New York Codes, Rules and Regulations
Title 8 - EDUCATION DEPARTMENT
Chapter II - Regulations of the Commissioner
Subchapter F - Private Schools
Part 126 - Licensed Private Career Schools Or Licensed Private Schools
Section 126.8 - Financial Viability and Reporting

(i) the school's equity, primary reserve, and net income ratios yield a composite score of at least 1.5, using the methodology set forth in federal regulation 34 CFR section 668.172. The composite score shall be calculated at the highest level of ownership; and

(ii) the school is able to meet all of its financial obligations and provide the administrative resources necessary to comply with all licensure or certification requirements. A school is deemed unable to meet its financial or administrative obligations pursuant to this paragraph if:

(i) owes an outstanding liability to the department for the school or any other licensed or certified school, previously licensed or certified school, or unlicensed school for which the owner has or previously had an ownership interest and fails to demonstrate that such liability is being paid in accordance with law, regulation, order, settlement, or other written agreement with the department; or

(ii) owes a liability to the department for any violation of Article 101 of the Education Law or this Part and fails to demonstrate that such liability is being paid in accordance with law, regulation, order, settlement, or other written agreement with the department.

(i) the school's financial statement, regardless of the school's composite score, contains any adverse, qualified, or disclaimed opinions, or any disclosure in the notes to the financial statement that there is substantial doubt about the school's ability to continue as a going concern in accordance with United States generally accepted accounting principles;

(ii) failure to timely and completely pay any assessments that may be due pursuant to sections 5001(9), 5007(10)(d), and 5007(10)(e) of the Education Law, and section 126.10(j)(11) of this Part;

(iii) failure to timely and completely submit any financial statements that may be due pursuant to section 5001(4) of the Education Law and section 126.10(j)(11) of this Part;

(iv) failure to timely pay a student refund where a school is required to pay such refund pursuant to Article 101 of the Education Law and this Part, or under any other law, regulation, or accreditation standard, or any failure to timely pay such refund;

(v) the school has an unacceptable level of annual student dropout/withdrawal rates, as determined by the commissioner;

(vi) the school demonstrates a precipitous decline in student enrollment or gross tuition income, as determined by the commissioner;

(vii) violation of a provision or requirement in a security or loan agreement with a creditor;

(viii) failure to make a timely lease, rent or other debt service payment; or any notice of eviction, order to vacate, or any other event or action that may impact a school's ability to operate at its licensed location;

(ix) issuance of a notice or order by a school's accrediting agency, such as an order to show cause or similar action, that, if not satisfied, could result in the withdrawal, revocation or suspension of institutional accreditation for failing to meet one or more of the agency's standards;

(x) if the school is publicly traded, any material adverse action taken against the school by the United States Securities and Exchange Commission, including but not limited to revocation of registration, delisting, or sanction for untimely or incomplete filing of required reports;

(xi) any notice, order, or action taken by the United States government or an agent or instrumentality thereof that could result in the withdrawal, revocation, or suspension of a school's federal Student Exchange Visitor Program certification; or

(xii) any substantial withdrawal of owner equity from the school by any means that results in, or that the commissioner determines will likely result in, the school's composite score falling below 1.0.

(1) the commissioner approves a plan, submitted by the school, which adequately details the actions the school is taking to improve its financial viability and to mitigate any risk to the interruption or cessation of instruction and to student tuition funds; and

(2) maintains a composite score of between 1.0 and 1.4 or higher for each of its two subsequent fiscal years.

(i) A school placed on probation shall submit reports on its financial condition as directed by the commissioner. Such report shall be on a form and shall include content prescribed by the commissioner and shall be reviewed by the commissioner to determine the school's financial viability. The commissioner may require that this report be completed by an independent auditor.

(ii) During the probationary period, the school and the department shall make efforts to resolve the problems at the school, through the school's demonstration of alternative methods of financial viability acceptable to the commissioner. Alternative methods of demonstrating financial viability may include:

(iii) By the conclusion of the probationary period, the school must satisfactorily demonstrate to the commissioner that it is financially viable by meeting one or more alternative methods of demonstrating financial viability set forth in this subdivision, or the general standards set forth in subdivision (a) of this section. If the school cannot demonstrate to the commissioner that it is financially viable by one or more methods set forth in this subparagraph, and if the commissioner determines that the school's financial condition continues to threaten its ability to educate students and/or jeopardize student tuition funds, the commissioner shall schedule a hearing pursuant to subdivisions (2) and (3) of section 5003 of the Education law, to consider suspension or revocation the school's license.

(i) a balance sheet of the corporate entity or partnership with a certification of accuracy signed by the individual shareholders of the corporation or partners, and dated not more than 30 days prior to the date of the license application;

(ii) a certificate of incorporation for a corporate entity, or a partnership agreement for a partnership;

(iii) a statement indicating the location and type of all bank accounts held by the corporate owners or partners in their official capacities;

(iv) audited financial statements for the previous two fiscal years.

(v) a projected operating budget, including all projected expenses, revenues, profits and losses, by month, for two consecutive 12-month periods (the first two projected years) for initial licensure; and

(vi) such other information as the commissioner may require regarding the adequacy of the applicant's resources beyond all indebtedness available for educational purposes and to ensure the capability of the prospective school to meet its financial obligations.

(i) Any school that received five hundred thousand dollars or more in gross tuition in a school fiscal year shall be required to submit to the commissioner an annual audited financial statement prepared in accordance with generally accepted accounting principles for that fiscal year. In addition, any school that has a gross tuition of less than five hundred thousand dollars in a school fiscal year but whose combined state and federal student financial aid in such year equals one hundred thousand dollars or more shall also submit an annual audited financial statement to the commissioner for that fiscal year.

(ii) Schools whose gross tuition is less than five hundred thousand dollars in a School fiscal year and which receive less than one hundred thousand dollars in state and federal student financial aid in a school fiscal year shall file with the commissioner an unaudited financial statement in a format prescribed by the commissioner, provided, however, that any such school shall file an audited financial statement the fiscal year after a reviewed financial statement is submitted. For such schools, audited financial statements are required every two years, at minimum, with reviewed financial statements allowed during the alternate year. 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 financial statement pursuant to this paragraph even during alternate years when reviewed statements would ordinarily be allowed.

(iii) annual financial statements shall be due no later than 120 days from the end of the school's fiscal year. The commissioner may extend this deadline for up to 60 days for good cause shown, as determined by the commissioner.

(iv) annual financial statements shall include the following data, disaggregated by each licensed location: