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AB-1344 Private postsecondary education: California Private Postsecondary Act of 2009.(2019-2020)

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Date Published: 10/07/2019 02:00 PM
AB1344:v94#DOCUMENT

Assembly Bill No. 1344
CHAPTER 520

An act to amend, repeal, and add Section 94801.5 of the Education Code, relating to private postsecondary education.

[ Approved by Governor  October 04, 2019. Filed with Secretary of State  October 04, 2019. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 1344, Bauer-Kahan. Private postsecondary education: California Private Postsecondary Act of 2009.
Existing law, the California Private Postsecondary Education Act of 2009, provides for student protections and regulatory oversight of private postsecondary institutions in the state. The act is enforced by the Bureau for Private Postsecondary Education within the Department of Consumer Affairs. The act requires an out-of-state private postsecondary educational institution to comply with specified requirements, including providing the bureau evidence of the institution’s accreditation, evidence that the institution is approved to operate in the state where the institution maintains its main administrative location, the agent for service of process, and a copy of the institution’s catalog and sample agreement. Under existing law registration with the bureau is valid for 2 years. Existing law repeals the act on January 1, 2021.
If the operation of the act is extended by another measure, this bill would, effective July 1, 2022, specify additional duties under the act. In particular, the bill would require an out-of-state private postsecondary educational institution to provide the bureau with specified information regarding whether or not the institution, or a controlling officer of, or a controlling interest or controlling investor in, the institution, or in the parent entity of the institution, has been subject to certain adverse state or federal actions in the previous 5 years before seeking authorization to operate in California, and with any additional documentation the bureau deems necessary for consideration in the registration process.
The bill would require an institution that is registered with the bureau and enrolls any student residing in California to notify the bureau of any of specified indicators of potential suspect activities of the institution or a controlling officer of, or a controlling interest or controlling investor in, the institution or in the parent entity of the institution, and would authorize the bureau to determine, within 30 days of receipt of the notification, whether the institution should be permitted to continue to enroll California residents. The bill would authorize the bureau, in its discretion, to limit enrollments, permitting the institution to enroll California residents pending the completion of a review by the bureau. The bill would authorize an institution to seek review of a bureau decision through a writ of mandate action. The bill would require the bureau to adopt through emergency regulations an updated registration form. The bill would require the bureau to disclose on its internet website a list of registered institutions and disclose a designated email address for a California resident to send a complaint to the bureau about an institution.
Existing law specifies conduct by regulated institutions that, if undertaken, is a crime.
Because this bill would extend the application of those criminal provisions, it would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 94801.5 of the Education Code is amended to read:

94801.5.
 (a) Effective July 1, 2017, an out-of-state private postsecondary educational institution shall register with the bureau, pay a fee pursuant to Section 94930.5, and comply with all of the following:
(1) The institution shall provide the bureau with all of the following information:
(A) Evidence of accreditation.
(B) Evidence that the institution is approved to operate in the state where the institution maintains its main administrative location.
(C) The agent for service of process consistent with Section 94943.5.
(D) A copy of the institution’s catalog and sample enrollment agreement.
(2) The institution shall comply with the requirements of the Student Tuition Recovery Fund, established in Article 14 (commencing with Section 94923), and regulations adopted by the bureau related to the fund, for its students residing in California.
(3) The institution shall provide disclosures pursuant to the requirements for the Student Tuition Recovery Fund, established in Article 14 (commencing with Section 94923), and regulations adopted by the bureau related to the fund, for its students residing in California.
(b) This section does not apply to nonpublic higher education institutions that grant undergraduate degrees, graduate degrees, or both, and that are formed as nonprofit corporations and are accredited by an agency recognized by the United States Department of Education.
(c) An institution described in subdivision (a) that fails to comply with this section is not authorized to operate in this state.
(d) A registration with the bureau pursuant to this section shall be valid for two years.
(e) The bureau shall develop, through emergency regulations, a registration form. The adoption of these regulations shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare for purposes of Sections 11346.1 and 11349.6 of the Government Code. These emergency regulations shall become law through the regular rulemaking process by January 1, 2018.
(f) This section shall remain in effect only until July 1, 2022, and as of January 1, 2023, is repealed.

SEC. 2.

 Section 94801.5 is added to the Education Code, to read:

94801.5.
 (a) An out-of-state private postsecondary educational institution shall register with the bureau, pay a fee pursuant to Section 94930.5, and comply with all of the following:
(1) The institution shall provide the bureau with all of the following information for consideration of initial registration by the bureau pursuant to paragraph (2).
(A) Evidence of institutional accreditation.
(B) Evidence that the institution is approved to operate in the state where the institution maintains its main administrative location.
(C) The agent for service of process consistent with Section 94943.5.
(D) A copy of the institution’s catalog and, if the institution uses enrollment agreements, a copy of a sample enrollment agreement.
(E) Whether or not the institution, or a predecessor institution under substantially the same control or ownership, had its authorization or approval revoked or suspended by a state or by the federal government, or, within five years before submission of the registration, was subject to an enforcement action by a state or by the federal government that resulted in the imposition of limits on enrollment or student aid, or is subject to such an action that is not final and that was ongoing at the time of submission of the registration.
(F) Whether or not the institution, or a controlling officer of, or a controlling interest or controlling investor in, the institution or in the parent entity of the institution, had been subject to any education, consumer protection, unfair business practice, fraud, or related enforcement action by a state or federal agency within five years prior to submitting the registration. If so, the institution shall provide the bureau a copy of the operative complaint with the registration.
(G) Whether or not the institution is currently on probation, show cause, or subject to other adverse action, or the equivalent thereof, by its accreditor or has had its accreditation revoked or suspended within the five years prior to submitting the registration.
(H) Whether or not the institution, within five years prior to submitting the registration, has settled, or been adjudged to have liability for, a civil complaint alleging the institution’s failure to provide educational services, including a complaint alleging a violation of Title IX of the federal Education Amendments of 1972 (Public Law 92-318) or a similar state law, or a complaint alleging a violation of a law concerning consumer protection, unfair business practice, or fraud, filed by a student or former student, an employee or former employee, or a public official, for more than two hundred fifty thousand dollars ($250,000). The institution shall provide the bureau a copy of the complaint filed by the plaintiff and a copy of the judgment or settlement agreement for any such judgment or settlement, and the bureau shall consider, pursuant to paragraph (2), all material terms and aspects of the settlement, including, for example, whether a student plaintiff remained enrolled or reenrolled at the institution.
(I) Any additional documentation the bureau deems necessary for consideration in the registration process.
(2) When considering whether to approve, deny, or condition initial registration based upon the information provided by an institution pursuant to paragraph (1), the bureau shall do all of the following:
(A) Not consider any individual submission made under paragraph (1) to be solely determinative of the institution’s eligibility for registration but, exercising its reasonable discretion, approve, reject, or condition registration based upon a review of all of the information provided to it under paragraph (1).
(B) Provide an institution with reasonable notice and opportunity to comment before the bureau regarding any determination to deny, condition, or reject initial registration before that determination becomes final. After the determination becomes final, the institution may seek review of the bureau’s decision through an action brought pursuant to Section 1085 of the Code of Civil Procedure.
(C) The initial registration, if approved, shall memorialize that the institution agrees, as a condition of its registration, to be bound by this section and that its registration may be rejected, conditioned, or revoked for failure to comply with this section, as provided by subdivision (b). The agreement shall be signed by a responsible officer of the institution.
(3) An institution that is registered with the bureau and enrolls a student residing in California shall report in writing to the bureau, within 30 days, the occurrence of any of the following:
(A) The institution has its authorization or approval revoked or suspended by a state or by the federal government, or has been subject to an enforcement action by a state or by the federal government that resulted in the imposition of limits on enrollment or student aid.
(B) The institution or a controlling officer of, or a controlling interest or controlling investor in, the institution or in the parent entity of the institution is subject to any education, consumer protection, unfair business practice, fraud, or related enforcement action by a state or federal agency. If so, the institution shall provide the bureau a copy of the operative complaint.
(C) The institution is currently on probation, show cause, or subject to other adverse action, or the equivalent thereof, by its accreditor or the accreditation of the institution is revoked or suspended.
(D) The institution settles, or is adjudged to have liability for, a civil complaint alleging the institution’s failure to provide educational services, including a complaint alleging a violation of Title IX of the federal Education Amendments of 1972 (Public Law 92-318) or a similar state law, or a complaint alleging a violation of a law concerning consumer protection, unfair business practice, or fraud, filed by a student or former student, an employee or former employee, or a public official, for more than two hundred fifty thousand dollars ($250,000). The institution shall provide to the bureau a copy of the complaint filed by the plaintiff and a copy of the judgment or settlement agreement for any such judgment or settlement, and the bureau shall consider, pursuant to subdivision (b), all material terms and aspects of the settlement, including, for example, whether a student plaintiff remained enrolled or reenrolled at the institution.
(4) The requirements of the Student Tuition Recovery Fund, established in Article 14 (commencing with Section 94923), and regulations adopted by the bureau related to the fund, for its students residing in California.
(5) The institution shall provide disclosures pursuant to the requirements for the Student Tuition Recovery Fund, established in Article 14 (commencing with Section 94923), and regulations adopted by the bureau related to the fund, for its students residing in California.
(b) (1) Upon receipt of any of the notifications in paragraph (3) of subdivision (a), the bureau shall, within 30 days of receiving the notice, request the institution to explain in writing why the institution should be permitted to continue to enroll California residents. If the bureau, after reviewing the information submitted in response to the request and after consultation with the Attorney General, issues a written finding that there is no immediate risk to California residents from the institution continuing to enroll new students, the institution shall be permitted, pending completion of a review by the bureau, to continue to enroll new students or the bureau may, in its discretion, limit enrollments.
(2) Any institution under review pursuant to paragraph (1) may have its registration revoked by the bureau if, after further review, the bureau issues a written finding that there is a substantial risk posed to California residents by the institution continuing to enroll California residents.
(3) An institution shall have the right to reasonable notice and opportunity to comment to and before the bureau regarding any determination to revoke registration or to limit enrollment before that determination becomes final. An institution may seek review of a bureau order limiting new student enrollment or revoking registration under this subdivision through an action brought pursuant to Section 1085 of the Code of Civil Procedure.
(4) Nothing in this subdivision shall be construed as preventing the bureau from revoking an institution’s registration on any other grounds specified in this chapter. Nothing in this section shall be construed as prohibiting or impairing the ability of an institution registered pursuant to this section or eligible to register pursuant to this section from applying to be an approved institution pursuant to this chapter.
(c) This section shall not apply to nonpublic higher education institutions that grant undergraduate degrees, graduate degrees, or both, that are formed as nonprofit corporations, and that are accredited by an agency recognized by the United States Department of Education.
(d) An institution described in subdivision (a) that fails to comply with this section is not authorized to operate in this state. Any institution whose registration is denied or revoked is authorized to reapply for registration after 12 months have elapsed from the date of the denial or revocation of registration.
(e) A registration with the bureau pursuant to this section shall be valid for five years.
(f) The bureau shall develop through emergency regulations effective on and after July 1, 2021, a registration form. The adoption of these regulations shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare for purposes of Sections 11346.1 and 11349.6 of the Government Code. These emergency regulations shall become law through the regular rulemaking process by January 1, 2022.
(g) The bureau shall disclose on its internet website a list of institutions registered pursuant to this section through reasonable means and disclose a designated email address for California residents to send a complaint to the bureau about an institution registered pursuant to this section. Complaints received through this email address shall be investigated in the same manner as complaints received by the bureau for institutions approved to operate pursuant to this chapter, but bureau enforcement in response to such complaints against institutions registered pursuant to this section shall be governed by subdivision (b).
(h) This section shall become operative on July 1, 2022.

SEC. 3.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.