COMMITTEE SUBSTITUTE

FOR

H. B. 2697


(By Delegates Williams, Ennis, Heck, Henderson,

Manuel, Osborne and Shelton)

(Originating in the Committee on Finance)

[April 3, 1997]


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; and to further amend said article by adding thereto two new sections, designated sections six and seven, relating to authority of board of directors of the state college system over proprietary education institutions, some of which to be renamed West Virginia private postsecondary education institutions as well as correspondence, business, occupational and trade schools; permits; annual reports; accreditation standards; requirements for use of term "college" in name; requirements to offer associate degree programs or nondegree programs longer than one year; exemptions from requirements; prohibiting discrimination against students and graduates of West Virginia private institutions of higher education; participation in job training programs; definitions; and requirement of studies to address West Virginia higher education grant program, transferability of academic credits; study teams for study created; and reports to Legislative oversight commission on education accountability.

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; and that said article be further amended by adding thereto two new sections, designated sections six and seven, all to read as follows:
ARTICLE 3. BOARD OF DIRECTORS OF THE STATE COLLEGE SYSTEM.

§18B-3-5. Permits required for West Virginia private post secondary education institution, correspondence, business, occupational and trade schools; surety bonds and fees; issuance, renewal and revocation of permit; reports; rules; penalty and enforcement.

(a) It shall be unlawful for any person representing a West Virginia private post secondary education institution (hereinafter "private post secondary education institution"), or a correspondence, business, occupational or trade school (all collectively called "institutions" or "institution") inside or outside this state, as such shall be defined by the board of directors of the state college system (hereinafter the "board") 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 institution first applies for a permit, or obtains a permit, from the West Virginia board of directors in the manner and on the terms herein prescribed.
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 two 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 An institution is considered to be established under the provisions of this article on the date it first begins to lawfully operate. An established school institution 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 institution for each campus it operates in this state.
(b) Each application shall be accompanied by a surety bond in the penal sum of thirty-five thousand dollars for any school institution 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 institution 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 thirty-five thousand dollars: Provided, however, That any school institution which has operated in West Virginia for less than ten years, including those schools institutions which have changed ownership within the last ten years except those schools institutions noted above 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 institution located in another state which applies for a permit hereunder, shall provide a surety bond of fifty thousand dollars: Provided further, That any school institution 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 institution'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 deemed a termination for cause.
In addition, any school institution 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 institution's audited financial statements are qualified because the school's institution'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 An institution may be required to maintain the increased bonding requirements described above 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 institution to meet contractual obligations; or failure of the school institution to meet the requirements of this section. The bond shall be given by the school institution itself as a blanket bond covering all of its representatives. The surety on any such bond may cancel the same upon giving thirty days' notice in writing to the principal on said 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 said cancellation.
(c) A permit shall be 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 herein required, may be renewed. All fees collected for the issuance or renewal of such permit shall be deposited in the state treasury to the credit of the board of directors.
The board may refuse a permit to any school institution if the board finds that the school institution engages in practices which are inconsistent with this section or with rules and regulations issued pursuant thereto. A permit issued hereunder, upon fifteen days' notice and after a hearing, if a hearing is requested by the school institution may be suspended or revoked by the board of directors for fraud or misrepresentation in soliciting or enrolling students, for failure of the school institution 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 regulation of the state board of directors pertinent thereto. Prior to the board taking any adverse action, including refusal, suspension or revocation of a permit, the school institution 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 an institution, shall comply with all constitutional provisions, including due process, relating to the protection of property rights.
(d) All private post secondary education institutions, 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. All private post secondary education institutions , correspondence, business, occupational or trade schools which have 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 institution. No school nor any representative of a school institution 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, 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 institutions 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 private post secondary education institutions, 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 a national or regional accrediting agency or association approved recognized 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 post secondary education, may offer post secondary educational programs leading to (and upon successful completion of such programs award graduates) certificates, diplomas and associate degrees in accordance with the academic standards required by such 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 such 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 such an investigation. All evaluations or investigations of private post secondary education institutions, correspondence, business, occupational and trade schools, and actions resulting from such 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 private post secondary education institutions that award specialized associate degrees shall be defined as private post secondary education institutions of higher education, and specialized associate degrees shall mean degrees awarded by such private post secondary education institutions pursuant to a program of not less than two academic years: Provided, That nothing herein shall be construed to qualify the said proprietary schools institutions for additional state moneys not otherwise qualified for under other provisions of this code.
(f) In regard to private post secondary education institutions and other proprietary educational institutions operating under this section of the code which are accredited by a national or regional accrediting agency or association recognized by the United States department of education and which provided training at a campus located in this state:
(1) Any rule or standard which is authorized by this or any section of the 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 private post secondary education institutions or proprietary institutions correspondence, business, occupational and trade schools which such board or other agency has the legal authority to enforce under any section of the 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 hereunder are hereby recognized as post secondary. Academic progress shall be measured and reported in credit hours and all reports/documents 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 institution who solicits, sells or offers to sell courses of instruction to any resident of this state for consideration or remuneration unless the school institution first applies for a permit, or obtains a permit, shall be 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 private post secondary education institution, 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 institution if the school institution did not hold a valid permit at the time the contract was signed by any of the parties thereto. 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 hereunder) 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 United States Constitution, and shall follow the substantive standards and procedural requirements established by or under authority of this section.
(iI) The following provisions are applicable to certain institutions authorized to operate under this section:
(1) An institution shall be authorized to use the term "college" in its name only if it offers at least one associate degree program, such as a specialized an associate or occupational associate degree, or associate of science or arts degree, at a campus or location in this state: Provided, That any West Virginia institution using the term "college" in its name on the first day of January, one thousand nine hundred ninety-seven, may continue using the term "college" in its name or in any future name, revision or designation. A West Virginia branch campus or additional location, or other training facility established by an institution originating in and licensed by another state that is not authorized to use the term "college" in its state of origin may not use the term "college" in its West Virginia operations.
(2) Institutional changes, such as the addition of a new campus or training facility, the relocation of the main campus, appointment of new members to the private post secondary education institution board of directors or other controlling body, appointment of a new president or other officers or administrators, changes in the level of program offerings, or any other such changes, may not cause the institution to be deemed to be a new institution or otherwise adversely alter the institution's legal status or rights granted under any section of the code or other law unless specifically provided for therein: Provided, That the private post secondary education institution continues to offer at least one associate degree program.
(3) An institution that has not operated a campus in this state under a permit issued pursuant to this section for at least five years may not offer nondegree programs that are longer than one year in length without approval of the board of directors of the state college system, and may not offer associate degree programs unless the institution is a subsidiary or division of another private post secondary education institution authorized to award associate degrees in West Virginia: Provided, That any institution which has offered associate degree programs, or nondegree programs longer than one year in length, at a campus in this state on or after the first day of January, one thousand nine hundred ninety-two, may continue to offer such programs.

§18B-3-6. Students of private post secondary education institutions eligible for state employment and job training opportunities provided by or on behalf of the state of West Virginia under equal protection of the law; private post secondary education institution defined; board of directors and higher
education central office report to be provided to legislative oversight commission on education accountability.
(a) Students and graduates of private post secondary education institutions shall be accorded equal protection of the laws as accorded by the constitution of the United States and the constitution of the state of West Virginia.
(1) For purposes of qualifying an individual for employment, promotion or training opportunities offered by or through the state of West Virginia, and all of its agencies and political subdivisions, the educational and training achievements attained by students and graduates of private post secondary education institutions, including academic credits, credentials and degrees awarded shall be recognized and accepted to the same extent as educational and training achievements attained by students at public community colleges or other educational institutions;
(2) Individuals who are eligible for job training assistance or benefits through state, federal or joint state and federal job training and assistance programs administered by or on behalf of the state of West Virginia may use such job training assistance or benefits to enroll in any job training program offered by a private post secondary education institution or institutions to the extent allowed by federal law or by the requirements of the job assistance program, funding or benefit.
(b) A private post secondary education institution is an institution that:
(1) Has provided educational programs in West Virginia for at least fifty years;
(2) Has been accredited by an accrediting agency recognized by the United States department of education under the Higher Education Act of 1965, as amended, for a total of at least twenty years;
(3) Has offered associate degree educational programs at a campus in West Virginia for a total of at least fifteen years;
(4) Has been authorized to operate in West Virginia under section five of this article for a total of at least fifteen years;
(5) Has been owned and operated by a private entity that has not undergone a change of ownership resulting in a change of majority control, unless the new majority ownership has previously held an ownership interest in a private post secondary education institution for at least five years;
(6) Additional campuses or locations owned and supervised by an educational institution that meets the definition of a private post secondary education institution are deemed to qualify under the main campus for purposes of meeting such definition, notwithstanding that the additional campuses or locations may not meet all five of the above stated standards; and
(7) An accredited private post secondary education institution that offers associate degree programs, and that has owned and supervised one or more West Virginia campuses under permit issued pursuant to section five of this article for at least fifteen years prior to the first of July, one thousand nine hundred ninety-seven, is deemed to meet the standards required by subsection (b) of this section.
(c) A private post secondary education institution that meets the standards established by subsection (b) of this section shall be designated as a "West Virginia Private Post secondary Education Institution," and the annual permit issued by the board shall identify the institution utilizing only such designation and referring only to this section of the code: Provided, That, except as may be otherwise provided for in this section, the institution shall continue operating under the provisions of section five of this article, and such designation shall not affect the legal rights and legal responsibilities applicable to the institution under section five nor shall such designation cause any other legal mandates, obligations or requirements to be applied to the private post secondary education institutions under any other provision of this code.
§18B-3-7. Higher education grant program not accessible to private post secondary education institutions as defined, correspondence courses, business schools or other proprietary institutions; transferability of credits to post secondary education institutions within the university of West Virginia system and the state college system of West Virginia from private post secondary education institutions as defined, correspondence courses, business schools, and other proprietary institutions is permissive but not mandatory; requirement of study of transferability of credits and access and cost of such access to the West Virginia higher education grant program to be performed by the higher education central office.

(a)It is the intent of the Legislature that:
(1) tThe West Virginia higher education grant program not be subject to subsection (a), section six, article three, chapter eighteen-b of the code of West Virginia, one thousand nine hundred thirty-one, as amended.
(2) tThe transferability of credits from private post secondary education institutions as defined in subsection (b), section six, article three, chapter eighteen-b of the code of West Virginia, one thousand nine hundred thirty-one as amended, to institutions within the university system of West Virginia or the state college system of West Virginia be permissive. The receiving public post secondary education institution shall use the same discretion, policies and procedures promulgated by it or its governing board as it would use to evaluate credits received from other education institutions.
(b) The higher education central office is hereby required to make a study of the West Virginia higher education grant program with regard to: mMaking the West Virginia higher education grant program accessible to the students of private post secondary education institutions, correspondence schools, business schools and other proprietary institutions; the additional cost if any of making the West Virginia higher education grant program so accessible; the ability of the higher education central office staff to monitor disbursements to such students; the ability of the higher education central office staff to assure compliance with applicable state and federal regulations with regard to disbursements of student financial aid to such students; the additional cost to the state of West Virginia, if any, to make the West Virginia higher education grant program so accessible; and studying such other matters as are required to complete this study.
(1) tThe study team for such study shall include the secretary of education and the arts or his or her designee, the senior administrator of the higher education central office or his designee, the vice chancellor for community colleges, five members from the private post-secondary education institution or other proprietary school community, one member to be selected by the senior administrator from the West Virginia higher education grant program advisory council of West Virginia grants who represents private independent institutions and one member from the West Virginia higher education grant program advisory council of West Virginia grants to be selected by the senior administrator who is representative of public institutions, one member to be selected by the chancellor of the state college system from one of the campuses of the state college system, one member to be selected by the chancellor of the university system of West Virginia from one of the campuses of the university system of West Virginia; Provided, That if the selection of five members from the private post secondary education institutions is not provided for by associational membership in a representative organization or some other representative body then all participants in the development of this study who represent the private post secondary education institution community shall have a total of five votes rather than five members.
(2) Members of the study team shall pay for their own expenses associated with serving on the study team, except for state employees who shall be reimbursed by their agencies.
(c) The higher education central office is hereby required to make a study on the transfer of credits between the private post secondary education institutions and other proprietary institutions and the public post secondary education institutions governed by the university system of West Virginia board of trustees and the board of the directors of the state college system of West Virginia.
(1) tThe study team for such study shall include the secretary of education and the arts or his or her designee, the vice chancellor for community colleges, the director of academic affairs for the higher education central office, one academic officer from a campus of the university system of West Virginia to be selected by the chancellor of the university system of West Virginia, one academic officer from the state college system to be selected by the chancellor of the state college system, four members from the private post secondary education institutions and other proprietary post secondary education institutions community; Provided, That if the selection of four members from the private post secondary education institutions is not provided for by associational membership in a representative organization or some other representative body then all participants in the development of this study who represent the private post secondary education institution community shall have a total of four votes rather than four members.
(2) Members of the study team shall pay for their own expenses associated with serving on the study team, except for state employees who shall be reimbursed by their agencies.
(d) Such studies of the transferability of credits among private post secondary education institutions as defined and the university system of West Virginia and the state college system of West Virginia and access to the West Virginia higher education grant program by private post secondary education institutions as defined, shall commence on the first day of July, one thousand nine hundred, ninety-seven, and be completed by the thirtieth day of November, one thousand nine hundred ninety-seven with the findings of both studies to be presented at the December meeting of the Llegislative oversight commission on education accountability. Such findings may include, in addition to a majority finding, a minority finding if three or more members wish such to be included in the report to the Llegislative oversight commission on education accountability. Those members voting to include such minority finding in the committee's report to the Llegislative oversight commission on education accountability may also, with the leave of the chairman of the Legislative oversight commission on education accountability present the minority report to the Legislative members of the commission.