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Massachusetts Proprietary Schools

Certificate of Deposit

To:Commonwealth of Massachusetts Banking Institution
From:Office of Proprietary Schools

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The instructions below are being provided to you by an entity that is either licensed or is applying for licensure as a private occupational school within the Commonwealth of Massachusetts. The entity is in the process of establishing a certificate of deposit to satisfy the indemnification requirement of Massachusetts General Laws Chapter 75C, § 4; or 75D, § 14; or 93, § 21F; whichever is appropriate.

In order for the CD to be approved by the Department of Elementary and Secondary Education, the CD must meet the following criteria:

  1. Be issued by a financial institution authorized by the Massachusetts Commission of Banking to operate a banking business within the Commonwealth (M.G.L. c.140E, § 1 and c. 167, § 1).
  2. Be in the amount designated by the Office of the State Auditor (OSA). Said amount shall be amended as determined by the OSA, which may occur annually.
  3. The funds must be in the school's name, but "held in trust for the benefit of students of [name of school]."
  4. Use the school's taxpayer identification number for tax reporting purposes. The school will receive proceeds of interest from the CD.
  5. Have a minimum term of one year.
  6. The Commissioner of Education must be a signatory on the account and no funds can be released without his signature. The signature card for the account should be forwarded to the Office of Proprietary Schools, which will obtain the Commissioner's signature and return the card to the financial institution. No funds may be disbursed from this account without the signature of the Commissioner or his designee.
  7. The Department must receive confirmation of the account, the amount, and the beneficiary from the financial institution in the form of a bank statement or passbook. Additionally, the Department must be copied on notices from the financial institution of the impending expiration or of the expiration of said account.

If you have any questions, or would like the Department to review the language drafted for the CD prior to execution, please feel free to contact the Department. Please note that all correspondence regarding this CD must be directed to:

Massachusetts Department of Elementary and Secondary Education
Office of Proprietary Schools
350 Main Street, P.O. Box 5023
Malden, MA 02148-5023
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