION AND FINANCE AN ACCOUNT OF THE
MISCELLANEOUS SPECIAL REVENUE FUND TO BE KNOWN  AS  THE  DEGREE-GRANTING
PROPRIETARY INSTITUTION SUPERVISION ACCOUNT.
  2. NOTWITHSTANDING ANY OTHER LAW, RULE OR REGULATIONS TO THE CONTRARY,
THE  STATE  COMPTROLLER IS HEREBY AUTHORIZED AND DIRECTED TO RECEIVE FOR
DEPOSIT TO THE CREDIT OF  THE  DEGREE-GRANTING  PROPRIETARY  INSTITUTION
SUPERVISION ACCOUNT ANY ASSESSMENTS OR FEES RECEIVED PURSUANT TO SECTION
SIXTY-FOUR  HUNDRED  FIFTY-SIX OF THE EDUCATION LAW AND ALL OTHER MONEYS
CREDITED OR TRANSFERRED TO SUCH ACCOUNT FROM ANY OTHER  FUND  OR  SOURCE
PURSUANT TO LAW.
  3.  MONIES OF THE ACCOUNT, FOLLOWING APPROPRIATION BY THE LEGISLATURE,
SHALL BE AVAILABLE TO THE EDUCATION DEPARTMENT AND MAY BE  EXPENDED  FOR
SERVICES   AND   EXPENSES   INCURRED   IN   SUPERVISING  AND  REGULATING
DEGREE-GRANTING PROPRIETARY INSTITUTIONS. MONIES SHALL BE  PAID  OUT  OF
SUCH ACCOUNT ON THE AUDIT AND WARRANT OF THE STATE COMPTROLLER.
  S 3. This act shall take effect immediately.

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Senate Bill S1042

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Sponsored By

Kenneth P. LaValle