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Private career schools in New York are operating without licenses and more than half are ignoring reporting requirements on job placement and graduation rates, according to an audit released today by New York State Comptroller Thomas P. DiNapoli. Auditors also found hundreds of public complaints that have been unresolved, some for more than a decade, with little or no action. The findings of the audit have been referred to Attorney General Eric Schneiderman’s office for further review.

“There is alarmingly little oversight of private career schools in New York, leaving too many young adults vulnerable to false promises,” DiNapoli said. “Schools have been allowed to operate without a license for years and some investigations into complaints were left open for 10 years or more. Millions of dollars and the education of thousands of New Yorkers are at stake. The State Education Department has taken some steps to tighten oversight but too many students may be getting taken for a ride if more isn’t done soon.”

The audit period covered Jan. 1, 2009 through June 27, 2012 and examined the State Education Department’s (SED) oversight of 491 private career schools (277 in New York City) which serve 46,000 students. These schools, also known as proprietary schools, provide training in a broad range of disciplines focusing on career and job placement such as computer programming, cosmetology, business, real estate and plumbing. With certain exceptions, State law requires most non-degree granting private schools that charge tuition to be registered or licensed by the state.

DiNapoli’s auditors found SED relies on public complaints to identify unlicensed schools, rather than conducting investigations of operating schools. Of 1,328 open investigations, 1,080 (81 percent) were initiated prior to 2009 and 724 had been open for at least 10 years.  

Auditors sampled 100 open investigations and found 18 schools that appeared to be operating without a state license. In several instances, auditors found that when unlicensed schools were identified and contacted, SED took no action if the school did not respond. Based on the sample results, there is considerable risk that a significant number of career schools are operating without a license.

Additionally, SED does not ensure that private career schools report enrollment, graduation and job placement information, as required by law. Of 491 schools, 292 (59 percent) did not submit required reports. As a result, SED has no record of whether the job and career opportunities promoted by these schools were achieved.  

When career schools apply for a license, the law requires SED to render a final decision within one year. Auditors found that of 148 applications, 66 (45 percent) were in pending status for more than one year and 20 applications were pending for at least two years.  

SED’s management information systems are based on a mainframe application developed in 1988 that has limited functionality. About 20 databases have been developed over the years for various elements of the program, but they are not integrated with each other or with the mainframe. As a result, it is difficult to obtain all information about any particular school.

Auditors recommended SED:

• Ensure that license applications are processed within one year of initiation;
• Establish time frames and procedures for completing investigations of career schools;
• Develop processes to prioritize investigations, follow-up with schools which do not submit required documentation and statistical reports and take disciplinary action against those in material non-compliance;
• Develop a system to assess school performance; and
• Develop and implement a formal plan to use information technology to improve oversight.

SED generally agreed with the findings and cited several instances in which updated computer systems will enhance its ability to provide greater oversight. SED officials noted that legislation passed in 2012 that increased the application fee for career schools from $250 to $5,000 will allow them to add staff and make other necessary improvements.

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