Amended in Assembly March 15, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 1996

Introduced by Assembly Member Gordon

February 16, 2016

An act to amend Section 94874 of the Education Code, relating to private postsecondary education.

LEGISLATIVE COUNSEL’S DIGEST

AB 1996, as amended, Gordon. Private postsecondary education: exemptions.

Existing law, the California Private Postsecondary Education Act of 2009, provides, among other things, for student protections and regulatory oversight of private postsecondary institutions in the state. The act is enforced by the Bureau for Private Postsecondary Education within the Department of Consumer Affairs. The act exempts an institution from its provisions if any of a list of specific criteria are met.

This bill would begin insert specify that a nonprofit institution that is accredited by the Accrediting Commission for Schools, Western Association of Schools and Colleges, does not award degrees or diplomas, and is paid from state or federal student financial aid programs for fewer than 20 percent of its students who receive vocational training is also exempted from the act. The bill would also end insert make nonsubstantive changes in the provision that relates to exemptions from the act.

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

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

SECTION 1.  

Section 94874 of the Education Code is amended
to read:

94874.  

Except as provided in Section 94874.2, all of the
following are exempt from this chapter:

(a) An institution that offers solely avocational or recreational
educational programs.

(b) (1) An institution offering educational programs sponsored
by a bona fide trade, business, professional, or fraternal
organization, solely for that organization’s membership.

(2) (A) Except as provided in subparagraph (B), a bona fide
organization, association, or council that offers preapprenticeship
training programs, on behalf of one or more Division of
Apprenticeship Standards-approved labor-management
apprenticeship programs that satisfies one of the following
conditions:

(i) It is not on the Eligible Training Provider List established
and maintained by the California Workforce Investment Board,
but has met the requirements for placement on the list.

(ii) It is on the Eligible Training Provider List established and
maintained by the California Workforce Investment Board, and
meets the requirements for continued listing.

(B) If an organization, association, or council has been removed
from the Eligible Training Provider List established and maintained
by the California Workforce Investment Board for failure to meet
performance standards, it is not exempt until it meets all applicable
performance standards.

(c) A postsecondary educational institution established, operated,
and governed by the federal government or by this state or its
political subdivisions.

(d) An institution solely 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 begin insert the end insert
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.

begin delete

(j)

end delete begin insert

(j) A nonprofit institution that is accredited by the Accrediting
Commission for Schools, Western Association of Schools and
Colleges, and does not award degrees or diplomas, and is paid
from state or federal student financial aid programs for fewer than
20 percent of its students who receive vocational training.

end insert

begin insert (k) end insert  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.

begin delete

(k)

end delete

begin insert (l) end insert  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).