Kentucky Auditor to Examine Board that Oversees For-profit Schools

The state auditor will audit the state Board for Proprietary Education for the first time in more than a decade after a state representative questioned the board’s operations and why 70 students of bankrupt Decker College haven’t received any compensation from a state fund meant to provide financial relief for students at for-profit schools that have closed their doors.

Rep. Reginald Meeks, D-Louisville, who has filed a bill in the General Assembly to restructure the board, emailed state Auditor Crit Luallen Wednesday and asked for the audit. His email referred to an article in The Courier-Journal that reported that 70 former Decker College students who applied more than a year ago for financial relief from the board’s $500,000 Student Protection Fund are still waiting to hear if they will get any money.

“I believe the work of your office would go far to help reestablish public confidence in this Board and help bring to light other issues we as a legislative body should address,” Meeks wrote in his email to Luallen, which he shared with the newspaper.

Terry Sebastian, a spokesman for the auditor, said the auditor’s office has its own concerns about the administration of the fund and will “answer these and any other concerns raised during the audit.”

About 19,000 Kentucky residents attend for-profit schools, which are licensed by the proprietary board.

Outgoing proprietary board chairman Mark Gabis, whose successor was named Tuesday by Gov. Steve Beshear, said earlier this week that the board has been working on responding to the former Decker College student requests, but progress has been slow because the board needs further documentation to determine if the students are eligible for reimbursement from the fund.

The fund has nearly $500,000 that comes from fees paid by for-profit schools operating in Kentucky, but the board has only disbursed $79,837.27 to 24 students since 2002, according to records obtained by The Courier-Journal under the Kentucky Open Records Act. The records don’t indicate that any Decker students have received money, although some disbursements contain incomplete information on the recipient and proprietary school.

Records show that the Kentucky Attorney General’s Office has made repeated appeals since 2008 for the board to help the students. Allison Gardner Martin, a spokeswoman, has said the office is “deeply concerned” that the proprietary board hasn’t compensated Decker students who were saddled with loans and debt after the Louisville for-profit school closed in 2005.

Sen. Vernie McGaha, R-Russells Springs, who questioned last month why the board had not been audited in more than a decade, said Wednesday he supported the audit.

“I have a sneaking suspicion they may find a lack of documentation and oversight,” he said.
In an interview Wednesday, Meeks said he and other lawmakers have questions about the board’s operations, its makeup, whether there’s enough oversight of its finances and whether it is protecting consumers.

The majority of the board’s 11 members are employed by for-profit schools. The board is appointed by the governor, and its composition is determined by a state statute thats calls for three members to be from proprietary schools, three from technical schools and five to represent the public at-large. One of the board’s seats is currently vacant. Meeks’ bill would decrease the number of for-profit representatives on the board.

Beshear appointed Sullivan University System executive David Keene on Tuesday to replace Gabis, whose term expired last summer.

Keene’s appointment begins immediately, said Kerri Richardson, a spokeswoman for Beshear. Keene won’t necessarily repleace Gabis as the chairman, who will be elected by the board at a future meeting.

Richardson said in a statement this week that the governor’s “primary concern is the protection of these students,” who depend on for-profit schools for their education. She said the governor and his office would be working with Meeks and the General Assembly during the legislative session to address concerns about the board, including “discussing ideas about the makeup of this board to ensure the proper oversight of these schools.”

State Attorney General Jack Conway announced in December that his office is investigating seven for-profit schools in the state for aggressive recruiting and other practices that he said may violate Kentucky’s Consumer Protection Act and other state laws. He refused to name the schools being investigated.

Martin said Wednesday that it would be inappropriate for the office to comment on the audit because any criminal findings it may uncover would be referred to the attorney general’s office.


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