By: Shapiro S.B. No. 1534
A BILL TO BE ENTITLED
AN ACT
relating to the operation and certification of career schools or
colleges.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 132.001, Education Code, is amended to
read as follows:
Sec. 132.001. Definitions
In this chapter:
(1) "Career school or college" means any business
enterprise operated for a profit or on a nonprofit basis that
maintains a place of business within this state or solicits
business within this state, that is not specifically exempted by
this chapter, and:
(A) that offers or maintains a course or courses
of instruction or study; or
(B) at which place of business such a course or
courses of instruction or study are available through classroom
instruction or by distance education, or both, to a person for the
purpose of training or preparing the person for a field of endeavor
in a business, trade, technical, or industrial occupation, or for
avocational or personal improvement.
(1-a) "Class" or "course" means an identifiable unit of
instruction that is part of a program of instruction.
(1-b) "Course time" means a course or class period as
follows:
(A) a 50-minute to 60-minute lecture,
recitation, or class, including a laboratory class or shop
training, in a 60-minute period;
(B) a 50-minute to 60-minute internship in a
60-minute period; or
(C) 60 minutes of preparation in asynchronous
distance education.
(2) "Owner" of a career school or college means:
(A) in the case of a career school or college
owned by an individual, that individual;
(B) in the case of a career school or college
owned by a partnership, all full, silent, and limited partners;
(C) in the case of a career school or college
owned by a corporation, the corporation, its directors, officers,
and each shareholder owning shares of issued and outstanding stock
aggregating at least 10 percent of the total of the issued and
outstanding shares;
(D) in the case of a career school or college in
which the ownership interest is held in trust, the beneficiary of
that trust; or
(E) in the case of a career school or college
owned by another legal entity, a person who owns at least 10 percent
ownership interest in the entity.
(3) "School employee" means any person, other than an
owner, who directly or indirectly receives compensation from a
career school or college for services rendered.
(4) "Representative" means a person employed by a
career school or college operating in this state,, whether the
school or college is located within or without this state, to act as
an agent, solicitor, broker, or independent contractor to directly
procure students for the school or college by solicitation within
or without this state at any place.
(5) "Agency administrator" means the agency
administrator of the Texas Workforce Commission or a person,
knowledgeable in the administration of regulating career schools
and colleges, designated by the agency administrator to administer
this chapter.
(6) "Notice to the career school or college" means
written correspondence sent to the address of record for legal
service contained in the application for a certificate of approval.
"Date of Notice" means the date the notice is mailed by the
commission.
(7) "Support" or "supported" means the primary source
and means by which a career school or college derives revenue to
perpetuate its operation.
(8) "Person" means any individual, firm, partnership,
association, corporation, limited liability company, or other
private entity or combination.
(9) "Unearned tuition" means total tuition and fees
subject to refund under Section 132.061.
(10) "Small career school or college" means a career
school or college that does not receive any payment from federal
funds under 20 U.S.C. Section 1070 et seq. and its subsequent
amendments or a prepaid federal or state source as compensation in
whole or in part for any student tuition and fees or other charges
and either:
(A) has an annual gross income from student
tuition and fees that is less than or equal to $ 100,000 for
programs regulated by the agency;
(B) exclusively offers programs to assist
students to prepare for an undergraduate or graduate course of
study at a college or university; or
(C) exclusively offers programs to assist
students, who have obtained, or who are in the process of obtaining,
degrees after completing an undergraduate or graduate course of
study at a college or university, to prepare for an examination.
(11) "Commission" means the Texas Workforce
Commission.
(12) "Division" means the division of education of the
commission.
(13) "Distance education" means a formal education
process offered by a career school or college operating in this
state in which:
(A) the student and instructor are separated by
physical distance; and
(B) a variety of communication technologies may
be used to deliver synchronous or asynchronous instruction to the
student.
(14) "Program" or "program of instruction" means a
postsecondary program of organized instruction or study offered by
a career school or college operating in this state that may lead to
an academic, professional, or vocational degree, certificate, or
other recognized educational credential.
(15) A career school or college "operates in this
state" or is "operating in this state" when it maintains a physical
place of business within this state where programs or programs of
instruction are offered through classroom instruction or by
distance education, or both.
SECTION 2. Section 132.002, Education Code, is amended to
read as follows:
Sec. 132.002. Exemptions
(a) The following schools or educational institutions may
be exempted from this chapter by the commission under Subsection
(d):
(1) a school or educational institution supported by
taxation from either a local or state source;
(2) a nonprofit school owned, controlled, operated,
and conducted by a bona fide religious, denominational,
eleemosynary, or similar public institution exempt from property
taxation under the laws of this state;
(3) a school or training program that offers
instruction of purely avocational or recreational subjects as
determined by the commission;
(4) a course or courses of instruction or study
sponsored by an employer for the training and preparation of its own
employees, and for which no tuition fee is charged to the student;
(5) a course or courses of study or instruction
sponsored by a recognized trade, business, or professional
organization for the instruction of the members of the organization
with a closed membership;
(6) a private college or university that awards a
recognized baccalaureate, or higher degree, and that maintains and
operates educational programs for which a majority of the credits
given are transferable to a college, junior college, or university
supported entirely or partly by taxation from either a local or
state source;
(7) a school or course that is otherwise regulated and
approved under and pursuant to any other law or rulemaking process
of this state or approved for continuing education credit by an
organization that accredits courses for the maintenance of a
license, except as provided by Subsection (c);
(8) an aviation school or instructor approved by and
under the supervision of the Federal Aviation Administration;
(9) a school that offers intensive review of a
student's acquired education, training, or experience to prepare
the student for an examination, other than a high school
equivalency examination, that the student by law may not take
unless the student has completed or substantially completed a
particular degree program, or that the student is required to take
as a precondition for enrollment in or admission to a particular
degree program;
(10) a private school offering primary or secondary
education, which may include a kindergarten or prekindergarten
program, and that satisfies the compulsory attendance requirements
of Section 25.085 pursuant to Section 25.086(a)(1);
(11) a course or courses of instruction by bona fide
electrical trade associations for the purpose of preparing students
for electrical tests required for licensing and for the purpose of
providing continuing education to students for the renewal of
electrical licenses;
(12) a nonprofit arts organization that has as its
primary purpose the provision of instruction in the dramatic arts
and the communications media to persons younger than 19 years of
age;
(13) a course or training program conducted by a
nonprofit association of air conditioning and refrigeration
contractors approved by the Air Conditioning and Refrigeration
Contractors Advisory Board to provide instruction for technical,
business, or license examination preparation programs relating to
air conditioning and refrigeration contracting, as that term is
defined by Chapter 1302, Occupations Code;
(14) a course of instruction by a plumbing trade
association to prepare students for a plumbing test or program
required for licensing, certification, or endorsement or to provide
continuing education approved by the Texas State Board of Plumbing
Examiners; and
(15) a course of instruction in the use of
technological hardware or software if the course is offered to a
purchaser of the hardware or software or to the purchaser's
employee by a person who manufactures and sells, or develops and
sells, the hardware or software, and if the seller is not primarily
in the business of providing courses of instruction in the use of
the hardware or software, as determined by the commission; and
(16) a school or educational institution that is
physically located in another state, is legally authorized by the
state of its physical location to offer postsecondary education and
award degrees, is accredited by an accrediting agency recognized by
the U.S. Secretary of Education, and offers in the State of Texas
only postsecondary distance or correspondence programs of
instruction.
(b) Schools offering a course or courses of special study or
instruction financed or subsidized by local, state, or federal
funds or by any person, firm, association, or agency other than the
student involved, on a contract basis and having a closed
enrollment, may apply to the commission for exemption of such
course or courses from this chapter and such course or courses may
be declared exempt by the commission where the commission finds the
course or courses to be outside the purview of this chapter.
(c) If a state agency that issues a license or other
authorization for the practice of an occupation elects not to
regulate or approve course hours that exceed the minimum education
requirements for the issuance of the license or other
authorization, the licensing agency shall enter into a memorandum
of understanding with the commission for the regulation of those
excess course hours under this chapter. Any course taught under a
letter of approval or other written authorization issued by the
licensing agency before the effective date of the memorandum is
authorized under state law until the course is reviewed by the
commission. The licensing agency may terminate the memorandum of
understanding on notice to the commission.
(d) Except as provided by Subsection (g), a school or
educational institution is exempt from regulation under this
chapter only if:
(1) the owner of the school or educational
institution:
(A) applies to the commission for an exemption
under this section; and
(B) provides to the commission any information
considered necessary by the commission to support the owner's
application for an exemption; and
(2) the commission declares that the school or
educational institution is exempt after finding that the school or
institution is a school or institution listed in Subsection (a).
(e) After a school or educational institution is declared
exempt by the commission under this section, the commission may
inspect the school or institution or require the owner of the school
or institution to provide any information the commission considers
necessary for the commission to ensure the school or institution's
continued compliance with the requirements of the exemption.
(f) A school or educational institution listed in
Subsection (a) may seek a certificate of approval under Subchapter
C.
(g) An institution of higher education or a private or
independent institution of higher education, as defined by Section
61.003, that was exempt from regulation under this chapter before
September 1, 2003, remains exempt from regulation under this
chapter and is not required to comply with this section.
SECTION 3. Section 132.021, Education Code, is amended to
read as follows:
Sec. 132.021. Texas Workforce Commission
(a) The commission shall exercise jurisdiction and control
of the system of career schools and colleges operating in this
state, and the commission shall carry out supervision of the
provisions of this chapter, and enforce minimum standards for
approval of career schools and colleges under the operating
regulations and policies hereinafter set forth and as may be
adopted pursuant to this chapter.
(b) [Repealed by Acts 2005, 79th Leg., ch. 747 (H.B. 2806), ยง
12, effective September 1, 2005.]
(c) The commission may consult a recognized expert in a
field of study for assistance in determining minimum program
standards under this chapter for that field.
(d) The commission shall adopt policies and rules necessary
for carrying out this chapter.
SECTION 4. Section 132.051, Education Code, is amended to
read as follows:
Sec. 132.051. Certificate of Approval
(a) A career school or college operating in this state may
not maintain, advertise, solicit for, or conduct any program of
instruction in this state until the career school or college
receives a certificate of approval from the commission.
(b) Any contract entered into with any person for a program
of instruction by or on behalf of any person operating any career
school or college in this state to which a certificate of approval
has not been issued pursuant to this chapter is unenforceable in any
action brought thereon. Any note, other instrument of
indebtedness, or contract relating to payment for educational
services obtained from a career school or college operating in this
state that does not hold a certificate of approval issued under this
chapter is unenforceable in any action brought on the note,
instrument, or contract.
SECTION 5. Section 132.052, Education Code, is amended to
read as follows:
Sec. 132.052. Application for Certificate of Approval
Every career school or college desiring to operate in this
state or do business in this state shall make written application to
the commission for a certificate of approval. Such application
shall be verified, be in such form as may be prescribed by the
commission, and shall furnish the commission such information as
the commission may require.
SECTION 6. Section 132.059, Education Code, is amended to
read as follows:
Sec. 132.059. Registration of Representatives
(a) All representatives employed by a career school or
college operating in this state shall register with the commission.
Application for registration may be made at any time and shall be
based on information submitted in accordance with the provisions of
Section 132.052.
(b) Registration of a representative is effective upon
receipt of notice from the commission and remains in effect for a
period not in excess of 12 calendar months. Renewal of
representative registration shall be in accordance with the renewal
application form forwarded to the career school or college by the
commission.
(c) Denial or revocation of registration of a
representative by the commission shall be in accordance with the
provisions of this chapter applicable to denial or revocation of a
certificate of approval. The commission may deny, suspend, or
revoke the registration of a representative who has been convicted
of a felony, whether within or without this state.
(d) Career schools and colleges domiciled or having their
principal place of business outside of this state that engage
representatives to canvass, solicit, or contract with any person
within this state, are subject to the requirements for registration
of representatives.
(e) The commission shall deny registration of a
representative who owes a penalty under Section 132.152 or 132.155.
SECTION 7. Section 132.151, Education Code, is amended to
read as follows:
Sec. 132.151. Prohibitions
A person may not:
(1) operate a career school or college in this state
without a certificate of approval issued by the commission;
(2) solicit prospective students for or on behalf of a
career school or college operating in this state without being
registered as a representative of the career school or college as
required by this chapter;
(3) accept contracts or enrollment applications for or
on behalf of a career school or college operating in this state,
from a representative who is not bonded as required by this chapter;
(4) utilize advertising designed to mislead or deceive
prospective students;
(5) fail to notify the commission of the
discontinuance of the operation closure of any career school or
college operating in this state within 72 hours of cessation of
classes and make available accurate records as required by this
chapter;
(6) negotiate any promissory instrument received as
payment of tuition or other charge by a career school or college
operating in this state prior to completion of 75 percent of the
applicable program, provided that prior to such time, the
instrument may be transferred by assignment to a purchaser who
shall be subject to all the defenses available against the career
school or college named as payee; or
(7) violate any provision of this chapter.
SECTION 8. Section 132.154, Education Code, is amended to
read as follows:
Sec. 132.154. Injunctions
(a) Whenever the commission has probable cause to believe
that any career school or college operating in this state has
committed any acts that would be in violation of this chapter, the
commission shall apply for an injunction restraining the commission
of such acts.
(b) An action for an injunction under this section shall be
brought in Travis County.
SECTION 9. Section 132.156, Education Code, is amended to
read as follows:
Sec. 132.156. Sanctions
(a) If the commission has reasonable cause to believe that a
career school or college operating in this state has violated this
chapter or a rule adopted under this chapter, the commission may:
(1) order a peer review of the school or college; or
(2) suspend the admission of students to the school or
college.
(b) A peer review ordered under this section shall be
conducted by a peer review team composed of knowledgeable persons
selected by the commission. The commission shall attempt to
provide a balance on each team between members assigned to the team
who are from this state and those who are from other states. The
team shall provide the commission with an objective assessment of
the content of the career school's or college's curriculum and its
application. The costs of providing a peer review team shall be
paid by the school or college.
SECTION 10. Section 132.242, Education Code, is amended to
read as follows:
Sec. 132.242. Closed School or College
(a) If a career school or college operating in this state
closes, the commission shall attempt to arrange for students of the
closed school or college to attend another school or college,
regardless of whether the school or college is a career school or
college.
(b) The expense incurred by a school or college, regardless
of whether the school or college is a career school or college, in
providing a teachout that is directly related to educating a
student placed in the school or college under this section,
including the applicable tuition for the period for which the
student has paid tuition, shall be paid from the career school or
college tuition trust account.
(c) If the student cannot be placed in another school or
college, regardless of whether the school or college is a career
school or college, the student's tuition and fees shall be refunded
under Section 132.061(d).
(d) If a student does not accept a place that is available
and reasonable in another school or college, regardless of whether
the school or college is a career school or college, the student's
tuition and fees shall be refunded under the refund policy
maintained by the closing career school or college under Section
132.061.
(e) For each closed career school or college, refunds shall
be paid from the career school or college tuition trust account in
an amount not to exceed $ 150,000.
(f) If another school or college, regardless of whether the
school or college is a career school or college, assumes
responsibility for the closed career school's or college's students
with no significant changes in the quality of training, the student
is not entitled to a refund under Subsection (c) or (d).
(g) Attorney's fees, court costs, or damages may not be paid
from the career school or college tuition trust account.
SECTION 11. Section 132.301, Education Code, is amended to
read as follows:
Sec. 132.301. Hearing; Notice
(a) The commission may set a hearing on whether to issue a
cease and desist order against a person under Section132.303 if the
commission has reason to believe that the person is operating a
career school or college in this state without a certificate issued
by the commission in violation of Section 132.151.
(b) The commission shall serve on the person a statement of
charges and a notice of hearing, including a copy of the applicable
rules of the commission.
SECTION 12. Section 132.303, Education Code, is amended to
read as follows:
Sec. 132.303. Cease and Desist Order
After a hearing held under this subchapter, the commission
may issue against the person charged with operating a career school
or college in this state without a certificate issued by the
commission an order that requires that the person immediately cease
and desist from violating this chapter.
SECTION 13. This Act takes effect September 1, 2011.