HB2301 HD1

SECTION 1. The legislature finds that historically, the regulation of private trade, vocational, and technical schools was primarily aimed at ensuring the quality of education and instruction below the college level. As vocational education has become more diverse and specialized, the focus has shifted toward protecting consumers from false, deceptive, misleading, and unfair practices while ensuring adequate educational quality.

The legislature further finds that various audits and legislative assessments, including those conducted in 1997, 2002, and subsequent years, consistently highlight the department of education's lack of expertise, capacity, and alignment with consumer protection functions necessary for effective oversight of private trade, vocational, and technical schools. This gap in capability has raised concerns about the adequacy of consumer protection measures and the quality of education provided by these institutions.

The legislature also finds that in response to these findings, recommendations have been made over the years to transfer the responsibilities of private trade, vocational, and technical schools out of the department of education. The legislature believes that the department of commerce and consumer affairs would be better suited to administer this program.

Given that the department of education's primary mission is to provide primary and secondary education to students in grades kindergarten through twelfth grade, the purpose of this Act is to transfer the licensing responsibilities of private trade, vocational, and technical schools from the department of education to the department of commerce and consumer affairs.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

LICENSURE OF PRIVATE TRADE, VOCATIONAL, OR TECHNICAL SCHOOL

§ -1 Definitions. As used in this chapter, unless the context clearly requires otherwise:

"Department" means the department of commerce and consumer affairs.

"Private trade, vocational, or technical school" means an organization or corporation that provides instruction in any form or manner in any trade, occupation, or vocation for a consideration, reward, or promise of whatever nature, except:

(1) Schools maintained, or classes conducted, by employers for their own employees where no fee or tuition is charged;

(2) Courses of instruction given by any fraternal society, benevolent order, or professional organization to its members, which courses are not operated for profit;

(3) Classes conducted for less than five students at one and the same time;

(4) Classes or courses of instruction that are conducted for twenty or fewer class sessions during any twelve-month period;

(5) Avocational, hobby, recreation, or health classes or courses; or

(6) Courses of instruction on religious subjects given under the auspices of a religious organization.

§ -2 Licensure of private trade, vocational, or technical school. (a) The department shall license private trade, vocational, and technical schools as necessary for:

(1) Compliance with federal regulations or accreditation requirements;

(2) Qualifying the private trade, vocational, or technical school for federal, state, or private funding; or

(3) Qualifying graduates of the private trade, vocational, or technical school for professional licensure.

The purpose of the licensing is to protect consumers against practices by private trade, vocational, or technical schools that are false, deceptive, misleading, or unfair.

(b) A private trade, vocational, or technical school that requires licensure under subsection (a) shall submit the following to the department in such form as the department may direct:

(1) Proof that the school is accredited by an accrediting commission of career schools and colleges, accrediting council for continuing education and training, or an accrediting bureau of health education schools; provided that in lieu of such accreditation, the school may provide a letter from the relevant state, federal, or other licensing authority demonstrating that the private trade, vocational, or technical school's curriculum is sufficient to prepare a graduate to qualify for professional licensure;

(2) Proof of current business registration demonstrating good standing;

(3) A copy of the school's current general excise and tax license, including a current tax clearance; and

(4) Proof that the school has secured a surety bond in the sum of $50,000, payable in a form satisfactory to the department, to provide indemnification to any student suffering a financial loss as a result of the school not fulfilling its obligations under the terms of its license; provided that the bonding requirement may be reduced at the discretion of the department.

(c) A private trade, vocational, or technical school applying for initial licensure shall pay an initial license fee of $ to the department upon application for licensure under this section.

(d) Every two years following the date of initial licensure, a private trade, vocational, or technical school shall apply for a renewal license by:

(1) Submitting all documents required under subsection (b), with updated information as appropriate;

(2) Submitting a list of complaints officially filed within the past two years with any state or federal government agency or directly with the school; and

(3) Paying a renewal licensure fee of $ .

(e) Complaints alleging unfair or deceptive acts or practices by a private trade, vocational, or technical school shall be filed with the appropriate branch of the department for review, investigation, and appropriate recommendation for action, including appeals from action taken.

(f) Fees collected pursuant to this section shall be deposited into the general fund.

(g) The department may adopt reasonable rules relating to the implementation of this section and section -3.

§ -3 Suspension and revocation of license; procedure. (a) The department, after notice and opportunity for a hearing, may suspend or revoke a license at any time when, in the judgment of the department, the licensee is not complying with section -2 or the rules that may be adopted by the department. The notice of hearing shall be served personally or sent to the licensee by registered or certified mail with return receipt at the licensee's last known address.

(b) Notice of suspension or revocation shall be served personally upon the licensee or sent to the licensee by registered or certified mail with return receipt, and the licensee shall forward the licensee's license at once to the department, and cease at once to operate the private trade, vocational, or technical school.

SECTION 3. Section 302A-101, Hawaii Revised Statutes, is amended as follows:

1. By amending the definition of "license" to read:

""License" means the recognition granted by the Hawaii teacher standards board to an individual to practice the profession of teaching. [~~This definition shall not apply to the term "license" as it is used in sections 302A-425 and 302A-426.~~]"

2. By repealing the definition of "private trade, vocational, or technical school":

[""Private trade, vocational, or technical school" means an organization or corporation that provides instruction in any form or manner in any trade, occupation, or vocation for a consideration, reward, or promise of whatever nature, except:

~~(1)~~ ~~Schools maintained, or classes conducted, by employers for their own employees where no fee or tuition is charged;~~

~~(2)~~ ~~Courses of instruction given by any fraternal society, benevolent order, or professional organization to its members, which courses are not operated for profit;~~

~~(3)~~ ~~Classes conducted for less than five students at one and the same time;~~

~~(4)~~ ~~Classes or courses of instruction that are conducted for twenty or fewer class sessions during any twelve-month period;~~

~~(5)~~ ~~Avocational, hobby, recreation, or health classes or courses;~~

~~(6)~~ ~~Courses of instruction on religious subjects given under the auspices of a religious organization; and~~

~~(7)~~ ~~Schools registered or authorized by the department of commerce and consumer affairs or by boards and commissions placed in the department of commerce and consumer affairs for administrative purposes.~~"]

SECTION 4. Section 302A-425, Hawaii Revised Statutes, is repealed.

["~~§302A-425 Licensure of private trade, vocational, or technical school.~~ ~~(a) The department shall license private trade, vocational, and technical schools as necessary for:~~

~~(1)~~ ~~Compliance with federal regulations or accreditation requirements;~~

~~(2)~~ ~~Qualifying the private trade, vocational, or technical school for federal, state, or private funding; or~~

~~(3)~~ ~~Qualifying graduates of the private trade, vocational, or technical school for professional licensure.~~

The purpose of the licensing and regulation is to protect consumers against practices by private trade, vocational, or technical schools that are false, deceptive, misleading, or unfair. The department shall not be responsible for review of curriculum or assurance of program quality for those private trade, vocational, and technical schools whose curriculum or program falls outside of the department's mission.

~~(b) A private trade, vocational, or technical school that requires licensure under subsection (a) shall submit the following to the department in such form as the department may direct:~~

~~(1)~~ Proof that the school is accredited by an accrediting commission of career schools and colleges, accrediting council for continuing education and training, or an accrediting bureau of health education schools; provided that in lieu of such accreditation, the school may provide a letter from the relevant state, federal, or other licensing authority demonstrating that the private trade, vocational, or technical school's curriculum is sufficient to prepare a graduate to qualify for professional licensure;

~~(2)~~ ~~Proof of current business registration demonstrating good standing;~~

~~(3)~~ ~~A copy of the school's current general excise tax license, including a current tax clearance; and~~

~~(4)~~ Proof that the school has secured a surety bond in the sum of $50,000, payable in a form satisfactory to the department, to provide indemnification to any student suffering a financial loss as a result of the school not fulfilling its obligations under the terms of its license; provided that the bonding requirement may be reduced at the discretion of the department.

(c) A private trade, vocational, or technical school applying for initial licensure after December 31, 2017, shall pay an initial license fee of $2,000 to the department upon application for licensure under this section.

~~(d) Every two years following the date of initial licensure, a private trade, vocational, or technical school shall apply for a renewal license by:~~

~~(1)~~ ~~Submitting all documents required under subsection (b), with updated information as appropriate;~~

~~(2)~~ ~~Submitting a list of complaints officially filed within the past two years with any state or federal government agency or directly with the school; and~~

~~(3)~~ ~~For any application for license renewal submitted after December 31, 2017, paying a renewal licensure fee of $2,000.~~

(e) Complaints alleging unfair or deceptive acts or practices by a private trade, vocational, or technical school shall be filed with the appropriate branch of the department of commerce and consumer affairs for review, investigation, and appropriate recommendation for action, including appeals from action taken.

~~(f) Fees collected pursuant to this section shall be deposited into the general fund.~~

~~(g) The department may adopt reasonable rules relating to the implementation of this section and section 302A-426.~~"]

SECTION 5. Section 302A-426, Hawaii Revised Statutes, is repealed.

["~~§302A-426 Suspension and revocation of license; procedure.~~ (a) The department, after notice and opportunity for a hearing, may suspend or revoke a license at any time when, in the judgment of the department, the licensee is not complying with section 302A-425 or the rules that may be adopted by the board. The notice of hearing shall be served personally or sent to the licensee by registered or certified mail with return receipt at the licensee's last known address.

~~(c) All proceedings shall be subject to chapter 91.~~"]

SECTION 6. All rights, powers, functions, and duties previously performed by the department of education under sections 302A-425 and 302A-426, Hawaii Revised Statutes, are transferred to the department of commerce and consumer affairs.

SECTION 7. All rules, policies, procedures, guidelines, and other material adopted or developed by the department of education to implement provisions of the Hawaii Revised Statutes that are reenacted or made applicable to the department of commerce and consumer affairs by this Act shall remain in full force and effect until amended or repealed by the department of commerce and consumer affairs pursuant to chapter 91, Hawaii Revised Statutes.

In the interim, every reference to the department of education or the superintendent of education in those rules, policies, procedures, guidelines, and other material is amended to refer to the department of commerce and consumer affairs or the director of commerce and consumer affairs, as appropriate.

SECTION 8. All deeds, leases, contracts, loans, agreements, permits, or other documents executed or entered into by or on behalf of the department of education pursuant to sections 302A-425 and 302A-426, Hawaii Revised Statutes, shall remain in full force and effect. Upon the effective date of this Act, every reference to the department of education or the superintendent of education therein shall be construed as reference to the department of commerce and consumer affairs or the director of commerce and consumer affairs, as appropriate.

SECTION 9. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the department of education relating to the functions transferred to the department of commerce and consumer affairs shall be transferred with the functions to which they relate.

SECTION 10. All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; provided further that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

An officer or employee of the State who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges and without the necessity of examination; provided that such officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State as determined by the head of the department or the governor.

SECTION 11. The department of education and the department of commerce and consumer affairs shall collaborate to implement the transfers and transitions required under this Act with as little disruption as possible to ongoing duties, responsibilities, and public services provided.

SECTION 12. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 13. This Act shall take effect on July 1, 3000.

HOUSE OF REPRESENTATIVES	H.B. NO.	2301
THIRTY-THIRD LEGISLATURE, 2026		H.D. 1
STATE OF HAWAII