SENATE BILL 548
52nd legislature - STATE OF NEW MEXICO - first session, 2015
INTRODUCED BY
John M. Sapien
AN ACT
RELATING TO HIGHER EDUCATION; INCREASING THE MINIMUM SURETY BOND AMOUNT FOR PRIVATE POST-SECONDARY INSTITUTIONS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 21-23-7.1 NMSA 1978 (being Laws 1994, Chapter 108, Section 12, as amended) is amended to read:
"21-23-7.1. SURETY BOND REQUIRED--ALTERNATIVE SURETY.--
A. A college, university or career school registered or licensed by the department shall post with the department and maintain in effect a surety bond. The bond shall be payable to the department and shall be sufficient in amount to indemnify any student damaged as a result of fraud or misrepresentation by a registered or licensed college, university or career school or as a result of the college, university or career school ceasing operation prior to its students having completed the programs for which they have contracted.
B. The department is authorized to establish the amount of bond required on an individual basis, taking into consideration factors such as the college's, university's or career school's size, number of students and total income and assets of the college, university or career school in the state. In no case shall the bond be less than [five thousand dollars ($5,000)] one million five hundred thousand dollars ($1,500,000) nor shall it exceed [twenty] fifty percent of a college's, university's or career school's gross annual tuition revenue in New Mexico.
C. Surety bonds may be canceled only following delivery of written notice to the department no less than ninety days prior to the date of cancellation. In case of cancellation, the college, university or career school shall provide the department with a like surety or acceptable alternative in order to maintain licensure.
D. As an alternative to a surety bond, a college, university or career school may elect to and the department may require that a college, university or career school establish and maintain a cash deposit escrow account, irrevocable letter of credit or alternative payable to the department in an amount set by the department and subject to rules promulgated by the department. In no case shall the deposit or account required exceed [twenty] fifty percent of the college's, university's or career school's gross tuition annual revenue in New Mexico."
SECTION 2. Section 21-24-5 NMSA 1978 (being Laws 1971, Chapter 304, Section 5, as amended) is amended to read:
"21-24-5. REGISTRATION--SURETY BOND.--
A. No agent representing a proprietary school shall sell any course or solicit students in person or by mail, telephone or similar means in New Mexico for a consideration unless the institution has registered with the [commission] higher education department. The [commission] department shall charge an annual registration fee of not less than five hundred dollars ($500) for each proprietary school and an annual agent fee of not less than one hundred dollars ($100) for each agent operating in New Mexico.
B. Registration shall be made on forms provided by the [commission] department and accompanied by the annual registration fee.
C. The registration shall include a surety bond acceptable to the [commission] department in an amount not less than [ten thousand dollars ($10,000) or more than twenty-five thousand dollars ($25,000)] one million five hundred thousand dollars ($1,500,000). The bond may be continuous and shall be conditioned to provide indemnification to any student suffering loss as a result of any fraud or misrepresentation used in procuring [his] the student's enrollment and shall be supplied by the proprietary school. The surety may cancel the bond upon giving ninety days' notice in writing to the [commission] department and thereafter is relieved of liability for any breach of condition occurring after the effective date of the cancellation.
D. Registration shall not be permitted unless the applying proprietary school agrees to adhere to the [commission] department rules and regulations that provide for a tuition refund policy.
E. Upon ten days' notice, any registration may be suspended by the [commission] department pending a hearing by the [commission] department if the registrant solicits or enrolls students through fraud, deception or misrepresentation.
F. Registration shall be valid for one year, from July 1 through June 30. An application for renewal shall be accompanied by the fee and shall include a surety bond if a continuous bond has not been furnished.
G. The existence of a surety bond shall not be construed as a limitation or impairment of any right of recovery otherwise available, nor shall the amount of the bond be relevant in determining the amount of damages or other relief to which a plaintiff may be entitled.
H. No recovery shall be had by a proprietary school on any contract for or in connection with a course unless the proprietary school had registered at the time that its agent sold or negotiated the contract for the particular course.
I. Registration shall not constitute approval of any course, agent or proprietary school conducting or administering courses. Any representation to the contrary is a misrepresentation within the meaning of Section 21-24-4 NMSA 1978.
J. All fees collected from registration or renewal of registration shall be deposited with the state treasurer's office to the credit of the post-secondary educational institution fund and shall be spent by the [commission] department for the administration of the Out-of-State Proprietary School Act."
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