Changes in the Minnesota Requirements for School Bonds
Minnesota legislators recently passed a new bill that amends the requirements for higher education institutions in the state.
More specifically, Senate Bill 245 introduces stricter requirements for new post-secondary education institutions with conditional approval to grant degrees. They will now have to provide Minnesota school bonds before they can operate legally.
Further details about the new legislation can be found below.
The new Minnesota school bond requirements
Senate Bill 245 was approved by Governor Tim Walz on May 22th, 2019. It stipulates that new post-secondary education institutions, which have obtained conditional approval for degrees that permits them to receive accreditation, have to get a surety bond. Its amount should be 10% of the school’s net revenue from tuition and fees for the previous fiscal year. The law sets the minimum bond amount at $10,000.
According to the existing legislation, posting a surety bond or an irrevocable letter of credit is needed only when an institution could not meet the financial standards of the U.S. Department of Education. The bond amount in such cases is between $10,000 and $250,000. This rule remains in force for institutions that don’t comply with financial standards, in addition to the new bond requirement.
How to get bonded
If you are affected by the new requirement for Minnesota school bonds, you will have to obtain the necessary bonding, so that you can operate in the state. The surety bond functions as an additional layer of guarantee that you will comply with all applicable laws in your school activities.
In order to get bonded, you will have to pay a percentage of the bond amount that is required of you, which is called the premium. The exact cost is set on the basis of your personal and business finances as a bond applicant. The stronger these factors are, the lower your premium would be. If your finances are in good shape, the rates you can expect are between 0.75% and 5%.
Do you need any more information about how to meet the new school bond requirement in Minnesota? You can speak to our bonding expert by calling us at 877.514.5146.