SB1210 - 572R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 32-3001, Arizona Revised Statutes, is amended to read:

START_STATUTE32-3001. Definitions

In this chapter, unless the context otherwise requires:

1. "Accredited" means accredited by an accrediting agency that is recognized by the United States department of education.

2. "Board" means the state board for private postsecondary education.

3. "Degree" means an academic degree or honorary degree or the title of any designation, mark, appellation, series of letters or words, including associate, bachelor, master, doctor or fellow, which that signifies, purports to signify or is generally taken to signify satisfactory completion of the requirements of an educational program of study beyond the secondary school level or which that is an honorary title conferred for recognition of some meritorious achievement.

4. "Grant" means to award, bestow, confer, convey or sell.

5. "Operate" means to establish, keep, maintain or utilize a physical facility, location or mailing address in this state where, from which or through which students are procured for private vocational or private degree programs, private vocational or private degree programs are offered or private vocational credentials or private degrees are offered or granted and includes contracting for the performance of any of these acts.

5. "Operate" means to either:

(a) Establish and maintain a physical presence in this state, including a facility, location or mailing address, and an in-state director.

(b) Provide postsecondary education through online distance education to a person who resides in this state if the institution is not a participant in the national council for state authorization reciprocity agreements.

6. "Private vocational program" means an instructional program which that includes a course or group of courses as defined in section 15-101 for which a student does not earn a degree, and which that is designed to provide or is advertised as providing a student with sufficient skills for entry into a paid occupation, and which that is not conducted solely by a public school, public community college or public university.

7. "Out-of-state registration" means an authorization issued by the board to a private postsecondary education institution domiciled outside of this state that enrolls a resident of this state in an online program when the private postsecondary education institution is not a participant in the national council for state authorization reciprocity agreement. END_STATUTE

Sec. 2. Section 32-3021, Arizona Revised Statutes, is amended to read:

START_STATUTE32-3021. Private vocational program license; qualifications; provision of information; exemptions

A. A person shall not operate, as defined in section 32-3001, paragraph 5, subdivision (a), a private vocational program unless the person holds a private vocational program license issued pursuant to this chapter. Each program offered by a private vocational program licensee shall be authorized on a private vocational program license. The board shall prescribe the manner in which the private vocational programs are identified on the license.

B. A person shall not operate, as defined in section 32-3001, paragraph 5, subdivision (b), a private vocational program unless the person holds an out-of-state registration issued pursuant to section 32-3024.

B. C. An applicant for a license to operate, as defined in section 32-3001, paragraph 5, subdivision (a), a private vocational program license shall meet all of the following requirements:

1. Furnish a letter of credit, surety bond or cash deposit as provided in section 32-3023.

2. Make specific information concerning educational programs, including statements of purpose, objectives, course of study, policies, fees and other pertinent information, available to prospective students and the general public.

3. Be financially responsible and have management capability.

4. Maintain a qualified faculty.

5. Maintain facilities, equipment and materials that are appropriate for the stated program. All facilities shall meet applicable state and local health and safety laws.

6. Maintain appropriate records as the board prescribes that are properly safeguarded and preserved.

7. Use only advertisements that are consistent with the information made available as provided in paragraph 2 of this subsection.

8. Provide courses of instruction that meet stated objectives.

9. Provide a grievance procedure for students.

10. Comply with all federal and state laws relating to the operation of a private postsecondary educational institution.

11. Other requirements the board deems necessary.

C. D. An applicant for a private vocational program license shall submit evidence of meeting the requirements prescribed in subsection B C of this section to the board. The board shall verify the evidence submitted. Verification shall include on-site verification.

D. E. The filing of an application grants the board the authority to obtain information from any of the following:

1. A licensing board or agency in any state, district, territory or county of the United States or any foreign country.

2. The Arizona criminal justice information system as defined in section 41-1750.

3. The federal bureau of investigation.

E. F. The board, on application, may issue a private vocational program license to a new educational institution as provided in this section, except that the board shall establish separate minimum standards for licensure requirements of new educational institutions. These minimum standards may include the modification of licensure requirements as provided in subsection B C, paragraphs 3, 5, 6, 7 and 8 of this section to meet the circumstances of new educational institutions. The board, on application, may issue a private vocational program license to an educational institution that is otherwise exempt under subsection F G of this section. The board shall monitor the new educational institution to ensure compliance with the licensure requirements. The board shall issue a private vocational program license as provided in this subsection one time only to new educational institutions.

F. G. This section does not apply to any of the following:

1. A school licensed pursuant to chapter 5 of this title.

2. An instructional program or course sponsored by a bona fide trade association solely for its members.

3. Privately owned academic schools engaged in the process of general education that is designed to produce a level of development equivalent to that necessary to meet the requirements for entrance into a public community college or public university in this state and that may incidentally offer technical and vocational courses as part of the curriculum.

4. Schools or private instruction conducted by any person engaged in training, tutoring or teaching individuals or groups, if the instruction is related to hobbies, avocations, academic improvement or recreation and may only incidentally lead to gainful employment.

5. Schools conducted by any person solely for training the person's own employees.

6. An instructional program or course offered solely for employees and for the purpose of improving the employees in their employment if both of the following apply:

(a) The employee is not charged a fee.

(b) The employer provides or funds the program or course pursuant to a valid written contract between the employer and a program or course provider.

7. Training conducted pursuant to 14 Code of Federal Regulations part 141.

8. A school that solely provides an instructional program for certified nursing assistants and licensed nursing assistants and that is licensed by the nursing board pursuant to section 32-1606, subsection B, paragraph 11.

9. A professional driving training school licensed by the department of transportation pursuant to chapter 23, articles 1, 2 and 3 of this title.

10. A training program approved by the board of examiners of nursing care institution administrators and assisted living facility managers that solely provides training for managers and caregivers of assisted living facilities.

11. A yoga teacher training course or program or a yoga instructional course or program.

12. A private instructional program or course that is less than forty contact hours in length and that charges a fee of less than $1,000. For the purposes of this paragraph, "contact hour" means a fifty-minute session of scheduled in-class or online instruction.END_STATUTE

Sec. 3. Section 32-3022, Arizona Revised Statutes, is amended to read:

START_STATUTE32-3022. License to grant degrees

A. A person doing business for profit or not for profit in this state, except a public community college or public university, shall not grant or offer to grant a degree to any person or operate an institution which that grants or offers to grant a degree to any person unless the person doing business holds a license to grant degrees issued pursuant to this chapter. Each degree program offered by a holder of a license to grant degrees shall be authorized on the license. The board shall prescribe the manner in which the degrees, including level and subject area, shall be identified on the license.

B. An applicant for a license to grant degrees shall have each degree program it offers accredited or have institutional accreditation with an accrediting agency recognized by the United States department of education. The board shall prescribe appropriate evidence of accreditation which that each applicant shall submit and the manner in which degree programs shall be identified for institutional accreditation.

C. Notwithstanding subsection B of this section, an applicant for a license to grant degrees who that offers a degree program which that is not accredited shall meet all of the following requirements:

1. Application or commitment to apply for accreditation with an accrediting agency recognized by the United States department of education. The board shall prescribe the manner in which the applicant shall demonstrate application or commitment to apply for accreditation and the time periods in which the various stages of accreditation shall be met.

2. Demonstration in the manner prescribed by the board, including on-site verification, that the applicant meets the requirements prescribed in section 32-3021, subsections B and C and D if the applicant has not met the requirements in its application for accreditation.

3. Demonstration in the manner prescribed by the board that the applicant who that offers the degree provides actual instruction relating to each degree.

D. The board may, on application, issue a license to grant degrees to a new educational institution as provided in this section, except that the board shall establish separate minimum standards for licensure requirements of new educational institutions. The minimum standards may include the modification of licensure requirements as provided in section 32-3021, subsection B C, paragraphs 3, 5, 6, 7 and 8 to meet the circumstances of new educational institutions. The board shall monitor the new educational institution to ensure compliance with the licensure requirements. The board shall issue a license to grant degrees as provided in this subsection one time only to new educational institutions.

E. This section does not apply to religious degrees which that are used solely for religious purposes within a religious organization which that has tax exempt status from the internal revenue service. END_STATUTE

Sec. 4. Title 32, chapter 30, article 2, Arizona Revised Statutes, is amended by adding section 30-3024, to read:

START_STATUTE32-3024. Out-of-state registration; qualifications; records requirements; renewal; fee

A. This section applies to any private postsecondary education institution, regardless of accreditation status, whether or not the private postsecondary education institution offers vocational or degree programs, that is not domiciled in this state, that enrolls a resident of this state in a fully online program and that is not an active participant in the national council for state authorization reciprocity agreement.

B. A private postsecondary education institution that is not domiciled in this state shall submit an application for out-of-state registration to the board that includes:

1. Evidence that the private postsecondary education institution is legally authorized to operate in the state in which it is domiciled by the home state's postsecondary education regulatory agency.

2. Evidence that the private postsecondary education institution is accredited. If the private postsecondary education institution is not accredited, the private postsecondary education institution shall submit the additional information required in subsection C of this section.

3. Evidence that the private postsecondary education institution is providing financial protection for students in this state by providing one of the following:

(a) If the private postsecondary education institution is accredited, proof of financial viability pursuant to rules adopted by the board that includes the private postsecondary education institution's federal financial composite score, which must be greater than 1.5 for the current year.

(b) If the private postsecondary education institution is not accredited or does not meet the requirements of subdivision (a) of this paragraph, a surety bond, cash deposit or irrevocable letter of credit pursuant to section 32-3023, as determined by the board. The amount of the surety bond, cash deposit or irrevocable letter of credit shall be based on the institution's prior year gross tuition revenue from residents of this state.

4. The most recent year-to-date parent company financial statements and the most recently completed fiscal year financial statements in accordance with generally accepted accounting principles. The financial statements required by this paragraph shall include a balance sheet, a statement of cash flows and profit and loss statements.

5. An example of the PRIVATE postsecondary education institution's official student transcript.

C. A private postsecondary education institution that is not accredited shall submit the following for review and approval by the board:

1. Program information that is approved by the private postsecondary education institution's home state's postsecondary education regulatory agency and that is offered by the private postsecondary education institution to residents of this state, including the catalog, curricula, course descriptions and program objectives.

2. A list of all faculty teaching residents of this state and evidence of the faculty's qualifications to teach in the faculty's assigned subject areas.

3. Evidence that all vocational or degree programs offered meet the minimum credit hour and program length standards established by the private postsecondary education institution's home state.

4. A signed attestation from a responsible officer of the private postsecondary education institution affirming that the private postsecondary education institution will:

(a) Comply with the board's pro rata refund policy as established by board rule for all students of this state.

(b) Provide the following notifications to students who are residents of this state:

(i) that the private postsecondary education institution is registered to operate by the board.

(ii) an outline of the procedures students may follow to file a complaint against the private postsecondary education institution, including a statement that if a complaint is not resolved to the STUDENT'S satisfaction, the student may contact the board. The private postsecondary education institution shall provide contact information for the board and shall ensure that students will not be retaliated against for filing a complaint.

(iii) that the transferability of credits earned at the private postsecondary education institution is at the sole discretion of the receiving institution.

(iv) For private postsecondary education institutions offering programs or courses leading to or advertised as leading to professional licensure, a statement of whether completion of the program is sufficient to meet licensure requirements in this state. If the private postsecondary education institution is unable to determine whether a program will meet the professional licensure requirements of this state, the notification shall state that the program does not satisfy the licensure requirements of this state.

D. A private postsecondary education institution that is registered pursuant to this section shall report in writing to the board within thirty days after the occurrence of any of the following:

1. Any change in accreditation status, including any adverse action, probation or show-cause order by the private postsecondary education institution's accrediting agency.

2. Any suspension or revocation of the private postsecondary education institution's authorization by the private postsecondary education institution's home state or any other state.

3. Any material change in the private postsecondary education institution's financial status or a filing for bankruptcy.

4. Any new education, consumer protection or fraud-related enforcement action or lawsuit filed against the private postsecondary education institution by a state or federal agency.

5. Any change in ownership of the private postsecondary education institution following approval by the private postsecondary institution's home state.

E. Each private postsecondary education institution with out-of-state registration shall maintain a student's official transcript in perpetuity. The private postsecondary education institution shall maintain a student's enrollment and financing agreements for a period of at least ten years after the student is no longer enrolled. All records required to be retained by this subsection shall be maintained in digital form. Within thirty days after closure of the private postsecondary education institution, all student transcripts for residents of this state shall be submitted to the board.

F. An out-of-state registration for a private postsecondary education institution is valid for one year. An out-of-state registration shall be renewed annually through an application approved by the board. a private postsecondary education institution shall pay a fee in an amount set by the board for both initial out-of-state registration and renewal of registration. END_STATUTE

Sec. 5. Section 32-3071, Arizona Revised Statutes, is amended to read:

START_STATUTE32-3071. Definitions

In this article, unless the context otherwise requires:

1. "Assessment" means the amount a private postsecondary education institution is required to pay to the student tuition recovery fund.

2. "Ceasing operations" means that a private postsecondary education institution has stopped offering educational courses or programs to the public for any reason.

3. "Distance learning instruction" means a written correspondence or online education program for students who are enrolled in an institution licensed under this chapter.

4. 3. "Fund" means the student tuition recovery fund.

5. 4. "Newly enrolled student" means a student who is enrolling with a private postsecondary education institution for the first time.

6. 5. "Person injured" means a student of a private postsecondary education institution that charges prepaid tuition to a student who is damaged monetarily by the institution ceasing operations before fulfilling its contractual obligations or fully providing the services that were paid for in advance. Person injured does not include a nonresident student who is eligible to claim for recovery under a student tuition recovery fund or similar fund in the student's state of residence.

7. 6. "Prepaid tuition" means monies that are advanced to an educational institution before the educational institution provides its service.

8. 7. "Private postsecondary education institution" or "institution" means an educational institution that is subject to licensure or out-of-state registration under this chapter.

9. 8. "Total course cost" means the tuition and other fees that are charged by the private postsecondary education institution for each course offered. END_STATUTE

Sec. 6. Section 32-3072, Arizona Revised Statutes, is amended to read:

START_STATUTE32-3072. Student tuition recovery fund

A. The student tuition recovery fund is established and shall be administered by the board. A person who is injured by a private postsecondary education institution ceasing operations may recover from the fund an amount that does not exceed the actual damages sustained.

B. Each private postsecondary education institution that collects prepaid tuition and that holds a license or an out-of-state registration shall annually pay an assessment to the board for each newly enrolled student in an amount equal to the sum of two-tenths of one percent of the total course cost for each newly enrolled student, not to exceed $10 per student. A private postsecondary education institution is not required to pay more than $25,000 per annual assessment period. A private postsecondary education institution is not required to pay assessments for newly enrolled students who are not residents of this state and for whom the institution has paid a student tuition recovery fund assessment or an assessment to a similar fund in the student's state of residence. A private postsecondary education institution is not required to pay assessments for students who are not residents of this state and who are enrolled in distance learning instruction.

C. If on June 30 of any year the balance in the fund exceeds $500,000, and on notice by the board to institutions, only institutions and schools that are newly or provisionally licensed during or after that fiscal year then ended shall pay the assessment.END_STATUTE

Sec. 7. Section 32-3075, Arizona Revised Statutes, is amended to read:

START_STATUTE32-3075. Statute of limitations; recovery from fund; eligibility

A. A claim against the fund shall not be commenced later than one year after the private postsecondary education institution has ceased operations. The person injured shall submit a complaint to the board outlining the circumstances surrounding the claim. The board shall promptly investigate the complaint. If the complaint and claim are valid, the board shall pay the claim in the amount it considers reasonable.

B. Any person who is injured by a private postsecondary education institution ceasing operation is eligible to submit a claim against the fund unless the person is not a resident of this state and is enrolled in distance learning instruction. END_STATUTE