Number
120737
Version
SUBSTITUTE 2
Reference
Sponsor
ALD. COGGS, ZIELINSKI, WADE, PEREZ, BAUMAN, KOVAC, and BOHL
Title
A substitute ordinance relating to the provision of city financial assistance to for-profit institutions of higher education or to developers of projects that include for-profit institutions of higher education.
Sections
304-97 cr
Analysis
This ordinance provides that no city direct financial assistance shall be provided to any for-profit institution of higher education, including any for-profit college, university or institute, or to any developer of a project that will include selling or leasing real estate to a for-profit institution of higher education, unless the following criteria are met:
1. For a for-profit institution of higher education seeking city financial assistance, the institution shall provide documentation demonstrating that it is in compliance with all U.S. department of education regulations pertaining to program integrity, 34 CFR 600.
2. For a developer seeking city financial assistance for a project that will include selling or leasing real estate to a for-profit institution of higher education, the developer shall provide documentation demonstrating that the institution is in compliance with all U.S. department of education regulations pertaining to program integrity, 34 CFR 600.
This ordinance further provides that, in the case of direct financial assistance in the form of tax incremental financing or a loan, these restrictions on city direct financial assistance shall be in effect until the tax incremental district is closed or the loan is completely repaid.
Body
Whereas, According to the U.S. Department of Education, between 2000 and 2008, the number of students enrolled in for-profit nearly tripled, to 1.8 million; and
Whereas, Low-income and first-generation college students who have little familiarity with the college admission and financial aid processes and are often unaware of the opportunities available to them at public technical schools and universities are disproportionately represented in the student bodies of for-profit colleges; and
Whereas, For-profit colleges often prey on this low-income, first-generation population by promising quick degrees or certificates and high-paying jobs in return for enrolling at high tuition rates financed by high-interest loans; and
Whereas, According to Arnold Mitchem, president of the Council for Opportunity in Education, students enrolled in for-profit institutions may be faced with one or more of the following scenarios:
1. The school holds out the lure of high-paying jobs in a particular field of work, but either no such jobs exist or they require education or experience beyond what the school has provided.
2. Students enroll in a program for which they do not have the necessary skills and soon drop out; they are left with no degree or certificate but still have a large student loan to pay off.
3. Students enroll at the for-profit institution assuming that their credits are transferable to a public or other non-profit college or technical school, but later find out that they are not.
4. The education students receive at for-profit colleges ultimately does not provide a significant or real boost to their earnings.
; and
Whereas, For-profit colleges, taking advantage of a loophole in a federal law that caps the proportion of revenue a college can derive from federal student aid at 90% (the loophole allows tuition paid under the GI Bill to be counted as non-governmental revenue), target young veterans in particular, as evidenced by the fact that in 2009, the top 6 - and 8 of the top 10 -- colleges with the most veterans enrolled were for-profit colleges (U. S. Veterans Affairs Department); and
Whereas, According to Business Week, at Kaplan University, one of the most popular for-profit colleges, only 30% of 2-year students and 33% of 4-year students graduate; and
Whereas, Graduates of for-profit colleges also report receiving low incomes and little assistance from those institutions in finding employment in their fields of study; and
Whereas, The U.S. Department of Education is concerned about the record amount of student loan debt carried by college students and graduates, as well as the possibility that the programs of study offered by for-profit colleges may not lead to measurable positive outcomes and, therefore, devalue postsecondary education credentials through oversupply; and
Whereas, The City of Milwaukee has also witnessed a proliferation of for-profit colleges at the local level; and
Whereas, The Common Council finds that it is the best of the City of Milwaukee, its taxpayers and its residents -- particularly low-income, first-generation college students targeted by for-profit colleges - to ensure that no City financial assistance is provided to for-profit colleges, or to development projects that include for-profit colleges, unless those institutions can demonstrate compliance with the U.S. Department of Education's regulations pertaining to educational program integrity, 34 CFR 600; now, therefore
The Mayor and Common Council of the City of Milwaukee do ordain as follows:
Part 1. Section 304-97 of the code is created to read:
304-97. City Financial Assistance to For-Profit Institutions of Higher Education. 1. DEFINITION. In this section, "direct financial assistance" means the value of below-market land sales, any direct subsidies to developers or city expenditures for private improvements targeted specifically to a project. It includes the value of tax increment financing and below-market-rate loans provided by the city.
2. LIMITATION ON ASSISTANCE. No city direct financial assistance shall be provided to any for-profit institution of higher education, including any for-profit college, university or institute, or to any developer of a project that will include selling or leasing real estate to a for-profit institution of higher education, unless the following criteria are met:
a. For a for-profit institution of higher education seeking city financial assistance, the institution shall provide documentation demonstrating that it is in compliance with all U.S. department of education regulations pertaining to program integrity, 34 CFR 600.
b. For a developer seeking city financial assistance for a project that will include selling or leasing real estate to a for-profit institution of higher education, the developer shall provide documentation demonstrating that the institution is in compliance with all U.S. department of education regulations pertaining to program integrity, 34 CFR 600.
3. DURATION OF LIMITATION. In the case of direct financial assistance in the form of tax incremental financing or a loan, the limitation of sub. 2 shall be in effect until the tax incremental district is closed or the loan is completely repaid.
LRB
APPROVED AS TO FORM
__________________________
Legislative Reference Bureau
Date:______________________
Attorney
IT IS OUR OPINION THAT THE ORDINANCE
IS LEGAL AND ENFORCEABLE
__________________________
Office of the City Attorney
Date:______________________
Requestor
Drafter
LRB122936-3
JDO
01/25/2013