Submission of Required Annual Financial Statements and Statistical Reports

Number: 
28-0909
Date Issued: 
09/22/2009
Updated: 
11/01/2016

General Policy

Section 5001(4)(e)(i) of Education Laws requires that:

Licensed private career schools and candidate schools shall submit such certified statistical reports and annual financial statements as required by the commissioner. The commissioner may require audited statistical reports upon a determination that a school has provided false or inaccurate certified statistical reports. The financial statements shall be based on the fiscal year of the school and shall also include an itemized account of tuition refunds due and owing to past or presently enrolled students. Statistical reports shall include, but not be limited to, enrollment, completion and placement data. The commissioner shall use such financial statements and statistical reports submitted for the purposes of licensure of schools, establishing fees or assessments pursuant to this article and determining standards pursuant to paragraph b of subdivision five of section five thousand two of this article.

 

It is imperative that licensed private career schools and ESL schools timely and completely submit the financial statements that their schools are required to submit, so that BPSS may timely and accurately determine the financial viability of the schools it licenses (or certifies, in the case of ESL schools). If schools do not timely and completely submit these statements, they are subject to disciplinary action under Education Law Section 5003. In particular, Education Law Section 5003(6)(a) permits the Commissioner to impose a penalty of up to $3,500 (or up to $7,000 for the same violation committed within the previous five years), for any failure by any school to timely and completely submit required financial statements, or, in the case of licensed private career schools, statistical reports.

Required Financial Reports

Education Law Sections 5001(4)(e)(ii) and (iii) further prescribe the frequency (annual) and type of financial statement (audited or unaudited) that private career schools must submit based on the amount of their gross tuition income including some financial aid, and how the statement must be prepared. They also furnish the Commissioner with authority to require an audited statement to be submitted in certain circumstances where ordinarily an audited statement would not be required. The Commissioner’s regulations at 8 NYCRR Part 126.8 state substantially similar financial reporting requirements for licensed private career schools, in order to permit the Commissioner to determine “the adequacy of resources beyond all indebtedness available for instruction purposes and to ensure financial viability of the school to meet its obligations to all enrolled students.”

8 NYCRR Part 126.10(j)(11)(i) of the Commissioner’s regulations sets forth similar financial reporting requirements for English as a Second Language (ESL) Schools. That provision requires that ESL schools must similarly submit financial statements as follows:

Any [ESL] school which received $500,000 or more in gross tuition in a school fiscal year shall be required to submit to the commissioner an annual audited statement of revenue prepared in accordance with generally accepted accounting principles for that fiscal year. In addition, any school which has a gross tuition of less than $500,000 in a school fiscal year shall file with the commissioner either an audited statement of revenue or an unaudited reviewed statement of revenue provided, however, that any such school shall file an audited statement of revenue the fiscal year after an unaudited reviewed statement of revenue is submitted. For such schools, audited statements of revenue are required every two years, at minimum, with unaudited reviewed statements of revenue allowed during the alternate year.

8 NYCRR Part 126.10(j)(11)(i) similarly furnishes the Commissioner with authority to require an audited statement of revenue from ESL schools in certain circumstances where ordinarily an audited statement would not be required:

Upon a determination by the commissioner that a school has submitted false or inaccurate statements or that a significant, unsubstantiated decline in gross tuition has occurred, the commissioner may require any such school to file an audited statement of revenue pursuant to this paragraph even during alternate years when unaudited reviewed statements would ordinarily be allowed.

July 1st is the annual deadline by which both licensed private career schools and ESL schools must make the foregoing submissions of their school’s financial statements.

A complete financial statement includes:

  • It must be prepared in accordance with Generally Accepted Accounting Principles (GAAP) in the USA.
  • An Independent Auditor’s Opinion (either audited or reviewed, depending on the type of statement required to be submitted that year)
  • A Balance Sheet
  • A Statement of Income and Retained Earnings
  • A Statement of Cash Flows
  • Notes to the Statements (either audited or reviewed, depending on the type of statement required to be submitted that year)

Required Statistical Reports

In conjunction with Education Law Section 5001(4)(e)(i), 8 NYCRR Part 126.10(f) of the Commissioner’s regulations prescribes that “[e]ach school shall submit annual statistical reports on forms prescribed by the commissioner”, and specifically identifies what exactly must be submitted with such reports. The Bureau of Proprietary School Supervision (BPSS) considers that these statistical reports are sufficiently constituted by what is known as the Occupational Educational Data Survey. You may read about the specific contents of the Occupational Educational Data Survey, and what it is required to contain, at the following link:

 http://www.acces.nysed.gov/common/acces/files/bpss/oeds_annual_reporting_requirements_2015.pdf

BPSS has fixed April 15th as the annual deadline for licensed private career schools to file their Occupational Educational Data Surveys. ESL schools are not required to submit statistical reports.

Process of Reporting

This Policy Guideline has been necessitated by the inordinately large number of schools that have failed in recent years to comply with their reporting obligations as outlined herein. This Policy Guideline will accordingly set forth a schedule of civil penalties that BPSS will seek to impose against schools through informal settlement agreements when they fail to comply with the foregoing requirements. This schedule recognizes that the failure to timely and completely submit either a financial statement or an Occupational Educational Data Survey is in the nature of a statutory and regulatory violation, but it also recognizes that successful submission of such documents is an indispensable requirement that must be met without exception in order for BPSS to effectively regulate the schools it licenses or certifies.

Therefore, in order to be considered to have complied with the requirement that schools submit annual financial statements and statistical reports, those documents must be submitted to BPSS timely, i.e., by the deadline without exception: July 1 (in the case of financial statements), and April 15 (in the case of the Occupational Educational Data Survey for licensed private career schools).

These documents must also be submitted. This generally will mean uploading them to the BPSS web-based system, although the documents may be submitted to BPSS by U.S. postal mail if uploading them cannot be accomplished as described further below. It is anticipated that, in general, schools should be able to upload their financial and statistical reports electronically in most, if not all, cases. BPSS encourages manual submission of such documents to be avoided where possible.

Finally, in order to comply with the reporting requirements that this guideline has described, the documents timely submitted must be complete. This means that they must be submitted in the correct form, and must contain the information they are supposed to contain. Thus, for example, a school required to submit an audited financial statement must submit an audited, not an unaudited, statement (which also must satisfy the bulleted criteria above). Similarly, an Occupational Educational Data Survey must be completely filled out and must not be missing material information.

Again, the timeliness of a school’s required submissions is assessed as of the respective deadlines for financial statements (July 1) and the Occupational Educational Data Survey (April 15). If a school has technical difficulty uploading documents, it must immediately memorialize that fact in an email to Connie Tully at connie.tully@nysed.gov which informs her of the nature of the technical problem in sufficient detail that it may be attempted to be solved. Ms. Tully will then place the school on a schedule of compliance by means of email (e.g., instructions to try to upload the required documents again in 72 hours, etc.), in order to avoid the due date for submission passing before the document(s) in question can be successfully uploaded due to continuing technical problems. A school must, in this manner, document any technical problem(s) it has uploading documents to the BPSS web-based system. Otherwise, BPSS will reject any claim by any school that it experienced technical difficulties with the web-based system.

Penalties for Late or Incomplete Submissions

If a deadline for submission passes, a school will be deemed to have made an timely submission only if it can document its correspondence with BPSS which demonstrates that it was permitted to upload the submission (or provide it through some other means) after the applicable deadline.

The schedule of civil penalties that BPSS will seek to impose against schools that fail to comply with the above-described requirements is as follows:

First Violation

$500

Second Violation

$1,000

Third Violation

$2,000

Fourth Violation

$3,500

Fifth Violation

$3,500 (or $4,000 for violation within the previous five years)

Sixth Violation

$3,500 (or $5,000 for violation within the previous five years)

Seventh Violation

$3,500 (or $6,000 for violation within the previous five years)

Eighth Violation

$3,500 (or $7,000 for violation within the previous five years)

$3,500 is the maximum fine that the Commissioner may impose for a school’s failure to comply with the foregoing requirements (or up to $7,000 for the same violation committed within the previous five years). Education Law Section 5003(6)(a), however, permits the Commissioner to impose a civil penalty that is greater than $3,500 for any violation that is repeated within five years of the previous violation. BPSS will impose these greater fines accordingly as shown in the above table.

Questions and Concerns

Any questions or concerns may be directed to Connie Tully at connie.tully@nysed.gov.

Effective Date

This Policy Guideline will become effective, and will begin to be applied, to both financial and statistical reporting requirements, in 2017. Financial reports are due - for the school’s fiscal year ending in 2016 - on or before July 1, 2017. The statistical reporting requirements (OEDS) are due on or before April 15, 2017 for the program period reflecting July 1, 2015 - June 30, 2016. The same July 1st and April 15th due dates will be applicable every year thereafter.