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

Senate Bill No. 1247

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, begin delete 94947, and 94949.5 end delete begin insert and 94947 end insert 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.

begin delete

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.

end delete

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 begin delete board end delete begin insert bureau end insert 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.

begin insert

(4) Two members, which shall be employers that hire students,
appointed by the director.

end insert begin delete

(4)

end delete

begin insert ( end insert begin insert 5) end insert  One public member appointed by the Senate Committee on
Rules.

begin delete

(5)

end delete

begin insert ( end insert begin insert 6) end insert  One public member appointed by the Speaker of the
Assembly.

begin delete

(6) Four

end delete

begin insert ( end insert begin insert 7) end insert begin insert   end insert begin insert Two nonvoting, end insert ex-officio members as follows:

(A) The chair begin delete , or the designee of the chair, end delete of the policy
committee of the Assembly with jurisdiction over legislation
relating to the begin delete bureau, end delete begin insert bureau or designee end insert appointed by the Speaker
of the Assembly.

(B) The chair begin delete , or the designee of the chair, end delete of the policy
committee of the Senate with jurisdiction over legislation relating
to the begin delete bureau, end delete begin insert bureau or designee end insert appointed by the Senate
Committee on Rules.

begin delete

(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.

end delete

(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.

begin insert

(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.

end insert begin delete

(e)

end delete

begin insert (f) end insert   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 begin delete board end delete begin insert bureau end insert .

(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 begin delete Board end delete begin insert Bureau end insert 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 begin delete Board end delete begin insert Bureau end insert for Private
Postsecondary Education by calling (toll-free telephone number)
or by completing a complaint form, which can be obtained on the
begin delete board’s end delete begin insert bureau’s end insert 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 begin delete Board end delete begin insert Bureau end insert 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 begin delete Board end delete begin insert Bureau end insert 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:

 

begin delete “Notice end delete begin insert “NOTICE end insert begin insert ” end insert

begin delete You end delete begin insert “You end insert 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 begin delete 15 end delete begin insert 12.5 end insert 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.

begin delete

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.

end delete

begin delete SEC. 42. end delete
begin insert SEC. 41. end insert   

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.

begin delete SEC. 43. end delete
begin insert SEC. 42. end insert   

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.

begin delete SEC. 44. end delete
begin insert SEC. 43. end insert   

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.