H.B. 405

             1     

POSTSECONDARY SCHOOL STATE AUTHORIZATION

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: James A. Dunnigan

             5     
Senate Sponsor: ____________

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill enacts the Utah Postsecondary School State Authorization Act.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines terms;
             13          .    provides that a postsecondary school may obtain state authorization for purposes of
             14      34 C.F.R. Sec. 600.9 by obtaining a certificate of postsecondary state authorization;
             15          .    allows the Division of Consumer Protection to:
             16              .    enter into a reciprocity agreement with another state; and
             17              .    make rules consistent with the provisions of this bill;
             18          .    establishes qualifications for and a procedure by which a postsecondary school may
             19      obtain a certificate of postsecondary state authorization from the Division of
             20      Consumer Protection;
             21          .    provides that, under certain circumstances, the Division of Consumer Protection
             22      may deny, suspend, or revoke a certificate of postsecondary state authorization;
             23          .    provides procedures to enforce compliance with the provisions of this bill; and
             24          .    makes technical and conforming changes.
             25      Money Appropriated in this Bill:
             26          None
             27      Other Special Clauses:


             28          None
             29      Utah Code Sections Affected:
             30      AMENDS:
             31           13-2-1 , as last amended by Laws of Utah 2012, Chapter 375
             32           13-34-103 , as last amended by Laws of Utah 2011, Chapter 221
             33           13-34-105 , as last amended by Laws of Utah 2013, Chapter 124
             34           13-34-106 , as last amended by Laws of Utah 2011, Chapter 221
             35           13-34-110 , as last amended by Laws of Utah 2011, Chapter 221
             36           13-34-113 , as last amended by Laws of Utah 2011, Chapter 221
             37      ENACTS:
             38           13-34a-101 , Utah Code Annotated 1953
             39           13-34a-102 , Utah Code Annotated 1953
             40           13-34a-103 , Utah Code Annotated 1953
             41           13-34a-201 , Utah Code Annotated 1953
             42           13-34a-202 , Utah Code Annotated 1953
             43           13-34a-203 , Utah Code Annotated 1953
             44           13-34a-204 , Utah Code Annotated 1953
             45           13-34a-205 , Utah Code Annotated 1953
             46           13-34a-206 , Utah Code Annotated 1953
             47           13-34a-207 , Utah Code Annotated 1953
             48           13-34a-301 , Utah Code Annotated 1953
             49           13-34a-302 , Utah Code Annotated 1953
             50           13-34a-303 , Utah Code Annotated 1953
             51           13-34a-304 , Utah Code Annotated 1953
             52           13-34a-305 , Utah Code Annotated 1953
             53           13-34a-306 , Utah Code Annotated 1953
             54      REPEALS:
             55           13-34-107.5 , as enacted by Laws of Utah 2011, Chapter 221
             56           13-34-107.6 , as enacted by Laws of Utah 2011, Chapter 221
             57     
             58      Be it enacted by the Legislature of the state of Utah:


             59          Section 1. Section 13-2-1 is amended to read:
             60           13-2-1. Consumer protection division established -- Functions.
             61          (1) There is established within the Department of Commerce the Division of Consumer
             62      Protection.
             63          (2) The division shall administer and enforce the following:
             64          (a) Chapter 5, Unfair Practices Act;
             65          (b) Chapter 10a, Music Licensing Practices Act;
             66          (c) Chapter 11, Utah Consumer Sales Practices Act;
             67          (d) Chapter 15, Business Opportunity Disclosure Act;
             68          (e) Chapter 20, New Motor Vehicle Warranties Act;
             69          (f) Chapter 21, Credit Services Organizations Act;
             70          (g) Chapter 22, Charitable Solicitations Act;
             71          (h) Chapter 23, Health Spa Services Protection Act;
             72          (i) Chapter 25a, Telephone and Facsimile Solicitation Act;
             73          (j) Chapter 26, Telephone Fraud Prevention Act;
             74          (k) Chapter 28, Prize Notices Regulation Act;
             75          (l) Chapter 32a, Pawnshop and Secondhand Merchandise Transaction Information Act;
             76          (m) Chapter 34, Utah Postsecondary Proprietary School Act;
             77          (n) Chapter 34a, Utah Postsecondary School State Authorization Act;
             78          [(n)] (o) Chapter 41, Price Controls During Emergencies Act;
             79          [(o)] (p) Chapter 42, Uniform Debt-Management Services Act; and
             80          [(p)] (q) Chapter 49, Immigration Consultants Registration Act.
             81          Section 2. Section 13-34-103 is amended to read:
             82           13-34-103. Definitions.
             83          As used in this chapter:
             84          (1) "Agent" means any person who:
             85          (a) owns an interest in or is employed by a proprietary school [and who:]; and
             86          [(a)] (b) (i) enrolls or attempts to enroll a resident of this state in a proprietary school;
             87          [(b)] (ii) offers to award educational credentials for remuneration on behalf of a
             88      proprietary school; or
             89          [(c)] (iii) holds himself out to residents of this state as representing a proprietary school


             90      for any purpose.
             91          (2) (a) "Certificate of registration" means approval [of] from the division to operate a
             92      school or institution in compliance with this chapter and rules adopted under this chapter. [The
             93      registration is not]
             94          (b) "Certificate of registration" does not mean an endorsement of the school or
             95      institution by either the division or the state.
             96          (3) "Division" means the Division of Consumer Protection.
             97          (4) "Educational credentials" means degrees, diplomas, certificates, transcripts, reports,
             98      documents, or letters of designation, marks, appellations, series of letters, numbers, or words
             99      which signify or appear to signify enrollment, attendance, progress, or satisfactory completion
             100      of the requirements or prerequisites for any educational program.
             101          (5) "Institution" means an individual, corporation, partnership, association,
             102      cooperative, or other legal entity.
             103          (6) "Offer" means to advertise, publicize, solicit, or encourage any person directly or
             104      indirectly.
             105          (7) "Operate" in this state means to:
             106          (a) maintain a place of business in the state;
             107          (b) solicit business in the state;
             108          (c) conduct significant educational activities within the state; or
             109          (d) offer or provide postsecondary instruction leading to a postsecondary degree or
             110      certificate to any number of Utah residents from a location outside the state by correspondence
             111      or any telecommunications or electronic media technology.
             112          (8) "Ownership" means:
             113          (a) the controlling interest in a school, institution, or college[. If]; or
             114          (b) if an entity holds the controlling interest in the school, institution, or college [is
             115      owned or controlled by other than a natural person, "ownership" refers to], the controlling
             116      interest in the [legal] entity [which controls] that holds the controlling interest in the school,
             117      institution, or college.
             118          (9) "Postsecondary education" means education or educational services offered
             119      primarily to [persons] individuals who:
             120          (a) have completed or terminated their secondary or high school education; or [who]


             121          (b) are beyond the age of compulsory school attendance.
             122          (10) (a) "Proprietary school" means [any] a private institution, including a business,
             123      modeling, paramedical, tax preparation, or trade or technical school, [other than a school
             124      exempted under this chapter,] that offers postsecondary education:
             125          [(a)] (i) in consideration of the payment of tuition or fees; and
             126          [(b)] (ii) for the attainment of educational, professional, or vocational objectives.
             127          [(11) "Rules" means those rules adopted by the division under the Utah Administrative
             128      Rulemaking Act necessary to enforce and administer this chapter.]
             129          (b) "Proprietary school" does not include an institution that is exempt from this chapter
             130      under Section 13-34-105 .
             131          [(12)] (11) "Utah institution" means a [postsecondary educational] school or institution
             132      [whose headquarters or primary operations are in Utah.] that:
             133          (a) offers postsecondary education; and
             134          (b) is headquartered or primarily operates in Utah.
             135          Section 3. Section 13-34-105 is amended to read:
             136           13-34-105. Exempted institutions.
             137          (1) This chapter does not apply to:
             138          (a) a Utah institution directly supported, to a substantial degree, with funds provided
             139      by:
             140          (i) the state;
             141          (ii) a local school district; or
             142          (iii) other Utah governmental subdivision;
             143          (b) an institution that offers instruction exclusively at or below the 12th grade level;
             144          (c) a lawful enterprise that offers only professional review programs, [such as]
             145      including C.P.A. and bar examination review and preparation courses;
             146          (d) a private[, postsecondary educational] institution that:
             147          (i) provides postsecondary education; and
             148          (ii) is owned, controlled, operated, or maintained by a bona fide church or religious
             149      denomination, [which] that is exempted from property taxation under the laws of this state;
             150          (e) [subject to Subsection (3) and Section 13-34-107.5 ,] a school or institution that is
             151      accredited by a regional or national accrediting agency recognized by the United States


             152      Department of Education;
             153          (f) subject to Subsection (4), a business organization, trade or professional association,
             154      fraternal society, or labor union that:
             155          (i) sponsors or conducts courses of instruction or study predominantly for bona fide
             156      employees or members; and
             157          (ii) does not[, in advertising, describe itself] advertise as a school;
             158          (g) an institution that:
             159          (i) (A) exclusively offers general education courses or instruction [solely] that are
             160      remedial, avocational, nonvocational, or recreational in nature; and
             161          (B) does not advertise occupation objectives or grant educational credentials; or
             162          (ii) exclusively prepares individuals to teach courses or instruction described in
             163      Subsection (1)(g)(i)(A);
             164          (h) an institution that offers only workshops or seminars:
             165          (i) lasting no longer than three calendar days; and
             166          (ii) for which academic credit is not awarded;
             167          (i) an institution that offers programs:
             168          (i) in barbering, cosmetology, real estate, or insurance; and
             169          (ii) that are regulated and approved by a state or federal governmental agency;
             170          (j) an education provider certified by the Division of Real Estate under Section
             171      61-2c-204.1 ;
             172          (k) an institution that offers aviation training if the institution:
             173          (i) (A) is approved under Federal Aviation Regulations, 14 C.F.R. Part 141; or
             174          (B) provides aviation training under Federal Aviation Regulations, 14 C.F.R. Part 61;
             175      and
             176          (ii) exclusively offers aviation training that a student fully receives within 24 hours
             177      after the student pays any tuition, fee, or other charge for the aviation training;
             178          (l) an institution that provides emergency medical services training if all of the
             179      institution's instructors, course coordinators, and courses are approved by the Department of
             180      Health; and
             181          (m) an institution that exclusively conducts nurse aide training programs that are
             182      approved by the State Office of Vocational Education and are subject to the Nurse Aide


             183      Registry[; and].
             184          [(n) a private, nonprofit educational institution that has been in continuous operation as
             185      a private, nonprofit educational institution for at least 20 years, except as provided in
             186      Subsection (5), Subsection 13-34-106 (8) and Section 13-34-107.6 .]
             187          (2) If available evidence suggests that an exempt institution under this section is not in
             188      compliance with the standards of registration under this chapter and applicable division rules,
             189      the division shall contact the institution and, if appropriate, the state or federal government
             190      agency to request corrective action.
             191          (3) An institution, branch, extension, or facility operating within the state that is
             192      affiliated with an institution operating in another state shall be separately approved by the
             193      affiliate's regional or national accrediting agency to qualify for the exemption described in
             194      Subsection (1)(e).
             195          (4) For purposes of Subsection (1)(f), a business organization, trade or professional
             196      association, fraternal society, or labor union is considered to be conducting the course
             197      predominantly for bona fide employees or members if it hires a majority of the persons who:
             198          (a) successfully complete its course of instruction or study with a reasonable degree of
             199      proficiency; and
             200          (b) apply for employment with that same entity.
             201          [(5) An institution subject to, or expressly exempted from any part of, this chapter is:]
             202          [(a) established as an educational institution within the state;]
             203          [(b) independent of the state system of higher education;]
             204          [(c) subject to compliance with the applicable provisions of this chapter; and]
             205          [(d) authorized to operate educational programs beyond secondary education, including
             206      programs leading to a degree or certificate.]
             207          Section 4. Section 13-34-106 is amended to read:
             208           13-34-106. Responsibilities of division.
             209          The division [is responsible for the administration of this chapter, and] shall [do the
             210      following]:
             211          (1) prescribe the contents of the registration statements required by this chapter relating
             212      to the quality of education and ethical and business practices;
             213          [(2) issue:]


             214          [(a) certification of registration upon receipt and approval of the registration statement
             215      required under Section 13-34-107 ; and]
             216          [(b) a certificate of exemption under Section 13-34-107.5 upon receipt and approval of
             217      an application and verification that the requirements of Subsection 13-34-105 (1)(e) and Section
             218      13-34-107.5 are met;]
             219          (2) upon receipt and approval of a registration statement under Section 13-34-107 ,
             220      issue a certification of registration;
             221          (3) receive, investigate, and make available for public inspection [the] a registration
             222      [statements] statement filed by a proprietary [schools] school operating or intending to operate
             223      in the state;
             224          (4) maintain and publicize a list of proprietary schools for which a registration
             225      statement is on file with the division;
             226          (5) on the division's own initiative or in response to a complaint filed with the division,
             227      do any of the following with respect to [any] an institution subject to, or reasonably believed by
             228      the division to be subject to, this chapter:
             229          (a) investigate;
             230          (b) audit;
             231          (c) review;
             232          (d) appropriately act, including enforcing this chapter or any other law enforced by the
             233      division; [and] or
             234          (e) refer a matter to[: (i)] another governmental entity; [or]
             235          [(ii) the institution's accrediting body, if the institution is an exempt institution under
             236      Section 13-34-107.5 ;]
             237          (6) negotiate and enter into an interstate reciprocity [agreements] agreement with [other
             238      states] another state, if in the judgment of the division, the [agreements are or will help to]
             239      agreement helps effectuate the purposes of this chapter;
             240          (7) consent to the use of [educational terms in business names] an educational term in
             241      a business name in accordance with Section 13-34-114 ; and
             242          (8) establish and maintain a process for reviewing and appropriately acting on
             243      complaints concerning [postsecondary educational] institutions [operating] that provide
             244      postsecondary education and operate in the state, including enforcing applicable state laws.


             245          Section 5. Section 13-34-110 is amended to read:
             246           13-34-110. Enforcement of contracts or agreements -- Rescission based on
             247      defective registration statement.
             248          (1) A proprietary school [shall be unable to] may not enforce in the courts of this state
             249      [any] a contract or agreement relating to postsecondary education services in this state unless,
             250      at the time the contract or agreement was [entered into] executed, an effective registration
             251      statement was on file with the division and made accessible to every applicant at the time of
             252      admission to the school.
             253          (2) It is a violation of this chapter if a proprietary school or [its] the proprietary school's
             254      agent:
             255          (a) fails to file an effective registration statement;
             256          (b) willfully omits from a registration statement provided under Section 13-34-107 [or
             257      an application under Section 13-34-107.5 for an exemption certificate any] a material statement
             258      of fact required by this chapter [and] or applicable regulations; or
             259          (c) includes in a registration statement any material statement of fact that [was known,
             260      or should have been known, to] the proprietary school knew or should have known to be false,
             261      deceptive, inaccurate, or misleading.
             262          (3) A student who enrolled in a proprietary school, in reliance upon the school's
             263      registration statement, may rescind the contract or agreement of enrollment and obtain a refund
             264      from the school of all tuition, fees, and other charges paid to the school if the school or its
             265      agent committed a violation under Subsection (2).
             266          (4) A violation of this chapter is also a violation of Section 13-11-4 .
             267          Section 6. Section 13-34-113 is amended to read:
             268           13-34-113. Denial, suspension, or revocation of a certificate of registration --
             269      Limitations.
             270          (1) In accordance with Chapter 2, Division of Consumer Protection, and Title 63G,
             271      Chapter 4, Administrative Procedures Act, the division may initiate proceedings to deny,
             272      suspend, or revoke a certificate of registration to operate a proprietary school under this chapter
             273      [or an exemption certificate under Section 13-34-107.5 ] if:
             274          (a) the division finds that the order is in the public interest; and
             275          (b) (i) the registration statement[,] or renewal statement[, or application for an


             276      exemption certificate] is incomplete, false, or misleading in any respect;
             277          (ii) the division determines that the educational credential associated with the
             278      proprietary school [or accredited institution] represents the undertaking or completion of
             279      educational achievement that has not been undertaken and earned; or
             280          (iii) the proprietary school[, accredited institution,] or an individual described in
             281      Subsection 13-34-107 (2)(a)(ii)(B) has:
             282          (A) violated any provision of:
             283          (I) this chapter;
             284          (II) the rules made by the division pursuant to this chapter; or
             285          (III) a commitment made in a registration statement for a certificate of registration to
             286      operate the proprietary school [or in an application for an exemption certificate];
             287          (B) caused or allowed to occur a violation of any provision of:
             288          (I) this chapter;
             289          (II) the rules made by the division pursuant to this chapter; or
             290          (III) a commitment made in a registration statement for a certificate of registration to
             291      operate the proprietary school;
             292          (C) been enjoined by any court, or is the subject of an administrative or judicial order
             293      issued in this or another state, if the injunction or order:
             294          (I) includes a finding or admission of fraud, breach of fiduciary duty, or material
             295      misrepresentation; or
             296          (II) was based on a finding of lack of integrity, truthfulness, or mental competence;
             297          (D) been convicted of a crime involving moral turpitude;
             298          (E) obtained or attempted to obtain a certificate of registration under this chapter by
             299      misrepresentation;
             300          (F) failed to timely file with the division any report required by:
             301          (I) this chapter; or
             302          (II) rules made by the division pursuant to this chapter;
             303          (G) failed to furnish information requested by the division; or
             304          (H) failed to pay an administrative fine imposed by the division in accordance with this
             305      chapter.
             306          (2) Division staff may place reasonable limits upon a proprietary school's continued


             307      certificate of registration to operate if:
             308          (a) there are serious concerns about the proprietary school's ability to provide the
             309      training in the manner approved by the division; and
             310          (b) limitation is warranted to protect the students' interests.
             311          [(3) (a) The division may:]
             312          [(i) conduct a criminal background check on an individual described in Subsection
             313      13-34-107 (2)(a)(ii)(B); and]
             314          [(ii) require a proprietary school to provide to the division any information and to cover
             315      any costs necessary to conduct a criminal background check on an individual described in
             316      Subsection 13-34-107 (2)(a)(ii)(B)(I) through (IV), including:]
             317          [(A) a fingerprint card in a form acceptable to the division;]
             318          [(B) consent to a criminal background check by the Utah Bureau of Criminal
             319      Identification and the Federal Bureau of Investigation;]
             320          [(C) the cost of a criminal background check; and]
             321          [(D) the cost of fingerprinting.]
             322          [(b) Money paid to the division for the cost of a criminal background check is
             323      nonlapsing.]
             324          (3) (a) The division may require an individual described in Subsection
             325      13-34-107 (2)(a)(ii)(B) to:
             326          (i) submit a fingerprint card in a form acceptable to the division; and
             327          (ii) consent to a criminal background check by:
             328          (A) the Federal Bureau of Investigation;
             329          (B) the Utah Bureau of Criminal Identification; or
             330          (C) another agency of any state that performs criminal background checks.
             331          (b) The proprietary school or the individual who is subject to the background check
             332      shall pay the cost of:
             333          (i) the fingerprint card described in Subsection (3)(a)(i); and
             334          (ii) the criminal background check.
             335          Section 7. Section 13-34a-101 is enacted to read:
             336     
CHAPTER 34a. UTAH POSTSECONDARY SCHOOL

             337     
STATE AUTHORIZATION ACT


             338     
Part 1. General Provisions

             339          13-34a-101. Title.
             340          (1) This chapter is known as "Utah Postsecondary School State Authorization Act."
             341          (2) This part is known as "General Provisions."
             342          Section 8. Section 13-34a-102 is enacted to read:
             343          13-34a-102. Definitions.
             344          As used in this chapter:
             345          (1) "Accredited institution" means a postsecondary school that is accredited by an
             346      accrediting agency.
             347          (2) "Accrediting agency" means a regional or national private educational association
             348      that:
             349          (a) is recognized by the United States Department of Education;
             350          (b) develops evaluation criteria; and
             351          (c) conducts peer evaluations to assess whether a postsecondary school meets the
             352      criteria described in Subsection (2)(b).
             353          (3) "Agent" means a person who:
             354          (a) (i) owns an interest in a postsecondary school; or
             355          (ii) is employed by a postsecondary school; and
             356          (b) (i) enrolls or attempts to enroll a Utah resident in a postsecondary school;
             357          (ii) offers to award an educational credential for remuneration on behalf of a
             358      postsecondary school; or
             359          (iii) holds oneself out to Utah residents as representing a postsecondary school for any
             360      purpose.
             361          (4) "Certificate of postsecondary state authorization" means a certificate issued by the
             362      division to a postsecondary school in accordance with the provisions of this chapter.
             363          (5) "Division" means the Division of Consumer Protection.
             364          (6) "Educational credential" means a degree, diploma, certificate, transcript, report,
             365      document, letter of designation, mark, or series of letters, numbers, or words that represent
             366      enrollment, attendance, or satisfactory completion of the requirements or prerequisites of an
             367      educational program.
             368          (7) "Intentional violation" means a violation of a provision of this chapter that occurs


             369      or continues after the division, the attorney general, a county attorney, or a district attorney
             370      gives the violator written notice, delivered by certified mail, that the violator is or has been in
             371      violation of the provision.
             372          (8) "Operate" means to:
             373          (a) maintain a place of business in the state;
             374          (b) conduct significant educational activities within the state; or
             375          (c) provide postsecondary education to a Utah resident that:
             376          (i) is intended to lead to a postsecondary degree or certificate; and
             377          (ii) is provided from a location outside the state by correspondence or
             378      telecommunications or electronic media technology.
             379          (9) "Operating history" means a report, written evaluation, publication, or other
             380      documentation regarding:
             381          (a) the current accreditation status of a postsecondary school with an accrediting
             382      agency; and
             383          (b) an action taken by an accrediting agency that:
             384          (i) places a postsecondary school on probation;
             385          (ii) imposes disciplinary action against a postsecondary school; or
             386          (iii) requires a postsecondary school to take corrective action.
             387          (10) "Ownership" means:
             388          (a) the controlling interest in a postsecondary school; or
             389          (b) if an entity holds the controlling interest in the postsecondary school, the
             390      controlling interest in the entity that holds the controlling interest in the postsecondary school.
             391          (11) "Postsecondary education" means education or educational services offered
             392      primarily to individuals who:
             393          (a) have completed or terminated their secondary or high school education; or
             394          (b) are beyond the age of compulsory school attendance.
             395          (12) (a) "Postsecondary school" means a person that provides or offers educational
             396      services to individuals who:
             397          (i) have completed or terminated secondary or high school education; or
             398          (ii) are beyond the age of compulsory school attendance.
             399          (b) "Postsecondary school" does not include an institution that is part of the state


             400      system of higher education under Section 53B-1-102 .
             401          (13) "Private postsecondary school" means a postsecondary school that is not a public
             402      postsecondary school.
             403          (14) "Public postsecondary school" means a postsecondary school:
             404          (a) established by a state or other governmental entity; and
             405          (b) substantially supported with government funds.
             406          Section 9. Section 13-34a-103 is enacted to read:
             407          13-34a-103. Duties of the division.
             408          (1) The division shall administer and enforce the provisions of this chapter.
             409          (2) In administering this chapter, the division shall:
             410          (a) receive and review completed registration forms in accordance with the provisions
             411      of this chapter;
             412          (b) develop, maintain, and make available to the public a list of postsecondary schools
             413      that have a current, valid certificate of postsecondary state authorization;
             414          (c) adopt a fee schedule in accordance with Section 63J-1-504 to cover the cost of
             415      processing a registration form and issuing a certificate of postsecondary state authorization; and
             416          (d) in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, and
             417      consistent with this chapter, make rules governing:
             418          (i) the content and form of a registration form;
             419          (ii) the filing and review procedures relating to a registration form submitted under this
             420      chapter;
             421          (iii) the filing and review of complaints filed with the division under this chapter;
             422          (iv) the denial, suspension, or revocation of a certificate of postsecondary school state
             423      authorization; and
             424          (v) enforcement of the provisions of this chapter.
             425          (3) (a) The division may execute an interstate reciprocity agreement.
             426          (b) If the division executes an interstate reciprocity agreement described in Subsection
             427      (3)(a):
             428          (i) except as provided by division rule, the provisions of this chapter do not apply to a
             429      postsecondary school that obtains state authorization under the reciprocity agreement; and
             430          (ii) the division may, in accordance with Title 63G, Chapter 3, Utah Administrative


             431      Rulemaking Act, make rules relating to:
             432          (A) the standards for granting a postsecondary school state authorization under a
             433      reciprocity agreement;
             434          (B) any filing, documentation, or fee required for a postsecondary school to obtain state
             435      authorization under a reciprocity agreement; and
             436          (C) penalties if a postsecondary school that obtains state authorization under a
             437      reciprocity agreement fails to comply with the rules that the division makes under this
             438      Subsection (3).
             439          Section 10. Section 13-34a-201 is enacted to read:
             440     
Part 2. State Authorization Procedures

             441          13-34a-201. Title.
             442          This part is known as "State Authorization Procedures."
             443          Section 11. Section 13-34a-202 is enacted to read:
             444          13-34a-202. State authorization -- Certificate of postsecondary state
             445      authorization.
             446          (1) A postsecondary school that operates in the state obtains state authorization for
             447      purposes of 34 C.F.R. Sec. 600.9 if the postsecondary school obtains a certificate of
             448      postsecondary state authorization under this chapter.
             449          (2) A postsecondary school may obtain state authorization in a manner different from
             450      the manner described in Subsection (1) if the alternative manner is accepted by the United
             451      States Department of Education.
             452          (3) (a) A certificate of postsecondary state authorization is not an endorsement or
             453      approval of a postsecondary school by the division or the state.
             454          (b) A postsecondary school may not represent that a certificate of postsecondary state
             455      authorization is an endorsement or approval by the division or the state.
             456          Section 12. Section 13-34a-203 is enacted to read:
             457          13-34a-203. Nonprofit postsecondary school -- Procedure to obtain certificate of
             458      postsecondary state authorization.
             459          (1) The division shall, in accordance with the provisions of this section, issue a
             460      certificate of postsecondary state authorization to a postsecondary school that:
             461          (a) is a nonprofit postsecondary school; and


             462          (b) has operated as a nonprofit for at least 20 years.
             463          (2) To obtain a certificate of postsecondary state authorization under this section, a
             464      postsecondary school shall:
             465          (a) submit a completed registration form to the division that:
             466          (i) for a nonprofit, private postsecondary school, includes:
             467          (A) a copy of the private postsecondary school's articles of incorporation;
             468          (B) documentation from the United States Internal Revenue Service that demonstrates
             469      that the private postsecondary school has nonprofit status, and that the private postsecondary
             470      school has had nonprofit status for at least 20 consecutive years from the day on which the
             471      private postsecondary school submits the completed registration form; and
             472          (C) satisfactory documentation that the private postsecondary school has complied with
             473      the complaint process requirements described in Section 13-34a-206 ; or
             474          (ii) for a nonprofit, public postsecondary school, includes:
             475          (A) documentation sufficient to demonstrate that the public postsecondary school has
             476      operated as a nonprofit for at least 20 consecutive years from the day on which the public
             477      postsecondary school submits the completed registration form; and
             478          (B) satisfactory documentation that the public postsecondary school has complied with
             479      the complaint process requirements described in Section 13-34a-206 ; and
             480          (b) pay a nonrefundable fee, established by the division, in accordance with Subsection
             481      13-34a-103 (2)(c) to pay for the cost of processing the registration form and issuing the
             482      certificate of postsecondary state authorization.
             483          (3) The division shall develop and make available to the public:
             484          (a) a registration form for nonprofit, private postsecondary schools, as described in
             485      Subsection (2)(a)(i); and
             486          (b) a registration form for nonprofit, public postsecondary schools, as described in
             487      Subsection (2)(a)(ii).
             488          (4) The division shall deposit money that the division receives under Subsection (2)(b)
             489      into the Commerce Service Account, created in Section 13-1-2 .
             490          (5) If there is a change in circumstance that may affect a postsecondary school's status
             491      under this section, the postsecondary school shall notify the division in writing of the change
             492      within 30 days after the day on which the change occurs.


             493          (6) A certificate of postsecondary state authorization issued under this section:
             494          (a) establishes a postsecondary school by name as an educational institution, as
             495      described in 34 C.F.R. Sec. 600.9(a)(1)(i);
             496          (b) makes a postsecondary school independent of the state system of higher education;
             497      and
             498          (c) authorizes a postsecondary school to operate educational programs in the state that
             499      are beyond secondary education, including programs that lead to a degree or certificate.
             500          Section 13. Section 13-34a-204 is enacted to read:
             501          13-34a-204. Postsecondary school -- Procedure to obtain certificate of
             502      postsecondary state authorization.
             503          (1) The division shall, in accordance with the provisions of this section, issue a
             504      certificate of postsecondary state authorization to a postsecondary school.
             505          (2) To obtain a certificate of postsecondary state authorization under this section, a
             506      postsecondary school shall:
             507          (a) submit a completed registration form to the division that includes:
             508          (i) proof of current accreditation from the postsecondary school's accrediting agency;
             509          (ii) proof that the postsecondary school is fiscally responsible and can reasonably fulfill
             510      the postsecondary school's financial obligations, including:
             511          (A) a copy of an audit of the postsecondary school's financial statements, with all
             512      applicable footnotes, including a balance sheet, an income statement, a statement of retained
             513      earnings, and a statement of cash flow, that was performed by a certified public accountant;
             514          (B) at the postsecondary school's election, a copy of an audit of the postsecondary
             515      school's parent company's financial statements, with all applicable footnotes, including a
             516      balance sheet, an income statement, a statement of retained earnings, and a statement of cash
             517      flow, that was performed by a certified public accountant; and
             518          (C) a copy of all other financial documentation that the postsecondary school provided
             519      to the postsecondary school's accrediting agency since the postsecondary school's last
             520      registration with the division under this chapter or within the 12 months before the day on
             521      which the postsecondary school submits a completed registration form under this section,
             522      whichever is longer;
             523          (iii) proof of good standing in the state where the postsecondary school is organized;


             524          (iv) the postsecondary school's operating history with the postsecondary school's
             525      accrediting agency since the postsecondary school's last registration with the division under this
             526      chapter or within the 12 months before the day on which the postsecondary school submits a
             527      completed registration form under this section, whichever is longer;
             528          (v) the number of Utah residents who enrolled in the postsecondary school since the
             529      postsecondary school's last registration with the division under this chapter or within the 12
             530      months before the day on which the postsecondary school submits a completed registration
             531      form under this section, whichever is longer;
             532          (vi) satisfactory documentation that the postsecondary school has complied with the
             533      complaint process requirements described in Section 13-34a-206 ;
             534          (vii) (A) the number of complaints that a Utah resident has filed against the
             535      postsecondary school since the postsecondary school's last registration with the division under
             536      this chapter or within the 12 months before the day on which the postsecondary school submits
             537      a completed registration form under this section, whichever is longer; and
             538          (B) upon request, includes copies of the complaints described in Subsection
             539      (2)(a)(vii)(A);
             540          (viii) a disclosure that states whether the postsecondary school or an owner, officer,
             541      director, or administrator of the postsecondary school has been:
             542          (A) convicted of a crime;
             543          (B) subject to an order issued by a court; or
             544          (C) subject to an order issued by an administrative agency that imposed disciplinary
             545      action; and
             546          (ix) a notarized personal verification by the owner or a responsible officer of the
             547      postsecondary school that the information provided under Subsection (2)(a) is complete and
             548      accurate; and
             549          (b) pay a nonrefundable fee, established by the division, in accordance with Subsection
             550      13-34a-103 (2)(c) to pay for the cost of processing the registration form and issuing the
             551      certificate of postsecondary state authorization.
             552          (3) The division shall develop and make available to the public a registration form
             553      described in Subsection (2)(a).
             554          (4) The division shall deposit money that the division receives under Subsection (2)(b)


             555      into the Commerce Service Account, created in Section 13-1-2 .
             556          (5) If a postsecondary school maintains more than one physical campus in the state, the
             557      postsecondary school shall file a separate registration form for each physical campus in the
             558      state.
             559          (6) (a) A certificate of postsecondary state authorization issued under this section is not
             560      transferrable.
             561          (b) (i) If a postsecondary school's ownership or governing body changes after the
             562      postsecondary school obtains a certificate of postsecondary state authorization under this
             563      section, the postsecondary school shall submit a new completed registration form in accordance
             564      with Subsection (2) within 60 days after the day on which the change in ownership or
             565      governing body occurs.
             566          (ii) If a postsecondary school fails to timely comply with the requirements described in
             567      Subsection (6)(b)(i), the postsecondary school's certificate of postsecondary state authorization
             568      immediately and automatically expires.
             569          (c) If there is a change in circumstance that may affect a postsecondary school's status
             570      under this section, the postsecondary school shall notify the division in writing of the change
             571      within 30 days after the day on which the change occurs.
             572          (7) A certificate of postsecondary state authorization issued under this section expires
             573      one year after the day on which the certificate of postsecondary state authorization is issued.
             574          Section 14. Section 13-34a-205 is enacted to read:
             575          13-34a-205. Background checks.
             576          (1) The division may require an owner, officer, director, administrator, faculty member,
             577      staff member, or other agent of a postsecondary school that applies for or holds a certificate of
             578      postsecondary state authorization to:
             579          (a) submit a fingerprint card in a form acceptable to the division; and
             580          (b) consent to a criminal background check by:
             581          (i) the Federal Bureau of Investigation;
             582          (ii) the Utah Bureau of Criminal Identification; or
             583          (iii) another agency of any state that performs criminal background checks.
             584          (2) The postsecondary school or the postsecondary school's owner, officer, director,
             585      administrator, faculty member, staff member, or other agent who is subject to the background


             586      check shall pay the cost of:
             587          (a) the fingerprint card described in Subsection (1)(a); and
             588          (b) the criminal background check.
             589          Section 15. Section 13-34a-206 is enacted to read:
             590          13-34a-206. Complaints -- Information for students and prospective students.
             591          (1) A postsecondary school shall provide each student or prospective student written
             592      information regarding how to file a complaint against the postsecondary school with the
             593      division, the postsecondary school's accrediting agency, and the postsecondary school's
             594      approval or licensing entity.
             595          (2) To satisfy the requirements described in Subsection (1), a postsecondary school
             596      may place a conspicuous link on the postsecondary school's website that links to:
             597          (a) the contact information of each entity described in Subsection (1); or
             598          (b) a third party's website that states the contact information for each entity described
             599      in Subsection (1).
             600          (3) The division shall establish a process for reviewing and responding to complaints
             601      that the division receives under this chapter.
             602          Section 16. Section 13-34a-207 is enacted to read:
             603          13-34a-207. Discontinuance of operations.
             604          (1) If a postsecondary school ceases to operate, at least 30 days before the day on
             605      which the postsecondary school ceases to operate, the postsecondary school shall give the
             606      division written notice that includes:
             607          (a) the date on which the postsecondary school will cease to operate; and
             608          (b) for an accredited institution, a written certification, signed by the postsecondary
             609      school's owner or officer, that the postsecondary school has complied with the postsecondary
             610      school's accrediting agency's closure requirements.
             611          (2) After a postsecondary school submits a written notice described in Subsection (1),
             612      the postsecondary school may not recruit or enroll new students in the state.
             613          Section 17. Section 13-34a-301 is enacted to read:
             614     
Part 3. Enforcement

             615          13-34a-301. Title.
             616          This part is known as "Enforcement."


             617          Section 18. Section 13-34a-302 is enacted to read:
             618          13-34a-302. Denial, suspension, or revocation of certificate of postsecondary state
             619      authorization.
             620          (1) In accordance with Chapter 2, Division of Consumer Protection, and Title 63G,
             621      Chapter 4, Administrative Procedures Act, the division may deny, suspend, or revoke a
             622      certificate of postsecondary state authorization if:
             623          (a) for a certificate of postsecondary state authorization issued under Section
             624      13-34a-203 , the postsecondary school:
             625          (i) fails to comply with a requirement described in Section 13-34a-203 ;
             626          (ii) omits a material fact from the postsecondary school's completed registration form;
             627      or
             628          (iii) includes a material fact in the postsecondary school's completed registration form
             629      that is incomplete, false, inaccurate, or misleading; or
             630          (b) for a certificate of postsecondary state authorization issued under Section
             631      13-34a-204 :
             632          (i) the denial, suspension, or revocation is in the public interest; and
             633          (ii) the postsecondary school:
             634          (A) fails to meet a requirement described in Section 13-34a-204 ;
             635          (B) submits a registration form or any supporting documentation that is incomplete,
             636      false, inaccurate, or misleading;
             637          (C) grants an educational credential to an individual that the individual did not earn;
             638          (D) violates a provision of this chapter or a rule made under this chapter;
             639          (E) is the subject of an order issued by a court or an administrative agency that includes
             640      a finding or admission of fraud, breach of fiduciary duty, or misrepresentation, or behavior that
             641      lacked moral integrity, truthfulness, or mental competence;
             642          (F) has been convicted of a crime of moral turpitude;
             643          (G) fails to give the division information that the division requests in connection with a
             644      certificate of postsecondary state authorization; or
             645          (H) fails to timely pay a fine imposed under this chapter.
             646          (2) For a postsecondary school that obtains a certificate of postsecondary state
             647      authorization under Section 13-34a-204 , the division may place reasonable requirements on the


             648      postsecondary school if:
             649          (a) the requirement protects student interests; and
             650          (b) the postsecondary school engaged in any of the behavior described in Subsection
             651      (1)(b)(ii).
             652          Section 19. Section 13-34a-303 is enacted to read:
             653          13-34a-303. Right to rescind.
             654          If a postsecondary school's certificate of postsecondary state authorization is revoked
             655      under Subsection 13-34a-302 (2), a student who enrolled in the postsecondary school in reliance
             656      upon the postsecondary school's possession of a valid certificate of postsecondary state
             657      authorization may rescind any enrollment agreement and obtain a full refund from the
             658      postsecondary school for any tuition, fees, or other charges that the student paid to the
             659      postsecondary school.
             660          Section 20. Section 13-34a-304 is enacted to read:
             661          13-34a-304. Violations.
             662          A postsecondary school violates this chapter if:
             663          (1) the postsecondary school fails to comply with a provision of this chapter or a rule
             664      made under this chapter; or
             665          (2) for a postsecondary school that submits a registration form under section
             666      13-34a-204 , the postsecondary school:
             667          (a) intentionally omits a material fact from the postsecondary school's registration
             668      form; or
             669          (b) includes a material fact in the postsecondary school's registration form that the
             670      postsecondary school knows or should have known is false, deceptive, inaccurate, or
             671      misleading.
             672          Section 21. Section 13-34a-305 is enacted to read:
             673          13-34a-305. Enforcement.
             674          (1) The division may, in accordance with Chapter 2, Division of Consumer Protection,
             675      and Title 63G, Chapter 4, Administrative Procedures Act:
             676          (a) investigate a postsecondary school, in response to a complaint or on the division's
             677      own initiative, to verify compliance with the provisions of this chapter; or
             678          (b) initiate an adjudicative proceeding to enforce compliance with the provisions of


             679      this chapter.
             680          (2) (a) The division may refer an alleged violation of a provision of this chapter to the
             681      attorney general, a county attorney, or a district attorney.
             682          (b) The attorney general, county attorney, or district attorney shall investigate the
             683      alleged violation, and, following the investigation, may file a civil or criminal action in district
             684      court to:
             685          (i) enjoin the defendant from further violation of the chapter; and
             686          (ii) impose the applicable penalties described in Section 13-34a-306 .
             687          (3) Nothing in this chapter prevents a postsecondary school from performing an
             688      internal investigation.
             689          Section 22. Section 13-34a-306 is enacted to read:
             690          13-34a-306. Penalties.
             691          (1) In an adjudicative proceeding under Subsection 13-34a-305 (1) or in a district court
             692      action under Subsection 13-34a-305 (2), the division or the district court may impose a fine of
             693      up to:
             694          (a) $1,000 for each violation of this chapter that is not an intentional violation; and
             695          (b) $5,000 for each intentional violation.
             696          (2) The division shall deposit any money the division receives under Subsection (1)
             697      into the Consumer Protection Education and Training Fund, created in Section 13-2-8 .
             698          (3) A violation of a provision of this chapter is a violation of Section 13-11-4 .
             699          (4) An intentional violation is a class B misdemeanor.
             700          Section 23. Repealer.
             701          This bill repeals:
             702          Section 13-34-107.5 , Exemption certificate -- Application and renewal process.
             703          Section 13-34-107.6 , Confirmation of private nonprofit educational institution --
             704      Effect of confirmation -- Fees.




Legislative Review Note
    as of 2-24-14 6:52 PM


Office of Legislative Research and General Counsel


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