An order affecting chs.
EAB 3 and
4 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. Effective 6-1-04.
Summary of Final 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.
Summary of Comments by Legislative Review Committees
No comments were received.
An order affecting ch.
Phar 6 relating to the professional service area requirements where the pharmacist is absent. Effective 6-1-04.
Summary of Final Regulatory Flexibility Analysis
These rules will have no significant economic impact on a substantial number of small businesses, as defined in s.
227.114 (1) (a), Stats.
Summary of Comments by Legislative Review Committees
No comments were received.
An order affecting chs.
Psy 1 and
5, relating to the definition of prohibited dual relationships, the elaboration of the prohibition on exploitative relationships, the responsibility of license-holders to cooperate with board investigations, a requirement to maintain records, and violations of broad orders. Effective 6-1-04.
Summary of Final Regulatory Flexibility Analysis
These rules will have no significant economic impact on a substantial number of small businesses, as defined in s.
227.114 (1) (a), Stats.
Summary of Comments by Legislative Review Committees
No comments were received.
An order affecting ch.
Trans 149, relating titling and registration of homemade, reconstructed or repaired salvage vehicles.
Effective 6-1-04.
Summary of Final Regulatory Flexibility Analysis
The amendments of these rules have no direct affect on small businesses.
Summary of Comments by Legislative Review Committees
No comments were received.
An order affecting chs.
DWD 290 and
293, relating to the adjustment of thresholds for application of prevailing wage rates and payment and performance assurance requirements. Effective 6-1-04.
Summary of Final Regulatory Flexibility Analysis
A final regulatory flexibility analysis is not required because the rule does not affect small business as defined in s.
227.114, Stats.
Summary of Comments by Legislative Review Committees
No comments were received.
