Known as an Act to Support Improved Financial Stability in Higher Education, the legislation requires higher education institutions to make public and accessible financial reports and 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 also establishes financial penalties on institutions for non-compliance with reporting and planning. The bill 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.”
“Today the House took a step on improving accountability and the financial stability at our colleges and universities,” said Representative Aaron Michlewitz, Chair of the House Committee on Ways & Means (D-Boston). “By enacting this legislation both our institutes of higher education and our students will be better prepared for the worst case scenario.”
“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 provision 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.
o Requires an independent institution to immediately notify BHE of any known financial liabilities or risks likely that may result in closure.
o 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.
o The BHE may accept the results of an annual financial screening conducted by an accrediting agency authorized by the U.S. Department of Education.
o 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.