Repeal of Obsolete Provisions
This rule repeals obsolete retroactivity provisions contained related to reimbursement claims filed with the department prior to November 1, 2000.
Fiscal Estimate
DATCP estimates that this rule will save $180,000 for the agricultural chemical cleanup fund each year. This includes the following projected savings:
•By lowering the cleanup cost reimbursement rate from 80% to 75% (as required by current law), DATCP will save approximately $160,000 each year.
•By paying reimbursement claims on a first-come, first-served basis instead of installments, DATCP will save approximately $20,000 in interest costs each year.
DATCP estimates that it will save an additional $50,000 each year by reducing the reimbursement rate for repeat spills. But DATCP estimates that these savings will be offset, each year, by $50,000 in additional reimbursement payments related to concrete structure removal and private well replacement.
Initial Regulatory Flexibility Analysis
This rule affects businesses that clean up spills of fertilizers and pesticides in Wisconsin. Currently more than 360 businesses are involved in fertilizer or pesticide cleanups. Most of the cleanups occur at farm centers, agricultural dealerships and agricultural cooperatives. Many of these businesses are “small businesses" as defined in s.
227.114 (1) (a), Stats.
This rule will affect the reimbursement of spill cleanup costs. But this rule will not, by itself, have a major impact on small business. This rule merely implements a reimbursement rate reduction that the Legislature has already mandated. The rule changes expedite reimbursement payments, and increase reimbursement eligibility for certain cleanup costs. Small businesses will not need additional professional services to comply with this rule.
This rule will reduce reimbursement rates for repeat spills. However, businesses handling agricultural chemicals can participate in the department's Environmental Partners program to minimize their risk of repeat spills.
Environmental Assessment
DATCP has prepared an environmental assessment on this rule. You may obtain a free copy of the environmental assessment by contacting the Wisconsin Department of Agriculture, Trade and Consumer Protection, Division of Agricultural Resource Management, 2811 Agriculture Drive, P.O. Box 8911, Madison WI 53708, or by calling (608) 224-4523. Copies will also be available at the hearing.
Fertilizer Tonnage Fees Used to Fund the Agricultural Chemical Cleanup Program (ATCP 40)
The department of agriculture, trade and consumer protection (DATCP) currently administers an agricultural chemical cleanup program under s.
94.73, Stats. The program is partly funded by fertilizer tonnage fee surcharges.
Fertilizer manufacturers and distributors currently pay tonnage fees and surcharges, based on their annual gross sales of fertilizer in this state. Under current rules, manufacturers pay a surcharge of 38 cents per ton to fund the agricultural chemical cleanup program. This rule increases the surcharge to 86 cents per ton, as authorized by
2003 Wis. Act 33. The new surcharge will apply to fertilizer distributed after July 1, 2004, with initial payment due in August 2005.
This rule also updates current rules to reflect fee changes made by
1999 Wisconsin Act 9 (DATCP has already changed its fee collections according to reflect the statutory changes). The statutory changes decreased the basic fertilizer inspection fee by 2 cents per ton, and added a fertilizer weights and measures inspection fee of 2 cent per ton.
Fiscal Estimate
This rule will increase fertilizer tonnage fee revenues deposited to the agricultural chemical cleanup fund. The increased fee revenues will help finance the reimbursement of agricultural chemical spill cleanup costs, and reduce a projected deficit in the fund. In recent years, the fund has expended from $3.6 to $3.9 million per year in reimbursement payments, whole generating only $2,614,000 in annual revenues.
The fund had a substantial reserve until recently, but that reserve dropped below $200,000 at the end of FY 2002-03. Fiscal year 2003-04 is expected to end with unreimbursed claims (a deficit) of $784,000. Those claims (and associated interest expenses) must be reimbursed in subsequent years.
Initial Regulatory Flexibility Analysis
This rule affects tonnage fees paid by businesses (approximately 500) that are licensed to manufacture or distribute fertilizer in Wisconsin. This rule may indirectly affect farmers, landscape businesses and other persons who purchase and use fertilizer, to the extent that tonnage fee costs are passed on to those purchasers. Some of the affected businesses are “small businesses" as defined in s.
227.114 (1) (a), Stats.
This rule will not have a major adverse impact on small business. The rule will generate an additional $624,000 in fees on the 1,300,000 tons of fertilizer sold annually in Wisconsin. These fertilizers have an average price of more than $150 per ton. The fee increase represents a price increase of about 0.3% on an agricultural input that typically has annual price fluctuations of several percent. This rule does not add any new record keeping or reporting requirements for affected businesses.
By increasing revenues for the agricultural chemical cleanup fund, this rule will benefit businesses (including fertilizer manufacturers and distributors) who rely on the fund for reimbursement of spill cleanup costs. Cleanups often cost more than $30,000, and sometimes more than $100,000. This rule will assist small businesses by assuring adequate funding to cover up to 75% of cleanup costs (subject to a $3,000 deductible).
It will also help ensure faster payment of cleanup reimbursement claims.
Notice of Hearing
Educational Approval Board
NOTICE IS HEREBY GIVEN that pursuant to ss.
45.54 (2),
(3),
(10) (c) 4., and
227.11 (2), Stats., and interpreting ss.
45.54 (2),
(3),
(7) and
(10), Stats., the Wisconsin Educational Approval Board will hold a public hearing at the time and place indicated below to consider an order relating to the regulation of for-profit postsecondary schools; out-of-state, non-profit colleges and universities; and in-state, non-profit institutions incorporated after 1991.
Hearing Information
The public hearing will be held:
Tuesday, February 10, 2004 at 1:30 p.m.
8th Floor Board Conference Room
Department of Veterans Affairs
30 W. Mifflin Street
Madison, Wisconsin
Interested persons are invited to present information at the hearing. Persons appearing may provide oral testimony but are urged to submit facts, opinions and argument in writing. Written commentary may also be submitted without making a personal appearance by mail addressed to the Educational Approval Board, 30 W. Mifflin Street, P.O. Box 8696, Madison, WI 53708. Written comments must be received by February 9, 2004 to be included in the official record of rule-making proceedings.
Any person who has a qualifying disability as defined by the Americans with Disabilities Act that requires the meeting or materials at the meeting to be in an accessible location or format must contact the EAB at 608/266-1996 at least ten days prior to the hearing so that necessary arrangements can be made.
Analysis prepared by the Educational Approval Board
This rule will implement provisions related to the creation of a student protection fund. Enabling legislation was contained in the 2003-05 biennial budget (
2003 Wisconsin Act 33). In addition, the rule will clarify a number of existing rule provisions.
-Clarifies that the board approves schools and their programs.
The rule updates a number of outdated references to clarify that the board approves schools and the programs they offer. Although programs are comprised of a series of courses, the board does not approve these courses individually.
-Create provisions related to implementing a student protection fund.
Under current rule, a school subject to board oversight must provide a surety bond in an amount equal to 125% of unearned tuition as a condition of obtaining and retaining approval. The bond is intended to provide indemnification to any student, parent, guardian, or sponsor suffering loss or damage as a result of any fraud or false representation used in procuring enrollment, a violation of school approval and operating requirements, or the student being unable to complete a program because the school failed to perform its contractual obligation.
The board also relies on the surety bond as a measure of a school's financial stability. When applying for a bond, a surety company evaluates a school's finances and assesses the risks for failure. If a school is unable or has trouble securing a bond, it generally means there are underlying financial concerns which the board carefully considers during the approval process.
When establishing the bond level, the board relies on information that is typically included in the school's annual financial statements. Unfortunately, this information can be 12 to 18 months old by the time it is received and analyzed. As a result, bond levels are not always sufficient to fully protect students being served and their sponsors.
For new schools, it is even more challenging to set an appropriate bond level. Because no financial history exists, the board must rely on enrollment and tuition revenue projections from the prospective school. It can be a year or more before reliable data is available to know if the bond was set at an appropriate level. In the past, there have been schools that have closed during this critical “start-up" period and students (and their sponsors) have not been fully protected by the bond.
In an attempt to better protect students, the 2003-05 state budget (
2003 Wisconsin Act 33) included a provision authorizing the board to create a student protection fund. The fund would become the primary mechanism for providing protection to students in catastrophic situations in which a school closes.
This rule requires schools subject to board oversight to pay a new fee equal to $0.50 per $1,000 of adjusted gross annual school revenue (AGASR). The AGASR refers to the amount of revenue remaining after subtracting from gross annual school revenues the amount of refunds actually made to Wisconsin students or their sponsors during the same fiscal year for which the school reported the gross annual school revenues.
The fees generated will be placed into a newly created student protection appropriation. To the extent that the surety bond is unable to fully cover the losses incurred by a student or sponsor when a school closes, the board would be permitted to authorize the full or partial payment of those losses from the student protection appropriation.
Once funding in the student protection appropriation reaches $1.0 million, the fee assessment for schools will no longer be imposed, as required by state statute.
The rule also specifies that unexpended general operating revenues received by the board shall be transferred to the student protection appropriation, except that the board could retain unexpended revenues up to 20 percent of its annual operating budget to manage cash flow variances and unanticipated revenue reductions. Because the board in entirely funded by program revenues, this will help ensure that approved schools do not incur unanticipated fee increases.
-Amend surety bond requirements as a result of creating a student protection fund.
The student protection fund will allow the board to better protect students and their sponsors in school closure situations. Under the student protection fund, the risk of any one school closing will be spread across the more than 125 schools the board approves. At the same time, the student protection fee paid will be more equitable, reflecting not only a school's level of risk but also its ability to pay the fee.
In response to creating the student protection fund, the board will modify the current requirements for surety bonds. Instead of requiring schools to obtain a bond equal to 125 percent of unearned tuition, the board will require schools to carry a fixed bond of $25,000 or 125% of unearned tuition, whichever is less. The rule retains current provisions that allow the board to reduce these bonds if certain criteria are met. However, the rule specifies that no bond could be less than $1,000, or an amount equal to $2,000 for each representative, if any, the school employs. The overall impact of reducing the surety bond levels will more than offset increases from the student protection fee.
-Clarify the instructor qualifications required by the EAB.
Under current rule, a school is required to provide certain information regarding its faculty and/or instructors as a condition of board approval. This rule establishes specific criteria regarding the qualifications faculty members and/or instructors must possess.
-Clarify when newly approved schools are required to submit their 1st payment renewal fee.
The rule clarifies that a new school may defer its first payment renewal fee -- otherwise due no later than September 1st -- until March 1st of the following year.
Fiscal Estimate/Initial Regulatory Flexibility Analysis
This proposed administrative rule will implement the provisions contained in the 2003-05 state budget (
2003 Wisconsin Act 33) creating a student protection fund. Under the statutory provisions of the student protection fund, the Educational Approval Board (EAB) is required to develop rules for a new student protection fee. Funding generated from these fees will be placed in a separate appropriation to make payment to certain individuals who suffer a loss due to the closure of a school that has been approved by the EAB.
Under the proposed rule order, beginning in 2005, schools regulated by the EAB would pay an annual fee of $0.50 per $1,000 of school revenue. Reported school revenues for the 2004 approval year are $92.6 million. It is estimated that school revenues will increase by 10 percent in 2005 to $101.8 million. By applying the $0.50 fee to this figure, it is estimated that $50,900 will be generated in FY 05. The rule also includes a provision in which any unexpended operating revenues of the EAB exceeding a 20 percent reserve would be transferred to the fund.
While the proposed rule order imposes a new fee on schools, it will also reduce the current bonding requirements for schools. Under current rule, a school must obtain a surety bond equal to 125 percent of its unearned tuition, unless the EAB approves a reduction. For the 2004 approval year, schools will be required to obtain over $9.3 million in bond coverage. Based on rate filings with the state's Office of the Commissioner of Insurance, the average cost charged by surety companies is approximately $10 per $1,000 of needed coverage. Therefore it is assumed that the required surety bonds are currently costing schools roughly $93,000 annually.
The proposed rule will modify the surety bond requirement and specify that the maximum surety bond needed would be $25,000 or 125 percent of unearned tuition, whichever is less. This would require total bond coverage of about $2.1 million. Using the same cost information, this level of bond coverage would cost schools approximately $21,000. The resulting $72,000 in savings would offset the $50,900 of costs associated with the new fee.
The overall fiscal impact of this proposed rule on EAB-approved schools will result in estimated net savings of about $21,100. However, individual schools will be affected differently based on their specific financial circumstances. Based on an analysis of individual school information, the proposed rule will result in savings for 55 schools. Forty-four schools will experience an increase of less than $100 and 31 will incur an increase greater than $100.
Although some schools will experience a cost increase, many of them are already experiencing savings because their current bond reflects a reduction granted by the EAB. Thus, the calculated increase may not be representative of the “true savings."
As the amount of revenue generated by schools subject to EAB oversight increases, so will the fees collected under the provisions of this rule. However, under s.
45.54 (10) (cm),
Stats., the EAB is required to discontinue collecting fees to support the student protection fund during the period of time that the balance in the fund exceeds $1.0 million. Assuming that no payments are made from the student protection fund and that unexpended annual operating revenues are transferred into the fund, it is estimated that it will take nearly 10 years to reach the $1.0 million threshold. At that time, schools subject to EAB oversight would no longer be assessed a fee.
Copies of the Rule and Contact Person
Copies of this proposed rule are available from the EAB website <eab.state.wi.us> or upon request to:
Blanca James
Educational Approval Board
30 W. Mifflin Street, 9th Floor
P.O. Box 8696
Madison, Wisconsin 53708
608/266-1996
Questions regarding the rule should be directed to David Dies at 608/267-7733.
