Current through Register Vol. 35, No. 6, March 26, 2024
Standards for reviewing and analyzing financial stability
are a critical component of the institution's overall assessment. The
institution's financial stability will be reviewed by the department to assess
the institutions ability to meet financial obligations including, but not
limited to, obligations to enrolled students. In determining financial
stability of the institution the department shall review the following
requirements:
A. Insurance:
Institutions registered by the department shall maintain valid standard,
commercial liability insurance, worker's compensation insurance, and property
insurance sufficient to protect students, employees, and other citizens from
hazards in the institution's facilities. Where applicable institutions shall
have liability insurance covering students involved in internships at sites and
locations other than the institution.
B. Financial statement analysis: The
department shall consider an institution's financial history when reviewing an
application for registration. In the case where an institution submits an audit
report and management letter provided by a certified public accountant, the
department shall normally accept the report as accurate and rely on the
auditor's professional responsibility to evaluate and to make known their
professional opinion.
C. New
institutions not previously operating in any capacity in any state or
jurisdiction shall demonstrate liquid assets sufficient to operate the
institution for a period of one year exclusive of anticipated revenue from
tuition and fees. These assets shall be sufficient to pay all projected salary
and benefits of employees and the rent, utilities, insurance and other costs of
operating the institution's facilities for a period of one year. If an
institution has audited financials available for the year prior to that of the
application, such audited financials shall be submitted for review. Any new
institution shall submit the following:
(1)
bank statements, investor agreements, any other financial donations or gifts
used to develop the institution;
(2) the institution's projected income
statement certified as accurate by the institution. The income statement must
include details of projected salaries and benefits of employees, rent,
utilities, insurance, any financial obligations made by the institution, and
any other operating costs; and
(3)
any additional information which the department may request.
D. Existing Institutions: If an
institution has previously operated in any capacity in any jurisdiction, it
must submit documents based on the following thresholds:
(1) An institution with seven hundred fifty
thousand dollars ($750,000) or more in gross annual tuition revenue and all
federal Title IV financial aid institutions shall submit, on a schedule set by
the department, an audit report and management letter prepared by a certified
public accountant in accordance with the New Mexico Public Accountancy Act,
Sections
61-28B-1
et seq. NMSA 1978. If the institution has been required to obtain a financial
responsibility composite score as computed using the latest version of the
United States department of education index score formula it shall provide the
score to the department. The financial responsibility composite score must be
1.5 or above as computed using the latest version of the United States
department of education index score formula. The composite score must be
calculated by the United States department of education, a recognized
accreditor, or a certified public accountant contracted at the expense of the
institution.
(2) An institution
with gross annual tuition revenue of two hundred fifty thousand dollars
($250,000) or more but less than seven hundred forty nine thousand nine hundred
ninety-nine dollars ($749,999) shall submit, on a schedule set by the
department, either an audit report and management letter prepared by a
certified public accountant in accordance with the New Mexico Public
Accountancy Act, Sections
61-28B-1
et seq. NMSA 1978 or a review of financial statements prepared by a certified
public accountant in accordance with the New Mexico Public Accountancy Act. If
the institution has been required to obtain a financial responsibility
composite score as computed using the latest version of the United States
department of education index score formula it shall provide the score to the
department. The financial responsibility composite score must be 1.5 or above
as computed using the latest version of the United States department of
education index score formula. The composite score must be calculated by the
United States department of education, a recognized accreditor, or a certified
public accountant contracted at the expense of the institution.
(3) An institution with gross annual tuition
revenue of less than two hundred forty nine thousand nine hundred ninety-nine
dollars ($249,999) shall submit on a schedule set by the department either an
audit report and management letter prepared by a certified public accountant in
accordance with the New Mexico Public Accountancy Act, Sections
61-28B-1
et seq. NMSA 1978, a review of financial statements prepared by a certified
public accountant in accordance with the New Mexico Public Accountancy Act, or
an income statement and balance sheet certified as accurate by the institution.
In addition to the audit report and management letter, the review of financial
statements, or the income statement and balance sheet as described in this
paragraph, the institution shall submit copies of business tax returns and bank
statements for the most current year. If the institution has been required to
obtain a financial responsibility composite score as computed using the latest
version of the United States department of education index score formula it
shall provide the score to the department. The financial responsibility
composite score must be 1.5 or above as computed using the latest version of
the United States department of education index score formula. The composite
score must be calculated by the United States department of education, a
recognized accreditor, or a certified public accountant contracted at the
expense of the institution.
E. Failure to satisfactorily meet financial
requirements: If considerable concern is established as to the institution's
ability to maintain its operation, department staff may contact the school to
request additional information that may influence the institution's financial
picture. If concerns are not addressed through the additional information
provided to the department, a department financial analyst may conduct a second
financial review. If after the second review, substantial doubt remains about
the institution's ability to continue, the department may contract for further
independent review of the records. All costs associated with contracting a
third party independent reviewer will be charged to the institution. Following
review and based on the determination of the department:
(1) the institution may be authorized for
operation; or
(2) the institution
may be placed on probationary status and required to submit a management plan
of action; and
(3) the department
may report the failure to satisfactorily meet financial requirements to the
U.S. department of education and the institution's accreditor. If the issue is
not resolved, the department may take action to forward the file to the
attorney general's office for issuance of a notice of contemplated action to
deny registration.
