HOUSE BILL REPORT

SSB 5880

As Amended by the House

BYSenate Committee on Education (originally sponsored by Senators Benitz, Saling, Bailey, Owen and Bauer)

Establishing a tuition recovery fund for private vocational schools.

House Committe on Higher Education

Majority Report:  Do pass.  (10)

      Signed by Representatives Jacobsen, Chair; Heavey, Vice Chair; Allen, Barnes, Basich, Miller, Nelson, Silver, Unsoeld and K. Wilson.

House Staff:Joan Elgee (786-7166)

Rereferred House Committee on Ways & Means/Appropriations

Majority Report:  Do pass with amendment.  (23)

      Signed by Representatives Locke, Chair; Allen, Belcher, Braddock, Brekke, Bristow, Ebersole, Fuhrman, Grant, Grimm, Hine, Holland, McLean, McMullen, Nealey, Niemi, Peery, Sayan, Silver, L. Smith, H. Sommers, Sprenkle and B. Williams.

House Staff:      Bill Robinson (786-7142)

AS PASSED HOUSE APRIL 16, 1987

BACKGROUND:

In 1986, following a Legislative Budget Committee sunset review, the legislature revised the regulation of private vocational schools.  Private vocational schools, unless exempt, must obtain a license from the Commission for Vocational Education (CVE).  The prior exemption for accredited schools was deleted.

The security requirements were modified to require a minimum $5,000 bond or other security and to raise the maximum security from $75,000 to $200,000.  Also, the legislature specified that the security is to be determined on an incremental scale based on the amount of unearned prepaid tuition in possession of the school.

Some schools have had difficulty meeting the security requirement.

SUMMARY:

The security provisions of the private vocational school chapter are deleted and a new self-insurance system established.

As a requirement for licensure, each private vocational school must make cash deposits into a tuition recovery fund.  The fund shall be initially capitalized at $200,000 and shall achieve an operating balance of at least $1,000,000 within five years. Deposits from the fund shall be used to settle claims that a student or enrollee has lost tuition or fees as a result of a school's unfair business practice and for administrative costs.  No liability accrues to the state from claims against the fund.

The amount of liability for each school that may be satisfied from the fund is a minimum of $5,000 and a maximum of $200,000, and shall be based on an incremental scale that recognizes the average amount of unearned prepaid tuition in possession of the school.  The Commission for Vocational Education (CVE) shall adopt a matrix for determining the contribution required by each school, which shall be based on each school's share of the aggregated liability of all schools.  A school's share of the initial capitalization shall be deposited within 30 days of the effective date of the section.  The remaining amounts, equalling a school's share of the $1,000,000, shall be paid in ten equal increments over a five year period.  When the deposits total $5,000,000, the agency may reduce the schedule of deposits and may also consider proposals for disbursing surplus funds for such purposes as vocational scholarships.

The CVE may make disbursements from the fund to settle claims.  New procedures for school closures are established.  The CVE shall attempt to notify all potential claimants.  If a claimant neglects or refuses to file a claim verification within 30 days of notification, the CVE shall be relieved of further duty on behalf of the claimant.

Procedures are set forth for releasing current security.

Appropriation:    $26,000 to the Commission for Vocational Education.

Fiscal Note:      Attached.

Effective Date:The bill contains an emergency clause and take effect immediately.

House Committee ‑ Testified For:    (Higher Education)  Linda Broderick, Commission for Vocational Education.

(Ways & Means/Appropriations)  None Presented.

House Committee - Testified Against:      (Higher Education)  None Presented.

(Ways & Means/Appropriations)  None Presented.

House Committee - Testimony For:    (Higher Education)  The bill is desperately needed.

(Ways & Means/Appropriations)  None Presented.

House Committee - Testimony Against:      (Higher Education)  None Presented.

(Ways & Means/Appropriations)  None Presented.