Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred H.B. No. 761 entitled:

begs leave to report as follows:

The purpose of this bill is to exempt unaccredited institutions from certain disclosure requirements, when they comply with all state and federal tax laws, as well as requirements that include having 25 students in Hawaii, and an employee residing in the State.

Testimony in support of the intent of this bill was received from a concerned individual. Testimony in opposition to this bill was received from the Department of Commerce and Consumer Affairs, the Chamber of Commerce of Hawaii, the University of Hawaii, and the University of Phoenix.

Your Committee finds that in 1999, the Legislature made significant amendments to the unaccredited institutions law to more closely regulate non-legitimate unaccredited institutions, or "diploma mills." Since then, several institutions fitting the description of "diploma mill" have stated that they would not set up operations in Hawaii because of these new statutory requirements.

Your Committee further finds that Hawaii remains unique among the states in that it does not license, register, or otherwise evaluate the quality of a school's curriculum as a condition of doing business here. Instead, the law is based almost entirely on disclosure and "let the buyer beware." Because there is no regulatory oversight of unaccredited schools other than disclosure requirements, the State has adopted some disclosures that may not be required in other states.

Your Committee has amended this bill by deleting its contents and replacing it with provisions allowing unaccredited institutions to make an abbreviated disclosure in connection with promotional materials in periodicals published by an unaffiliated person or entity.

Your Committee finds that as amended, this bill will take a small but significant step in the direction of relieving legitimate local organizations of the burden of placing an overpowering disclaimer in their advertising, while maintaining the mission of protecting the public against the proliferation of "diploma mills."

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 761, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 761, H.D. 1, and be placed on the calendar for Third Reading.