New School Applicant Orientation

1. New School Applicant Orientation Private Licensed Schools Division of Higher and Career Education November 7, 2018

2. Contents • Legal Authority • Resources • New School Application • New Program Application • A new program application is mandatory with each new school license application. • Applications are not complete and cannot be processed without at least one new program application.

3. Legal Authority • Statute • Regulations • Board Policy Memos

4. Resources • Statute and regulations • Board policy memos • Forms • Instructions • Samples

5. New School Application New SCHOOL APPLICATION

6. Contents • Staff, Board, and Consultants • Fees • Application Form • Facility • Type of Ownership – PDE – 5004 Forms • School Name • Surety • Finances

7. Contents Continued • Ethics Statement • Records Retention Agreement • PDE-340 Forms – Director Qualifications • Admissions Representative License Application • Enrollment Agreement • Catalog • New Program Applications

8. Staff Role • Determine if application is complete and acceptable for Board review • Give school feedback with 10-day “corrective action” period

9. Staff Role Continued • Staff can answer questions and provide guidance and insight into Board requirements and standards. • Staff cannot teach applicants to develop a syllabus, prepare basic financial statements, or operate the school.

10. Staff • Patricia Landis – Division Chief • Tammy Keisling • Lynette Trovich • (717) 783-8228

11. Role of Board • Approve • Approve Pending • Defer • Deny

12. Consultants • Accountant • Attorney • Educational/Administrative

13. Fees • $ 300 – This Mandatory Seminar • $ 7500 – Application Fee • $ 1400 – Each Additional Program • $ 750 – Site Visit • $ 600 – Admissions Representatives

14. Application Form • Shaded cells require data-entry. All others are locked. • Some cells self-populate or self-calculate based on other entries • You can tab from cell to cell that requires data-entry

15. New Program Application Screenshot

16. PDE-1003 Tab • Complete all information • Must have valid mailing address, phone number and e-mail address • Many communications will be by e-mail

17. PDE-1003 • Be sure the address, fax, phone number, and e-mail that you provide are active. Otherwise, important correspondence or communication about your application might not reach you!

18. Embed a Document • Embed documents larger than 1 paragraph • Embed as an Icon • If the full document covers the screen, it is not embedded as an Icon. Only the symbol should be visible in the application. • Embed in Word format. Do not embed pdf files • Pdf files cannot be opened on Mac computers.

19. An Embedded Document

20. How to Embed a Document Insert Object Create from File Click Display as icon Browse – select file from your computer Click ok

21. Embed Screenshot

22. Facility • Must have Certificate of Occupancy • Floor plan with measurements of instructional space • Floor plan can be self-prepared but it must include dimensions

23. Remote Facility • If part of the training is provided at another site, list the address. • Driving range, clinical facility, lab • Site visit required • $ 750 additional site visit fee • Remote vs. Externship Site • Oversight by instruction = remote • Oversight by employee of business = externship

24. Type of Ownership • Corporate registration from Department of State, Corporate Bureau • Partnership agreement • Personal financials if sole proprietorship

25. PDE-5004 Forms – Ownership Information • Needed for each corporate officer - Note – One person may serve in multiple roles in your corporation. Complete a Pde-5004 form for each office held. • Every corporate school must have four PDE-5004 forms – One each for Pres, VP, Treasurer and Secretary • Criminal background checks

26. School Name • Fictitious Name registration from Department of State Corporate Bureau unless the school name is exactly the same as the name of the corporation.

27. Surety • Surety Bond • PTAF Pennsylvania Training Assurance Fund • Irrevocable Administrative Trust

28. Financial Documents Required • Business Plan • P & L Proforma (projected) • PDE-2006 Income Statement and Balance Sheet (actual) • Audited Financial Statement for Owner • Reviewed statements may be accepted for some small schools. • Submitting a reviewed statement can result in a delay if an audited statement is requested. • Evidence of School Capitalization

29. Generally Accepted Accounting Principles • All financial information must conform with Generally Accepted Accounting Principles (GAAP) • The common set of accounting principles, standards and procedures that companies use to compile their financial statements. • Still room for interpretation and different methodologies within GAAP.

30. Accrual Accounting • Key concept of GAAP is Accrual Accounting • An accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. Economic events are recognized at the time in which the transaction occurs rather than when payment is made (or received). • This method gives a more accurate picture of a company's current financial condition. 

31. Business Plan Respond to all questions on business plan form

32. Pro-Forma Projection • Projection prior to opening and for first 18 months of operation • Be realistic – include all possible expenses including facilities, utilities, advertising, printing costs, staffing, staff benefits, insurance, and all other expenses.  • Include attrition • It is okay if there is no profit immediately

33. Pro-Forma Projections • Failure to accurately anticipate reasonable expenses or unrealistic revenue projections can result in deferral or denial by the Financial Review Committee (FRC). 

34. PDE-2006 • A guide for the FRC to assess the financial strength and solvency of the applicant school • Measures the current condition and ability to operate in the future through: • Income Statement (page 1) – Revenue and Expenses • Balance Sheet (pg 2) – Assets, Liabilities & Stockholder’s Equity • Disclosure Information (page 3) – Methodologies, Terms of Significant Notes, Parent Company Information, Pending regulatory/legal Issues and Explanations • Key Indicators (page 4) – Individual program information

35. PDE-2006 Income Statement Page 1

36. PDE-2006 Balance Sheet Page 2

37. PDE 2006 Disclosures – Page 3

38. PDE-2006 Key Indicators – Page 4

39. PDE-2006 Form • PDE-2006 – ACTUAL, REAL, income statement and balance sheet – not projected • MUST balance • May not be completely zeros • At least 4 months of operating capital

40. Owner’s Financials • All applicant schools must demonstrate the financial solvency of the owners.  • If the school is a proprietorship (single owner) or partnership, the application should include personal financial statements.  • If the school is owned by a corporation, corporate financial statements must be provided.  • Financial Statement for Owner must be Audited • Reviewed Statement may be accepted, but no guarantee

41. Evidence of Capital • 4 months of operating costs without relying on tuition revenue • In the name of school

42. Financial Standards • Financial statements provided for new school applications are expected to meet the following criteria: • A current ratio of 1:1 (current assets to current liabilities) • A positive net worth, accompanied by a reasonable debt to equity ratio • Sufficient cash reserves to support 4 months of operation without depending on tuition revenue. • Accurate and realistic reflection of the revenue and expenditures anticipated prior to opening and the first 18 months of operation.

43. Disclaimer – re: Financials • Information is provided to guide schools and applicants in financial planning and financial reporting.  However, the Board and the Financial Review Committee may look at any other indicator to determine stability and are not limited to or bound by the criteria outlined in this presentation.

44. Financial Summary • Business Plan • Pro-forma – required projection of income and expenses for first year • PDE-2006 is the PLS form for your income statement and balance sheet – this is real – not projected • Audited Report for Parent (possible reviewed) • Capital – evidence of capitalization of school

45. Capitalization Capitalization is cash contributed to an organization (either through stock or direct paid-in contributions.) Capitalization is cash invested in the school that is available to purchase fixed assets and pay the school’s operating expenses.

46. Additional Help • Consult an accountant if needed

47. Ethics Statement • Serious commitment • Read carefully and comply • Signed by owner or director

48. PDE-1647 Statement on Reasonable Service and Business Ethics

49. Records Repository • Should be with another Private Licensed School in Pennsylvania • Must have signature for both schools • No fee may be required after closure • Service fees may be charged to students. • Samples

50. Sample Repository – No Form Provided