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Minutes for HB2070 - Committee on Education
Short Title
Allowing certain private not-for-profit postsecondary educational institutions to recoup credit card fees by permitting a surcharge for credit card transactions in the same manner as municipal universities, community colleges, technical colleges and vocational educational schools.
Minutes Content for Thu, Mar 11, 2021
The Chair opened the hearing on HB2070.
Ms. Lawrence gave a brief overview of the bill. (Attachment 9)
Matt Lindsey, President, Kansas Independent College Association and Foundation (KICA) explained the current law. Kansas is one of 10 states that do not allow merchants to recover the cost of accepting credit card payments by charging a surcharge or convenience fee to the user. Kansas does allow for state agencies to choose to pass the credit card surcharge on to the individual using a credit card to pay a bill. This allowance extends in Kansas law to any state or local governmental agency, including the Regents universities and community and technical colleges. If a student or parent chooses to pay his or her tuition at the University of Kansas (KU) by credit card, and thereby earn miles or points or at least space out the payments according to their individual choice, KU is allowed under law to charge that student or parent the amount of the charges to process that payment. KU and other institutions, public or private, are not required to pass that cost on to the person using the credit card but are permitted to do so.
However, the law does not allow non-profit colleges to choose to pass this cost on, but rather must absorb it. This creates a significant competitive imbalance against non-profit colleges. It cost KICA institutions $1.64 million in 2018-2019 and the only remedy is to add that cost to the tuition which is then charged to all students whether they pay with cash or credit.
The central philosophy underlying this bill is that the permission granted to pass on the credit card surcharge already in existing statute for public higher education should include all Kansas-based educational entities, including non-profit colleges. (Attachment 10)
Shelley Kneuvean, Vice President, Finance and Administration, Baker University, expressed support for this bill stating under current law, public universities and colleges are able to pass on credit card fees to those that opt to pay their student bills by credit card as a convenience fee. More and more of our students and their families are electing to pay their student account balances with credit cards due to the convenience of paying online. Baker University is incurring more than $200,000 in fees annually by the credit card companies. Baker does not intend to make money on these fees but to simply pass on the fee to those who use a credit card.
With the pandemic hitting all of higher education extremely hard, Baker has struggled with declining enrollment and revenue. Budget reductions are made without compromising academic excellence and student experience. These types of changes would greatly assist in facing unprecedented budgetary and financial limitations. (Attachment 11)
Nancy Bramlett, Vice President of Financial and Administrative Services, University of Saint Mary (USM), supports this bill saying like most small non-profit liberal arts institutions, USM operates on thin operating margins and these fees are a significant expense for the institution. Many USM students are low income and USM strives to find the balance of keeping tuition affordable while maintaining a fiscally sound operating margin.
These fees also place institutions at a competitive disadvantage with the Regent's schools as well as schools in most neighboring states since these schools have the option of passing credit card fees along to their students. USM respectfully requests to be permitted the same ability as the other Regent's schools to pass along credit card fees. (Attachment 12)
Ronald J. Olinger, Chief Financial Officer, Benedictine College, included in his testimony a table outlining the last five years of credit card charges paid by Benedictine College for credit card payments by students. This shows a very substantial amount resulting in lost revenue to Benedictine College each year.
In fiscal year 2019-2020 alone, 32 percent of tuition, fees, room and board were paid with credit cards. This, over a quarter of a million-dollar cost, represented 10 percent of the annual fund donations for last year.
Benedictine supports this bill that would grant permission to what the Regent's universities, Washburn, and the Kansas Community Colleges already do. (Attachment 13)
A request was made for information as to whether state or federal laws require the disclosure of credit card surcharges. Matt Willis, Analyst, Legislative Research Department, reports that there is no state or federal law requiring disclosure but all four of the major credit card companies do require disclosure as part of their agreements with merchants. (Attachment 14)(Attachment 15)
There being no further Conferees, the Chair closed the hearing on SB2070.
The meeting was adjourned at 2:22 PM.
The next meeting will be held March 15, 2021, at 1:30 PM in Room 144-S.
