Luallen to audit Board for Proprietary Education

FRANKFORT — State Auditor Crit Luallen on Wednesday said she will audit the Kentucky State Board for Proprietary Education, the agency that licenses 122 private, for-profit career schools.

Luallen's audit was requested by state Rep. Reginald Meeks, D-Louisville, who is sponsoring a bill to end the for-profit education industry's control of the board. Meeks also would transfer the board's oversight of seven for-profit colleges granting two-year degrees to the state's Council on Postsecondary Education.

The board operates a $500,000 compensation fund for students who claim to have been shortchanged by for-profit schools. But a number of claims to the fund are outstanding, and no audit has been performed in many years, Meeks wrote to Luallen in an e-mail on Wednesday.

The Courier-Journal of Louisville reported Wednesday that 70 former students of Decker College in Louisville, which closed and filed for bankruptcy in 2005, still await financial relief from the fund. Meeting minutes show the board's 11 members — six of whom represent for-profit schools — discussed among themselves in 2010 how they should respond to the Decker-related claims.

"I believe the work of your office would go far to help re-establish public confidence in this board and help bring to light other issues we as a legislative body should address," Meeks wrote to Luallen.

A few hours later, Luallen said in a statement: "We share some of the concerns raised regarding the administration of the student compensation fund. We will now move forward to develop the scope of our review to answer these and any other concerns raised during our audit."

Jan Gordon, chairwoman of the board's complaint committee, said the board will cooperate. In fact, Gordon said, the board voted in December to request a review by Luallen following questions from state lawmakers regarding the lack of earlier audits. But Gordon said she didn't know whether the request ever was sent.

"We don't have anything to hide," said Gordon, executive director of Spencerian College's Louisville campus.

The for-profit education industry has been getting scrutiny by Congress, the U.S. Department of Education and the states.

Some students complain they've gone into debt on tuition, fees and books — often using federal financial aid — without obtaining the educations or job placements the schools promised in their advertising.

Kentucky Attorney General Jack Conway last month subpoenaed records from six for-profit colleges operating in Kentucky, seeking information about their student loan default rates, recruitment practices and job placements. Conway declined to identify the colleges.