HB-5995, As Passed House, September 9, 2008

SUBSTITUTE FOR

HOUSE BILL NO. 5995

     A bill to amend 1943 PA 148, entitled

"An act to provide for the regulation and licensing of proprietary

schools in the state; to require surety; to provide for collection

and disposition of fees; and to prescribe penalties for the

violation of this act,"

by amending the title and sections 1, 1a, 2, 2a, 2b, and 3 (MCL

395.101, 395.101a, 395.102, 395.102a, 395.102b, and 395.103), the

title and sections 1, 2, 2a, 2b, and 3 as amended and section 1a as

added by 1983 PA 60, and by adding sections 2c and 2d.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

     An act to provide for the regulation and licensing of

proprietary career schools in the state; to provide for the powers

and duties of certain state governmental officers and entities; to

require surety; to provide for collection and disposition of fees;

and to prescribe penalties and administrative fines for the

violation violations of this act.

     Sec. 1. (1) A proprietary school shall secure from the board a

license issued in the form prescribed by the board and in

accordance with this act. A career school shall not operate in this

state without a license or temporary permit from the department

under this act. The department shall prescribe the form of license

and temporary permit.

     (2) A license issued under this act shall be is not valid for

not more than 1 year. If the applicant The department may renew the

license of a career school that continues to comply with this act

and the rules promulgated under this act. , the license may be

renewed.

     (3) The license may be revoked department may revoke a license

granted under this act at any time if, in the judgment of the board

department, the person career school to whom which the license is

issued is not complying with provisions of the any applicable law

or the rulings of the board department.

     (4) A person shall not be granted Except as provided in

section 2d, the department shall not grant a temporary permit or a

license to operate a proprietary career school that operates as

part of, or in conjunction with, another business or commercial

enterprise which that utilizes or sells goods or services produced

by students.

     Sec. 1a. (1) This act shall be known and may be cited as the

"career schools act".

     (2) As used in this act:

     (a) "Board" means the state board of education.

     (b) "Person" means an individual, partnership, corporation,

association, organization, or other legal entity.

(a) (c) "Proprietary "Career school" means a private business

school, trade school, home study school, or other school that uses

a certain plan or method to teach a trade , occupation, or vocation

or occupational skills for a consideration, reward, or promise of

whatever nature any kind. Proprietary school includes, but is not

limited to, a private business, trade, or home study school.

Proprietary Career school does not include any of the following:

     (i) A school or college possessing authority to grant degrees.

     (ii) A school licensed or approved by law through another board

or department of this state.

     (iii) A school maintained or a program conducted, without

profit, by a person for that person's employees.

     (b) "Department" means the department of labor and economic

growth.

     Sec. 2. (1) A license shall not be issued until the applicant

The department shall not issue a license to a career school under

this act unless the career school has operated in this state under

a temporary permit from the department in a manner satisfactory to

the board department and until the board department has approved

the method and content of the advertising, the standards and the

methods of instruction, the personnel, and the operating and

instructional practices of the school.

     (2) A The department may grant a temporary permit to operate

as a proprietary career school may be granted on the basis of based

on a written proposal submitted in the manner and form prescribed

by the board department. The proposal shall include plans for

facilities, instructional procedures, personnel, business

standards, and operating and instructional practices which that

comply with this act and with rules promulgated under this act. A

temporary permit issued under this act shall be is not valid for

not more than 1 year. If the applicant The department may renew the

temporary permit of a career school that continues to comply with

this act and the rules promulgated under this act. , a temporary

permit may be renewed.

     Sec. 2a. (1) The board department shall provide for adequate

inspection of all proprietary career schools. The board department

shall promulgate rules pursuant to under the administrative

procedures act of 1969, Act No. 306 of the Public Acts of 1969,

being sections 24.201 to 24.315 of the Michigan Compiled Laws 1969

PA 306, MCL 24.201 to 24.328, and employ the personnel necessary to

carry out administer this act. A proprietary career school shall

submit reports required by the board department and shall make

available to authorized representatives of the board department all

records pertaining to the instructional program of the school or to

any individual student or enrollee.

     (2) The board department shall set and collect fees for

licenses, temporary permits, and renewals issued under this act.

The fees shall be used solely for administrative expenses incurred

under this act.

     (3) The board department shall exercise jurisdiction and

control over proprietary career schools and solicitors for

proprietary career schools consistent with this act and Act No. 40

of the Public Acts of 1963, being sections 395.121 to 395.125 of

the Michigan Compiled Laws 1963 PA 40, MCL 395.121 to 395.125.

     Sec. 2b. A proprietary career school shall provide the board

department with evidence of surety conditioned to provide

indemnification to a student suffering loss because of inability to

complete an approved course or program of study due to the closing

of the proprietary career school. A The surety may consist of a

bond, the amount of which shall be determined according to rules

promulgated by the board department. Surety shall expire on June 30

following the date of issuance and the career school must submit

proof of renewal shall be submitted to the board prior to

department before the date of expiration. Failure Any failure to

submit evidence of surety shall invalidate invalidates a license to

operate as a proprietary career school. This section does not apply

to a proprietary career school with that has a license issued by

the board prior to under this act before November 2, 1967.

     Sec. 2c. A career school licensed under this act shall publish

a grievance procedure for students that includes a right to file a

complaint with the department for any violation of this act or

rules.

     Sec. 2d. (1) A career school may sell goods produced or

services provided by a student enrolled in an educational program

operated by the school if all of the following are met:

     (a) The program includes classroom study and practical

training.

     (b) Any practical training included in the program is

supervised by a member of the faculty.

     (c) It is an integral part of the program that the student

engage in producing the goods or providing the services as part of

his or her practical training.

     (d) Income from the sale of goods produced and services

provided by students in the program does not exceed 15% of the

program's total annual income.

     (e) Money from the sale of the goods or services is used

solely to support the school and does not involve pecuniary gain or

profit or any other advantage or compensation for its officers,

directors, shareholders, members, or faculty.

     (f) The school does not charge a student a monetary penalty or

increase his or her program hours beyond the number approved by the

department if he or she does not attend any practical training.

     (g) A student engaged in producing goods or providing services

as part of his or her practical training does not displace a

regular employee.

     (h) A student enrolled in the program is not responsible for

recruiting purchasers of the goods or services.

     (i) The school provides a written notice to any student

applying to participate in the program and any prospective

purchasers of goods and services that discloses that the goods and

services are provided by students.

     (j) The school has obtained the approval of the department

described in this section.

     (2) A career school shall not operate an educational program

described in subsection (1), or sell goods produced or services

provided by a student enrolled in that program, without the written

approval of the department.

     (3) An approval or renewal of an approval under this section

is valid for 1 year.

     (4) The department may renew an approval described in this

section if the career school continues to comply with this section

and any rules promulgated under this section. A career school

requesting renewal of an approval shall submit an application for

renewal to the department, in the form prescribed by the

department, and include with the application any financial

information requested by the department that demonstrates the

career school's compliance with subsection (1) in the preceding

year.

     (5) The department shall revoke an approval granted under this

section if the career school's license under this act is revoked.

The department may revoke an approval granted under this section at

any time if the department determines that the career school to

which the approval is granted is not complying with this section or

any rules promulgated under this section.

     (6) Any financial information provided to the department by a

career school under this section is confidential and is not subject

to the disclosure requirements of the freedom of information act,

1976 PA 442, MCL 15.231 to 15.246, except that disclosure of

financial information may be made in any of the following

circumstances:

     (a) With the written consent of the school.

     (b) Pursuant to a court proceeding.

     (c) The disclosure is made to an agent or employee of the

department.

     (d) The disclosure is made to an agent or employee of a state

or the federal government authorized by law to see or review the

information.

     Sec. 3. (1) In lieu of revocation under section 1(3), the

department may assess an administrative fine against a career

school of not more than $1,000.00 for a violation of this act or

rules promulgated under this act. However, the department may not

assess administrative fines under this subsection against a career

school that in the aggregate are more than $10,000.00 for multiple

violations of this act or rules promulgated under this act that

arise from the same transaction.

     (2) A person who career school that violates this act shall be

and has its license revoked, or that operates in this state without

a license, is guilty of a misdemeanor , punishable by a fine not to

exceed $1,000.00 of not more than $50,000.00, or imprisonment for a

period not to exceed 90 days not more than 1 year, or both.