Senate Bill No. 114–Committee on Human
Resources and Facilities
(On Behalf of Department of Education—
Postsecondary Education)
February 13, 2001
____________
Referred to Committee on Human Resources and Facilities
SUMMARY—Revises provisions governing bonding
requirements of certain postsecondary educational institutions. (BDR 34‑399)
FISCAL NOTE: Effect on Local Government: No.
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EXPLANATION
– Matter in bolded italics is new; matter
between brackets [omitted material] is material to be omitted.
Green numbers along
left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).
AN ACT relating to postsecondary education; authorizing the commission on postsecondary
education to establish the amount of the bond required for certain
postsecondary educational institutions; expanding the conditions under which a
bond is required; revising other provisions governing the bonding requirements
of postsecondary educational institutions; and providing other matters properly
relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
1-1 Section 1. NRS 394.480 is hereby amended to read as follows:
1-2 394.480 1. [Each
postsecondary] Notwithstanding the provisions of
1-3 NRS 100.065 to the contrary, each:
1-4 (a) Postsecondary educational institution
initially licensed on or after
1-5 July 1, 1995, [each postsecondary]
shall file with the administrator
a
1-6 surety bond in the amount of $10,000 or in a greater amount
determined
1-7 by the commission for the period of the initial license to operate,
1-8 including any provisional period, or for a period that the
commission
1-9 determines is appropriate.
1-10 (b) Postsecondary educational institution or
other entity not licensed in
1-11 this state which is
authorized to employ one or more agents in this state,
1-12 [and each licensed] shall file with the administrator a surety bond in the
1-13 amount of $10,000 or in a greater amount determined by the
commission
1-14 for the period of the agent’s permit or for a period that the
commission
1-15 determines is appropriate.
2-1 (c) Licensed postsecondary educational
institution [which is adding a
2-2 facility at a new location] that poses a financial risk to the students who
2-3 are enrolled in the institution, as determined by the commission
upon
2-4 application for renewal of a license, shall file with the
administrator a
2-5 surety bond in the amount of
$10,000 [. Except when a surety is released,
2-6 the surety bond must cover:
2-7 (a) The period of the initial
license to operate, including any provisional
2-8 period;
2-9 (b) The period of the agent’s
permit; or
2-10 (c) A] or in a greater amount
determined by the commission for the
2-11 period of the renewal or for a period that the commission
determines is
2-12 appropriate.
2-13 (d) Licensed postsecondary
educational institution that files for a
2-14 change of ownership, shall file with the administrator a surety
bond in
2-15 the amount of $10,000 or in a greater amount determined by the
2-16 commission for the period ending 2 years after the [completion of the
2-17 facility at the new location,
2-18 as appropriate.
2-19 2. A] approval of the change of ownership or for a period that the
2-20 commission determines is appropriate.
2-21 The commission may at any time require a postsecondary educational
2-22 institution to file a new or supplementary bond in an amount and
for a
2-23 period determined appropriate by the commission if the commission
2-24 determines that the institution poses a financial risk to the
students who
2-25 are enrolled in the institution or that the current bond filed by
the
2-26 institution is insufficient to cover all claims, accrued or
contingent,
2-27 against the institution.
2-28 2. Notwithstanding the provisions of NRS 100.065
to the contrary, a
2-29 licensed postsecondary
educational institution shall file with the
2-30 administrator a surety bond
in the amount of $100,000 or 25 percent of the
2-31 annual income of the
institution received from tuition as reported in its
2-32 annual report to the
commission, whichever is greater, if:
2-33 (a) The institution participates in a program of student assistance
2-34 pursuant to the provisions
of [Subchapter IV of Chapter
28 of Title 20 of
2-35 the United States Code (] 20 U.S.C. §§ 1070 et seq.
; [);] and
2-36 (b) In any year, the default rate of the institution published by
the
2-37 Secretary of Education
pursuant to those provisions exceeds the maximum
2-38 allowable default rate
prescribed by federal law or by the Secretary of
2-39 Education pursuant to
federal law.
2-40 Except when a surety is
released, the bond must cover a period ending 2
2-41 years after the date on
which the default rate of the institution is published
2-42 as exceeding the maximum
allowable rate.
2-43 3. The bond required of a
postsecondary educational institution
2-44 pursuant to subsections 1
and 2 must be executed by the entity
that owns
2-45 the institution [or other entity] as principal , [and]
by a surety company as
2-46 surety [.] and by a licensed insurance agent residing in this state. The
2-47 bond must be payable to the
State of Nevada and must be conditioned to
2-48 provide indemnification to
any student, enrollee or his parent or guardian,
2-49 determined by the commission
to have suffered damage as a result of any
3-1 act by the postsecondary
educational institution that is a violation of NRS
3-2 394.383 to 394.560,
inclusive. The bonding company shall provide
3-3 indemnification upon receipt
of written notice of the determination by the
3-4 commission. The bond may be
continuous, but regardless of the duration of
3-5 the bond the aggregate
liability of the surety does not exceed the penal sum
3-6 of the bond.
3-7 4. A surety on any bond
filed pursuant to this section may be released
3-8 after the surety gives 30
days’ written notice to the administrator, but the
3-9 release does not discharge
or otherwise affect any claim filed by a student,
3-10 enrollee or his parent or
guardian for damage resulting from any act of the
3-11 postsecondary educational
institution or agent alleged to have occurred
3-12 while the bond was in
effect, or for an institution’s ceasing operations
3-13 during the term for which
tuition had been paid while the bond was in
3-14 force.
3-15 5. A license or an agent’s
permit is suspended by operation of law
3-16 when the institution or
agent is no longer covered by a surety bond as
3-17 required by this section.
The administrator shall give the institution or
3-18 agent, or both, at least 20
days’ written notice before the release of the
3-19 surety, to the effect that
the license or permit will be suspended by
3-20 operation of law until
another surety bond is filed in the same manner and
3-21 amount as the bond being
terminated.
3-22 6. If any student is
entitled to a refund from an institution pursuant to
3-23 any provision of NRS 394.383
to 394.560, inclusive, the surety shall
3-24 provide indemnification.
3-25 Sec. 2. This act becomes effective upon passage and approval.
3-26 H