Las Vegas computer school faces critics, receives license

Thursday, Feb. 10, 2000 | 11:13 a.m.

New Horizons Computer Center of Las Vegas will receive a provisional license to open a school after it provides the state a $100,000 bond.

The bond -- the largest ever sought by the state Commission on Postsecondary Education -- would help reimburse students' tuition if the school abruptly closes before students receive the classes they pay for.

The $100,000 bond is twice as much as what the commission's staff recommended. But critics say it still falls short of the amount of money needed to pay back students if the school suddenly shuts its doors.

Commissioners are particularly sensitive to the problems of school closures, particularly in the computer industry, where tuitions are higher than the average postsecondary course. Two computer schools in Las Vegas have closed their doors in the past three months.

In addition to the closures of classrooms operated by Vitrex Corp. and Computer Skills Institute in November and December, New Horizons -- an international franchise with 236 operations in 43 countries -- saw its former Las Vegas franchisee close the Las Vegas operation in 1997.

Bonds posted by schools when they are licensed and a student indemnification fund, authorized by the Nevada Legislature in 1995, help students recover tuition expenses when schools close. The legislation authorized the indemnification fund to grow to $250,000 and schools were required to contribute $5 for every new student they enrolled. Now that the fund has hit the $250,000 ceiling, schools are no longer required to contribute to it.

The new New Horizons operation is being opened by a new franchisee. Bob Wells, a former Union Bank of Switzerland executive in Chicago and New York City, moved his family to Las Vegas to start the operation.

Commissioners wrestled Wednesday with putting greater scrutiny on the New Horizon operation, even though Wells and his staff had nothing to do with the operation's failure in 1997.

Commission Chairman Steve Soukup, vice president-campus director of the University of Phoenix in Las Vegas, said it was unfortunate that Wells and his operation were bearing the brunt of the commission's increased scrutiny. But he added that commissioners had a responsibility to protect the interests of future students.

Assurances that the New Horizons franchise would help provide records to the state if the school ever abruptly closed and the amount of the bond were the major issues debated in the one-hour session.

The bond amount required by the state normally is determined by the proposed budget and enrollment projections of the school. The $50,000 bond amount proposed by the state was five times more than those approved on other smaller and less technical schools that received provisional licenses Wednesday.

But Commissioner Clara Andriola said a $50,000 bond would only cover reimbursing the tuitions of a handful of students. She said the expense of reimbursement could be as high as $500,000 in New Horizons' case. That's because one year's tuition at such a school is as high as $11,000.

Linda Montgomery, owner of the Learning Center, the city's largest computer training center, told commissioners they should require a higher bond to protect the integrity of the industry. She said based on New Horizons' budget, the school would be liable for about $504,000 in tuitions.

Ralph Loberger, director of North American franchise development for New Horizons in Santa Ana, Calif., estimated the higher bond amount would cost the school an additional $5,000 a year to operate. The state is requiring the bond to remain in effect for five years.

In their unanimous vote to license the school, commissioners also stipulated that their staff make contact with the school at least twice in the next year to be sure it is keeping accurate records on students and finances.

Asked if he felt the the commission's treatment of the school was fair, Loberger said he understood "where the commission is coming from." He said only five New Horizons franchises have ever closed, but the Las Vegas school happened to be one of them.

Montgomery said she was disappointed with the decision.

"I'm not satisfied," she said. "There should be a closer relationship between the revenue the school will generate and the amount of the bond required for licensure."