The Massachusetts House of Representatives, relying in part on a bill filed by Representative Ken Gordon (D-Bedford), addressed the recent closures of colleges and universities by passing legislation on Wednesday that will enable the state to better protect Massachusetts families and help schools deal with closures.
The proposed legislation that passed the House unanimously contains language requiring higher education institutions to make financial reports available to the public annually.
“I am proud that the House included the provisions of my bill requiring Massachusetts colleges and universities to make public financial reports. I filed this legislation because recent closures were devastating to students in my district and throughout the state,” said Rep. Gordon. “This legislation ensures that Massachusetts residents have the information they need to make decisions about their future and that our higher education institutions are properly equipped to handle the risk of closing.”
The bill also requires any institution facing financial risk of closure to develop contingency plans to ensure a process is in place to assist and inform its students and other stakeholders. The legislation relies on Rep. Gordon’s language to establish financial penalties on institutions for non-compliance with reporting and requires ethics and fiduciary training for higher education trustees and board members.
“This legislation will increase the transparency of the financial health of our public institutions of higher education requiring increased oversight, reporting, and accountability to protect students, families, and staff,” said House Speaker Robert A. DeLeo (D-Winthrop). “I’m proud of the work Chair Jeffrey Roy has done to lead this effort with the support of Chair Aaron Michlewitz and Representative Kenneth Gordon.”
“This legislation supports and strengthens our higher education system and these vital engines of opportunity, and in so doing, protects the interests of students and families,” said Representative Jeffrey Roy, Chair of the Higher Education Committee (D-Franklin). “The financial screening and enhanced reporting provisions will help us keep Massachusetts at the top of the heap and avoid the significant negative consequences of college closures for students, staff, and host communities. The training provisions will strengthen the governance of these institutions and assist boards in exercising their fiduciary responsibilities.”
The four major provisions of the bill address the following topics listed below.
- Financial reporting: Requires that all public higher education and independent institutions post on their websites a copy of the institution’s financial report and a summary written in terms understandable by the general public.
- Financial screening: Enables the Board of Higher Education (BHE) to monitor the financial health of independent institutions of higher education in Massachusetts.
- Requires an independent institution to immediately notify BHE of any known financial liabilities or risks likely that may result in closure.
- Requires BHE to annually conduct a financial screening of each institution and identify any institution it deems may be at risk of imminent closure. The BHE will keep confidential those assessments for independent institutions unless it is determined an institution is at risk of closure.
- The BHE may accept the results of an annual financial screening conducted by an accrediting agency authorized by the U.S. Department of Education.
- An institution determined to be at risk of imminent closure must prepare a contingency plan for closure, which includes a process to provide notice to a variety of stakeholders including, students, faculty, staff, pending applicants, and host communities. The closure plan must also include:
- arrangements for students to complete their program of study;
- a plan for the maintenance of student records; and,
- provide funding for refunding any student deposits and for the cost of protecting and maintaining student records.
- Enforcement: Requires penalties for failure to comply with financial screening requirements, which include fines of up to $1,000 per day, suspension of any state funds, or the suspension or revocation of any degree-granting authority.
- Board training: Requires comprehensive training programs for members of the boards of trustees of the state’s public higher education institutions on the proper governance, financial metrics, open meeting law, and their legal and fiduciary responsibilities, at least once every four years.
The bill now goes to the Senate.