THE STATE EDUCATION DEPARTMENT / THE UNIVERSITY OF THE STATE OF NEW YORK / ALBANY, NY 12234

 

TO:	Committee on Higher Education and Professional Practice
FROM:	Johanna Duncan-Poitier
SUBJECT:	Five Towns College: Authorization of Degree Powers Following a Change in Control
DATE:	November 11, 2005
STRATEGIC GOAL:	Goal 2
AUTHORIZATION(S):

 

SUMMARY

 

Issue for Decision (Consent Agenda)

 

Should the Board of Regents transfer degree powers to Five Towns College’s owners following a change of control?

 

Reason for Consideration

         
          Required by State statute.

         

Proposed Handling

 

The question will come before the Higher Education and Professional Practice Committee at its December 2005 meeting where it will be voted on and action taken.  It will then come before the full Board at its December 2005 meeting for final action.

 

Procedural History

 

The Board of Regents granted a provisional charter to Five Towns College on February 24, 1972, as a stock corporation.  (This was before the September 1, 1973, effective date of Chapter 901 of the Laws of 1972, which provided that education corporations shall follow the Not-for-Profit Corporation Law, as modified by the Education Law, rather than the General Corporations Law.)  The Regents have amended the charter over time and made it absolute in June 1981. 

 

The stock is closely held by its owners.  In the summer of 2004, they placed the stock in a Family Limited Partnership, with the general partner having a 51 percent interest.  In November 2004, a redistribution of the partnership reduced the general partner’s interest to 34 percent and increased the 3 other remaining partners’ interests to 22 percent each, for a total of 66 percent.  In the spring of 2005, the Department determined that this constituted a change in the control of the College under Section 224(1)(b) of the Education Law.

 

On October 17, 2005, the Department conducted a site visit to Five Towns College for the purpose of reviewing its governance and overall operation, and its compliance with the laws, rules, and regulations applicable to degree-granting institutions. 

 

Background Information

 

Education Law, Section 224(1)(b) mandates:

 

Notwithstanding any other provision of law to the contrary, no individual, association, partnership or corporation operating an institution on a for-profit basis and holding degree-conferring powers granted by the regents pursuant to the subdivision shall, through a change of ownership or control, convey, assign or transfer such degree-conferring authority without the consent of the regents.  For purposes of this subdivision, a change of ownership or control shall include, but shall not be limited to, merger or consolidation with any corporation; sale, lease, exchange or other disposition of all or substantially all of the assets of the institution; and the transfer of a controlling interest of the stock of a corporation.

 

To implement this provision, the Board of Regents adopted Section 3.46(b) of the Rules of the Board of Regents.  It provides that, following a change of ownership and control, a for-profit degree-granting institution enters a transition period of not more than two years, during which the Commissioner continues the registration of its programs and the Board confers degrees on its students who successfully complete registered degree programs, until it demonstrates to the Commissioner’s satisfaction its compliance with the laws, rules, and regulations applicable to degree-granting institutions. 

 

          Five Towns College’s charter authorizes it to award the degrees of Associate in Arts (A.A.), Associate in Science (A.S.), Associate in Applied Science (A.A.S.), Associate in Occupational Studies (A.O.S.), Bachelor of Science (B.S.), Bachelor of Professional Studies (B.P.S.), Bachelor of Fine Arts (B.F.A.), Bachelor of Music (Mus.B.), Master of Science in Education (M.S. in Ed.), Master of Music (M.M.), and Doctor of Musical Arts (D.M.A.).

 

Following the October 2005 site visit, the Commissioner determined that Five Towns College continues to comply with the laws, rules, and regulations applicable to degree-granting institutions. The four persons constituting the Family Limited Partnership did not change as a consequence of the redistribution of interests; prior to the redistribution they had been significantly involved in the College’s operation and continued to be involved following the redistribution.  In addition, the charter requires that the College be governed by its board of trustees, who need not be stockholders.     

 

 

 

Recommendation

 

It is recommended that the Board take the following action:

 

VOTED, that the owners of Five Towns College, Dix Hills, be authorized, effective December 9, 2005, to confer on duly qualified students successfully completing its registered programs all degrees authorized by the College’s charter.

 

Timetable for Implementation

 

The authorization of degree granting authority would take effect immediately.