Section 31B. (a) As used in this section the following terms shall, unless the context clearly requires otherwise, have the following meanings:-

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”Accrediting agency”, an organization recognized by the United States Department of Education to provide accreditation to an institution.

”Board”, the board of higher education established in section 4 of chapter 15A.

”Financial screening”, a review and evaluation of an institution’s financial information, conducted by the board or by an accrediting agency on behalf of the board, designed to assess whether an institution’s financial status indicates that it may be at risk of imminent closure.

”Governing body”, the group of persons at an institution that exercises authority and has oversight or control of its matters or discharge functions of a fiduciary character for the institution including, but not limited to, its board of trustees or equivalent.

”Imminent closure”, a determination based on the financial screening that an institution is at risk of being unable to continue operations within a period of time established by the board.

”Institution”, an independent institution of higher education located in the commonwealth and authorized to grant degrees pursuant to any general or special law.

(b)(1) An institution shall immediately notify the board of any known financial liabilities or risks that are reasonably likely to result in the imminent closure of the institution or otherwise negatively affect the institution’s ability to fulfill its obligations to current and admitted students.

(2) The board shall establish a process to annually assess each institution’s financial information to identify whether an institution is at risk of imminent closure. The assessment shall be based on a review of information received through an annual financial screening of the institution as well as any additional information submitted under clause (ii) of paragraph (3). Financial screenings may be conducted by: (i) an accrediting agency, pursuant to a memorandum of understanding approved by the board; or (ii) the department of higher education.

(3) Upon either: (i) a determination by the board that an institution may be at risk of imminent closure; or (ii) acceptance by the board of a determination made by an accrediting agency that an institution may be at risk of imminent closure, the board shall provide the institution with a summary of the basis for its determination. Upon receiving the summary, the institution shall immediately: (i) inform the board of any known liabilities, risks or financial issues; (ii) provide to the board any information necessary to accurately and fairly determine the institution’s financial status and likelihood of imminent closure and to monitor its condition; and (iii) prepare a contingency plan for closure, which shall include a process for the institution or the board, or both, as determined by the board, to provide appropriate notification to relevant stakeholders, as determined by the board, including, but not limited to, enrolled students, candidates who have submitted applications, recent graduates, faculty, staff and host communities. The board shall establish requirements for contingency plans for closure that shall include, but not be limited to: (i) arrangements for students to complete their programs of study; (ii) a plan for the transfer and long-term maintenance of student records if the institution ceases to exist; (iii) information about the rights and responsibilities of student loan borrowers; (iv) information about the institution’s financial condition, accreditation status and any outstanding compliance issues regarding federal and state student financial aid programs; and (v) a plan that assures the refund of deposits made by students in anticipation of enrolling or continuing their enrollment at the institution and for the cost of protecting and maintaining student records including, subject to criteria established by the board, a requirement that the institution furnish a bond with surety or a letter of credit sufficient to meet the costs of so refunding and maintaining. An institution required to submit a contingency plan for closure shall also provide the board with access to all financial and other records upon request of the board.

(c) Upon a finding by the board that an institution has failed to comply with the requirements of this section, the board may impose a fine not to exceed $1,000 per day, order the suspension of any state funding designated for the institution, suspend or revoke any degree granting authority previously conferred upon the institution or impose other penalties the board deems appropriate.

(d) Any information submitted to, or developed by, the board in furtherance of this section shall not be a public record and shall be exempt from disclosure under clause Twenty-sixth of section 7 of chapter 4 and section 10 of chapter 66.

(e) Each member of an institution’s governing body shall receive instruction and training in higher education financial metrics, legal and fiduciary responsibilities and applicable standards for accreditation at least once every 4 years.

(f) Each institution shall post on its website a copy of the institution’s annual financial report or statement, required pursuant to section 8F of chapter 12 and a summary of the report, however termed, that is written in terms that are understandable by the general public.

(g) The board shall establish rules and regulations to implement and enforce this section.