Utah Representative Burgess Owens presented a bill on Tuesday to modify the procedures for institutions of higher education wishing to alter ownership or for a private institution aiming to transition to a public entity.
Named the Change of Ownership and Conversion Improvement Act, the legislation mandates a comprehensive evaluation for colleges and universities undergoing ownership changes or transitioning from for-profit to nonprofit status. Owens, the representative for Utah’s 4th Congressional District, emphasized the necessity of this amendment to ensure a meticulous review process.
The existing system, dating back to 1965, offered financial aid to universities and students but now faces criticism for its sluggish pace, leaving institutions waiting up to five years for a final decision, as stated in the bill.
The proposed revisions aim to establish a transparent and responsible framework, streamlining operations, empowering institutions, and upholding the integrity of conversions, according to Owens.
One significant change is the shift from taxpayer funding to institution-funded application processes. Owens highlighted that instituting fees for ownership changes would promote accountability and facilitate smoother transitions without bureaucratic delays.
Under the bill, institutions would be responsible for covering the application processing costs, with funds divided equally between the Department of Education and the IRS for tax exemption verification.
Furthermore, the legislation guarantees expedited reviews, mandating a 90-day limit for the Secretary of Education to approve or reject applications; failure to meet this deadline would result in automatic approval.
To safeguard nonprofit entities, the bill stipulates that sales of higher education institutions must not exceed fair market value. Additionally, in cases where private institutions seek to go public, a committee of directors must oversee and authorize significant asset transactions to prevent conflicts of interest among stakeholders with ownership in both for-profit and nonprofit organizations.