HOUSE BILL REPORT

SB 5597

BYSenators Vognild and Moore

Establishing minimum bond for cosmetology schools.

House Committe on Commerce & Labor

Majority Report:  Do pass.  (11)

      Signed by Representatives Wang, Chair; Cole, Vice Chair; Fisch, Fisher, R. King, O'Brien, Patrick, Sanders, Sayan, C. Smith and Walker.

House Staff:Joan Elgee (786-7166)

AS PASSED HOUSE APRIL 9, 1987

BACKGROUND:

Cosmetology schools are required to maintain a surety bond on file with the Department of Licensing to protect students. The director of Licensing has the authority to set bonding levels with a maximum of $25,000.  By rule, the department presently requires bonding levels of $6,000 for schools with 19 or fewer students and $12,000 for schools with 20 or more students.

SUMMARY:

A minimum bond for cosmetology schools is established.  A school must have on file with the Department of Licensing at least a bond of $1,000 or 5 percent of the school's annual gross tuition, whichever is greater.  The maximum bonding level is maintained at $25,000 and the bond is designated as solely for the protection of unearned, prepaid student tuition.  Schools are required to verify gross tuition amounts on an annual basis.  Applicants for new cosmetology school licenses are required to estimate annual gross tuition to establish a bond amount.

Fiscal Note:      Requested March 26, 1987.

House Committee ‑ Testified For:    Neil Hansen, Crown School of Hair Design; and Gary Smith, Independent Business Association.

House Committee - Testified Against:      Cynthia Jones, Department of Licensing.

House Committee - Testimony For:    If a school has a small number of students, the bond should be smaller.  The revised formula is more fair and will still protect students.

House Committee - Testimony Against:      Students will not have adequate protection with reduced bonds and coverage limited to tuition loss.