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

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Date Published: 04/12/2019 04:00 AM
AB1344:v97#DOCUMENT

Amended  IN  Assembly  April 11, 2019
Amended  IN  Assembly  April 02, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill No. 1344


Introduced by Assembly Members Bauer-Kahan, Berman, Chiu, Eggman, Low, and McCarty
(Coauthor: Assembly Member Gloria)

February 22, 2019


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


LEGISLATIVE COUNSEL'S DIGEST


AB 1344, as amended, 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, 2021, 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, a predecessor institution under substantially the same control or ownership, or a controlling officer or investor in 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 enforcement of the act. 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 its controlling officer or investor and would authorize the bureau to determine, within 10 days of receipt of the notification, whether the institution should be permitted to continue to enroll California residents. The bill would authorize the bureau to place an institution on a probationary status, permitting the institution to enroll California residents only with notice pending the outcome of an investigation by the bureau. The bill would authorize an institution to challenge a bureau decision through a writ of mandate action and would specify the standard of review to be applied to an action brought by an institution. 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, 2021, and as of January 1, 2022, 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:
(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.
(E) Whether or not the institution, or a predecessor institution under substantially the same control or ownership, had its authorization or approval revoked, limited, or subject to conditions by a state or federal agency within five years prior to submitting the registration.
(F) Whether or not the institution, or a controlling officer or investor in 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 under review or investigation by its accreditor or 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 related to the educational services provided by the institution, or related to issues of consumer protection, unfair business practice, or fraud, filed by a student or former student 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 judgement judgment or settlement agreement for any such judgement judgment or settlement.
(I) Any additional documentation the bureau deems necessary for the enforcement of this chapter.
(2) The registration 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 or revoked for failure to comply with this section section, based upon information provided pursuant to this section, or upon any grounds that serve as the basis for revoking an approval for an institution to operate pursuant to this chapter. 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 10 days, the occurrence of any of the following:
(A) The institution, or a predecessor institution under substantially the same control or ownership, has its authorization or approval revoked, limited, or subjected to conditions by a state or federal agency.
(B) The institution or a controlling officer or investor in 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 under review or investigation 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 related to the educational services provided by the institution, or related to issues of consumer protection, unfair business practice, or fraud, filed by a student or former student or students 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 judgement judgment or settlement agreement for any such judgement judgment or settlement.
(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 10 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 an investigation by the bureau, to continue to enroll new students on a probationary status. The probationary status shall be communicated to enrolled students by the institution through emailed notifications and a clearly posted notification on the institution’s internet website.
(2) Any institution on probation pursuant to paragraph (1) may have its registration revoked by the bureau if, after further investigation, the bureau issues a written finding that there is a substantial risk posed to California residents by the institution continuing to enroll California residents. If the bureau does not issue such a finding within one year of placing the institution on probationary status, the probation shall lapse.
(3) If the bureau, after its review of the information offered by the institution in response to the bureau’s request pursuant to paragraph (1), and after consultation with the attorney general, makes a written finding that there is a substantial risk posed to California residents from the institution continuing to enroll California residents, the bureau shall revoke the institution’s registration and order the institution to immediately cease the enrollment of California residents.
(4) An institution may challenge a bureau order placing it on probation, limiting new student enrollment, or revoking registration under this subdivision through an action brought pursuant to Section 1085 of the Code of Civil Procedure. The institution shall prevail if the institution proves by a preponderance of the evidence that the bureau’s order was arbitrary, capricious, or not based upon substantial evidence.
(5) 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.
(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, 2021.

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.