Title of Rule: WAC 490-105-080 How are contributions to the tuition recovery trust fund calculated? and 490-105-170 What actions are prohibited?

Purpose: Rules outline contribution schedule into the tuition recovery trust fund under a change of ownership, and expanding language on prohibited actions.

Statutory Authority for Adoption: RCW 28C.10.040.

Statute Being Implemented: Chapter 28C.10 RCW.

Summary: To implement TRTF legislation enacted in 2001 and to expand language on prohibited actions.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Peggy Rudolph, Olympia, (360) 586-8682.

Name of Proponent: Workforce Training and Education Coordinating Board, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: Rule outlining tuition recovery trust fund contributions. New legislation entitles new school owner to assume prior owner's tuition recovery trust fund payment schedule instead of starting from the initial contribution.

What actions are prohibited? Expands prohibited actions by a school that will enable the agency to take action to deny, revoke, or suspend a license sooner.

Proposal Changes the Following Existing Rules: Rule outlining tuition recovery trust fund contributions. New legislation entitles new school owner to assume prior owner's tuition recovery trust fund payment schedule instead of starting from the initial contribution.

What actions are prohibited? Expands prohibited actions by a school that will enable the agency to take action to deny, revoke, or suspend a license sooner.

September 5, 2001

Peggy Rudolph

Program Specialist

OTS-5174.1

AMENDATORY SECTION(Amending WSR 01-01-141, filed 12/20/00, effective 1/20/01)

WAC 490-105-080   How are contributions to the tuition recovery trust fund calculated?   (See RCW 28C.10.082 and 28C.10.084.)

(1) Establishment of fund liability ((limits)). The amount of liability that can be satisfied by this fund on behalf of each individual school licensed under this chapter is ((identified in the table in subsection (4) of this section)) the amount of unearned prepaid tuition in the possession of the owner.

(a) ((If the school is located within the state of Washington, its liability limit will be based on the total annual tuition income received from or on behalf of all students, as reported in the financial statement required by WAC 490-105-040 (2)(a);

(b) If the school is located outside the state of Washington, its liability limit is based on the total annual tuition income received from or on behalf of Washington state residents, as reported in the financial statement required by WAC 490-105-040 (2)(a);

(c) If the school was not in operation prior to the date of initial licensing, its liability limit is based on the total annual tuition estimate supplied under the provisions of WAC 490-105-040 (2)(c);

(d) The minimum liability established in any circumstance is five thousand dollars.)) If the school is located within the state of Washington, the amount of liability that can be satisfied by this fund is the amount of unearned, prepaid tuition from or on behalf of all students.

(b) If the school is located outside the state of Washington, the amount of liability that can be satisfied by this fund is the amount of unearned prepaid tuition from or on behalf of Washington state residents.

(2) Matrices for calculating initial deposits and any assessments necessary under subsection (7) of this section:

((Level of Liability:		Annual Tuition Revenue:		Prorated Share:
$5,000		$0 - $50,000		0.15%
$7,500		$50,001 - $75,000		0.23%
$10,000		$75,001 - $100,000		0.30%
$15,000		$100,001 - $150,000		0.46%
$20,000		$150,001 - $200,000		0.61%
$25,000		$200,001 - $250,000		0.76%
$35,000		$250,001 - $350,000		1.07%
$50,000		$350,001 - $500,000		1.52%
$75,000		$500,001 - $750,000		2.28%
$100,000		$750,001 - $1,000,000		3.05%
$125,000		$1,000,001 - $1,250,000		3.81%
$150,000		$1,250,001 - $1,500,000		4.57%
$175,000		$1,500,001 - $1,750,000		5.33%
$200,000		$1,750,001 - $2,000,000		6.10%
$225,000		$2,000,001 - $2,250,000		6.86%
$250,000		$2,250,001 - $2,500,000		7.62%
$275,000))		⟩$2,500,000		8.38%

(3) Initial deposit. When ((the)) a new school submits its initial license application, it must include for deposit into the tuition recovery trust fund, the amount identified in the ((third)) second column of the table below.

(4) Contribution schedule. In order to remain licensed under this chapter, the school must remit to the agency semiannual payments for deposit into the tuition recovery trust fund. The amount of the deposits for the first five years is calculated by applying the percentages displayed under subsection (2) of this section, to an amount totaling one million dollars as required by RCW 28C.10.084. In the second five years, contributions for amounts between zero and one hundred fifty thousand dollars will be reduced by fifty percent.

If the school's total annual tuition income is:		((Its liability limit under the Tuition Recovery Trust Fund is:	((Based on its liability limit, the)) A new school will make an initial deposit to the fund of:	The school will make the following semiannual payments for the first five years it is licensed:	The school will make the following semiannual payments for the second five years it is licensed:
$0	- $50,000	$5,000	$305	$122	$61
$50,001	- $75,000	$7,500	$457	$183	$92
$75,001	- $100,000	$10,000	$609	$244	$122
$100,001	- $150,000	$15,000	$914	$366	$183
$150,001	- $200,000	$20,000	$1,219	$487	$487
$200,001	- $250,000	$25,000	$1,523	$609	$609
$250,001	- $350,000	$35,000	$2,133	$853	$853
$350,001	- $500,000	$50,000	$3,046	$1,219	$1,219
$500,001	- $750,000	$75,000	$4,570	$1,828	$1,828
$750,001	- $1,000,000	$100,000	$6,093	$2,437	$2,437
$1,000,001	- $1,250,000	$125,000	$7,616	$3,046	$3,046
$1,250,001	- $1,500,000	$150,000	$9,139	$3,656	$3,656
$1,500,001	- $1,750,000	$175,000	$10,663	$4,265	$4,265
$1,750,001	- $2,000,000	$200,000	$12,186	$4,874	$4,874
$2,000,001	- $2,250,000	$225,000	$13,710	$5,483	$5,483
$2,250,001	- $2,500,000	$250,000	$15,233	$6,092	$6,092
⟩$2,500,000		$275,000))	$16,757	$6,702	$6,702

(5) The agency will send semiannual notices of the due dates and amounts of deposits required under subsection (4) of this section. The fee for late filings under WAC 490-105-070(2) of this chapter applies to late payments of deposits into the fund for a period cumulating to thirty calendar days. Failure to make a deposit within thirty calendar days is a violation of RCW 28C.10.050 (1)(f).

(6) Each semiannual notice will include:

(a) The school's aggregated prior deposits into the fund;

(b) The school's balance of remaining payments, based on the most recent deposit received and adjusted to the current contribution level;

(c) The cumulated balance existing in the fund at the most recent half-year accounting; and

(d) A summary showing any disbursals made from the fund to satisfy claims in the period since the last summary was disseminated.

(7) If disbursements made to settle claims reduce the operating balance below one million dollars and recovery of such funds has not been ensured under the provisions of RCW 28C.10.084 (10)(d), the agency will assess each school a pro rata share of the amount required to restore the deficiency. The assessment will be made within thirty calendar days of the date deficiency is created. Each school's share of the assessment will be calculated using the percentages established under subsection (2) of this section. If the school's assessment equals or is less than the semiannual amount of deposit established for the school under subsection (4) of this section, the assessment must be paid within thirty calendar days of notice. If the assessment exceeds the amount of the school's semiannual deposit, it may apply to the agency for a schedule of deferred payments. The agency will grant deferrals on application, but in no case will the extension exceed one year beyond the date of the assessment.

(8) Funds disbursed to settle claims against a currently licensed school will be recovered by the agency under a schedule to be negotiated with the affected school on a case-by-case basis. To secure deferral of payment more than thirty calendar days after demand for recovery is made, the burden to prove manifest hardship rests on the school but in no case will the time extended exceed one year beyond the date of the initial demand notice.

(9) Claimant, as referenced under RCW 28C.10.084 (10)(a), is further defined to mean an enrolled student in regular attendance or on an authorized leave of absence at the time of closure.

[Statutory Authority: RCW 28C.10.040. 01-01-141, 490-105-080, filed 12/20/00, effective 1/20/01. Statutory Authority: RCW 28C.10.040(2). 98-22-033, 490-105-080, filed 10/29/98, effective 11/29/98.]

(2) In addition to the actions described in RCW 28C.10.110 it is an unfair business practice for a private vocational school or its agent to:

(a) Advertise, offer, sell, or award any educational credential without requiring the consumer to enroll in and successfully complete a prescribed program of study, as outlined in the school's catalog or brochure;

(b) Sell, discount, or transfer contracts or promissory notes for tuition to third parties without the signed consent of the student or the student's financial sponsors, and a statement notifying all parties that the cancellation and refund policy continues to apply;

(c) Misrepresent to students the potential amount of federal financial aid available;

(d) Employ the term "accredited" in advertising unless:

(i) The school holds a current grant of accreditation; and

(ii) The term "accredited" is accompanied with equal prominence by the full name and/or seal of the agency from whom the school holds a current grant of accreditation.

(iii) If the accrediting agency is not recognized by the United States Secretary of Education under the provisions of the Higher Education Act (Chapter 34 CFR), as amended, the school must provide the agency with documentation of its grant of accreditation and other related information required by the agency to establish the nature and scope of the accrediting agency. The agency will approve or disapprove its use in advertising after reviewing submitted documentation.

(3) Schools are prohibited under RCW 28C.10.110(3) from advertising educational programs under the "help wanted" section of publications. Schools may, however, advertise under a help wanted classification for the purposes of:

(a) Recruiting for bona fide job openings; or

(b) Soliciting job opportunities for available graduates.

(4) To establish consistency in the implementation of this section, the following definitions will apply:

(a) "Advertise" means the publishing by a school of information that establishes its identity, location, and nature of its training programs. It may or may not contain an offer of training.

(b) "Help wanted" section means any classified advertising section in a publication that contains job listings. The particular wording the publication uses to identify such a section is not material.

(c) "Newspaper" means a printed publication containing news, editorials, advertisements, etc. The definition extends to tabloids such as "nickel-savers" that contain primarily or exclusively advertising. It is not material whether the publication is sold or given away.

(d) For purposes of this section, it is not considered "advertising" if a school inserts a notice in a "help wanted" section referring the reader to a different classified heading in the same issue of the same publication, as long as:

(i) An offer of training is being made by the school under an appropriate other section in the same issue of the same publication; and

(ii) The referral notice contains only the name of the school and not its address, telephone number, or description of program(s); and

(iii) The overall size and general appearance of what appears as a notice is consistent with its purpose only to refer readers elsewhere.

(5) Schools are prohibited from making offers of training without including the full name and/or d/b/a under which the school is licensed. Permutations of the name and/or d/b/a such as initials or nicknames can be used only with prior written permission of the agency.

(6) RCW 28C.10.110(12) makes it an unfair business practice for a school to attempt to recruit students within forty feet of a building that contains a welfare or unemployment office. The term "recruiting" is defined by statute. Other terms employed in the statute are further defined as follows:

(a) The distance of "forty feet from a building" is measured as a straight line from any doorway affording public access. In instances of buildings with multiple entrances, the distance is measured from any part of the structure.

(b) When applied to state government, "welfare or unemployment office" means buildings offering public access to provide services to clients of the Washington state employment security department or the department of social and health services.

(c) When applied to county and municipal agencies, "welfare or unemployment office" means those buildings offering public access for the purpose of providing shelter, food, employment, health, and social services.

(d) The term "welfare or unemployment office" includes established locations operated by community-based, nonprofit organizations for the purpose of providing shelter, food, employment, health, and social services to disadvantaged populations.

(7) The agency is authorized to deny, revoke, or suspend the license of any school found to have engaged in a "substantial number" of unfair business practices or "significant" unfair business practices. Those two quoted terms are further defined as follows:

(a) The agency may conclude that a substantial number of unfair business practices has occurred when a pattern of persistent violations exists and there are multiple complaints alleging various unfair business practices.

(b) The agency may conclude that unfair business practices are significant when it determines that their egregious nature threaten the operation of the school and/or jeopardize the ability of students to secure contracted services. An abrupt school closure which fails to comply with WAC 490-105-210 provisions may also be considered as significant.

[Statutory Authority: RCW 28C.10.040(2). 98-22-033, 490-105-170, filed 10/29/98, effective 11/29/98.]

Washington State Code Reviser's Office