Month: September 2017 - Page 2

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Minnesota postsecondary institutions will see changes in the surety bond they are required to obtain. SF 943 is a bill relating to higher education in the state with a provision about postsecondary and private career schools. The bill takes effect on September 1, 2017.

Under previous law, “any registered institution” (meaning postsecondary institutions registered with the state of Minnesota’s Office of Higher Education) must provide a surety bond if the institution fell below minimum financial standards necessary for the school to continue participating in Title IV. Students at Title IV schools are eligible to receive federal student aid, like grants and loans. The surety bond could be no less than $10,000 and no more than $250,000, as mandated by the U.S. Department of Education.

SF 943 adds onto this section of the law, mandating that new schools that have been given conditional approval for degrees so they can apply for accreditation must also obtain a surety bond if the school doesn’t meet minimum financial standards for Title IV participation. SF 943 also gives schools the option of submitting an irrevocable letter of credit to the Commissioner of Management and Budget in lieu of the bond.

SF 943 mandates that if a postsecondary institution closes, the school’s surety bond “must first be used to destroy any private educational data under section 13.32 left at a physical campus in Minnesota after all other governmental agencies have recovered or retrieved records under their record retention policies.” Remaining funds are to be used for tuition reimbursement, giving refund priority in the following order:

1. Cash payments made by or on behalf of a student
2. Private student loans
3. Veteran Administration benefits not already reimbursed by the VA

Additional funds left over after record destruction and tuition reimbursement can be used to recoup administrative costs incurred as a result of the school’s closure.

Postsecondary institutions are required to post a no more than $20,000 surety bond if they do not have a binding agreement with the Office of Higher Education for student record preservation. SF 943 allows schools to provide an irrevocable letter of credit instead, to be used for destruction of academic records if the school closes.

Private career schools are defined as postsecondary institutions offering less programs that are less than an associate degree level and not considered private institutions under the Minnesota Private and Out-of-State Public Postsecondary Education Act. Private career schools are already required to post a surety bond that is between $10,000 and $250,000 to guarantee their contracts with students. The bond amount is calculated based on ten percent of the previous year’s net income (previously, the amount was based on gross income). SF 943 eliminates the $250,000 surety bond cap.

Need a Minnesota surety bond? Single Source Insurance can get you the best rate for your bond—get in touch today.

Pharmacies entering into a contract with Express Scripts now need to post a $500,000 surety bond. Express Scripts is a pharmacy benefits management company providing services like home prescription delivery, claims processing, and other pharmacy services.

Express Scripts is requiring pharmacies to obtain a performance bond, a type of surety bond that guarantees that the principal (the pharmacy) will uphold the terms of their contract.�The surety bond is required of pharmacies for the first two years of their contract, though Express Scripts might sometimes require bond coverage for a longer period of time.�Pharmacies entering into contracts with Express Scripts should ensure that they are familiar with the terms of their contract to avoid having claims made on their bond.

Ready to apply for a surety bond or have more questions about this new bond? Get in touch with Single Source Insurance today.