BILL NUMBER: SB 967 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 27, 2003
PASSED THE ASSEMBLY AUGUST 21, 2003
AMENDED IN ASSEMBLY AUGUST 18, 2003
AMENDED IN ASSEMBLY JUNE 23, 2003
AMENDED IN SENATE APRIL 23, 2003
AMENDED IN SENATE MARCH 26, 2003
INTRODUCED BY Senator Burton
(Coauthors: Senators Brulte, Johnson, McPherson, Scott, and
Vasconcellos)
(Coauthors: Assembly Members Firebaugh, Strickland, and Wesson)
FEBRUARY 21, 2003
An act to amend Sections 94739, 94800, 94802, 94901, 94905, and
94945 of, to amend and renumber Section 94740.1 of, and to add
Sections 94740.3 and 94740.5 to, the Education Code, relating to
postsecondary education.
LEGISLATIVE COUNSEL'S DIGEST
SB 967, Burton. Postsecondary education: Private Postsecondary
and Vocational Education Reform Act of 1989: regionally accredited
institutions.
Existing law, known as the Private Postsecondary and Vocational
Education Reform Act of 1989, generally sets minimum standards of
instructional quality, ethical and business practices, health and
safety, and fiscal responsibility for private postsecondary and
vocational educational institutions, as defined. The act excludes
from the definition of private postsecondary educational institutions
subject to regulation under its provisions for-profit institutions
accredited by the Accrediting Commission for Senior Colleges and
Universities or the Accrediting Commission for Community and Junior
Colleges of the Western Association of Schools and Colleges (WASC),
if the institution exclusively confers degrees upon the completion of
a course of study of 2 or more years. The act establishes the
Bureau for Private Postsecondary and Vocational Education, which,
among other things, is required to review and investigate all
institutions, programs, and courses of instruction approved under the
act. Numerous terms are defined for the purposes of the act.
This bill would modify that definitional exclusion to exclude all
for-profit institutions accredited by WASC.
The bill would define "non-WASC regional accrediting agency" and
"non-WASC regionally accredited institution" for the purposes of the
act.
The bill would require a non-WASC regionally accredited
institution to include, in its application to operate in this state,
a copy of the certificate of accreditation issued by the non-WASC
regional accrediting agency. The bill would require the bureau to
determine that a non-WASC regionally accredited institution meets
prescribed requirements before granting the institution approval to
issue degrees. The bill would require the bureau to include, in an
annual report to the Legislature and the California Postsecondary
Education Commission that is required under existing law, its
findings and recommendations relative to institutions that have
secured institutional or programmatic approval pursuant to this
provision.
The bill would also make related technical changes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 94739 of the Education Code is amended to read:
94739. (a) "Private postsecondary educational institution" means
any person doing business in California that offers to provide or
provides, for a tuition, fee, or other charge, any instruction,
training, or education under any of the following circumstances:
(1) A majority of the students to whom instruction, training, or
education is provided during any 12-month period is obtained from, or
on behalf of, students who have completed or terminated their
secondary education or are beyond the age of compulsory high school
attendance.
(2) More than 50 percent of the revenue derived from providing
instruction, training, or education during any 12-month period is
obtained from, or on behalf of, students who have completed or
terminated their secondary education or are beyond the age of
compulsory high school attendance.
(3) More than 50 percent of the hours of instruction, training, or
education provided during any 12-month period is provided to
students who have completed or terminated their secondary education
or are beyond the age of compulsory high school attendance.
(4) A substantial portion, as determined by the council, by
regulation, of the instruction, training, or education provided is
provided to students who have completed or terminated their secondary
education or are beyond the age of compulsory high school
attendance.
(b) The following are not considered to be private postsecondary
educational institutions under this chapter:
(1) Institutions exclusively offering instruction at any or all
levels from preschool through the 12th grade.
(2) Institutions offering education solely avocational or
recreational in nature, and institutions offering this education
exclusively.
(3) Institutions offering education sponsored by a bona fide
trade, business, professional, or fraternal organization, solely for
that organization's membership.
(4) Postsecondary or vocational educational institutions
established, operated, and governed by the federal government or by
this state, or its political subdivisions.
(5) Institutions offering continuing education where 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, trade, or job category.
(B) A state-recognized professional licensing body, such as the
State Bar of California, that licenses persons in a particular
profession, trade, or job category.
(C) A bona fide trade, business, or professional organization.
(6) A nonprofit institution owned, controlled, and operated and
maintained by a bona fide church, religious denomination, or
religious organization comprised of multidenominational members of
the same well-recognized religion, 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, if the
education is limited to instruction in the principles of that church,
religious denomination, or religious organization, or to courses
offered pursuant to Section 2789 of the Business and Professions
Code, and the diploma or degree is limited to evidence of completion
of that education, and the meritorious recognition upon which any
honorary degree is conferred is limited to the principles of that
church, religious denomination, or religious organization.
Institutions operating under this paragraph shall offer degrees and
diplomas only in the beliefs and practices of the church, religious
denomination, or religious organization. The enactment of this
paragraph expresses the legislative intent that the state shall not
involve itself in the content of degree programs awarded by any
institution operating under this paragraph, as long as the
institution awards degrees and diplomas only in the beliefs and
practices of the church, religious denomination, or religious
organization. Institutions operating under this paragraph shall not
award degrees in any area of physical science. Any degree or diploma
granted in any area of study under these provisions 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. Degrees awarded under this paragraph
shall reflect the nature of the degree title, such as "associate of
religious studies," or "bachelor of religious studies," or "master of
divinity" or "doctor of divinity." The use of the degree titles
"associate of arts" or "associate of science," "bachelor of arts" or
"bachelor of science," "master of arts" or "master of science," or
"doctor of philosophy" or "Ph.D." shall only be awarded by
institutions approved to operate under Article 8 (commencing with
Section 94900) or meeting the requirements for an exemption under
Section 94750. The enactment of this paragraph is intended to
prevent any entity claiming to be a nonprofit institution owned,
controlled, and operated and maintained by a bona fide church,
religious denomination, or religious organization comprised of
multidenominational members of the same well-recognized religion,
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, from marketing and granting degrees or diplomas
that are represented as being linked to their church, religious
denomination, or religious organization, but which, in reality, are
degrees in secular areas of study. An institution operating under
this paragraph shall file annually with the council evidence to
demonstrate its status as a nonprofit religious corporation under the
Corporations Code. A college or university operating under this
paragraph shall file annually with the council evidence to
demonstrate its status as a nonprofit religious corporation under the
Corporations Code.
(7) (A) Public institutions accredited by the Accrediting
Commission for Senior Colleges and Universities or the Accrediting
Commission for Community and Junior Colleges of the Western
Association of Schools and Colleges.
(B) Institutions accredited by the Accrediting Commission for
Senior Colleges and Universities or the Accrediting Commission for
Community and Junior Colleges of the Western Association of Schools
and Colleges that are incorporated and lawfully operating 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 that are not managed by any entity for profit.
(C) For-profit institutions accredited by the Accrediting
Commission for Senior Colleges and Universities or the Accrediting
Commission for Community and Junior Colleges of the Western
Association of Schools and Colleges.
(D) Institutions accredited by the Western Association of Schools
and Colleges that do not meet all of the criteria in subparagraph (B)
and that are incorporated and lawfully operating as a nonprofit
public benefit corporation pursuant to Part 2 (commencing with
Section 5110) of Division 2 of Title 1 of the Corporations Code, that
have been in continuous operation since April 15, 1997, and that are
not managed by any entity for profit. Notwithstanding this
subdivision, institutions that meet the criteria in this subparagraph
shall be subject to Section 94831, except subdivision (c) of that
section, and Sections 94832, 94834, 94838, and 94985.
SEC. 2. Section 94740.1 of the Education Code is amended and
renumbered to read:
94740.7. "Registered," "registered institution," or "registered
educational service" means any individual or organization that offers
an educational service and is registered to operate under Article
9.5 (commencing with Section 94931).
SEC. 3. Section 94740.3 is added to the Education Code, to read:
94740.3. "Non-WASC regional accrediting agency" means a regional
accrediting agency, other than the Western Association of Schools and
Colleges, recognized by the United States Department of Education as
possessing similar quality and rigor in accreditation standards, and
limited to the following:
(a) Middle States Association of Colleges and Schools, Commission
on Higher Education.
(b) New England Association of Schools and Colleges, Commission on
Institutions of Higher Education.
(c) North Central Association of Colleges and Schools, The Higher
Learning Commission.
(d) Northwest Association of Schools and of Colleges and
Universities, Commission on Colleges and Universities.
(e) Southern Association of Colleges and Schools, Commission on
Colleges.
SEC. 4. Section 94740.5 is added to the Education Code, to read:
94740.5. "Non-WASC regionally accredited institution" means a
degree-granting institution that has been accredited by one of the
non-WASC regional accrediting agencies listed in Section 94740.3. It
does not include any of the following:
(a) An institution within the meaning of paragraph (7) of
subdivision (b) of Section 94739 that has been accredited by the
Accrediting Commission for Senior Colleges and Universities or the
Accrediting Commission for Community and Junior Colleges of the
Western Association of Schools and Colleges.
(b) An institution that has provisional accreditation.
(c) An institution that has applied for accreditation.
(d) An institution that is identified by an accrediting agency as
a candidate for accreditation.
SEC. 5. Section 94800 of the Education Code is amended to read:
94800. All institutions approved under this chapter shall be
maintained and operated, or in the case of a new institution, shall
demonstrate that it will be maintained and operated, in compliance
with all of the following minimum standards:
(a) That the institution is financially capable of fulfilling its
commitments to its students.
(b) That upon satisfactory completion of training, the student is
given an appropriate degree, diploma, or certificate by the
institution, indicating that the course or courses of instruction or
the program or programs of instruction or study have been
satisfactorily completed by the student.
(c) That the institution provides instruction as part of its
educational program. Instruction shall include any specific, formal
arrangement by an institution for its enrollees to participate in
learning experiences wherein the institution's faculty or contracted
instructors present a planned curriculum appropriate to the enrollee'
s educational program.
SEC. 6. Section 94802 of the Education Code is amended to read:
94802. (a) Each institution desiring to operate in this state
shall make application to the bureau, upon forms to be provided by
the bureau. The application shall include, as a minimum, at least
all of the following:
(1) A catalog published, or proposed to be published, by the
institution containing the information specified in the criteria
adopted by the bureau. The catalog shall include specific dates as
to when the catalog applies.
(2) A description of the institution's placement assistance, if
any.
(3) Copies of media advertising and promotional literature.
(4) Copies of all student enrollment agreement or contract forms
and instruments evidencing indebtedness.
(5) The name and California address of a designated agent upon
whom any process, notice, or demand may be served.
(6) The information specified in Section 94808.
(7) The institution's most current financial report as described
in Section 94806.
(8) An application submitted by a non-WASC regionally accredited
institution, as defined in Section 94740.5, shall include a copy of
the certificate of accreditation issued by the non-WASC regional
accrediting agency, as defined in Section 94740.3.
(b) Each application shall be signed and certified under oath by
the owners of the school or, if the school is incorporated, by the
principal owners of the school (those who own at least 10 percent of
the stock), or by the corporate officers or their designee.
(c) Following review of the application and any other further
information submitted by the applicant, or required in conformity
with Article 8 (commencing with Section 94900) and Article 9
(commencing with Section 94915), and any investigation of the
applicant as the bureau deems necessary or appropriate, the bureau
either shall grant or deny approval to operate to the applicant.
SEC. 7. Section 94901 of the Education Code is amended to read:
94901. (a) (1) Except as provided in Section 94905, the bureau
shall conduct a qualitative review and assessment of the institution.
It also shall conduct a qualitative review and assessment of all
programs offered except continuing education programs and programs
that are exclusively avocational or recreational in nature. The
review shall include the items listed in subdivision (b) of Section
94900, through a comprehensive onsite review process, performed by a
qualified visiting committee impaneled by the bureau for that
purpose.
(2) An institution may include some or all of its separate
operating sites under one application. Alternately, it may submit
separate applications for any one site or combination of sites. The
satellites or branches included in either an initial or renewal
application shall be considered by the bureau to comprise a separate,
single institution for purposes of regulation, approval, and
compliance under this chapter.
(3) The application shall include a single fee based on the number
of branches, satellites, and programs included within a single
application in order to cover the costs involved for those multisite
and multiprogram reviews. If the application is for renewal of an
existing approval, the institution need only submit information
necessary to document any changes made since the time its previous
application was filed with the bureau. Fees for renewal applications
will be based on the actual costs involved in the administrative
review process.
(b) The number of sites inspected by the bureau as part of its
review process shall be subject to the following considerations:
(1) If the application for approval includes branches and
satellites, the bureau shall inspect each branch and may inspect any
satellite campus.
(2) If the application is for approval to operate a branch or a
satellite, the bureau, in addition to inspecting the branch or
satellite, also may inspect the institution operating the branch or
satellite campus.
(c) The bureau may waive or modify the onsite inspection for
institutions offering home study or correspondence courses. The
visiting committee shall be impaneled by the bureau within 90 days of
the date of the receipt of a completed application, and shall be
composed of educators, and other individuals with expertise in the
areas listed in subdivision (b) of Section 94900, from
degree-granting institutions legally operating within the state.
Within 90 days of the receipt of the visiting committee's evaluation
report and recommendations, or any reasonable extension of time not
to exceed 90 days, the bureau shall take one of the following
actions:
(1) If the institution is in compliance with this chapter, and has
not operated within three years before the filing of the application
in violation of this chapter then in effect, the bureau may grant an
approval to operate not to exceed five years.
(2) If the institution is in compliance with this chapter, but has
operated within three years before the filing of the application in
violation of this chapter then in effect, or if the bureau determines
that an unconditional grant of approval to operate is not in the
public interest, the bureau may grant a conditional approval to
operate subject to whatever restrictions the bureau deems
appropriate. The bureau shall notify the institution of the
restrictions or conditions, the basis for the restrictions or
conditions, and the right to request a hearing to contest them.
Conditional approval shall not exceed two years.
(3) The bureau may deny the application. If the application is
denied, the bureau may permit the institution to continue offering
the program of instruction to students already enrolled or may order
the institution to cease instruction and provide a refund of tuition
and all other charges to students.
(d) When evaluating an institution whose purpose is to advance
postsecondary education through innovative methods, the visiting
committee shall comprise educators who are familiar with, and
receptive to, evidence bearing on the educational quality and
accomplishments of those methods.
(e) The standards and procedures utilized by the bureau shall not
unreasonably hinder educational innovation and competition.
(f) Each institution or instructional program offering education
for entry into a health care profession in which the provider has
primary care responsibilities shall offer that education within a
professional degree program that shall be subject to approval by the
bureau pursuant to this section.
(g) (1) If an institution is not operating in California when it
applies for approval to operate for itself or a branch or satellite
campus, the institution shall file with its application an
operational plan establishing that the institution will satisfy the
minimum standards set forth in subdivision (a) of Section 94900. The
operational plan also shall include a detailed description of the
institution's program for implementing the operational plan,
including proposed procedures, financial resources, and the
qualifications of owners, directors, officers, and administrators
employed at the time of the filing of the application. The bureau
may request additional information to enable the bureau to determine
whether the operational plan and its proposed implementation will
satisfy these minimum standards.
(2) If the bureau determines that the operational plan satisfies
the minimum standards described in subdivision (a) of Section 94900,
that the institution demonstrates that it will implement the plan,
and that no ground for denial of the application exists, the bureau
shall grant a temporary approval to operate, subject to any
restrictions the bureau reasonably deems necessary to ensure
compliance with this chapter, pending a qualitative review and
assessment as provided in subdivisions (a) and (b) of Section 94900.
The bureau shall inspect, pursuant to subdivision (a) of Section
94901, the institution, or branch or satellite campus if approval is
sought for that campus between 90 days and 180 days after operation
has begun under the temporary approval to operate. Following receipt
of the visiting committee's or the bureau staff's report, the bureau
shall act as provided in paragraph (1), (2), or (3) of subdivision
(c).
(h) If at any time the bureau determines that an institution has
deviated from the standards for approval, the bureau, after
identifying for the institution the areas in which it has deviated
from the standards, and after giving the institution due notice and
an opportunity to be heard, may place the institution on probation
for a prescribed period of time, not to exceed 24 calendar months.
During the period of probation, the institution shall be subject to
special monitoring. The conditions for probation may include the
required submission of periodic reports, as prescribed by the bureau,
and special visits by authorized representatives of the bureau to
determine progress toward total compliance. If, at the end of the
probationary period, the institution has not taken steps to eliminate
the cause or causes for its probation to the satisfaction of the
bureau, the bureau may revoke the institution's approval to award
degrees and provide notice to the institution to cease its
operations.
(i) An institution may not advertise itself as an approved
institution unless each degree program offered by the institution has
been approved in accordance with the requirements of this section.
The bureau shall review all operations of the institution, pertaining
to California degrees, both within and outside of California. The
bureau may conduct site visits outside of California, including the
institution's foreign operations, when the bureau deems these visits
to be necessary. The institution shall be responsible for the
expenses of the visiting team members including the bureau's staff
liaison. The bureau may authorize any institution approved to issue
degrees under this section to issue certificates for the completion
of courses of study that are within the institution's approved
degree-granting programs.
(j) An institution shall not offer any educational program or
degree title that was not offered by the institution at the time the
institution applied for approval to operate, and shall not offer any
educational program or degree title at a campus that had not offered
the program or degree title at the time the institution applied for
approval to operate that campus, unless the bureau first approves the
offering of the program or degree title after determining that it
satisfies the minimum standards established by this section.
SEC. 8. Section 94905 of the Education Code is amended to read:
94905. (a) (1) Any non-WASC regionally accredited institution, as
defined in Section 94740.5, that is incorporated in another state
and maintains its accredited status throughout the period of a
student's course of study, and that is approved by the bureau to
operate, may issue degrees, diplomas, or certificates. Except for
continuing education programs and programs that are exclusively
avocational or recreational in nature, accredited public or private
postsecondary educational institutions incorporated in another state
shall not offer degrees, diplomas, or certificates in California
unless they comply with this section.
(2) A non-WASC regionally accredited institution approved to
operate pursuant to this section, and any and all of its program
offerings, are subject to the requirements of Article 13 (commencing
with Section 94950).
(b) The bureau shall not approve a non-WASC regionally accredited
institution to issue degrees, diplomas, or certificates pursuant to
this section until the bureau has determined that the institution has
complied with all of the following requirements:
(1) The institution meets the financial responsibility
requirements set forth in paragraph (2) of subdivision (a) of Section
94804.
(2) The institution's cohort default rate on guaranteed student
loans does not exceed 15 percent for the three most recent years, as
published by the United States Department of Education.
(3) The institution submits to the bureau copies of its most
recent Integrated Postsecondary Education Data System Report of the
United States Department of Education and its accumulated default
rate.
(4) The institution pays fees in accordance with Section 94932.
(5) The institution has submitted an application to operate for
itself or a branch or satellite campus pursuant to Section 94802 or
an application for renewal pursuant to Section 94840.
(c) A non-WASC regionally accredited institution shall be required
to notify the bureau of the addition of a degree, diploma, or
certificate program that is not included in the institution's initial
or renewal application within 90 days of adding the program. If a
non-WASC regional accrediting agency, as defined in Section 94740.3,
requires approval of the additional degree, diploma, or certificate
program, a copy of the certificate of accreditation or approval shall
be included with the notice to the bureau, and no additional review
or investigation of the program shall be required by the bureau. If
the regional accrediting agency does not require approval of the
additional degree, diploma, or certificate program, the institution
shall include its most recent certificate of accreditation with the
notice to the bureau, and no additional review or investigation of
the program or institution shall be required by the bureau. Nothing
in this subdivision shall be construed to limit the authority of the
bureau to investigate student complaints.
(d) A non-WASC regionally accredited institution approved to
operate pursuant to this section shall be subject to disciplinary
action by the bureau if the institution loses its accreditation or
federal financial aid eligibility due to an action taken by a
non-WASC regional accrediting agency or federal authority.
(e) A non-WASC regionally accredited institution approved to
operate pursuant to this section is exempt from the requirements of
Sections 94900 and 94901, Article 9 (commencing with Section 94915),
and Article 9.5 (commencing with Section 94931), except for the
applicable financial responsibility requirements referenced by
paragraph (2) of subdivision (a) of Section 94804. Any non-WASC
regionally accredited institution that is not approved to operate
pursuant to this section may apply for approval to operate pursuant
to Sections 94900 and 94901.
(f) The bureau shall annually include, in the report it prepares
pursuant to Section 94995, its findings and recommendations relative
to institutions that have secured institutional or programmatic
approval pursuant to this section.
SEC. 9. Section 94945 of the Education Code is amended to read:
94945. (a) The bureau shall assess each institution, including a
non-WASC regionally accredited institution, as defined in Section
94740.5, except for an institution that receives all of its students'
total charges, as defined in subdivision (k) of Section 94852, from
third-party payers for the purpose of compliance with the provisions
of this chapter that are related to the Student Tuition Recovery
Fund. A third-party payer, for the purposes of this section, means
an employer, government program, or other payer that pays a student's
total charges directly to the institution when no separate agreement
for the repayment of that payment exists between the third-party
payer and the student. A student who receives third-party payer
benefits for his or her institutional charges is not eligible for
benefits from the Student Tuition Recovery Fund.
(1) (A) The amount assessed each institution shall be calculated
only for those students who are California residents and who are
eligible to be reimbursed from the fund. It shall be based on the
actual amount charged each of these students for total tuition cost,
regardless of the portion that is prepaid, and shall be assessed as
tuition is paid or loans are funded on behalf of the
student, based upon academic term.
The amount of the assessment on an institution shall be determined in
accordance with paragraphs (2) and (3).
(B) Each institution shall collect the amount assessed by the
bureau in the form of a Student Tuition Recovery Fund fee from its
new students, and remit these fees to the bureau during the quarter
immediately following the quarter in which the fees were collected
from the students, or from loans funded on behalf of the students,
except that an institution may waive collection of the Student
Tuition Recovery Fund fee and assume the fee as a debt of the
institution. The student's subsequent disenrollment at the
institution shall not relieve the institution of the obligation to
pay the fee to the bureau, nor be the basis for refund of the fee to
the student. An institution may not charge a fee of any kind for the
collection of the Student Tuition Recovery Fund fee. An institution
may refuse to enroll a student who has not paid, or made provisions
to pay, the appropriate Student Tuition Recovery Fund fee.
(C) For the purposes of this section, a "new student" means a
student who signs his or her enrollment agreement on or after
January 1, 2002. Those students who sign their enrollment agreement
prior to January 1, 2002, are not "new students" for purposes of this
section, and shall be assessed the Student Tuition Recovery Fund fee
in effect prior to January 1, 2002, except that an institution may
waive collection of the Student Tuition Recovery Fund fee in effect
prior to January 1, 2002. Institutions electing to waive collection
of the Student Tuition Recovery Fund fee shall disclose this fact to
the student in the enrollment agreement, along with the amount of the
fee paid on the student's behalf to the bureau.
(2) The amount collected from a new student by an institution
shall be calculated on the basis of the course tuition paid over the
current calendar year, based upon the assessment rate in effect when
the student enrolled at the institution, without regard to the length
of time the student's program of instruction lasts. For purposes of
annualized payment, a new student enrolled in a course of
instruction that is longer than one calendar year in duration shall
pay fees for the Student Tuition Recovery Fund based on the amount of
tuition collected during the current calendar year.
(3) The assessment made pursuant to this section shall be made in
accordance with both of the following:
(A) Each new student shall pay a Student Tuition Recovery Fund
assessment for the period of January 1, 2002, to December 31, 2002,
inclusive, at the rate of three dollars ($3) per thousand dollars of
tuition paid, rounded to the nearest thousand dollars.
(B) Commencing January 1, 2003, Student Tuition Recovery Fund fees
shall be collected from new students at the rate of two dollars and
fifty cents ($2.50) per thousand dollars of tuition charged, rounded
to the nearest thousand dollars. For new students signing enrollment
agreements between January 1, 2002, and December 31, 2002,
inclusive, the assessment rate of three dollars ($3) per thousand
dollars of tuition paid, rounded to the nearest thousand dollars, as
provided in subparagraph (A) of this paragraph, shall remain the
assessment rate for the duration of the student's enrollment
agreement.
(4) The bureau may levy additional reasonable special assessments
on an institution under this section only if these assessments are
required to ensure that sufficient funds are available to satisfy the
anticipated costs of paying student claims pursuant to Section
94944.
(5) (A) The bureau may not levy a special assessment unless the
balance in any account in the Student Tuition Recovery Fund falls
below two hundred fifty thousand dollars ($250,000), as certified by
the Secretary of the State and Consumer Services Agency.
(B) A special assessment is a surcharge, collected by each
institution from newly enrolled students, of up to 100 percent of
that institution's regular assessment for four consecutive quarters.
The affected student shall pay the surcharge simultaneously with his
or her regular quarterly payment to the Student Tuition Recovery
Fund.
(C) The bureau shall provide at least 90 days' notice of an
impending special assessment to each affected institution. This
notice shall also be posted on the bureau's Internet Web site.
(D) The bureau may apply any special assessment payments that it
receives from an institution as a credit toward that institution's
current or future obligations to the Student Tuition Recovery Fund.
(6) The assessments shall be paid into the Student Tuition
Recovery Fund and credited to the appropriate account in the fund,
and the deposits shall be allocated, except as otherwise provided for
in this chapter, solely for the payment of valid claims to students.
Unless additional reasonable assessments are required, no
assessments for the degree-granting postsecondary educational
institution account shall be levied during any fiscal year if, as of
June 30 of the prior fiscal year, the balance in that account of the
fund exceeds one million five hundred thousand dollars ($1,500,000).
Unless additional reasonable assessments are required, no
assessments for the vocational educational institution account shall
be levied during any fiscal year if, as of June 30 of the prior
fiscal year, the balance in that account exceeds four million five
hundred thousand dollars ($4,500,000). However, regardless of the
balance in the fund, assessments shall be made on any newly approved
institution. Notwithstanding Section 13340 of the Government Code,
the moneys so deposited in the fund are continuously appropriated to
the bureau for the purpose of paying claims to students pursuant to
Section 94944.
(b) The bureau may deduct from the fund the reasonable costs of
administration of the tuition recovery program authorized by Section
94944 and this section. The maximum amount of administrative costs
that may be deducted from the fund, in a fiscal year, shall not
exceed one hundred thousand dollars ($100,000) from the
degree-granting postsecondary educational institution account and
three hundred thousand dollars ($300,000) from the vocational
educational institution account, plus the interest earned on money in
the fund that is credited to the fund. Prior to the bureau's
expenditure of any amount in excess of one hundred thousand dollars
($100,000) from the fund for administration of the tuition recovery
program, the bureau shall develop a plan itemizing that expenditure.
The plan shall be subject to the approval of the Department of
Finance. Institutions, including any non-WASC regionally accredited
institution, as defined in Section 94740.5, except for schools of
cosmetology licensed pursuant to Article 8 (commencing with Section
7362) of Chapter 10 of Division 3 of the Business and Professions
Code and institutions that offer vocational or job training programs,
that meet the student tuition indemnification requirements of a
California state agency, that secure a policy of surety or insurance
from an admitted insurer protecting their students against loss of
paid tuition, or that demonstrate to the bureau that an acceptable
alternative method of protecting their students against loss of
prepaid tuition has been established, shall be exempted from this
section.
(c) Reasonable costs in addition to those permitted under
subdivision (b) may be deducted from the fund for any of the
following purposes:
(1) To make and maintain copies of student records from
institutions that close.
(2) To reimburse the bureau or a third party serving as the
custodian of records.
(d) In the event of a closure by any approved institution under
this chapter, any assessments that have been made against those
institutions, but have not been paid into the fund, shall be
recovered. Any payments from the fund made to students on behalf of
any institution shall be recovered from that institution.
(e) In addition to civil remedies, the bureau may order an
institution to pay previously unpaid assessments or to reimburse the
bureau for any payments made from the fund in connection with the
institution. Before any order is made pursuant to this section, the
bureau shall provide written notice to the institution and notice of
the institution's right to request a hearing within 30 days of the
service of the notice. If a hearing is not requested within 30 days
of the service of the notice, the bureau may order payment. If a
hearing is requested, Chapter 5 (commencing with Section 11500) of
Part 1 of Division 3 of Title 2 of the Government Code shall apply,
and the bureau shall have all powers prescribed in that chapter.
Within 30 days after the effective date of the issuance of the order,
the bureau may enforce the order in the same manner as if it were a
money judgment pursuant to Title 9 (commencing with Section 680.010)
of Part 2 of the Code of Civil Procedure.
(f) In addition to any other action that the bureau may take under
this chapter, the bureau may suspend or revoke an institution's
approval to operate because of the institution's failure to pay
assessments when due or failure to pay reimbursement for any payments
made from the fund within 30 days of the bureau's demand for
payment.
(g) The moneys deposited in the fund shall be exempt from
execution and shall not be the subject of litigation or liability on
the part of creditors of those institutions or students.