News: CJ Exclusives

New Board Begins Licensure of Proprietary Schools

Goal is to streamline approval of specialized, for-profit institutions

Last year’s General Assembly created a new regulatory body that may cut red tape rather than increase it. The new State Board of Proprietary Schools will take the community college board out of the business of licensing these private institutions — many of which focus on training in a specialized trade or field — so that the entrepreneurs who run them can bring students in quickly.

Under North Carolina law, proprietary schools must be licensed by a state authority. The University of North Carolina system is the licensing agency for proprietary schools that offer bachelors’ degrees.

Until this year, the State Board of Community Colleges has been the licensing agency for proprietary schools that offer associates’ degrees, trade certificates, and technical training. Examples of proprietary schools currently licensed include the New Horizons Computer Learning Centers in Charlotte, Fayetteville, Greensboro, and the Triangle; the Carolina School of Broadcasting in Charlotte; King’s College in Charlotte; and the NASCAR Technical Institute in Mooresville.

The legislature passed a law creating the new board last summer. The board replaces the community college board as licensing authority.

When the community college system controlled the licensing process, a conflict existed. The community colleges compete directly with proprietary schools for students.

“It’s always been a little uncomfortable for the community college system to license schools that offer the same kinds of instruction that are offered at the community colleges,” said the North Carolina Community College System’s executive vice-president and chief of staff, Kennon Briggs, after the board’s first meeting.

The chairman of the new Board of Proprietary Schools, Robert Hodge, explained that the NCCCS also benefited by off-loading oversight of the proprietary schools. With the legislature making deep budget cuts, the NCCCS was eager to stop paying the salary costs of staff members who conducted the licensing procedures (the salaries totaled $234,945 during 2011).

Under the new organization, staff salaries will be paid by licensing fees rather than by state appropriations. The fee for initial licensing is $2,500, and the additional site location fee (for those schools with more than one location) is $1,000. The annual renewal fee is $750.

John Pettitt, the new board’s secretary-treasurer, who was the executive director of proprietary schools for the community colleges until last year, said the time was right to create an independent board, not just because of the loss of appropriations, but because the number of proprietary schools is increasing in the state.

Hodge said that he also welcomed the change, because he wanted to end some of bureaucratic red tape proprietors encountered under the old system. He said that the system office had been fair when conducting proprietary school business, but sometimes it moved too slowly for the high-energy entrepreneurs who own such schools.

“Most owners make decisions and want to take action quickly,” he explained. “But then they have to apply for a license, and the government bureaucracy would take a lot of time to process the applications. We thought that if we had our own board, we could eventually turn applications around within 30 days.”

They won’t be able to do so immediately, however. Initially, the Board of Proprietary Schools will function under the authority of the State Board of Community Colleges.

Pettitt said the current situation is intended to be “an intermediate step. Sometime down the road the proprietary board will become independent, but until everyone learns the ropes and gets familiar with the issues, they will make recommendations to the community college board.”

To give some idea of the scope of the new board’s responsibilities, during the 2011-12 fiscal year the community college board licensed or renewed the licenses for 80 schools. The board has received 12 new applications this fiscal year and thus far has approved seven of them.

While the board technically does not reject applications, it occasionally delays the licensure of some schools, listing them as “pending.” Briggs explained that the current five schools with licenses that have not yet been approved “did not meet 100 percent of the criteria for licensure or re-licensure, and as such they remain pending until they are withdrawn by the applicant or can be recommended to the state board for approval.” Briggs added that the board’s staff work with the schools to help make them suitable for licensure.

Jay Schalin is state policy director for the John W. Pope Center for Higher Education Policy.