Satisfactory Academic Progress (§ 126.4(e)(2))

Current regulations require that schools perform satisfactory academic progress (SAP) evaluations of students but do not specify when, or how often, they must be performed. For example, under current rule, a school might allow students to go through 450 hours out of a 900-hour program before they receive a SAP evaluation, and only receive a second evaluation at the end of the program. The proposed amendment to 126.4(e)(2):

• Ensures that students receive early and frequent feedback related to their academic progress by generally requiring SAP evaluations at the midpoint and endpoint of each quarter or term;

• Clarifies minimum attendance and grade requirements for academic progress and graduation; and

• Creates an early warning provision, where schools must notify students who are not meeting academic or attendance requirements.

Standard of Financial Viability (§ 126.8)

Current law and regulation require licensed private career schools to submit annual financial statements. The Department must review and analyze the financial viability of schools based on these filings. In addition, the Department may take measures to protect student tuition dollars, such as probation or requiring schools with low financial viability to establish a performance bond in the event of a school closure. The field will benefit from a better understanding of the process by which the Department will analyze financial viability or implement probation and other corrective interventions.

The proposed amendment creates a transparent framework and process for assessing the financial viability of all licensed private career schools and certified ESL schools. The framework is adapted from the United States Department of Education’s system of evaluating the financial viability of postsecondary schools. The Department’s Office of Higher Education utilizes portions of this framework in analyzing the financial viability of colleges and universities. It was also utilized by the OSC in its recent program audit of BPSS.

Additionally, current regulation requires certified ESL schools to submit an annual “statement of revenue” as opposed to audited financial statements. However, it is not possible to accurately evaluate the financial viability of schools based on a “statement of revenue.” Indeed, over the past several years, several certified ESL schools have abruptly shut down due to financial issues that the Department was unable to foresee through reviewing such statements. OSC also identified this limitation in the Department’s current process and the attendant risks to students in its program audit of BPSS. As a solution, the proposed amendment repeals the current section 126.8 of the Commissioner’s regulations and adds a new section 126.8 which:

• Establishes clear criteria for assessing the financial viability of schools: schools will be considered financially viable if: (i) the schools’ equity, primary reserve and net income rations yield a composite score of at least 1.5; and (ii) the school is able to meet all of its financial obligations and provide the administrative resources necessary to comply with all licensure or certification requirements.

• Identifies triggering events that may indicate financial viability concerns. Schools must notify the Department within five days of any such triggering event.

• Establishes alternative standards of financial viability. A school that is determined not to be financially viable may be eligible to continue operation by meeting one of the following alternate standards:

Zone alternative. A school that does not meet the general standards of financial viability solely because the composite score falls below 1.5 will be eligible for the zone alternative if its composite score falls between 1.0 and 1.4.

Probation. A school that does not meet the general standards of financial viability and does not qualify for the zone alternative may be placed on probation. By the conclusion of the probationary period, the school must demonstrate that it is financially viable by meeting one or more alternative methods demonstrating financial viability. If the school cannot, and the Commissioner determines that the school’s financial condition continues to threaten its ability to educate students and/or jeopardize student tuition funds, the Department shall schedule a hearing that may result in suspension or revocation of the school’s license.

• Provides that the commissioner may deny, suspend, revoke or decline to renew any license or certification if the commissioner determines that a schools’ financial condition may result in the interruption or cessation of instruction or jeopardize student tuition funds pursuant to Education Law § 5001(5)(c)(3).

• Establishes financial reporting requirements for initial and renewal licensure or certification applications, including the submission of audited financial statements, and requires schools to submit annual financial statements. Previously such requirements only applied to licensed private career schools; the proposed amendment expands such requirements to include certified ESL schools.

School Accountability (§ 126.19)

Current law and regulation require licensed private career schools to submit annual statistical data reports that include information on enrollment, completion, and job-placement data. Although annual data reporting is a core element of school supervision, the current data has limited utility given the lack of clearly-defined data elements and standardized definitions for completion and job-placement rates. In addition, as OSC recognized in its program audit, certified ESL schools are not currently required to submit any data reports. The proposed section 126.19:

• Establishes clearly defined data elements to standardize data collection across schools.

• Establishes standardized definitions for “completion rate” and “job-placement rate.”

• Requires both licensed private career schools and certified ESL schools to submit annual statistical data reports.

• Requires schools to report key summary data in their catalogs and promotional materials.

• Permits the commissioner to establish a school data report system on the Department’s website that includes data determined to be useful for consumers to make informed decisions about whether they should attend a licensed or certified school.

Student Social Security Numbers on Enrollment Agreements (§ 126.7(b)(5))

Current regulation requires student social security numbers to be included on student enrollment agreements, which are jointly signed by a student and school agent. A student’s social security number is highly confidential, and there are other ways to validate students’ identity without including such information on enrollment agreements. The proposed amendment eliminates this requirement, thus providing better data privacy for students.

Required 30-day Notice Prior to School Closure (§ 126.11(c))

Subdivision (c) of section 126.11 of Regulations of the Commissioner requires licensed private career schools to provide the Department with at least 30 days’ notice prior to a school’s closure. This notice helps to ensure that a plan is in place for displaced students and for the maintenance of student records. However, no such regulation exists for certified ESL schools. There have been several cases over the past few years where certified ESL schools have provided minimal or no notice of closure. The proposed amendment closes this gap and ensures that ESL schools provide the same notice to the Department that licensed private career schools must provide.

Prohibition from Enrolling New Students Upon a Denial of Licensure Renewal (§ 126.10(b))

When a school submits a timely and complete application for the renewal of its license to operate, regulation guides that the Department provide schools with a written approval or denial 30 days prior to the expiration of the school license. In the case of a denial, this 30-day notice provides time to teach-out or transition students and implement a plan for the permanent safe-keeping of student records. The proposed amendment ensures that schools do not enroll any students after such a denial but before expiration of its current license.

Academic Standing and Counseling Records (§ 126.11(a))

The proposed amendment requires schools to maintain documentation of the academic standing evaluations and academic counseling in the student record.

Technical Amendments (§ 126.10(j))

The proposed amendment makes technical revisions to subdivision (j) of section 126.10 of the Commissioner’s regulations to clarify that sections 126.8, 126,19, and 126.11(c) of the Commissioner’s regulations are applicable to certified ESL schools. Additionally, such section is amended to remove language that is now superfluous in light of the amendments to section 126.8 regarding financial reporting requirements for certified ESL schools.

Since publication of A Notice of Proposed Rule Making in the State Register on June 23, 2021, non-substantive revisions were made to section 126.4(e)(2)(xi) of the Commissioner’s regulations to clarify that student’s and director’s signature are required only in cases where a student fails to meet SAP standards. Students who meet SAP standards shall still be provided written notice, but such notice will not require student and director signatures. Additionally, non-substantive technical revisions were made to section 126.19(a)(2) to eliminate a repeated subparagraph and renumber such subparagraphs in paragraph (2) accordingly.

These non-substantive revisions do not require any changes to the previously published Regulatory Impact Statement, Regulatory Flexibility Analysis and Rural Area Flexibility Analysis.

The purpose of the proposed rule is to improve the Department’s Bureau of Proprietary School Supervision (BPSS) oversight of postsecondary career schools (licensed private career schools) and for-profit English as a second language schools (certified ESL schools) to maintain educational quality and protect students through the evaluation of schools’ financial viability, the collection and use of school data, and the evaluation of students’ academic progress. Because it is evident from the nature of the proposed amendment that it will have no impact on jobs and employment opportunities, no further steps were needed to ascertain that fact and none were taken. Accordingly, a job impact statement is not required and one has not been prepared.