BILL NUMBER: SB 1247 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 22, 2014
AMENDED IN ASSEMBLY AUGUST 18, 2014
AMENDED IN ASSEMBLY JULY 1, 2014
AMENDED IN ASSEMBLY JUNE 18, 2014
AMENDED IN ASSEMBLY JUNE 5, 2014
INTRODUCED BY Senator Lieu
(Principal coauthor: Assembly Member Bonilla)
FEBRUARY 20, 2014
An act to amend Sections 94801, 94802, 94809, 94813, 94816, 94829,
94837, 94847, 94874, 94874.1, 94876, 94877, 94878, 94879, 94880,
94885, 94888, 94890, 94891, 94904, 94909, 94910, 94916, 94923, 94924,
94925, 94929.5, 94930.5, 94932.5, 94941, 94945, 94948, and 94950 of,
to add Sections 94874.2, 94880.1, 94885.5, 94947, and
94949.5 and 94947 to, to add and repeal Sections
94885.1 and 94929.9 of, and to repeal and add Section 94949 of, the
Education Code, relating to private postsecondary education, and
making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
SB 1247, as amended, Lieu. Private postsecondary education:
California Private Postsecondary Education Act of 2009.
Existing law, the California Private Postsecondary Education Act
of 2009, provides for the regulation of private postsecondary
educational institutions by the Bureau for Private Postsecondary
Education in the Department of Consumer Affairs. The act exempts an
institution from its provisions, if any of a list of specific
criteria are met.
This bill would recast and revise various provisions of the act.
The bill would, beginning January 1, 2016, remove the exemption from
its provisions for an institution that is approved to participate in
veterans financial aid programs pursuant to a specified federal law,
and that is not an independent institution of higher education,
thereby making the act applicable to the institution.
The bill would require the bureau to, among other things, contract
with the Office of the Attorney General, or other appropriate state
agency, to establish a process for bureau staff to be trained to
investigate complaints filed with the bureau, post specified
information on its Internet Web site, establish a task force no later
than March 1, 2015, to identify standards for specified educational
and training programs and provide a report to the Legislature
regarding those programs, adopt minimum operating standards for an
institution that ensure, among other things, that an institution
offering a degree is accredited and that an unaccredited institution
offering a degree satisfies certain requirements, and establish
application processing goals and timelines to ensure that an
institution's approval to operate application is promptly reviewed by
the bureau.
The bill would require the Secretary of Business, Consumer
Services, and Housing, in consultation with the Legislature, to
appoint a Bureau for Private Postsecondary Education Monitor to carry
out specified duties to improve the bureau's operations, and would
require the monitor to submit specified reports to the Legislature
related to the bureau.
The bill would make other technical and conforming changes.
The act establishes the Student Tuition Recovery Fund and requires
the bureau to adopt regulations governing the administration and
maintenance of the fund, including requirements relating to
assessments on students and student claims against the fund, and
establishes that the moneys in this fund are continuously
appropriated to the bureau for specified purposes.
This bill would require those regulations to ensure that students
are eligible for payment from the fund in specified circumstances.
Existing law repeals that act on January 1, 2015.
This bill would instead repeal that act on January 1, 2017, thus
extending the operation of the act by 2 years.
By extending the operation of the Student Tuition Recovery Fund, a
continuously appropriated fund, this bill would make an
appropriation.
Under existing law, the act 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.
This bill would appropriate $130,000 from the Private
Postsecondary Education Administration Fund to the bureau for the
2014-15 fiscal year for staff support to the bureau and the advisory
committee, as specified.
Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 94801 of the Education Code is amended to read:
94801. The Legislature finds and declares all of the following:
(a) In 2013, more than 300,000 Californians attended more than
1,100 private postsecondary schools in California.
(b) Private postsecondary schools can complement the public
education system and help develop a trained workforce to meet the
demands of California businesses and the economy; however, concerns
about the value of degrees and diplomas issued by private
postsecondary schools, and the lack of protections for private
postsecondary school students and consumers of those schools'
services, have highlighted the need for strong state-level oversight
of private postsecondary schools.
(c) Numerous reports and studies have concluded that California's
previous attempts at regulatory oversight of private postsecondary
schools under the Department of Consumer Affairs have consistently
failed to ensure student protections or provide effective oversight
of private postsecondary schools.
(d) It is the intent of the Legislature in continuing the
operation of this chapter for two years until January 1, 2017, to
ensure all of the following:
(1) Minimum educational quality standards and opportunities for
success for California students attending private postsecondary
schools in California.
(2) Meaningful student protections through essential avenues of
recourse for students.
(3) A regulatory structure that provides for an appropriate level
of oversight.
(4) A regulatory governance structure that ensures that all
stakeholders have a voice and are heard in policymaking by the
bureau.
(5) A regulatory governance structure that provides for
accountability and oversight by the Legislature through program
monitoring and periodic reports.
(6) Prevention of the harm to students and the deception of the
public that results from fraudulent or substandard educational
programs and degrees.
(e) The Legislature advises future policymakers to continually and
carefully evaluate this chapter and its administration and
enforcement. Where there are deficiencies in the law or regulatory
oversight, the Governor and the Legislature should act quickly to
correct them.
SEC. 2. Section 94802 of the Education Code is amended to read:
94802. An institution that had a valid approval to operate on
June 30, 2007, issued by the former Bureau for Private Postsecondary
and Vocational Education pursuant to former Chapter 7 (commencing
with Section 94700) of Part 59 of Division 10 of Title 3 of the
Education Code, as it read on June 30, 2007, shall maintain that
approval under this chapter. For the purposes of this chapter, the
approval to operate shall be valid for three calendar years after the
expiration date of the approval, as it read on June 30, 2007.
SEC. 3. Section 94809 of the Education Code is amended to read:
94809. (a) An institution that had an application for an approval
to operate pending with the former Bureau for Private Postsecondary
and Vocational Education on June 30, 2007, may continue to operate
until a decision is made in regard to the institution regarding the
application for approval to operate, but shall comply with, and is
subject to, this chapter.
(b) An institution that did not have a valid approval to operate
issued by, and did not have an application for approval to operate
pending with, the former Bureau for Private Postsecondary and
Vocational Education on June 30, 2007, that began operations between
July 1, 2007, and January 1, 2010, may continue to operate unless a
denial of approval to operate has been issued and has become final,
but shall comply with, and is subject to, this chapter.
(c) Students seeking to enroll in institutions operating under
subdivisions (a) and (b) shall be notified by the institution, in
writing and prior to executing an enrollment agreement, that the
institution's application for approval to operate has not been
reviewed by the bureau.
(d) (1) An institution that is denied an approval to operate
pursuant to subdivision (a) or (b) may file an appeal pursuant to the
procedures established in Section 94888.
(2) An institution that has filed an appeal may continue to
operate during the appeal process but must disclose in a written
statement approved by the bureau, to all current and prospective
students, that the institution's application for approval to operate
was denied by the bureau because the bureau determined the
application did not satisfy the requirements to operate in
California, that the institution is appealing the bureau's decision,
and that the loss of the appeal may result in the institution's
closure.
(3) If the bureau determines that the continued operation of an
institution poses a significant risk of harm to students, the bureau
shall make an emergency decision pursuant to Section 94938.
SEC. 4. Section 94813 of the Education Code is amended to read:
94813. "Accredited" means an institution is accredited by an
accrediting agency recognized by the United States Department of
Education.
SEC. 5. Section 94816 of the Education Code is amended to read:
94816. "Applicant" means a person, as defined in Section 94855,
who has submitted an application to the board for an approval to
operate or for a renewal of an approval to operate. An approval to
operate shall be issued only to an applicant.
SEC. 6. Section 94829 of the Education Code is amended to read:
94829. "Default" means failure of a borrower and endorser, if
any, to make an installment payment for a loan received under the
federal student financial aid programs when due, or to meet other
terms of the promissory note, provided that this failure persists for
270 days if payment is due monthly or 360 days if payment is due
less frequently. For purposes of this section, "endorser" means an
individual who signs a promissory note and agrees to repay the loan
in the event that the borrower does not.
SEC. 7. Section 94837 of the Education Code is amended to read:
94837. "Educational program" means a planned sequence composed of
a single course or module, or set of related courses or modules,
that provides education, training, skills, or experience, or a
combination of these.
SEC. 8. Section 94847 of the Education Code is amended to read:
94847. "License and examination preparation" means instruction
designed to assist students to prepare for an examination for
licensure. "License and examination preparation" does not include an
educational program designed to instruct students in the skills and
knowledge necessary to satisfy the qualifications for licensure.
SEC. 9. Section 94874 of the Education Code is amended to read:
94874. Except as provided in Section 94874.2, the following are
exempt from this chapter:
(a) An institution that offers solely avocational or recreational
educational programs.
(b) An institution offering educational programs sponsored by a
bona fide trade, business, professional, or fraternal organization,
solely for that organization's membership.
(c) A postsecondary educational institution established, operated,
and governed by the federal government or by this state or its
political subdivisions.
(d) An institution offering either of the following:
(1) Test preparation for examinations required for admission to a
postsecondary educational institution.
(2) Continuing education or license examination preparation, if
the institution or the program is approved, certified, or sponsored
by any of the following:
(A) A government agency, other than the bureau, that licenses
persons in a particular profession, occupation, trade, or career
field.
(B) A state-recognized professional licensing body, such as the
State Bar of California, that licenses persons in a particular
profession, occupation, trade, or career field.
(C) A bona fide trade, business, or professional organization.
(e) (1) An institution owned, controlled, and operated and
maintained by a religious organization lawfully operating as a
nonprofit religious corporation pursuant to Part 4 (commencing with
Section 9110) of Division 2 of Title 1 of the Corporations Code, that
meets all of the following requirements:
(A) The instruction is limited to the principles of that religious
organization, or to courses offered pursuant to Section 2789 of
Business and Professions Code.
(B) The diploma or degree is limited to evidence of completion of
that education.
(2) An institution operating under this subdivision shall offer
degrees and diplomas only in the beliefs and practices of the church,
religious denomination, or religious organization.
(3) An institution operating under this subdivision shall not
award degrees in any area of physical science.
(4) Any degree or diploma granted under this subdivision shall
contain on its face, in the written description of the title of the
degree being conferred, a reference to the theological or religious
aspect of the degree's subject area.
(5) A degree awarded under this subdivision shall reflect the
nature of the degree title, such as "associate of religious studies,"
"bachelor of religious studies," "master of divinity," or "doctor of
divinity."
(f) An institution that does not award degrees and that solely
provides educational programs for total charges of two thousand five
hundred dollars ($2,500) or less when no part of the total charges is
paid from state or federal student financial aid programs. The
bureau may adjust this cost threshold based upon the California
Consumer Price Index and post notification of the adjusted cost
threshold on its Internet Web site, as the bureau determines, through
the promulgation of regulations, that the adjustment is consistent
with the intent of this chapter.
(g) A law school that is accredited by the Council of the Section
of Legal Education and Admissions to the Bar of the American Bar
Association or a law school or law study program that is subject to
the approval, regulation, and oversight of the Committee of Bar
Examiners, pursuant to Sections 6046.7 and 6060.7 of the Business and
Professions Code.
(h) A nonprofit public benefit corporation that satisfies all of
the following criteria:
(1) Is qualified under Section 501(c)(3) of the United States
Internal Revenue Code.
(2) Is organized specifically to provide workforce development or
rehabilitation services.
(3) Is accredited by an accrediting organization for workforce
development or rehabilitation services recognized by the Department
of Rehabilitation.
(i) An institution that is accredited by the Accrediting
Commission for Senior Colleges and Universities, Western Association
of Schools and Colleges, or the Accrediting Commission for Community
and Junior Colleges, Western Association of Schools and Colleges.
(j) An institution that satisfies all of the following criteria:
(1) The institution has been accredited, for at least 10 years, by
an accrediting agency that is recognized by the United States
Department of Education.
(2) The institution has operated continuously in this state for at
least 25 years.
(3) During its existence, the institution has not filed for
bankruptcy protection pursuant to Title 11 of the United States Code.
(4) The institution's cohort default rate on guaranteed student
loans does not exceed 10 percent for the most recent three years, as
published by the United States Department of Education.
(5) The institution maintains a composite score of 1.5 or greater
on its equity, primary reserve, and net income ratios, as provided
under Section 668.172 of Title 34 of the Code of Federal Regulations.
(6) The institution provides a pro rata refund of unearned
institutional charges to students who complete 75 percent or less of
the period of attendance.
(7) The institution provides to all students the right to cancel
the enrollment agreement and obtain a refund of charges paid through
attendance at the second class session, or the 14th day after
enrollment, whichever is later.
(8) The institution submits to the bureau copies of its most
recent IRS Form 990, the institution's Integrated Postsecondary
Education Data System Report of the United States Department of
Education, and its accumulated default rate.
(9) The institution is incorporated and lawfully operates as a
nonprofit public benefit corporation pursuant to Part 2 (commencing
with Section 5110) of Division 2 of Title 1 of the Corporations Code
and is not managed or administered by an entity for profit.
(k) Flight instruction providers or programs that provide flight
instruction pursuant to Federal Aviation Administration regulations
and meet both of the following criteria:
(1) The flight instruction provider or program does not require
students to enter into written or oral contracts of indebtedness.
(2) The flight instruction provider or program does not require or
accept prepayment of instruction-related costs in excess of two
thousand five hundred dollars ($2,500).
SEC. 10. Section 94874.1 of the Education Code is amended to read:
94874.1. (a) Except as provided in Section 94874.2, an
institution that is accredited by a regional accrediting agency that
is recognized by the United States Department of Education, and is
not an agency described in subdivision (i) of Section 94874, is
exempt from this chapter, except Article 14 (commencing with Section
94923).
(b) This section shall remain in effect only until January 1,
2016, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2016, deletes or extends
that date.
SEC. 11. Section 94874.2 is added to the Education Code, to read:
94874.2. Beginning January 1, 2016, an institution that is
approved to participate in veterans' financial aid programs pursuant
to Section 21.4253 of Title 38 of the Code of Federal Regulations
that is not an independent institution of higher education, as
defined in subdivision (b) of Section 66010, may not claim an
exemption from this chapter.
SEC. 12. Section 94876 of the Education Code is amended to read:
94876. (a) The powers and duties set forth in this chapter are
vested in the Director of Consumer Affairs, who may delegate them to
a bureau chief, subject to the provisions of this section. The bureau
chief shall work in collaboration with the director. The director is
responsible for the implementation of this chapter and he or she
shall ensure that the protection of the public is the bureau's
highest priority.
(b) The bureau chief shall be appointed by the Governor, subject
to confirmation by the Senate, and is exempt from the State Civil
Service Act pursuant to Part 2 (commencing with Section 18500) of
Division 5 of Title 2 of the Government Code.
(c) Each power granted to, or duty imposed upon, the bureau under
this chapter shall be exercised and performed in the name of the
bureau, subject to any conditions and limitations the director may
prescribe. The bureau chief may delegate any powers or duties to a
designee.
(d) As may be necessary to carry out this chapter, the director,
in accordance with the State Civil Service Act, may appoint and fix
the compensation of personnel.
SEC. 13. Section 94877 of the Education Code is amended to read:
94877. (a) The bureau shall adopt and shall enforce regulations
to implement this chapter pursuant to the Administrative Procedure
Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code).
(b) The bureau shall develop and implement an enforcement program,
pursuant to Article 18 (commencing with Section 94932) to implement
this chapter. The enforcement program shall include a plan for
investigating complaints filed with the bureau. The bureau shall
contract with the office of the Attorney General, or other
appropriate state agency, to establish a process for the bureau's
staff to be trained to investigate complaints, including, but not
limited to, the information, evidence, and materials needed to
process complaints.
(c) The bureau shall institute training to ensure that its staff
are equipped to review and verify the accuracy of the data contained
in consumer disclosures, including, but not limited to, the School
Performance Fact Sheet.
(d) The bureau shall establish a program to proactively identify
unlicensed institutions, identify material or repeated violations of
this chapter and regulations implementing this chapter, and take all
appropriate legal action.
SEC. 14. Section 94878 of the Education Code is amended to read:
94878. (a) The bureau shall establish an Internet Web site that
includes at least all of the following information:
(1) An explanation of the bureau's scope of authority.
(2) (A) A directory of approved institutions, and a link, if
feasible, to the Internet Web site of each institution.
(B) For each institution, the directory shall be developed in a
manner that allows the user to search by institution and shall
include all of the following information:
(i) The status of the institution's approval to operate.
(ii) The information provided by the institutions, including, but
not limited to, the annual report, as required by Section 94934,
including the school catalog and the School Performance Fact Sheet.
The School Performance Fact Sheet shall be maintained on the
directory for at least five years after the date of its submission to
the bureau.
(iii) If a law school satisfies the requirements of this chapter
regarding a School Performance Fact Sheet by complying with the
requirements of Section 94910.5, the bureau shall include the
information provided by the institution pursuant to Section 94910.5
on its Internet Web site and shall maintain the information in the
same manner as required by clause (ii).
(iv) The disciplinary history of the institution, which shall
include, but shall not be limited to, all of the following:
(I) Pending formal accusations filed by the bureau.
(II) Suspensions, revocations, citations, fines, infractions,
probations, pending litigation filed by the bureau, and final
judgments resulting from litigation filed by the bureau.
(III) Pending or final civil or criminal cases filed by the
Attorney General, a city attorney, or a district attorney in this
state, or filed in any state by an attorney general or a federal
regulatory or prosecutorial agency if the case would be actionable
under California or federal law, of which the bureau has received
notice.
(IV) Final administrative actions by the United State Department
of Education, including orders requiring restitution to students.
(V) All disciplinary actions ordered by an accreditation agency,
including any order to show cause, of which the bureau has received
notice pursuant to Section 94934 or other information otherwise
publicly available of which the board bureau
has received notice.
(b) The bureau shall maintain the Internet Web site described in
subdivision (a). The bureau shall ensure that the information
specified in subdivision (a) is kept current. The bureau shall update
the Internet Web site at least annually, to coincide with the
submission of annual reports by the institutions pursuant to Section
94934.
(c) (1) The bureau shall post on its Internet Web site a list of
all institutions that were denied approval to operate, after the
denial is final, and describe in clear and conspicuous language the
reason the institution was denied approval. The bureau shall include
with this list the statement provided in paragraph (2) on its
Internet Web site.
(2) "The following institutions were denied approval to operate by
the Bureau for Private Postsecondary Education for failing to
satisfy the standards relating to educational quality, or consumer
protection, or both. These unlicensed institutions are not operating
in compliance with the law, and students are strongly discouraged
from attending these institutions."
SEC. 15. Section 94879 of the Education Code is amended to read:
94879. The bureau shall conduct an outreach program to secondary
school pupils as well as prospective and current private
postsecondary students, to provide them with information on how to
best select a private postsecondary institution, how to enter into
enrollment agreements, how to make informed decisions in the private
postsecondary education marketplace, and how to contact the bureau
for assistance. The bureau may accomplish the purposes of this
section in cooperation with other federal, state, or local entities,
or any combination of these entities.
SEC. 16. Section 94880 of the Education Code is amended to read:
94880. (a) There is within the bureau a 14-member advisory
committee. On or before July 1, 2015, the members of the committee
shall be appointed as follows:
(1) Three members, who shall have a demonstrated record of
advocacy on behalf of consumers, of which the director, the Senate
Committee on Rules, and the Speaker of the Assembly shall each
appoint one member.
(2) Two members, who shall be current or past students of
institutions, appointed by the director.
(3) Three members, who shall be representatives of institutions,
appointed by the director.
(4) Two members, which shall be employers that hire students,
appointed by the director.
(4)
( 5) One public member appointed by the
Senate Committee on Rules.
(5)
( 6) One public member appointed by the
Speaker of the Assembly.
(6) Four
( 7) Two nonvoting,
ex-officio members as follows:
(A) The chair , or the designee of the chair,
of the policy committee of the Assembly with jurisdiction over
legislation relating to the bureau, bureau or
designee appointed by the Speaker of the Assembly.
(B) The chair , or the designee of the chair,
of the policy committee of the Senate with jurisdiction over
legislation relating to the bureau, bureau or
designee appointed by the Senate Committee on Rules.
(C) One attorney employed in the consumer law section of the
Office of the Attorney General, to be appointed by the Attorney
General.
(D) A representative employed in the career and college transition
division of the State Department of Education, to be appointed by
the Superintendent of Public Instruction.
(b) (1) A public member shall not, either at the time of his or
her appointment or during his or her tenure in office, have any
financial interest in any organization currently or previously
subject to regulation by the bureau, be a close family member of an
employee, officer, or the director of any institution subject to
regulation by the bureau, or currently have, or previously have had,
a business relationship, in the five years preceding his or her
appointment, with any institution subject to regulation by the
bureau.
(2) A public member shall not, within the five years immediately
preceding his or her appointment, have engaged in pursuits on behalf
of an institution or institutional accreditor or have provided
representation to the postsecondary educational industry or a
profession regulated by the bureau, if he or she is employed in the
industry or a member of the profession, respectively, and he or she
shall not engage in those pursuits or provide that representation
during his or her term of office.
(c) The advisory committee shall examine the oversight functions
and operational policies of the bureau and advise the bureau with
respect to matters relating to private postsecondary education and
the administration of this chapter, including annually reviewing the
fee schedule and the equity of the schedule relative to the way
institutions are structured, and the licensing and enforcement
provisions of this chapter. The advisory committee shall make
recommendations with respect to policies, practices, and regulations
relating to private postsecondary education, and shall provide any
assistance as may be requested by the bureau.
(d) The bureau shall actively seek input from, and consult with,
the advisory committee regarding the development of regulations to
implement this chapter prior to the adoption, amendment, or repeal of
its regulations, and provide the advisory committee with sufficient
time to review and comment on those regulations. The bureau shall
take into consideration and respond to all feedback provided by
members of the advisory committee.
(e) The bureau chief shall attend all advisory committee meetings
and shall designate staff to provide ongoing administrative support
to the advisory committee.
(f) Until January 1, 2017, the director shall personally attend,
and testify and answer questions at, each meeting of the advisory
committee.
(g) The advisory committee shall have the same access to records
within the Department of Consumer Affairs related to the operation
and administration of this chapter as do members of constituent
boards of the department in regard to records related to their
functions.
(h) Advisory committee meetings shall be subject to the
Bagley-Keene Open Meetings Act. Advisory committee meeting materials
shall be posted on the Internet.
(i) The advisory committee shall meet at least quarterly and shall
appoint a member of the committee to represent the committee for
purposes of communicating with the Legislature.
(j) The Department of Consumer Affairs shall review, and revise if
necessary, the department's conflicts of interest regulations to
ensure that each advisory committee member is required to disclose
conflicts of interest to the public.
SEC. 17. Section 94880.1 is added to the Education Code, to read:
94880.1. (a) (1) The bureau shall establish a task force no later
than March 1, 2015, to review standards for educational and training
programs specializing in innovative subject matters and instructing
students in high-demand technology fields for which there is a
demonstrated shortage of skilled employees. The members of the task
force may include postsecondary education experts, owners of
institutions, consumer advocates focused on education, high
technology employers, students of short-term focused high technology
training programs, and providers of high technology training in
subjects including, but not necessarily limited to, programming,
software development, computer science, and coding.
(2) At least two members of the task force shall be members of the
advisory committee. One of these members shall serve as chair of the
task force.
(3) The task force shall transmit a report with its recommendations
and findings to the advisory committee no later than January 1, 2016.
The task force's report shall include, but not necessarily be
limited to, all of the following:
(A) Whether students attending institutions should receive certain
disclosures prior to enrolling in an educational program offered by
those institutions.
(B) Whether the means of reporting student outcomes and the
content of those reports are appropriate.
(C) The steps the state may take to promote the growth of
high-quality training programs in skills for high technology
occupations.
(b) The advisory committee shall review and approve, modify, or
reject the report prepared pursuant to paragraph (3) of subdivision
(a). The bureau shall provide the approved report to the Legislature
no later than July 1, 2016.
(c) The requirement for submitting a report imposed under this
subdivision is inoperative on January 1, 2017, pursuant to Section
10231.5 of the Government Code.
(d) The report to be submitted to the Legislature pursuant to
subdivision (c) shall be submitted in compliance with Section 9795 of
the Government Code.
SEC. 18. Section 94885 of the Education Code is amended to read:
94885. (a) The bureau shall adopt by regulation minimum operating
standards for an institution that shall reasonably ensure that all
of the following occur:
(1) The content of each educational program can achieve its stated
objective.
(2) The institution maintains specific written standards for
student admissions for each educational program and those standards
are related to the particular educational program.
(3) The facilities, instructional equipment, and materials are
sufficient to enable students to achieve the educational program's
goals.
(4) The institution maintains a withdrawal policy and provides
refunds.
(5) The directors, administrators, and faculty are properly
qualified.
(6) The institution is financially sound and capable of fulfilling
its commitments to students.
(7) That, upon satisfactory completion of an educational program,
the institution gives students a document signifying the degree or
diploma awarded.
(8) Adequate records and standard transcripts are maintained and
are available to students.
(9) The institution is maintained and operated in compliance with
this chapter and all other applicable ordinances and laws.
(b) Except as provided in Section 94855.1, an institution offering
a degree must satisfy one of the following requirements:
(i) Accreditation by an accrediting agency recognized by the
United States Department of Education, with the scope of that
accreditation covering the offering of at least one degree program by
the institution.
(ii) An accreditation plan, approved by the bureau, for the
institution to become fully accredited within five years of the
bureau's issuance of a provisional approval to operate to the
institution. The provisional approval to operate to an unaccredited
degree-offering institution shall be in compliance with Section
94885.5.
SEC. 19. Section 94885.1 is added to the Education Code, to read:
94885.1. (a) An institution that is not accredited by an
accrediting agency recognized by the United States Department of
Education and offering at least one degree program, and that has
obtained an approval to operate from the bureau on or before January
1, 2015, shall be required to satisfy at least one of the following
no later than July 1, 2015:
(1) Accreditation by an accrediting agency recognized by the
United States Department of Education, with the scope of that
accreditation covering the offering of at least one degree program by
the institution.
(2) Compliance with subdivision (b).
(b) The bureau shall identify institutions that are subject to
subdivision (a) and notify those institutions by February 1, 2015 of
the accreditation requirements pursuant to this section and that the
institution is required provide the following information to the
bureau if the institution plans to continue to offer a degree program
after July 1, 2015:
(1) An accreditation plan that, at a minimum, identifies an
accrediting agency recognized by the United States Department of
Education from which the institution will seek accreditation, with
the scope of that accreditation covering the offering of at least one
degree program, and outlines the process by which the institution
will achieve accreditation candidacy or pre-accreditation by July 1,
2017, and full accreditation by July 1, 2020.
(2) Evidence of having achieved accreditation candidacy or
pre-accreditation by July 1, 2017.
(3) Evidence of having obtained full accreditation by July 1,
2020.
(4) Any additional documentation the bureau deems necessary.
(c) An institution that satisfies the requirements of subdivision
(b) shall comply with all of the following:
(1) Notify students seeking to enroll in the institution, in
writing, prior to the execution of the student's enrollment
agreement, that the institution's approval to offer a degree program
is contingent upon the institution being subsequently accredited.
(2) A visiting committee, empaneled by the bureau pursuant to
Section 94882, shall review the institution by January 1, 2017, and
determine if the institution is likely to achieve full accreditation
by July 1, 2020. If the visiting committee finds the institution
deficient in its accreditation plan, the bureau may prohibit the
institution from enrolling new students in its degree program or
programs, and require the execution of a teach-out plan for its
enrolled students.
(d) Any institution that fails to comply with the requirements of
this section by the dates provided, as required, shall have its
approval to operate automatically suspended on the applicable date.
The bureau shall issue an order suspending the institution and that
suspension shall not be lifted until the institution complies with
the requirements of this section. A suspended institution shall not
enroll new students in any of its degree programs, and shall execute
a teach-out plan for its enrolled students.
(e) The bureau shall adopt emergency regulations for purposes of
implementing this section. 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 within one year of the enactment of
this section.
(e)
(f) This section shall remain in effect until January
1, 2021, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2021, deletes or extends
that date.
SEC. 20. Section 94885.5 is added to the Education Code, to read:
94885.5. (a) If an institution that has not been accredited by an
accrediting agency recognized by the United States Department of
Education seeks to offer one or more degree programs, the institution
shall satisfy the following requirements in order to be issued a
provisional approval to operate from the bureau:
(1) The institution may not offer more than two degree programs
during the term of its provisional approval to operate.
(2) The institution shall submit an accreditation plan, approved
by the bureau, for the institution to become fully accredited within
five years of issuance of its provisional approval to operate. The
plan shall include, at a minimum, identification of an accreditation
agency recognized by the United States Department of Education, from
which the institution plans to seek accreditation, and outline the
process by which the institution will achieve accreditation candidacy
or pre-accreditation within two years, and full accreditation within
five years, of issuance of its provisional approval.
(3) The institution shall submit to the bureau all additional
documentation the bureau deems necessary to determine if the
institution will become fully accredited within five years of
issuance of its provisional approval to operate.
(b) If an institution is granted a provisional approval to operate
pursuant to subdivision (a), the following is required:
(1) Students seeking to enroll in that institution shall be
notified in writing by the institution, prior to the execution of the
student's enrollment agreement, that the institution's approval to
operate is contingent upon it being subsequently accredited.
(2) Within the first two years of issuance of the provisional
approval, a visiting committee, empaneled by the bureau pursuant to
Section 94882, shall review the institution's application for
approval and its accreditation plan, and make a recommendation to the
bureau regarding the institution's progress to achieving full
accreditation.
(3) The institution shall provide evidence of accreditation
candidacy or preaccreditation within two years of issuance of its
provisional approval, and evidence of accreditation within five years
of issuance of its provisional approval, with the scope of that
accreditation covering the offering of at least one degree program.
(c) An institution required to comply with this section that fails
to do so by the dates provided, as required, shall have its
provisional approval to operate automatically suspended on the
applicable date. The bureau shall issue an order suspending the
institution and that suspension shall not be lifted until the
institution complies with the requirements of this section. A
suspended institution shall not enroll new students in any of its
degree programs and shall execute a teach-out plan for its enrolled
students.
(d) An institution issued a provisional approval under this
section is required to comply with all other laws and regulations.
(e) The bureau shall adopt emergency regulations for purposes of
implementing this section. 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 within one year of the enactment of
this section.
SEC. 21. Section 94888 of the Education Code is amended to read:
94888. (a) The bureau shall adopt by regulation both of the
following:
(1) The process and procedures whereby an institution seeking
approval to operate may apply for and obtain an approval to operate.
(2) The process and procedures governing the bureau's approval and
denial of applications for approval to operate, including the
process and procedures whereby an applicant for which an application
has been denied may appeal that denial.
(b) The bureau shall, by regulation, establish both of the
following:
(1) A process for issuing a notification of a denial of an
approval to operate to an institution that submits an application for
approval to operate and for which that application is denied. The
notification of denial shall include a statement of reasons for the
denial.
(2) Application processing goals and timelines to ensure an
institution that has submitted a complete application for approval to
operate has that application promptly reviewed for compliance within
30 days of bureau receipt of the application, or within an
appropriate timeline as determined by the bureau. The timelines shall
ensure that an institution that has submitted a complete and
compliant application receives approval within 30 days of the
application being deemed compliant by the bureau, or within an
appropriate timeline as determined by the bureau.
SEC. 22. Section 94890 of the Education Code is amended to read:
94890. (a) (1) The bureau shall grant an institution that is
accredited an approval to operate by means of its accreditation.
(2) The bureau shall adopt by regulation the process and
procedures whereby an institution that is accredited may apply for
and obtain an approval by means of that accreditation. The bureau
shall establish application processing goals and timelines to ensure
that an institution that has submitted a complete application for
approval to operate by means of its accreditation has that
application promptly reviewed for compliance within 30 days of the
bureau's receipt of the application or within an appropriate timeline
as determined by the bureau. The timelines shall ensure that an
institution that has submitted a complete and compliant application
receives approval within 30 days of the application being deemed
compliant by the bureau, or within an appropriate timeline as
determined by the bureau.
(b) The term of an approval to operate pursuant to this section
shall be coterminous with the term of accreditation. Upon renewal of
the institution's accreditation, the institution shall submit
verification to the bureau, on a form provided by the bureau, that
the institution's accreditation has been renewed.
(c) Institutions that are granted an approval to operate by means
of the institution's accreditation shall comply with all other
applicable requirements in this chapter.
SEC. 23. Section 94891 of the Education Code is amended to read:
94891. (a) The bureau shall adopt by regulation the process and
procedures whereby an institution may obtain a renewal of an approval
to operate.
(b) To be granted a renewal of an approval to operate, the
institution shall demonstrate its continued capacity to meet the
minimum operating standards.
(c) (1) An institution that is denied renewal of an approval to
operate may file an appeal in accordance with the procedures
established by the bureau pursuant to Section 94888.
(2) An institution that has filed an appeal of a denial of a
renewal application may continue to operate during the appeal
process, but must disclose in a written statement, approved by the
bureau, to all current and prospective students, that the institution'
s application for renewal of approval to operate was denied by the
bureau because the bureau determined the application did not satisfy
the requirements to operate in California, that the institution is
appealing the bureau's decision, and that the loss of the appeal may
result in the institution's closure.
(3) If the bureau determines that the continued operation of the
institution during the appeal process poses a significant risk of
harm to students, the bureau shall make an emergency decision
pursuant to its authority provided in Section 94938.
SEC. 24. Section 94904 of the Education Code is amended to read:
94904. (a) Before an ability-to-benefit student may execute an
enrollment agreement, the institution shall have the student take an
independently administered examination from the list of examinations
prescribed as of July 1, 2012, by the United States Department of
Education pursuant to Section 484(d) of the federal Higher Education
Act of 1965 (20 U.S.C. Sec. 1070a et seq.). The student shall not
enroll unless the student achieves a score, as specified by the
United States Department of Education, demonstrating that the student
may benefit from the education and training being offered.
(b) If the United States Department of Education does not have a
list of relevant examinations that pertain to the intended
occupational training, the bureau may publish its own list of
acceptable examinations and required passing scores.
SEC. 25. Section 94909 of the Education Code is amended to read:
94909. (a) Except as provided in subdivision (d), prior to
enrollment, an institution shall provide a prospective student,
either in writing or electronically, with a school catalog
containing, at a minimum, all of the following:
(1) The name, address, telephone number, and, if applicable,
Internet Web site address of the institution.
(2) Except as specified in Article 2 (commencing with Section
94802), a statement that the institution is a private institution and
that it is approved to operate by the board
bureau .
(3) The following statements:
(A) "Any questions a student may have regarding this catalog that
have not been satisfactorily answered by the institution may be
directed to the Board Bureau for
Private Postsecondary Education at (address), Sacramento, CA (ZIP
Code), (Internet Web site address), (telephone and fax numbers)."
(B) "As a prospective student, you are encouraged to review this
catalog prior to signing an enrollment agreement. You are also
encouraged to review the School Performance Fact Sheet, which must be
provided to you prior to signing an enrollment agreement."
(C) "A student or any member of the public may file a complaint
about this institution with the Board Bureau
for Private Postsecondary Education by calling (toll-free
telephone number) or by completing a complaint form, which can be
obtained on the board's bureau's
Internet Web site (Internet Web site address)."
(4) The address or addresses where class sessions will be held.
(5) A description of the programs offered and a description of the
instruction provided in each of the courses offered by the
institution, the requirements for completion of each program,
including required courses, any final tests or examinations, any
required internships or externships, and the total number of credit
hours, clock hours, or other increments required for completion.
(6) If the educational program is designed to lead to positions in
a profession, occupation, trade, or career field requiring licensure
in this state, a notice to that effect and a list of the
requirements for eligibility for licensure.
(7) Information regarding the faculty and their qualifications.
(8) A detailed description of institutional policies in the
following areas:
(A) Admissions policies, including the institution's policies
regarding the acceptance of credits earned at other institutions or
through challenge examinations and achievement tests, admissions
requirements for ability-to-benefit students, and a list describing
any transfer or articulation agreements between the institution and
any other college or university that provides for the transfer of
credits earned in the program of instruction. If the institution has
not entered into an articulation or transfer agreement with any other
college or university, the institution shall disclose that fact.
(B) Cancellation, withdrawal, and refund policies, including an
explanation that the student has the right to cancel the enrollment
agreement and obtain a refund of charges paid through attendance at
the first class session, or the seventh day after enrollment,
whichever is later. The text shall also include a description of the
procedures that a student is required to follow to cancel the
enrollment agreement or withdraw from the institution and obtain a
refund consistent with the requirements of Article 13 (commencing
with Section 94919).
(C) Probation and dismissal policies.
(D) Attendance policies.
(E) Leave-of-absence policies.
(9) The schedule of total charges for a period of attendance and
an estimated schedule of total charges for the entire educational
program.
(10) A statement reporting whether the institution participates in
federal and state financial aid programs, and if so, all consumer
information that is required to be disclosed to the student pursuant
to the applicable federal and state financial aid programs.
(11) A statement specifying that, if a student obtains a loan to
pay for an educational program, the student will have the
responsibility to repay the full amount of the loan plus interest,
less the amount of any refund, and that, if the student has received
federal student financial aid funds, the student is entitled to a
refund of the moneys not paid from federal student financial aid
program funds.
(12) A statement specifying whether the institution has a pending
petition in bankruptcy, is operating as a debtor in possession, has
filed a petition within the preceding five years, or has had a
petition in bankruptcy filed against it within the preceding five
years that resulted in reorganization under Chapter 11 of the United
States Bankruptcy Code (11 U.S.C. Sec. 1101 et seq.).
(13) If the institution provides placement services, a description
of the nature and extent of the placement services.
(14) A description of the student's rights and responsibilities
with respect to the Student Tuition Recovery Fund. This statement
shall specify that it is a state requirement that a student who pays
his or her tuition is required to pay a state-imposed assessment for
the Student Tuition Recovery Fund. This statement shall also describe
the purpose and operation of the Student Tuition Recovery Fund and
the requirements for filing a claim against the Student Tuition
Recovery Fund.
(15) The following statement:
"NOTICE CONCERNING TRANSFERABILITY OF CREDITS AND CREDENTIALS EARNED
AT OUR INSTITUTION
The transferability of credits you earn at (name of institution) is
at the complete discretion of an institution to which you may seek
to transfer. Acceptance of the (degree, diploma, or certificate) you
earn in (name of educational program) is also at the complete
discretion of the institution to which you may seek to transfer. If
the (credits or degree, diploma, or certificate) that you earn at
this institution are not accepted at the institution to which you
seek to transfer, you may be required to repeat some or all of your
coursework at that institution. For this reason you should make
certain that your attendance at this institution will meet your
educational goals. This may include contacting an institution to
which you may seek to transfer after attending (name of institution)
to determine if your (credits or degree, diploma, or certificate)
will transfer."
(16) A statement specifying whether the institution, or any of its
degree programs, are accredited by an accrediting agency recognized
by the United States Department of Education. If the institution is
unaccredited and offers an associate, baccalaureate, master's, or
doctoral degree, or is accredited and offers an unaccredited program
for an associate, baccalaureate, master's, or doctoral degree, the
statement shall disclose the known limitations of the degree program,
including, but not limited to, all of the following:
(A) Whether a graduate of the degree program will be eligible to
sit for the applicable licensure exam in California and other states.
(B) A degree program that is unaccredited or a degree from an
unaccredited institution is not recognized for some employment
positions, including, but not limited to, positions with the State of
California.
(C) That a student enrolled in an unaccredited institution is not
eligible for federal financial aid programs.
(b) If the institution has a general student brochure, the
institution shall provide that brochure to the prospective student
prior to enrollment. In addition, if the institution has a
program-specific student brochure for the program in which the
prospective student seeks to enroll, the institution shall provide
the program-specific student brochure to the prospective student
prior to enrollment.
(c) An institution shall provide the school catalog to any person
upon request. In addition, if the institution has student brochures,
the institution shall disclose the requested brochures to any
interested person upon request.
(d) An accredited institution is not required to provide a School
Performance Fact Sheet to a prospective student who is not a
California resident, not residing in California at the time of his or
her enrollment, and enrolling in an accredited distance learning
degree program offered by the institution, if the institution
complies with all federal laws, the applicable laws of the state
where the student is located, and other appropriate laws, including,
but not limited to, consumer protection and student disclosure
requirements.
SEC. 26. Section 94910 of the Education Code is amended to read:
94910. Except as provided in subdivision (d) of Section 94909 and
Section 94910.5, prior to enrollment, an institution shall provide a
prospective student with a School Performance Fact Sheet containing,
at a minimum, the following information, as it relates to the
educational program:
(a) Completion rates, as calculated pursuant to Article 16
(commencing with Section 94928).
(b) Placement rates for each educational program, as calculated
pursuant to Article 16 (commencing with Section 94928), if the
educational program is designed to lead to, or the institution makes
any express or implied claim related to preparing students for, a
recognized career, occupation, vocation, job, or job title.
(c) License examination passage rates for programs leading to
employment for which passage of a state licensing examination is
required, as calculated pursuant to Article 16 (commencing with
Section 94928).
(d) Salary or wage information, as calculated pursuant to Article
16 (commencing with Section 94928).
(e) If a program is too new to provide data for any of the
categories listed in this subdivision, the institution shall state on
its fact sheet: "This program is new. Therefore, the number of
students who graduate, the number of students who are placed, or the
starting salary you can earn after finishing the educational program
are unknown at this time. Information regarding general salary and
placement statistics may be available from government sources or from
the institution, but is not equivalent to actual performance data."
(f) All of the following:
(1) A description of the manner in which the figures described in
subdivisions (a) to (d), inclusive, are calculated or a statement
informing the reader of where he or she may obtain a description of
the manner in which the figures described in subdivisions (a) to (d),
inclusive, are calculated.
(2) A statement informing the reader of where he or she may obtain
from the institution a list of the employment positions determined
to be within the field for which a student received education and
training for the calculation of job placement rates as required by
subdivision (b).
(3) A statement informing the reader of where he or she may obtain
from the institution a list of the objective sources of information
used to substantiate the salary disclosure as required by subdivision
(d).
(g) The
following statements:
(1) "This fact sheet is filed with the Board
Bureau for Private Postsecondary Education. Regardless of
any information you may have relating to completion rates, placement
rates, starting salaries, or license exam passage rates, this fact
sheet contains the information as calculated pursuant to state law."
(2) "Any questions a student may have regarding this fact sheet
that have not been satisfactorily answered by the institution may be
directed to the Board Bureau for
Private Postsecondary Education at (address), Sacramento, CA (ZIP
Code), (Internet Web site address), (telephone and fax numbers)."
(h) If the institution participates in federal financial aid
programs, the most recent three-year cohort default rate reported by
the United States Department of Education for the institution and the
percentage of enrolled students receiving federal student loans.
(i) Data and information disclosed pursuant to subdivisions (a) to
(d), inclusive, is not required to include students who satisfy the
qualifications specified in subdivision (d) of Section 94909, but an
institution shall disclose whether the data, information, or both
provided in its fact sheet excludes students pursuant to this
subdivision. An institution shall not actively use data specific to
the fact sheet in its recruitment materials or other recruitment
efforts of students who are not California residents and do not
reside in California at the time of their enrollment.
SEC. 27. Section 94916 of the Education Code is amended to read:
94916. An institution extending credit or lending money to an
individual for institutional and noninstitutional charges for an
educational program shall cause any note, instrument, or other
evidence of indebtedness taken in connection with that extension of
credit or loan to be conspicuously marked on its face in at least
12-point type with the following notice:
"Notice "NOTICE "
You "You may assert against the
holder of the promissory note you signed in order to finance the cost
of the educational program all of the claims and defenses that you
could assert against this institution, up to the amount you have
already paid under the promissory note."
SEC. 28. Section 94923 of the Education Code is amended to read:
94923. (a) The Student Tuition Recovery Fund relieves or
mitigates economic loss suffered by a student while enrolled in an
educational program, as defined in Section 94837, at an institution
not exempt from this article pursuant to Article 4 (commencing with
Section 94874), who, at the time of his or her enrollment, was a
California resident or was enrolled in a California residency
program, prepaid tuition, and suffered economic loss.
(b) The bureau shall adopt by regulation procedures governing the
administration and maintenance of the Student Tuition Recovery Fund,
including requirements relating to assessments on students and
student claims against the Student Tuition Recovery Fund. The
regulations shall provide for awards to students who suffer economic
loss.
The regulations shall ensure that the following students, and any
other students deemed appropriate, are eligible for payment from the
Student Tuition Recovery Fund:
(1) Any student who was enrolled at an institution, at a location
of the institution, or in an educational program offered by the
institution, at the time that institution, location, or program was
closed or discontinued, as applicable, who did not choose to
participate in a teach-out plan approved by the bureau or did not
complete a chosen teach-out plan approved by the bureau.
(2) Any student who was enrolled at an institution or a location
of the institution within the 120-day period before the closure of
the institution or location of the institution, or who was enrolled
in an educational program within the 120-day period before the
program was discontinued, if the bureau determines there was a
significant decline in the quality or value of that educational
program during that time period.
(3) Any student who was enrolled at an institution or a location
of the institution more than 120 days before the closure of the
institution or location of the institution, in an educational program
offered by the institution as to which the bureau determines there
was a significant decline in the quality or value of the program more
than 120 days before closure.
(4) A student to whom an institution has been ordered to pay a
refund by the bureau but has failed to do so.
(5) A student to whom an institution has failed to pay or
reimburse loan proceeds under a federal student loan program as
required by law, or has failed to pay or reimburse proceeds received
by the institution in excess of tuition and other costs.
(6) A student who has been awarded restitution, a refund, or
other monetary award by an arbitrator or court, based on a violation
of this chapter by an institution or representative of an
institution, but who has been unable to collect the award from the
institution. The bureau shall review the award or judgment and shall
ensure the amount to be paid from the fund does not exceed the
student's economic loss.
(c) Any student who is required to pay a Student Tuition Recovery
Fund assessment who pays tuition equal to or greater than the
required assessment shall be deemed to have paid the required
assessment, whether or not his or her enrollment agreement specifies
collection of the required assessment, and whether or not the
institution identifies any money collected from the student as a
Student Tuition Recovery Fund assessment.
(d) The bureau shall establish regulations ensuring, as
permissible under California law, that a student who suffers
educational opportunity losses, whose charges are paid by a
third-party payer, is eligible for educational credits under the
fund.
(e) The bureau may seek repayment to the Student Tuition Recovery
Fund from an institution found in violation of the law for which a
student claim was paid. An institution shall not be eligible to renew
its approval to operate with the bureau if the repayment is not made
to the bureau as requested.
(f) The bureau shall, by regulation, define "economic loss." The
regulation shall ensure that the definition of "economic loss"
includes, but is not necessarily limited to, pecuniary loss, which is
the sum of the student's tuition, all other institutional charges as
defined in Section 94844, the cost of equipment and materials
required for the educational program as defined in Section 94837,
interest on any student loan used to pay for such charges, collection
costs, penalties, and any license or examination fees the student
paid to the institution but is unable to recover. Economic loss shall
also include the amount the institution collected and failed to pay
to third parties on behalf of the student for license fees or any
other purpose. Economic loss does not include Student Tuition
Recovery Fund assessments, unless the student is entitled to a full
refund under Section 94919 or 94920, room and board, supplies,
transportation, application fees, or nonpecuniary damages such as
inconvenience, aggravation, emotional distress, or punitive damages.
Economic loss does not include legal fees, attorney fees, court
costs, or arbitration fees. Nothing in this subdivision shall prevent
the bureau from further defining economic loss to include loss of
educational opportunity.
SEC. 29. Section 94924 of the Education Code is amended to read:
94924. (a) The bureau shall determine the amount of Student
Tuition Recovery Fund assessments to be collected for each student.
(b) All assessments collected pursuant to this article shall be
credited to the Student Tuition Recovery Fund, along with any accrued
interest, for the purpose of this article. Notwithstanding Section
13340 of the Government Code, the moneys in the Student Tuition
Recovery Fund are continuously appropriated to the bureau, without
regard to fiscal year, for the purposes of this article.
(c) Except when an institution provides a full refund pursuant to
Section 94919 or Section 94920, the Student Tuition Recovery Fund
assessment is nonrefundable.
SEC. 30. Section 94925 of the Education Code is amended to read:
94925. (a) The amount in the Student Tuition Recovery Fund shall
not exceed twenty-five million dollars ($25,000,000) at any time.
(b) If the bureau has temporarily stopped collecting the Student
Tuition Recovery Fund assessments because the fund has approached the
twenty-five million dollar limit in subdivision (a), the bureau
shall resume collecting Student Tuition Recovery Fund assessments
when the fund falls below twenty million dollars ($20,000,000).
(c) An otherwise eligible student who enrolled during a period
when institutions were not required to collect Student Tuition
Recovery Fund assessments is eligible for Student Tuition Recovery
Fund payments despite not having paid any Student Tuition Recovery
Fund assessment.
SEC. 31. Section 94929.5 of the Education Code is amended to read:
94929.5. (a) An institution shall annually report to the bureau,
as part of the annual report, and shall publish in its School
Performance Fact Sheet, all of the following:
(1) The job placement rate, calculated by dividing the number of
graduates employed in the field by the number of graduates available
for employment for each program that is either (1) designed, or
advertised, to lead to a particular career, or (2) advertised or
promoted with any claim regarding job placement.
(2) The license examination passage rates for the immediately
preceding two years for programs leading to employment for which
passage of a state licensing examination is required, calculated by
dividing the number of graduates who pass the examination by the
number of graduates who take the licensing examination the first time
that the examination is available after completion of the
educational program. The institution shall use state agency licensing
data to calculate license examination passage rates. If those data
are unavailable, the institution shall calculate the license
examination passage rate in a manner consistent with regulations
adopted by the bureau.
(3) Salary and wage information, consisting of the total number of
graduates employed in the field and the annual wages or salaries of
those graduates stated in increments of five thousand dollars
($5,000).
(4) If applicable, the most recent official three-year cohort
default rate reported by the United States Department of Education
for the institution and the percentage of enrolled students receiving
federal student loans.
(b) Nothing in this section shall limit the bureau's authority to
collect information from an institution to comply with this section
and ensure, by regulation and other lawful means, that the
information required by this section, and the manner in which it is
collected and reported, is all of the following:
(1) Useful to students.
(2) Useful to policymakers.
(3) Based upon the most credible and verifiable data available.
(4) Does not impose undue compliance burdens on an institution.
(c) Data and information disclosed pursuant to paragraphs (1) to
(3), inclusive, of subdivision (a) is not required to include
students who satisfy the qualifications specified in subdivision (d)
of Section 94909, but an institution shall disclose on its fact sheet
and to the bureau whether its data, information, or both, excludes
any students pursuant to this subdivision.
SEC. 32. Section 94929.9 is added to the Education Code, to read:
94929.9. (a) The bureau shall consider the graduate salary and
other outcome data and reporting requirements that are utilized by
the United States Department of Education, the Student Aid
Commission, accrediting agencies, and student advocate associations.
The bureau shall consider the reporting requirements of public
postsecondary institutions in California to evaluate the feasibility
of adopting these reporting requirements for private postsecondary
institutions. The bureau shall make recommendations to the
Legislature, on or before December 31, 2016, on how reporting
requirements under this chapter should be altered to ensure accurate,
useful, and consistent reporting by private postsecondary
institutions to the bureau and students.
(b) The bureau is authorized to enter into a personal services
contract with an appropriate independent contractor to assist in the
evaluation required by subdivision (a). In this connection, the
Legislature finds, pursuant to Section 19130 of the Government Code,
that this is a new state function.
(c) (1) A report to be submitted to the Legislature pursuant to
subdivision (a) shall be submitted in compliance with Section 9795 of
the Government Code.
(2) Pursuant to Section 10231.5 of the Government Code, this
section is repealed January 1, 2017.
SEC. 33. Section 94930.5 of the Education Code is amended to read:
94930.5. Subject to Section 94930, an institution shall remit to
the bureau for deposit in the Private Postsecondary Education
Administration Fund the following fees, in accordance with the
following schedule:
(a) The following fees shall be remitted by an institution
submitting an application for an approval to operate, if applicable:
(1) Application fee for an approval to operate: five thousand
dollars ($5,000).
(2) Application fee for the approval to operate a new branch of
the institution: three thousand dollars ($3,000).
(3) Application fee for an approval to operate by means of
accreditation: seven hundred fifty dollars ($750).
(b) The following fees shall be remitted by an institution seeking
a renewal of its approval to operate, if applicable:
(1) Renewal fee for the main campus of the institution: three
thousand five hundred dollars ($3,500).
(2) Renewal fee for a branch of the institution: three thousand
dollars ($3,000).
(3) Renewal fee for an institution that is approved to operate by
means of accreditation: five hundred dollars ($500).
(c) The following fees shall apply to an institution seeking
authorization of a substantive change to its approval to operate, if
applicable:
(1) Processing fee for authorization of a substantive change to an
approval to operate: five hundred dollars ($500).
(2) Processing fee in connection with a substantive change to an
approval to operate by means of accreditation: two hundred fifty
dollars ($250).
(d) (1) In addition to any fees paid to the bureau pursuant to
subdivisions (a) to (c), inclusive, each institution that is approved
to operate pursuant to this chapter shall remit both of the
following:
(A) An annual institutional fee, in an amount equal to
three-quarters of 1 percent of the institution's annual revenues
derived from students in California, but not exceeding a total of
twenty-five thousand dollars ($25,000) annually.
(B) An annual branch fee of one thousand dollars ($1,000) for each
branch or campus of the institution operating in California.
(2) The amount of the annual fees pursuant to paragraph (1) shall
be proportional to the bureau's cost of regulating the institution
under this chapter.
SEC. 34. Section 94932.5 of the Education Code is amended to read:
94932.5. (a) As part of its compliance program, the bureau shall
perform announced and unannounced inspections of institutions at
least every five years.
(b) On or before January 1, 2017, the bureau shall adopt
regulations setting forth policies and practices to ensure that
student protections are the highest priority of inspections and that
inspections are conducted based on risk and potential harm to
students. The regulations shall also set forth policies and practices
for providing notice to students enrolled at an institution of the
results of each inspection of the institution.
SEC. 35. Section 94941 of the Education Code is amended to read:
94941. (a) An individual who has cause to believe that an
institution has violated this chapter, or regulations adopted
pursuant to this chapter, may file a complaint with the bureau
against the institution. The complaint shall set forth the alleged
violation, and shall contain any other information as may be required
by the bureau.
(b) To ensure that the bureau's resources are maximized for the
protection of the public, the bureau, in consultation with the
advisory committee, shall establish priorities for its inspections
and other investigative and enforcement resources to ensure that
institutions representing the greatest threat of harm to the greatest
number of students are identified and disciplined by the bureau or
referred to the Attorney General.
(c) In developing its priorities for inspection, investigation,
and enforcement regarding institutions, the bureau shall consider as
posing heightened risks the characteristics of the following
institutions:
(1) An institution that receives significant public resources,
including an institution that receives more than 70 percent of its
revenues from federal financial aid, state financial aid, financial
aid for veterans, and other public student aid funds.
(2) An institution with a large number of students defaulting on
their federal loans, including an institution with a three-year
cohort default rate above 15.5 percent.
(3) An institution with reported placement rates, completion
rates, or licensure rates in an educational program that are far
higher or lower than comparable educational institutions or programs.
(4) An institution that experiences a dramatic increase in
enrollment, recently expanded educational programs or campuses, or
recently consolidated campuses.
(5) An institution that offers only nonremedial educational
program courses in English, but enrolls students with limited or no
English language proficiency.
(6) An institution that has experienced a recent change of
ownership or control, or a change in the business organization of the
institution.
(7) An institution with audited financial statements that do not
satisfy the bureau's requirements for financial stability.
(8) An institution that has recently been the subject of an
investigation, judgment, or regulatory action by, or a settlement
with, a governmental agency.
(9) An institution that experiences institutional or programmatic
accreditation restriction by an accreditor, government restriction
of, or injunction against, its approval to operate, or placement on
cash-reimbursement or heightened monitoring status by the United
States Department of Education.
(d) The bureau shall indicate in an annual report, to be made
publicly available on its Internet Web site, the number of temporary
restraining orders, interim suspension orders, and disciplinary
actions taken by the bureau, disaggregated by each priority category
established pursuant to subdivision (b).
(e) The bureau shall, in consultation with the advisory committee,
adopt regulations to establish categories of complaints or cases
that are to be handled on a priority basis. The priority complaints
or cases shall include, but not be limited to, those alleging
unlawful, unfair or fraudulent business acts or practices, including
unfair, deceptive, untrue, or misleading statements, including all
statements made or required to be made pursuant to the requirements
of this chapter, related to any of the following:
(1) Degrees, educational programs, or internships offered, the
appropriateness of available equipment for a program, or the
qualifications or experience of instructors.
(2) Job placement, graduation, time to complete an educational
program, or educational program or graduation requirements.
(3) Loan eligibility, terms, whether the loan is federal or
private, or default or forbearance rates.
(4) Passage rates on licensing or certification examinations or
whether an institution's degrees or educational programs provide
students with the necessary qualifications to take these exams and
qualify for professional licenses or certifications.
(5) Cost of an educational program, including fees and other
nontuition charges.
(6) Affiliation with or endorsement by any government agency, or
by any organization or agency related to the armed forces, including,
but not limited to, groups representing veterans.
(7) Terms of withdrawal and refunds from an institution.
(8) Payment of bonuses, commissions, or other incentives offered
by an institution to its employees or contractors.
SEC. 36. Section 94945 of the Education Code is amended to read:
94945. (a) This chapter does not limit or preclude the
enforcement of rights or remedies under any other applicable statute
or law.
(b) This chapter does not limit or preclude the Attorney General,
a district attorney, or a city attorney from taking any action
otherwise authorized under any other applicable statute or law.
(c) If the bureau has reason to believe that an institution has
engaged in a pattern or practice of violating the provisions of this
chapter or any other applicable law that involves multiple students
or other claimants, the bureau shall contract with the Attorney
General for investigative and prosecutorial services, as necessary.
SEC. 37. Section 94947 is added to the Education Code, to read:
94947. (a) Notwithstanding section 94874.2, an institution
described in subdivision (i) of Section 94874 that satisfies all of
the following requirements may claim an exemption from this chapter.
(1) The institution has been accredited by an accrediting agency
recognized by the United States Department of Education for at least
10 years, and has not been placed on probation or on a greater level
than standard monitoring, or sanctioned, by its accrediting agency.
(2) The institution is headquartered in California and has
operated continuously in this state for at least 25 years.
(3) The institution is privately held and prior to its current
exemption, the institution was granted an approval to operate by the
Bureau for Private Postsecondary Education, or its predecessor agency
and has experienced no change of ownership since the institution was
last approved.
(4) During its existence, the institution has not filed for
bankruptcy protection.
(5) The institution maintains an equity ratio composite score of
at least 1.5 based on the current financial stability test.
(6) At least 15 12.5 percent of the
institution's revenues are derived from sources other than financial
aid. For purposes of this requirement, financial aid includes all
forms of state or federal student assistance, including, but not
limited to, financial aid provided to veterans and financial aid
through the Cal Grant Program.
(7) The institution's cohort default rate does not exceed 13
percent for the most recent three years, as published by the United
States Department of Education.
(8) The institution has a graduation rate that exceeds 60 percent,
as reported to the Integrated Postsecondary Education Data System.
(9) The institution has not been subject to any legal or
regulatory actions by a state attorney general for a violation of
consumer protection laws that resulted in monetary settlement, fines,
or other documented violations.
(10) The institution provides a pro rata refund of unearned
institutional charges to students who complete 75 percent or less of
the period of attendance.
(11) The institution provides to all students the right to cancel
the enrollment agreement and obtain a refund of charges paid through
attendance at the second class session, or the 14th day after
enrollment, whichever is later.
(12) The institution complies with all other reasonable criteria,
necessary to ensure educational quality and protection of veterans,
established by the California State Approving Agency for Veterans
Education.
(13) The institution verifies its exemption pursuant to Section
94874.1.
(b) An institution exempt from this chapter pursuant to this
section may apply to the bureau for an approval to operate pursuant
to section 94874.8
(c) It is the intent of the Legislature that if the exemption
provided in this section is declared by a court to be invalid for any
reason, the requirements of this chapter shall apply to an
institution that would otherwise be subject to receive this
exemption.
SEC. 38. Section 94948 of the Education Code is amended to read:
94948. In addition to any other reporting requirements under this
chapter, the director shall provide written updates to the
Legislature every six months and shall participate in all oversight
hearings conducted by the appropriate policy committees and budget
subcommittees of the Senate and Assembly. The updates shall describe
the bureau's progress in protecting consumers and enforcing the
provisions of this chapter.
SEC. 39. Section 94949 of the Education Code is repealed.
SEC. 40. Section 94949 is added to the Education Code, to read:
94949. (a) The director shall provide to the Legislature a copy
of an independent review of the bureau's staffing resources needs and
requirements no later than March 15, 2015. The director shall
include with this report an overview of how the director intends to
ensure that the bureau's staff are sufficiently qualified for
purposes of implementing the provisions of this chapter, and the
estimated costs of meeting staffing and other requirements to
implement this chapter based on findings of the independent review.
The director shall include a brief evaluation of whether the current
fee structure is appropriate to satisfy those staffing and other
requirements.
(b) (1) A report to be submitted pursuant to subdivision (a) shall
be submitted in compliance with Section 9795 of the Government Code.
(2) Pursuant to Section 10231.5 of the Government Code, this
section is repealed on January 1, 2017.
SEC. 41. Section 94949.5 is added to the
Education Code, to read:
94949.5. (a) The Legislature finds and declares all of the
following:
(1) Two bureaus have operated under the Department of Consumer
Affairs to regulate private postsecondary education, one bureau from
1998 to 2007, inclusive, and one bureau since 2010. Numerous audits,
analyses conducted by state agencies and private entities,
legislative investigations and public comment have concluded that
California oversight of private postsecondary educational
institutions has not adequately served the interests of the public.
(2) The bureau collects substantial amounts of money annually
from institutions licensed under this chapter but lacks appropriate
spending authority and staffing to effectively implement this
chapter.
(3) California students and the economy benefit from government
oversight and regulations that result in access to quality
postsecondary education.
(4) Transparency in the bureau's functions, operations,
priorities, and organization will better assist the Legislature in
ensuring that the Department of Consumer Affairs and the bureau are
provided with the direction and resources necessary to implement this
chapter.
(b) The Secretary of Business, Consumer Services, and Housing, in
consultation with the Legislature, shall appoint a Bureau for Private
Postsecondary Education Monitor from a pool of qualified candidates
by January 1, 2016. The secretary may retain a person for this
position by a personal services contract. In this connection, the
Legislature finds, pursuant to Section 19130 of the Government Code,
that this is a new state function.
(c) The Secretary shall advertise the availability of this
position. The requirements for this position shall include experience
in private postsecondary education, familiarity with state laws,
rules, and procedures pertaining to the bureau, familiarity with
relevant administrative law and procedure, administrative complaint
prioritization, processing, and investigation, and familiarity with
the Department of Consumer Affairs and its powers and procedures. To
assume this position, a candidate shall have a record of student or
consumer, or student and consumer, representation or advocacy, and
have no current investment in, or be receiving personal remuneration
from, any institution subject to the bureau's regulations.
(d) (1) The monitor shall perform independent fact gathering and
data analysis functions by assessing the bureau's operations,
including its approvals to operate, applicant review, and complaint
and enforcement processes and procedures, with the primary goals of
improving the bureau's overall efficiency, effectiveness, and
compliance with state laws, particularly as relates to the bureau's
approval to operate, complaint, and enforcement processes.
(2) The monitor's duties shall include, but not necessarily be
limited to, evaluating relevant state laws, regulations, budgetary
actions, and processes to identify revisions that would improve state
regulation of private postsecondary institutions and student and
public protection.
(3) The monitor shall be provided findings from representatives of
the Bureau of State Audits, representatives of the Department of
Consumer Affair's Internal Audit Office, and findings from other
organizations performing evaluations of the bureau. To the extent
feasible, the monitor shall utilize, but not duplicate, information
and recommendations provided by audits and reviews previously
conducted by the Department of Consumer Affairs, the bureau, the
Legislative Analyst's Office, and the Bureau of State Audits,
independent staffing resource reviews, and other relevant
information.
(4) The monitor shall exercise no authority over the bureau's
management or staff; however, the bureau and its staff shall
cooperate with the monitor, and shall provide all data, information,
and files as requested by the monitor to perform his or her duties.
(5) The director shall assist the monitor in the performance of
his or her duties, and the monitor shall have the same investigative
authority related to the bureau as the director.
(e) The monitor shall submit an initial written report of his or
her findings and conclusions to the Legislature no later than July 1,
2016, and shall be available to make oral reports to Legislative
committees if requested to do so. The monitor may also provide
additional information to the Legislature at his or her discretion or
at the request of the Legislature. The monitor's reports shall be
made available to the public and posted on the bureau's Internet Web
site. The monitor shall make every effort to provide the Department
of Consumer Affairs and the bureau with an opportunity to reply to
any facts, finding, issues, or conclusions in his or her reports with
which the department or the bureau may disagree.
(f) The bureau shall reimburse the Business, Consumer Services and
Housing Agency for all of the costs associated with the employment
of the monitor.
SEC. 42. SEC. 41. Section 94950 of
the Education Code is amended to read:
94950. This chapter shall remain in effect only until January 1,
2017, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2017, deletes or extends
that date.
SEC. 43. SEC. 42. The sum of one
hundred thirty thousand dollars ($130,000) is hereby appropriated
from the Private Postsecondary Education Administration Fund to the
Bureau for Private Postsecondary Education, for the 2014-15 fiscal
year, to be combined with any other available funds, for purposes of
establishing one permanent attorney position at the bureau to assist
the bureau in its regulatory activities, and one permanent analyst
position at the bureau to provide support to the advisory committee.
SEC. 44. SEC. 43. 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.