N.Y. Education Law § 5001: Licensed private career schools

§ 5001. Licensed private career schools. 1. Schools required to be

licensed. No private school which charges tuition or fees related to

instruction and which is not exempted hereunder shall be operated by any

person or persons, firm, corporation, or private organization for the

purpose of teaching or giving instruction in any subject or subjects,

unless it is licensed by the department. As used in this article:

a. "licensed private career school" or "licensed private school" shall

mean any entity offering to instruct or teach any subject by any plan or

method including written, visual or audio-visual methods, and shall

include any institution licensed or registered as a registered business

school or computer training facility on the effective date of chapter

three hundred eighty-one of the laws of two thousand twelve. Following

such effective date, there shall be no distinction between institutions

previously defined as "registered business schools" or "computer

training facilities" and other licensed private schools, and any

reference in law to a registered business school or computer training

facility shall be deemed a reference to a licensed private career

school. Institutions holding a valid business school registration on

such effective date, including computer-training facilities, shall have

such registrations replaced by the commissioner, at no cost, with

licenses valid until the expiration date listed on such previous

registration;

b. "certified English as a second language school" or "certified ESL

school" shall mean a language school conducted for-profit which provides

instruction in English as a second language and which accepts no public

funds and is certified pursuant to paragraph f of subdivision four of

this section; and

c. "online education marketplace" shall mean a website or other

internet-based online technology tool with which a licensed private

career school or certified ESL school contracts for marketing or

advertising services, or services in connection with the collection of

tuition and/or fees, to the extent authorized in subdivision three of

section five thousand four of this article.

2. Exempt schools. The following schools are exempted from the

licensing requirement of this section:

a. institutions authorized to confer degrees in this state;

b. schools providing kindergarten, nursery, elementary or secondary

education, except schools conducted for profit which provide instruction

in English as a second language or preparation for high school

equivalency examinations to out-of-school youth or adults;

c. schools operated by governmental agencies or authorities;

d. schools which engage exclusively in training of students with

disabilities as defined in section forty-four hundred one of this

chapter;

e. schools conducted on a not-for-profit basis by firms or

organizations for the training of their own employees only, provided

that such instruction is offered at no charge to such employees, or by a

fraternal society or benevolent order for its members or their immediate

relatives only;

f. schools which provide instruction in the following subjects only:

religion, dancing, music, painting, drawing, sculpture, poetry, dramatic

art, languages, reading comprehension, mathematics, recreation, yoga,

martial arts, pilates and athletics, including the training of students

to teach such subjects, provided, however, that schools conducted for

the purpose of training personal trainers shall be excluded from this

exemption and shall be required to obtain licensure;

g. schools in which the course of instruction is licensed, registered

or approved under any other section of this chapter or by any other

department or agency of the state;

h. schools which provide instruction designed solely for giving flight

training and/or related ground school instruction;

i. schools in which instruction designed solely to prepare applicants

for admission to professional licensing examinations administered by the

department pursuant to title eight of this chapter, and applicants for

examination for admission to the practice of law;

j. schools which offer continuing education courses exclusively for

individuals licensed by the department pursuant to title eight of this

chapter and for individuals admitted to the practice of law;

k. schools which provide instruction given exclusively to employees of

a person or organization which has contracted with another person or

organization to provide such instruction at no cost to the employees;

l. conferences, trade shows, workshops, seminars, institutes or

courses of study offered and sponsored either jointly or individually by

recognized trade, business or professional organizations for the benefit

of their membership;

m. schools that limit their total conferences, trade shows, workshops,

seminars, institutes or other course offerings to no more than twice in

one calendar year with each of those offerings for no more than five

days;

n. schools which provide instruction exclusively to persons employed

full-time or part-time in the field in which instruction is being

offered, where the instruction is provided to meet continuing education

standards required for professional licensure as defined by law in this

state;

o. schools in candidacy status pursuant to subparagraph (iv) of

paragraph b of subdivision four of this section; and

p. schools which provide instruction in photography exclusively for

non-occupational purposes.

2-a. Schools exempted pursuant to subdivision two of this section may

waive such exemption and apply for a license; provided, however, that

the review of such applications shall be left to the discretion of the

commissioner.

2-b. Programs offered by licensed private career schools to employees

of a person or organization which has contracted with another person or

organization to provide such instruction at no cost to the employees

shall be exempt from the requirements of this article, provided that the

following requirements are met:

a. Only employees of the employer for which the program is being

offered may enroll in classes that make up the program.

b. Certificates or diplomas awarded to students in the program may not

reference in any way the department.

c. Prior to the commencement of the program, such schools shall submit

to the department a disclosure form, prescribed by the commissioner,

copies of which shall be provided to all students in such exempt

program, which shall include but not be limited to the following

information:

(i) a description of the location and time period in which the program

will be offered;

(ii) a statement that the students enrolled in the program shall not

be subject to any tuition liability for the program, even if such

students do not complete the program;

(iii) a statement that the program being provided to the employer has

not been approved by the department and is not under the department's

jurisdiction and that the students in the program have been advised of

the fact; and

(iv) the signatures of the school director or owner of the school and

the representative of the employer for which the program is being

offered certifying the accuracy of the statements on the form.

d. Any additional student openings in a program deemed exempt by the

department may be made available to students not affiliated with the

employer on the condition that such students execute a disclosure form

as prescribed in paragraph c of this subdivision. Such admitted students

shall only constitute up to ten percent of the exempt program's total

capacity.

4. Application, renewal application and application fees. a.

Application and renewal application for a license as a private career

school required by the commissioner shall be filed on forms prescribed

and provided by the department. Except as provided in subparagraph (iii)

of paragraph e of this subdivision, each renewal application for a

private career school licensed pursuant to this section shall include an

audited financial statement audited according to generally accepted

auditing standards by an independent certified public accountant or an

independent public accountant and statistical reports certified by the

owner or operator of the school, as required by the commissioner;

provided, however, that the commissioner shall accept a copy of a

current financial statement previously filed by a school with any other

governmental agency in compliance with the provisions of any federal or

state laws, or rules or regulations if such statement contains all of

the information required under this subdivision and conforms to this

subdivision's requirements of auditing, review and certification. Any

required audit of the financial statement shall be a condition of

licensure and shall be paid for by the school, and the results of the

audit shall be forwarded to the commissioner. Applications not

accompanied by the audits and reports required pursuant to this

subdivision shall not be considered for approval by the commissioner.

Initial applications shall be accompanied by financial reports as

required by the commissioner. The applicant shall receive a written

approval or denial together with the reasons for a denial of such

application.

b. (i) An initial license issued pursuant to the provisions of this

article shall be valid for a period of two years. A renewal of license

issued pursuant to the provisions of this article shall be valid for a

period of four years.

(ii) Every applicant and renewal applicant shall pay to the department

a nonrefundable, nontransferable application fee. The initial

application fee for new schools shall be five thousand dollars, of which

three thousand dollars shall accrue to the credit of the proprietary

vocational school supervision account and two thousand dollars shall

accrue to the tuition reimbursement account. For additional licensed

locations of currently operating schools, the application fee shall be

two thousand five hundred dollars, which shall accrue to the credit of

the proprietary vocational school supervision account. For renewal

applications, the fee shall be based on gross annual tuition income as

determined by the annual financial statements required in paragraph a of

this subdivision for the most recent school fiscal year, according to

the following schedule:

GROSS ANNUAL TUITION INCOME FEE

0-$199,999 $ 750.00

$200,000-$499,999 $ 1,500.00

$500,000-$999,999 $ 2,225.00

$1,000,000-$4,999,999 $ 4,500.00

$5,000,000-$9,999,999 $ 9,000.00

$10,000,000 or above $18,000.00

Such renewal fees shall accrue to the credit of the proprietary

vocational school supervision account. If the evaluation of a particular

course or facility requires the services of an expert not employed by

the department, the department shall retain such expert and the school

shall reimburse the department for the reasonable cost of such services.

(iii) Each school shall display, near the entrance to the school, the

license which has been issued to it. Such authorization shall be

displayed only during the period of its validity.

c. An application for renewal of any license shall be submitted at

least one hundred twenty days prior to the expiration date of the

current authorization to operate accompanied by the nonrefundable

application fee and such certified statistical reports and annual

financial statements required pursuant to this subdivision.

d. When complete and timely application has been made for renewal of

any license, the school shall receive a written approval or denial,

together with the reasons for denial of renewal, from the commissioner

no less than thirty days prior to the date such license expires.

e. Financial statements and statistical reports. (i) Licensed private

career schools and candidate schools shall submit such certified

statistical reports and annual financial statements as required by the

commissioner. The commissioner may require audited statistical reports

upon a determination that a school has provided false or inaccurate

certified statistical reports. The financial statements shall be based

on the fiscal year of the school and shall also include an itemized

account of tuition refunds due and owing to past or presently enrolled

students. Statistical reports shall include, but not be limited to,

enrollment, completion and placement data. The commissioner shall use

such financial statements and statistical reports submitted for the

purposes of licensure of schools, establishing fees or assessments

pursuant to this article and determining standards pursuant to paragraph

b of subdivision five of section five thousand two of this article. The

attorney general, the comptroller and the president of the higher

education services corporation shall have access to this information

when it is necessary to perform their duties as required by state law.

(ii) Any school which received five hundred thousand dollars or more

in gross tuition in a school fiscal year shall be required to submit to

the commissioner an annual audited financial statement prepared in

accordance with generally accepted accounting principles for that fiscal

year. In addition, any school which has a gross tuition of less than

five hundred thousand dollars in a school fiscal year but whose combined

state and federal student financial aid in such year equals one hundred

thousand dollars or more shall also submit an annual audited financial

statement to the commissioner for that fiscal year.

(iii) Schools whose gross tuition is less than five hundred thousand

dollars in a school fiscal year and which receive less than one hundred

thousand dollars in state and federal student financial aid in a school

fiscal year shall file with the commissioner an unaudited financial

statement in a format prescribed by the commissioner, provided, however,

that any such school shall file an audited financial statement the

fiscal year after a reviewed financial statement is submitted. For such

schools, audited financial statements are required every two years, at

minimum, with reviewed financial statements allowed during the alternate

year. Upon a determination by the commissioner that a school has

submitted false or inaccurate statements or that a significant,

unsubstantiated decline in gross tuition has occurred, the commissioner

may require any such school to file an audited financial statement

pursuant to this paragraph even during alternate years when reviewed

statements would ordinarily be allowed.

f. Alternate licensing provision. The commissioner shall issue

regulations which define alternate licensing or certification

requirements for the following:

(1) correspondence schools in which all approved programs and courses

are under three hundred hours;

(2) schools which are eligible for exemption under this section but

which elect to be licensed;

(3) non-profit schools exempt from taxation under section 501(c)(3) of

the internal revenue code whose programs are funded entirely through

donations from individuals or philanthropic organizations, or

endowments, and interest accrued thereon; and

(4) language schools conducted for-profit which provide instruction in

English as a second language and which accept no public funds.

5. Required disclosure for licensure. a. The commissioner shall

require that each applicant for a license for the operation of a private

career school disclose the following information:

(1) Whether the applicant, or any corporation, partnership,

association or organization or person holding an ownership or control

interest in such school, or any employee responsible in a supervisory

capacity for the administration of student funds or governmental funds,

has been convicted of a crime defined in this article, or any other

crime involving the operation of any educational or training program,

or, in connection with the operation of any such program, a crime

involving the unlawful acquisition, use, payment or expenditure of

educational or training program funds; and

(2) Whether the applicant, or any corporation, partnership,

association or organization or person holding an ownership or control

interest in such school, or any employee responsible in a supervisory

capacity for the administration of student funds or governmental funds

has been convicted:

(A) in this state of any of the following felonies defined in the

penal law: bribery involving public servants; commercial bribery;

perjury in the second degree; rewarding official misconduct; larceny, in

connection with the provision of services or involving the theft of

governmental funds; offering a false instrument for filing, falsifying

business records; tampering with public records; criminal usury; scheme

to defraud; or defrauding the government; or

(B) in any other jurisdiction of an offense which is substantially

similar to any of the felonies defined in clause (A) of this

subparagraph and for which a sentence to a term of imprisonment in

excess of one year was authorized and is authorized in this state

regardless of whether such sentence was imposed; and

(3) Whether the applicant, or any corporation, partnership,

association or organization or person holding an ownership or control

interest in such school, or any employee responsible in a supervisory

capacity for the administration of student funds or governmental funds,

has been finally determined in any administrative or civil proceeding to

have committed a violation of any provision of this article or any rules

and regulations promulgated pursuant thereto, or any related order or

determination of the commissioner, or of any similar statute, rule,

regulation, order or determination of another jurisdiction pertaining to

the licensure and operation of any educational or training program; and

(4) Whether any school owned or operated by the applicant closed or

ceased operation and, if so, whether at the time of the closing the

applicant was subject to a pending disciplinary action, disallowance,

fine or other penalty and whether it owed refunds to any government

agency or students.

b. No application for any license pursuant to this article shall be

denied by reason of disclosure pursuant to this subdivision of the

applicant, or any corporation, partnership, association or organization

or person holding an ownership or control interest in such school, or

any employee responsible in a supervisory capacity for the

administration of student funds or governmental funds unless the

commissioner makes a written determination that there is a direct

relationship between one or more of such previous offenses and the

license sought, or that issuance of the license would create an

unreasonable risk to property or to the safety, education or welfare of

specific individuals or the general public. In making such

determination, the commissioner shall be guided by the factors set forth

in section seven hundred fifty-three of the correction law. For purposes

of this subdivision, "ownership or control interest" means: with respect

to a school that is organized as or owned by a corporation, a position

as an officer or director of such corporation; or, with respect to a

school that is organized as or owned by a partnership, a position as a

partner; or any other interest totaling ten percent or more, whether

direct or indirect, in the total equity or assets of such school.

c. The commissioner may deny, suspend, revoke or decline to renew any

license: (1) if the significance of the convictions or administrative

violations warrant such action; (2) if the commissioner determines that

a school did not make any disclosure required by this subdivision; or

(3) if the commissioner determines that a school's financial condition

may result in the interruption or cessation of instruction or jeopardize

student tuition funds.

6. If, during the period for which a license is granted, the

commissioner determines that a school's financial condition may result

in the interruption or cessation of instruction or jeopardize student

tuition funds, the commissioner may, upon notice to the school, place

the school on probation for a period of no more than one year, during

which time the school and the department must make efforts to resolve

the problems at the school. The school shall submit a report on its

financial condition to the commissioner within the time prescribed by

the commissioner. Such report shall be in the form and shall include

content prescribed by the commissioner and shall be reviewed by the

commissioner to determine the school's financial viability. The

commissioner may suspend or revoke the school's license, as well as

require the cessation of student enrollment, upon a determination that

the school's financial condition continues to threaten its ability to

educate students and/or the student tuition funds. Alternatives for the

school to demonstrate a fiscally sound operation may include securing

and maintaining a performance bond, payable to the commissioner, in an

appropriate amount to eliminate any liability to the tuition

reimbursement account should the school cease operation, limiting the

collection of tuition funds until each student completes the program of

study, or other means acceptable to the commissioner. If no resolution

can be attained, a hearing, pursuant to subdivisions two and three of

section five thousand three of this article will be scheduled. Such

probation may include additional monitoring, inspections, limitations on

enrollment, teaching out some or all of a school's present students or

temporary cessation of instruction.

7. No license granted under this section shall be transferable or

assignable without the approval of the commissioner. Upon transfer or

assignment of any interest totaling twenty-five percent or more, whether

direct or indirect, in the total equity or assets of a school, such

school shall be deemed a new school required to submit a new school

application and obtain a new license pursuant to this article.

Provided, however, that upon such a substantial change in interest, the

previous school license shall remain in effect until the new license is

issued or denied or the previous license expires or is revoked,

whichever occurs first.

8. No licensed school shall discontinue operation or surrender its

license unless thirty days written notice of its intention to do so and

a plan for maintenance of safe keeping of the records of the school is

provided to the commissioner. However, upon good cause shown, the

commissioner may waive the thirty days notice requirement.

9. Annual supervision fund and tuition reimbursement account

assessment. a. The commissioner shall annually assess each school a

total percentage of that school's gross tuition pursuant to subdivision

three of section five thousand two of this article, as determined by the

annual audited financial statement required by this article. This

assessment shall be based upon each school's gross tuition from the

previous year, and shall be payable to the commissioner in equal

quarterly installments which shall be due on June first, September

first, December first and March first.

b. (i) Such annualized assessment shall be one percent for schools

which have paid less than sixteen quarters of assessments, but such

annual assessment shall not fall below five hundred dollars.

(ii) Such annualized assessment shall be eight-tenths of one percent

for schools which have paid sixteen or more quarters of assessments, but

such annual assessment shall not fall below five hundred dollars.

c. (i) Of the total assessment provided for herein, five-tenths of one

percent shall accrue to the credit of the tuition reimbursement account

pursuant to section five thousand seven of this article for those

schools which have paid less than sixteen quarters of assessments. Of

the total assessment provided for schools which have paid sixteen or

more quarters of assessments, three-tenths of one percent shall accrue

to the credit of the tuition reimbursement account pursuant to section

five thousand seven of this article. For schools paying the minimum

five hundred dollars annual assessment, none shall accrue to the tuition

reimbursement account.

(ii) The balance of the total assessment provided for herein shall be

dedicated to fund the department's supervision and regulation of

licensed private schools pursuant to an annual appropriation and an

annual plan of expenditure prepared by the commissioner and approved by

the director of the budget.

d. Payments made within thirty days following the due date shall be

subject to interest at one percent above the prevailing prime rate.

Thereafter, late payments may result in suspension of licensure by the

commissioner. Payments required by this subdivision shall be considered

a condition of licensure.