SB-0786, As Passed House, December 17, 2009

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 786

     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 sections 1, 1a, 2, 2a, 2b, and 3 (MCL 395.101,

395.101a, 395.102, 395.102a, 395.102b, and 395.103), sections 1, 2,

2a, 2b, and 3 as amended and section 1a as added by 1983 PA 60, and

by adding section 2c.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     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 person shall not operate a proprietary

school in this state without a temporary permit or license 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 to a proprietary

school that is accredited by a national or regional accrediting

agency recognized by the United States secretary of education is

valid for 3 years. A license issued under this act to any other

proprietary school is not valid for not more than 1 year. If the

applicant A proprietary school that is issued either a 1-year

license or a 3-year license shall pay an annual license fee set by

the department under section 2a(2). The department may renew the

license of a person 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 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

subsection (5), the department shall not grant a temporary permit

or a license to operate a proprietary school as part of, or in

conjunction with, another business or commercial enterprise which

that utilizes or sells goods or services produced by students.

     (5) A proprietary school may sell goods produced or services

provided by a student enrolled in an educational program operated

by a proprietary school, and the department may not refuse to grant

a temporary permit or license to a proprietary 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. The school shall clearly disclose to

the student in writing before he or she enrolls in the program that

the school intends to sell any goods or services produced by the

student as part of his or her practical training. The school shall

include this disclosure in a signed enrollment agreement between

the school and the student.

     (d) Any customer purchasing goods produced or services

provided by a student in the program is provided written

notification that the individual producing the goods or providing

the services is a student of the school.

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

solely to support the school.

     (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, or

require a student to recruit purchasers of the goods and services,

unless that obligation is clearly disclosed to the student in

writing before he or she enrolls in the program.

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

"proprietary schools act".

     (2) As used in this act:

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

means the department of energy, labor, and economic growth.

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

limited liability company, association, organization, or other

legal entity.

     (c) "Proprietary school" means a school that uses a certain

plan or method to teach a trade, occupation, or vocation 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 school does not

include any of the following:

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

     (ii) A school licensed 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.

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

department shall not issue a license under this act unless the

license applicant has operated 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 a

proprietary 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 person 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 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 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 schools and solicitors for proprietary

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 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 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 proprietary 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 a proprietary school. This section does not apply to a

proprietary school with a license issued by the board prior to

under this act before November 2, 1967.

     Sec. 2c. A proprietary school licensed under this act shall

adopt and publish a written policy that allows students to file a

complaint with the department for any violation of this act or

rules promulgated under this act.

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

department may assess an administrative fine against a proprietary

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

proprietary school that in the aggregate are more than $5,000.00

for multiple violations of this act or rules promulgated under this

act that arise from the same transaction.

     (2) A person who proprietary 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 $10,000.00, or

imprisonment for a period not to exceed 90 days not more than 1

year, or both.