Oregon Administrative Rules › Chapter 715 - HIGHER EDUCATION COORDINATING COMMISSION › Division 45 - PRIVATE CAREER SCHOOLS › Section 715-045-0032 - Standards for Financial Reporting

Current through Register Vol. 63, No. 7, July 1, 2024
(1) All private
			 career schools shall submit at initial licensing, and annually thereafter in
			 conjunction with the license renewal, financial information reflecting the
			 fiscal condition of the school at its start-up or at the close of its most
			 recent fiscal or calendar year, whichever is applicable. For such purposes the
			 information submitted shall conform to the following:
(a) At initial application for licensing, the
			 school must submit a business plan based on the major goals of the school for
			 the first two years of operation along with the methods and procedures for
			 achieving the goals. Included as part of the plan will be an opening balance
			 sheet, along with worksheets documenting the source and method of calculation
			 for amounts listed on the balance sheet. The school shall have sufficient
			 capital to provide all the appropriate instruction, support and administrative
			 services (including appropriate comprehensive general liability insurance),
			 staffing, equipment, and facilities. The Executive Director of the Higher
			 Education Coordinating Commission will use financial ratios relevant to the
			 private career school industry, such as those suggested by national
			 professional organizations, accrediting organizations, and other appropriate
			 financial statistics to determine the sufficiency of the planned capital. The
			 plan also shall include a projected income statement showing the projected
			 income and expenses for each of the first two years of operation, with the
			 first year's projections calculated on a monthly basis, and the second year's
			 projections calculated on a quarterly basis.
(b) If the executive director finds
			 sufficient evidence that a particular type or group of career schools faces
			 serious challenges in the procurement of comprehensive general liability
			 insurance that make them unable to obtain this insurance from admitted or
			 non-admitted insurance dealers, the executive director may allow a school to
			 substitute the requirement for comprehensive general liability insurance
			 described in paragraph (a) of this subsection with the requirements listed in
			 subsection (3)(e) of OAR 715-045-0029. The Commission shall post on its website
			 a list of types or groups of career schools subject to the substituted
			 requirements.
(c) If a career
			 school is found to be subject to the substitution regime described in paragraph
			 (b) of this subsection, the career school in question will be required to
			 provide a clear, legible, written notice, in no less than 12 point font, to
			 potential students before they sign an enrollment agreement with the college
			 that the school has no comprehensive liability insurance and may have
			 difficulties reimbursing student's tuition costs in the case where the school
			 becomes financially insolvent. The notice shall state the following:
"PLEASE NOTE: This school does not have general liability
				insurance and as a result, this school MAY BE AT RISK OF FINANCIAL HARM THAT
				COULD LEAD TO SCHOOL CLOSURE. By signing the school's enrollment agreement, YOU
				ARE ACKNOWLEDGING THIS RISK, which may make it more likely that you will be
				unable to obtain a refund of tuition or other fees paid to this school if the
				school is forced to shut down due to expenses incurred due to a LACK OF GENERAL
				LIABILITY INSURANCE or for any other reason."
This notice shall be signed by such potential student as an
				acknowledgement of receipt.
(d) In addition to the licensing requirements
			 cited in paragraph (a), (b), and (c) of this subsection, financial requirements
			 shall be based on a school's ability to fulfill its obligations to students,
			 meet refund obligations, meet operational expenses and other financial
			 obligations, and make the required contributions to the existing tuition
			 protection fund. When the sufficiency of the planned capital is questionable,
			 the executive director may require mechanisms be put in place to ensure the
			 availability of operating funds and funds required to satisfy student tuition
			 refund requests, including but not limited to a letter of credit, or the escrow
			 of unearned tuition funds.
(e) The
			 financial report for license renewal may be prepared by the school owner or
			 competent school personnel for schools with gross annual tuition income of less
			 than $225,000. Such report shall cover the most recent annual accounting period
			 completed. The balance sheet information must clearly show all assets,
			 liabilities, and net worth, while the income statement must clearly show the
			 profit or loss for the fiscal year. Each school also must provide a cash flow
			 statement showing its:
(A) Cash flow from
			 operations;
(B) Cash flow used in
			 investing; and
(C) Cash flow from
			 financing activities.
(f)
			 The information for license renewal must also show total instructional income
			 and expense for the school for the preceding fiscal year, along with supporting
			 worksheets and documentation as provided by the commission. If a school offers
			 both licensed programs and programs exempt from licensure, total instructional
			 income for licensed programs and exempt programs shall be displayed separately
			 so that gross tuition income from which license fees and the tuition protection
			 fund assessment will be computed is clearly identified. At the option of the
			 school owner, expenses may or may not be displayed separately for licensed and
			 exempt programs. The amount of the tuition protection fund assessment required
			 for an initial license will be computed on the basis of projected first year
			 tuition income but shall not be less than a liability limit of
			 $6,250;
(g) At the option of the
			 school, the financial report may be in the format provided by the
			 commission;
(h) Each school must
			 certify in its financial report that all refunds due students have been made
			 and are not in default. If any refund requests are pending, the school must
			 disclose this information along with a status report of the request(s);
			 documentation prepared for accreditation reviews or from reviewed financial
			 reports may be submitted to satisfy this requirement;
(i) In all instances, information supplied
			 must be certified true and correct by the school owner or an authorized
			 representative;
(j) Schools
			 reporting gross tuition income between $225,000 and $1,999,999, inclusive, will
			 submit a reviewed financial report that conforms to Generally Accepted
			 Accounting Principles (GAAP) and is completed and signed by an independent
			 Certified Public Accountant (CPA). In lieu of a reviewed financial report,
			 schools may submit income tax forms if all of the following conditions are met:
(A) The income tax forms were prepared and
			 signed by an independent Certified Public Accountant (CPA), and
(B) The income tax forms are reporting
			 financial information solely for the career school or the organization within
			 which the school function is embedded if the career school is not a legal
			 entity in its own right, and
(C)
			 The school or organization's fiscal year matches the tax year, and
(D) All sensitive information such as social
			 security numbers have been redacted, and
(E) The income tax forms are complete with
			 all related schedules and worksheets and include all information that would be
			 used to prepare a reviewed financial report, and
(F) The requirements of paragraph (f) of this
			 subsection are met. Separate forms displaying tuition costs for licensed
			 programs versus exempt programs and other activities must be included if the
			 career school is embedded within the operation of a larger organization and is
			 not a legal entity in its own right.
(G) Any income tax forms received by the
			 commission that do not meet the requirements of paragraph (h) of this
			 subsection will be shredded upon receipt.
(k) Schools that are accredited and offer
			 students state or federal financial aid may not submit income tax forms and
			 must submit an audited financial report signed by an independent Certified
			 Public Accountant, regardless of amount of gross tuition income.
(l) Schools reporting gross tuition income of
			 $2,000,000 or more will submit an audited financial report that conforms to
			 Generally Accepted Accounting Principles, (GAAP), Generally Accepted Audit
			 Standards, (GAAS), and Statements for Accounting and Review Services (SAARS)
			 currently in effect.