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The Texas Workforce Commission (TWC) announced last week that it was to operate in the state. The commission took this action against after concluding that the company had engaged in a systematic effort to mislead students and regulators about its record in placing graduates into jobs.

“Schools that misrepresent employment information about their programs potentially exploit vulnerable individuals with false hopes for job-placement after completing the program,” Tom Pauken, the commission’s chairman, said in . “TWC’s role is to ensure that students who make a decision to attend a career school receive reliable information so they can make an educated choice.”

At Higher Ed Watch, we applaud the commission for holding the school chain accountable for allegedly cooking the books on its job placement rates. But the real credit goes to , who uncovered the apparent scheme while conducting an investigation into the company’s practices. In fact, it’s unclear whether state regulators would have acted had it not been for the journalists’ dogged reporting.

A Player in Washington

Compared to the giant publicly-traded for-profit higher education companies like the Apollo Group, which owns the University of Phoenix, ATI Enterprises is a much smaller entity with 16 campuses in Texas and about two dozen in total nationwide. The company’s schools train students in wide variety of trades, including auto repair, air conditioning, dental and medical assisting, and respiratory therapy.

But despite its relatively smaller size, ATI has been a player in Washington, fighting the Obama administration’s efforts to increase federal oversight over the for-profit college sector. The trade school chain is a member of the Association for Private Sector Colleges and Universities (APSCU), which was , and ATI’s chief executive officer and vice chairman sits on . ATI is also a member of the Coalition for Educational Success, which has been over the agency’s regulatory actions.

Accusations Aired

Questions about ATI’s job placement rates first came to light in October, when into the company’s Texas campuses. According to the newscast:

To get prospects in the door ATI saturates daytime TV with commercials. In a YouTube video, ATI founder Arthur Benjamin praises ATI’s job placement rate.

‘Ninety percent of the people get jobs they were trained to do within a short period of time,” Benjamin said.

But the real number is much lower.

State records show 70 percent of ATI’s North Texas graduates got jobs in the most recent reporting period. But there’s evidence to question those numbers.

The news team reported that they had obtained records ATI had filed with the Texas Workforce Commission that showed “questionable” job placements. Among them were:

• Six graduates of ATI’s HVAC program, who allegedly were hired at an address in South Dallas which traces to a house and not an air conditioning firm.

• Five ATI welders who, the school claims, went to work at Paradise Landscaping. The owner of that business said no hires were made.

• Eight electronics technicians who allegedly got jobs with Pyle Security and Widgeon Technology. The owners of those firms say just one person was hired.

So what accounts for these discrepancies? According to former ATI officials, the schools were in the habit of, among other things, forging students’ signatures on these employment records. Here’s how the scheme apparently worked:

“When [students] graduate, they would sign off on all kinds of paperwork,” said a former ATI employee. “Then you would take a clean version of their signature, make copies of it, and then paste it into documents to say they were placed.”

But why would the schools ever take part in such a scheme? Career colleges that are accredited by national agencies (rather than regional ones) must generally place at least 70 percent of their students in jobs in the fields in which they trained to remain eligible to participate in the federal student aid programs. [The Texas Workforce Commission, meanwhile, requires schools to have job placement rates of at least 60 percent to operate in the state.] A failure to meet these thresholds could, in other words, be a death sentence for the schools. As a result, these institutions have a major incentive to do whatever it takes to keep these rates high.

Regulators Step In

ATI denied WFAA-TV’s allegations. But the news reports set off alarms at the Accrediting Commission of Career Schools and Colleges (ACCSC), which only several months earlier had come under fire at . The accreditor to investigate these charges. Soon afterwards, the company reportedly dismissed about a half dozen employees

But the Texas Workforce Commission, which works closely with ACCSC, was not satisfied. In March, the commission ordered the company to hire an outside accounting firm to verify the job placement records for all ATI schools in the state.While the firm did not look into whether students’ signatures had been forged, . For example, the accountants found that 90 percent of the schools’ programs “significantly overreported” their job placement rates for the 2010 fiscal year and 63 percent had actual rates below the commission’s required 60 percent threshold. In addition, the firm discovered that none of the sixteen schools had abided by the commission’s rules to contact all of their most recent graduates to verify their employment records. The accountants found that some of the schools’ programs had contacted as few as 11 percent of their former students to confirm whether or not these individuals were working in a job related to their training.

After receiving the firm’s report, the commission issued its order, which required ATI to immediately cease enrolling new students and come up with a plan to allow current students to complete their programs. The company, however, has the right to appeal the commission’s decision, and can challenge it in court.

At Higher Ed Watch, we commend the commission for taking this important step. However, we believe that the federal government, state regulators, and accreditors must also act to determine whether  these types of abuses are  widespread, and to ensure that students who were admitted to the schools under false pretenses are not left in the lurch. Stay tuned, as we will have more to say on this shortly.