Senate Bill No. 568
(By Senator Craigo and Plymale)
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[Originating in the Committee on Finance;
reported February 28, 1995.]
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A BILL to amend and reenact section five, article three, chapter
eighteen-b of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to requiring
correspondence, business, occupational and trade schools to
obtain a permit before offering courses to residents in this
state; exemptions; application and annual fees; inspection of
new applicants' facilities; surety bonds; renewal of permits;
refusal to issue or revocation of permits; annual reports;
adoption of rules; on-site visits; review of academic
standards; investigation of complaints; defining terms;
standards for private, proprietary educational institutions;
criminal penalties; and due process requirements.
Be it enacted by the Legislature of West Virginia:
That section five, article three, chapter eighteen-b of the code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 3. BOARD OF DIRECTORS OF THE STATE COLLEGE SYSTEM.
§18B-3-5. Permits required for correspondence, business,
occupational and trade schools; surety bonds and fees;
issuance, renewal and revocation of permit; reports; rules;
penalty and enforcement.
(a) It is unlawful for any person representing a
correspondence, business, occupational or trade school inside or
outside this state, as those schools are defined by the board of
directors by rule promulgated in accordance with article three-a,
chapter twenty-nine-a of this code, to solicit, sell or offer to
sell courses of instruction to any resident of this state for
consideration or remuneration unless the school first applies for
a permit, or obtains a permit, from the West Virginia board of
directors in the manner and on the terms prescribed in this
section.
All private training or educational institutions, schools or
academies or other organizations shall apply for a permit from the
board of directors of the state college system on forms provided by
the board. This section does not apply to private organizations
that offer only tax return preparation courses. Each initial
application shall be accompanied by a nonrefundable fee of one thousand dollars. The board may also assess an additional fee
based on any additional expense required to evaluate the
application. The board shall make a determination on the initial
permit application within ninety days after receipt of the
application and fee. An applicant for an initial permit shall show
proof at the time of filing an application that adequate facilities
are available and ready for occupancy and that all instructional
equipment, books and supplies and personnel are in place and ready
for operation. A representative of the board shall make an on-site
visit to all new applicants' facilities to confirm its readiness
for operation prior to issuance of the initial permit if the
facilities are located in West Virginia.
A school is considered to be established under the provisions
of this article on the date it first begins to lawfully operate.
An established school is not required to reapply for a permit as a
result of changes in governance, administration, ownership or form
of operation. After the first permit year an annual fee of five
hundred dollars is imposed on each school for each campus it
operates in this state.
(b) Each application shall be accompanied by a surety bond in
the penal sum of fifteen thousand dollars for any school which has
its physical facilities located in this state and which has operated in this state for at least ten years: Provided, That if
the school has changed ownership within the last ten years by
transfer of ownership control to a person who is a spouse, parent,
sibling, child or grandchild of the previous owner, the surety bond
shall continue in the penal sum of fifteen thousand dollars:
Provided, however, That any school which has operated in West
Virginia for less than ten years, including those schools which
have changed ownership within the last ten years except those
schools described in this subsection who have transferred ownership
control to a spouse, parent, sibling, child or grandchild of the
previous owner within the last ten years and any school located in
another state which applies for a permit under this section, shall
provide a surety bond of twenty thousand dollars: Provided
further, That any school may be required to increase its bond to
one hundred fifty thousand dollars if its accreditation is
terminated for cause or if the school's institutional eligibility
under the higher education act of 1965, as amended, has been
terminated for cause: And provided further, That expiration,
nonrenewal or voluntary relinquishment of accreditation or
institutional eligibility under said act, or failure to meet the
requirements of one or more programs under said act, shall not be
considered a termination for cause.
In addition, any school may be required to increase its bond
to an amount not to exceed four hundred thousand dollars if, in
accordance with the standards of the American institute of
certified public accountants, the school's audited financial
statements are qualified because the school's continued financial
viability as an ongoing concern is in doubt and the board of
directors determines an increased bond is reasonably necessary to
protect the financial obligations legally due the students then
enrolled at the institution. A school may be required to maintain
the increased bonding requirements described in this subsection
until all students attending classes at the date of termination
either graduate or withdraw. The bond may be continuous and shall
be conditioned to provide indemnification to any student suffering
loss as a result of any fraud or misrepresentation used in
procuring the student's enrollment; failure of the school to meet
contractual obligations; or failure of the school to meet the
requirements of this section. The bond shall be given by the
school itself as a blanket bond covering all of its
representatives. The surety on the bond may cancel the bond upon
giving thirty days' notice in writing to the principal on the bond
and to the state board of directors and thereafter shall be
relieved of liability for any breach of condition occurring after
the effective date of the cancellation.
(c) A permit is valid for one year corresponding to the
effective date of the bond and, upon application, accompanied by
the required fee and the surety bond as required in this
subsection, may be renewed. All fees collected for the issuance or
renewal of the permit shall be deposited in the state treasury to
the credit of the board of directors.
The board may refuse to issue a permit to any school if the
board finds that the school engages in practices which are
inconsistent with this section or with rules issued pursuant to
this section. A permit issued under this section, upon fifteen
days' notice and after a hearing, if a hearing is requested by the
school, may be suspended or revoked by the board of directors for
fraud or misrepresentation in soliciting or enrolling students, for
failure of the school to fulfill its contract with one or more
students who are residents of West Virginia, or for violation of or
failure to comply with any provision of this section or with any
rule of the state board of directors pertinent to this section.
Prior to the board taking any adverse action, including refusal,
suspension or revocation of a permit, the school shall be given
reasonable opportunity to take corrective measures. Any refusal,
suspension or revocation of a permit, or any other adverse action
against a school, shall comply with all constitutional provisions,
including due process, relating to the protection of property rights.
(d) All correspondence, business, occupational or trade
schools which have been issued a permit shall make annual reports
to the board of directors on forms furnished by the board and shall
provide such appropriate information as the board reasonably may
require. Each correspondence, business, occupational or trade
school which has been issued a permit shall furnish to the board of
directors a list of its official representatives. Each school
shall be issued a certificate of identification by the board of
directors for each of its official representatives.
(e) The issuance of a permit pursuant to this section does not
constitute approval or accreditation of any course or school. No
school nor any representative of a school shall make any
representation stating, asserting or implying that a permit issued
pursuant to this section constitutes approval or accreditation by
the state of West Virginia, the state board of directors or any
other department or agency of the state.
The board of directors is hereby authorized to adopt rules and
conduct on-site reviews to evaluate academic standards maintained
by schools for the awarding of certificates, diplomas and
specialized associate degrees, which standards may include
curriculum, personnel, facilities, materials and equipment: Provided, That in the case of accredited correspondence, business,
occupational and trade schools under permit on the first day of
July, one thousand nine hundred seventy-nine, having their physical
facilities located in this state, and which are accredited by the
appropriate nationally recognized accrediting agency or association
approved by the United States department of education, the
accrediting agency's standards, procedures and criteria shall be
accepted as meeting applicable laws, standards and rules of the
board of directors: Provided, however, That institutions, which
are institutionally accredited by accrediting agencies that are
recognized by the United States department of education to
establish academic standards for postsecondary education, may offer
postsecondary educational programs leading to (and upon successful
completion of the programs award graduates) certificates, diplomas
and associate degrees in accordance with the academic standards
required by the accrediting agency. If a review undertaken by the
board indicates there may be deficiencies in the academic standards
the institution maintains in its educational programs, that are of
such a material nature as to jeopardize continued accreditation,
the board shall notify the institution. If the board and the
institution are unable to agree on the deficiencies or the steps
necessary to correct the deficiencies, the board shall consult with the institution's accrediting agency regarding an academically
appropriate resolution, which resolution may include a joint on-
site review by the board and the accrediting agency. The board may
also review the academic standards of unaccredited institutions and
may require the institutions to maintain recognized academic
standards that are reasonably appropriate to the nature of the
institution and the training offered. The board of directors may
authorize an investigation of written student complaints alleging
a violation of this section, board rules, or accreditation
standards and may take appropriate action based on the findings of
the investigation. All evaluations or investigations of
correspondence, business, occupational and trade schools, and
actions resulting from the evaluations or investigations, shall be
made in accordance with rules promulgated by the board of directors
pursuant to article three-a, chapter twenty-nine-a of this code.
For the purposes of this section, "proprietary schools that
award specialized associate degrees" are defined as institutions of
higher education, and "specialized associate degrees" means degrees
awarded by the institutions pursuant to a program of not less than
two academic years: Provided, That nothing in this section shall
be construed to qualify these proprietary schools for additional
state moneys not otherwise qualified for under other provisions of this code.
(f) In regard to private, proprietary educational institutions
operating under this section, accredited by a national or regional
accrediting agency or association recognized by the United States
department of education and which provide training at a campus
located in this state:
(1) Any rule or standard which is authorized by this or any
section of this code or other law and which is now in effect or
promulgated hereafter by the board of directors (or other agency
with jurisdiction) shall be clearly, specifically and expressly
authorized by narrowly construed enabling law and shall be
unenforceable and without legal effect unless authorized by an act
of the Legislature under the provisions of article three-a, chapter
twenty-nine-a of this code.
(2) Notwithstanding any other provision of this section or
other law to the contrary, the institution's accrediting agency
standards, procedures and criteria shall be accepted as the
standards and rules of the board of directors (or other agency with
jurisdiction) and as meeting other law or legal requirements
relating to the operation of proprietary institutions which the
board or other agency has the legal authority to enforce under any
section of this code or other law: Provided, That nothing in this section shall be construed to deny students the use of remedies
that would otherwise be available under state or federal consumer
laws or federal law relating to federal college financial
assistance programs.
(3) Accredited institutions operating under this section are
hereby recognized as postsecondary. Academic progress shall be
measured and reported in credit hours and all reports and documents
shall be filed on a credit hour basis unless the institution
notifies the board that it utilizes clock hours as its unit of
measurement.
(g) A representative of any school who solicits, sells or
offers to sell courses of instruction to any resident of this state
for consideration or remuneration unless the school first applies
for a permit, or obtains a permit, is guilty of a misdemeanor, and,
upon conviction thereof, shall be fined not more that two hundred
dollars per day per violation, or imprisoned in the county jail not
more than sixty days, or both fined and imprisoned. No
correspondence, business, occupational or trade school shall
maintain an action in any court of this state to recover for
services rendered pursuant to a contract solicited by the school if
the school did not hold a valid permit at the time the contract was
signed by any of the parties to the contract. The attorney general
or any county prosecuting attorney, at the request of the board of directors or upon his or her own motion, may bring any appropriate
action or proceeding in any court of competent jurisdiction for the
enforcement of the provisions of this section relating to permits,
bonds and sureties.
(h) In regard to institutions operating under this section,
all substantive standards and procedural requirements established
by the board of directors (or the West Virginia state program
review entity or other agency with jurisdiction over institutions
operating under this section) shall meet all substantive and
procedural standards of due process relating to the protection of
an individual citizen's property rights as provided for under the
constitution of the United States, and shall follow the substantive
standards and procedural requirements established by or under
authority of this section.