Does the Texas Proprietary School Act cover a business that teaches classes, like a computer store or a hobby school?

Texas AG Opinion JM-529: Proprietary School Act

Plain-English summary

The Commissioner of Education asked the Attorney General six questions about how the Texas Proprietary School Act, which requires certain private schools to get a certificate of approval from the state, applies to businesses that teach courses. The core problem was that the Act pulls in two directions. Its definition of "proprietary school" is broad enough to include a business that teaches courses for "avocational or personal improvement," but a separate exemption removes schools that offer instruction in "purely avocational or recreational" subjects. Read literally, one provision seemed to cover the very thing the other one excused. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0529.pdf

The AG harmonized the two by focusing on what the school primarily does. A business is a regulated proprietary school if it primarily offers vocational training, even if some of its courses are only for personal enrichment. A business is exempt if it teaches subjects that are generally considered recreational or avocational and it does not hold itself out as offering vocational training. The AG pointed out that a subject is not inherently vocational or avocational; cooking, for example, can be either, depending on whether the student is training for a career or pursuing a hobby. Because of that, the Legislature left it to the commissioner's discretion to decide which subjects are primarily avocational, and the commissioner may look at a business's own claims and advertising to sort a given course. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0529.pdf

The Commissioner was especially concerned about businesses that sell computers and then teach buyers how to use them. The AG said the nature of the courses, not the nature of the product, controls: some computer courses are for personal use and some for business or vocational use, and the commissioner sorts them the same way. The AG added that the commissioner could reasonably conclude that certain kinds of help in learning to use a purchased product are not "courses of instruction or study" at all, and so fall outside the Act entirely. On the remaining questions, the AG concluded that the employer-sponsored-course exemption requires that no tuition be charged to the student and does not reach an arrangement where the student pays first and is reimbursed only if he passes; that one proprietary school may run several places of business, each of which must comply with the Act; and that a sales clerk who merely takes an enrollment form is not a "representative" required to hold a permit, because that role contemplates active recruiting of students. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0529.pdf

Currency note

This opinion was issued in 1986. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. The Texas Proprietary School Act has since been recodified; the Education Code sections cited here (chapter 32) have been renumbered and the program moved among agencies over the years. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, section number, or agency assignment mentioned here.

Common questions

Does a business that teaches classes automatically fall under the Texas Proprietary School Act?

Not automatically. The AG concluded that the Act reaches a business that primarily offers vocational training, even if some of its courses are only for personal improvement. A business that teaches subjects generally considered recreational or avocational, and does not claim to offer vocational training, is exempt. The commissioner of education decides which subjects are primarily avocational. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0529.pdf

What is the difference between "purely avocational" and "recreational" courses?

The AG said the Act does not require drawing a line between the two. The whole phrase "purely avocational or recreational" was meant to exempt organizations that do not claim to offer vocational training and that teach subjects generally considered non-vocational. The two words work together to describe the exempt category rather than marking off two separate ones. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0529.pdf

Does a computer store that teaches customers how to use its products need a certificate?

It depends on the courses, not the product. The AG concluded that the nature of the courses controls, so the commissioner sorts a computer store's classes the same way as any other school's, by whether they are primarily vocational or avocational. The commissioner could also decide that some help in learning to use a purchased product is not a "course of instruction or study" at all, which would place it outside the Act. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0529.pdf

Is an employer-sponsored course exempt if the employer reimburses the tuition afterward?

Only in some arrangements. The exemption applies to a course sponsored by an employer for its own employees where no tuition fee is charged to the student. The AG concluded that a student initially paying and then being reimbursed is not necessarily fatal, but that the exemption does not apply where the employer reimburses only if the student successfully completes the course, because in that situation a fee is effectively charged to the student. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0529.pdf

If a school has several locations, is each one a separate school?

No. The AG concluded that a single proprietary school may maintain more than one place of business; the "business enterprise" is the activity, not each address. But each separate location must still comply with the Act's requirements. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0529.pdf

Does a store clerk who takes a course enrollment need a representative permit?

Not on those facts alone. The Act defines a "representative" as someone employed to act as an agent, solicitor, broker, or contractor to directly procure students by solicitation, which contemplates active recruiting. The AG concluded that merely accepting an application or enrollment form for a course does not by itself make a clerk a "representative." Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0529.pdf

Background and statutory framework

The Texas Proprietary School Act, Education Code sections 32.01 through 32.81, made the Texas Education Agency responsible for issuing certificates of approval to proprietary schools. The definitional heart of the dispute was section 32.11(1), which defined a "proprietary school" as any business enterprise, for profit or nonprofit, that maintains or solicits business in Texas and offers a course of instruction "for the purpose of training or preparing the person for a field of endeavor in a business, trade, technical, or industrial occupation, or for avocational or personal improvement," subject to stated exclusions. Section 32.12(a)(3) then exempted "a school or training program which offers instruction of purely avocational or recreational subjects as determined by the administrator."

Because the inclusion of "avocational or personal improvement" courses in the definition seemed to conflict with the exemption for "purely avocational or recreational" subjects, the AG applied the rule that apparently conflicting statutes should be given the most reasonable construction consistent with legislative intent (State v. Jackson). The AG looked to the history of the Act, including a 1971 report of the Senate Committee on Vocational-Technical Education and a 1970 law review comment, both of which showed the Act's concern was the regulation of vocational education. The AG also relied on the observation that subjects are not inherently avocational or recreational; the same subject can be either depending on the student's relationship to it. Reading the two provisions together, the AG concluded that a school is covered when it primarily offers vocational training and exempt when it teaches primarily recreational or avocational subjects without holding itself out as offering vocational training, with the commissioner deciding which subjects fall where.

On the multi-location question, the AG read the word "enterprise" in section 32.11(1) as an activity, project, or undertaking (William Buchanan Foundation v. Shepperd), so that maintaining a place of business sets a minimum on the activity required rather than making each location a separate enterprise. Each place of business must still comply with section 32.33, and what counts as a "business enterprise" depends on the facts (Attorney General Opinion H-313). On the representative question, the AG read the definition in section 32.11(4) and the registration requirement in section 32.37 to reach only persons engaged in active recruiting, not a clerk who merely accepts an enrollment form.

Citations and references

The opinion cited the following authorities. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0529.pdf

Statutory provisions:

• Tex. Educ. Code §§ 32.01-32.81 (Texas Proprietary School Act), including § 32.11(1) (definition of "proprietary school"), § 32.11(4) (definition of "representative"), § 32.12(a)(3) (exemption for purely avocational or recreational subjects), § 32.12(a)(4) (exemption for employer-sponsored courses), § 32.33 (compliance by each place of business), and § 32.37 (registration of representatives)

Cases:

• State v. Jackson, 370 S.W.2d 797 (Tex. Civ. App. - Houston 1963), aff'd, 376 S.W.2d 341 (Tex. 1964)
• William Buchanan Foundation v. Shepperd, 283 S.W.2d 325 (Tex. Civ. App. - Texarkana 1955, no writ)

Attorney General opinion:

• Attorney General Opinion H-313 (1974)

The opinion also referred to a 1971 report of the Senate Committee on Vocational-Technical Education and a 1970 Texas Law Review comment on the regulation of proprietary vocational schools, both reproduced in the text below.

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0529
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0529.pdf

Original opinion text

Best-effort transcription from a scanned PDF text layer. Minor OCR errors may remain; the linked PDF is authoritative.

The Attorney General of Texas

August 7, 1986

JIM MATTOX
Attorney General

Mr. William N. Kirby
Commissioner of Education
Texas Education Agency
1701 N. Congress Avenue
Austin, Texas 78701

Opinion No. JM-529

Re: Applicability of the Texas Proprietary School Act to certain enterprises

Dear Mr. Kirby:

You have asked several questions about the interpretation of the Texas Proprietary School Act. Educ. Code §§ 32.01-32.81. We will answer only the specific questions asked. We note that some provisions of the act may raise constitutional questions of vagueness or improper delegation. We do not address those questions.

Under the Proprietary School Act your agency is responsible for issuing certificates of approval to proprietary schools. Several of your questions have to do with the definition of "proprietary school." In particular you are concerned about the status of organizations that teach courses for avocational purposes.

The act defines "proprietary school" as follows:

'Proprietary School,' referred to as 'school,' means any business enterprise operated for a profit, or on a nonprofit basis, which maintains a place of business within the State of Texas, or solicits business within the State of Texas, and which is not specifically exempted by the provisions of this Chapter and;

(A) which offers or maintains a course or courses of instruction or study; or

(B) in which place of business such a course or courses of instruction or study is available through classroom instruction or by correspondence, or both, to a person or persons for the purpose of training or preparing the person for a field of endeavor in a business, trade, technical, or industrial occupation, or for avocational or personal improvement, except as hereinafter excluded. (Emphasis added).

Educ. Code § 32.11(1). Thus, the definition of "proprietary school" expressly includes an organization that teaches courses for the purpose of "avocational or personal improvement." However, the act specifically exempts from the definition of "proprietary school"

a school or training program which offers instruction of purely avocational or recreational subjects as determined by the administrator. . . .

Educ. Code § 32.12(a)(3).

Although there are slight differences in wording, the exemption in section 32.12(a)(3) appears to negate the specific inclusion in the definition of "proprietary school" of courses taught for purposes of "avocational or personal improvement." Statutes apparently in conflict should be given the most reasonable construction that can be placed on them consistent with the intent of the legislature. State v. Jackson, 370 S.W.2d 797, 800 (Tex. Civ. App. - Houston 1963) aff'd, 376 S.W.2d 341 (Tex. 1964).

A committee report to the Sixty-second Legislature and a law review article both show that the concerns that gave rise to the Proprietary School Act were focused on regulation of vocational education in Texas. The Report of the Senate Committee on Vocational-Technical Education to the 62nd Leg., January 1971; Comment, The Proprietary Vocational School: The Need for Regulation in Texas, Tex. L. Rev. 69 (1970). Also, the act exempts schools that teach subjects that are "purely" avocational or recreational. Subjects are not inherently avocational or recreational. Rather, a subject such as cooking may be vocational or avocational depending on a particular person's relationship to the subject. We assume that the legislature intended to exempt schools that teach subjects that are avocational or recreational for most people and that do not claim to be offering vocational training. Therefore, we conclude that the most reasonable reading of section 32.11(1) together with section 32.12(a)(3) is that a school that teaches courses primarily for vocational training is a proprietary school, even if the purpose of some of its courses is merely "avocational or personal improvement." On the other hand, if a school teaches subject matter that is primarily considered to be recreational or avocational and if it does not hold itself out to be offering vocational training, then it is exempted from the provisions of the Proprietary School Act under section 32.12(a)(3). The legislature left it to the discretion of the commissioner of education to determine which subjects are primarily avocational or recreational. Educ. Code § 32.12(a)(3).

The preceding discussion of the status of "avocational" courses guides us in our responses to two of your questions. The first of those questions is:

How does the term 'purely avocational' differ from the term 'recreational?'

We do not think that the act requires you to distinguish between courses that are avocational and courses that are recreational. Rather, as we explained above, we think that the entire phrase "purely avocational or recreational" should be read to exempt from the provisions of the Proprietary School Act organizations that do not claim to be offering vocational training and that teach subjects that are generally considered to be for non-vocational purposes.

Your second question is:

How would courses which you deem to be purely avocational differ from a standard business or professional course?

The legislature left it to the discretion of the commissioner of education to determine what types of courses would be exempt under section 32.12(a)(3). Since many subjects can be taught for either vocational or avocational purposes, we think that the act permits the commissioner to examine the claims or advertising of an organization to determine whether a particular subject is offered for vocational or avocational purposes.

Your third question is:

Does the Texas Proprietary School Act apply to private enterprises (regardless of whether they are profit or nonprofit) which offer courses of instruction in the use of products they market when the products in question have applications which are not exclusively recreational or purely avocational?

You explain that you are particularly concerned about courses taught by businesses that sell computers. You note in your letter that there is no exemption in the act for businesses that instruct buyers in the use of products. We do think, however, that it would be within the discretion of the commissioner to conclude that certain types of assistance in helping customers learn how to use a product are not "courses of instruction or study" for purposes of the Proprietary School Act and therefore not within the act.

Also, even if a computer company does offer "courses of instruction or study," it is the nature of the courses offered and not the nature of the product that determines whether courses are exempt under section 32.12(a)(3). Some courses offered by such businesses deal with uses for a computer that are primarily for personal use, rather than business use. Other courses are probably taught for primarily business or vocational purposes. It is within the discretion of the commissioner to determine which courses fall into which category.

Your fourth question is:

Pursuant to section 32.12 (courses sponsored by an employer) at which point must the employer absorb any tuition costs for this exception to apply? If the employer reimburses the student for all tuition charges upon successful completion of the course (as an incentive to the student to complete the same) does the exception apply?

Section 32.12(a)(4) exempts from the provisions of the Proprietary School Act

a course or courses of instruction or study sponsored by an employer for the training and preparation of its own employees, and for which no tuition fee is charged to the student. . . .

You ask whether the employer must absorb any tuition costs in order for this exemption to apply. The exemption requires that no fee be charged to the student and that the course be "sponsored by" the employer. A "sponsor" has been defined as "a person or an organization that pays for or plans and carries out a project or activity." Webster's Ninth New Collegiate Dictionary (1984). Conceivably, then, an employer could "sponsor" a course by organizing it even if it were paid for by a third party. Whether a particular course is "sponsored by" an employer is a question of fact that depends on the circumstances of a particular case.

You also ask whether the exemption for courses sponsored by an employer is applicable if the students initially pay a tuition charge and are subsequently reimbursed by the employer. We do not think that the requirement of section 32.12(a)(4) that no fee be charged to students necessarily forecloses such an arrangement. Your question indicates, however, that you contemplate a situation in which a student would not be reimbursed if he did not successfully complete the course. We do not think that the section 32.12(a)(4) exemption would apply under those circumstances.

Your fifth question is:

Must each center (or store) where training is offered be considered a separate school?

A "proprietary school" is a "business enterprise . . . which maintains a place of business . . . or solicits business [in Texas]." Educ. Code § 32.11(1). The word "enterprise" suggests an activity, project, or undertaking. William Buchanan Foundation v. Shepperd, 283 S.W.2d 325 (Tex. Civ. App. - Texarkana 1955, no writ). Nothing in the term "business enterprise" limits the meaning to one place. We think that the phrase "maintains a place of business . . . or solicits business" in section 32.11(1) merely sets a minimum on what activity an enterprise must be engaged in to come within the Proprietary School Act. It does not mean that each separate place of business is a separate enterprise. A single proprietary school may maintain more than one place of business. Of course, each separate place of business maintained by a proprietary school must comply with the requirements of the Proprietary School Act. See Educ. Code § 32.33. What constitutes a "business enterprise" will depend on the facts of a particular case. See Attorney General Opinion H-313 (1974) (discussion of term "business entity").

Your sixth question is:

Must sales clerks in computer stores who take customer orders for one or more courses be considered representatives as defined in section 32.11(4), thus requiring them to obtain representative permits?

All representatives employed by a proprietary school must register with the commissioner of education. Educ. Code § 32.37. Section 32.11(4) defines "representative" as

a person employed by the school as defined herein, whether the school is located within or without the State of Texas, to act as an agent, solicitor, broker, or independent contractor to directly procure students or enrollees for the school by solicitation within or without this State at any place.

That definition contemplates active recruiting of students. Therefore, the fact that someone accepts an application or enrollment form for a course is not by itself enough to make that person a "representative."

SUMMARY

Schools that teach courses in subjects that are generally considered to be for recreational or avocational purposes and that do not claim to be offering vocational training are exempt from the provisions of the Proprietary School Act. Educ. Code §§ 32.11-32.31. It is within the discretion of the commissioner of education to determine whether certain types of assistance offered to help customers learn to use a product are "courses of instruction or study" for purposes of the Proprietary School Act.

JIM MATTOX
Attorney General of Texas

JACK HIGHTOWER
First Assistant Attorney General

MARY KELLER
Executive Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Sarah Woelk
Assistant Attorney General