SB790 - Postsecondary education: interstate reciprocity agreements for distance education: out-of-state postsecondary educational institutions.

Amended IN Assembly July 09, 2025 Amended IN Assembly June 26, 2025 Amended IN Senate May 06, 2025 Amended IN Senate April 10, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 790 Introduced by Senator Cabaldon (Coauthor: Assembly Member Fong) February 21, 2025 An act to amend Sections 94801.5, 94850.5, and 94897 of, and to add Chapter 11.1 (commencing with Section 66910) to Part 40 of Division 5 of Title 3 of, the Education Code, relating to postsecondary education. LEGISLATIVE COUNSEL'S DIGEST SB 790, as amended, Cabaldon. Postsecondary education: interstate reciprocity agreements for distance education: out-of-state postsecondary educational institutions. (1) Existing federal law requires a postsecondary educational institution that offers distance education to students located in a state in which the postsecondary educational institution is not physically located to meet any of that state’s requirements for it to offer distance education in that state. Existing federal law authorizes a state to participate in an interstate reciprocity agreement to comply with this requirement. This bill would authorize the Governor Governor, on or before January 1, 2028, to enter into one or more interstate reciprocity agreements for distance education through a compact on behalf of the state upon issuing certain written findings and after certain committees of the Legislature hold a joint hearing on the agreement, as provided. This bill would require the Governor to designate a state agency, department, or office for the implementation of an interstate reciprocity agreement for distance education if the Governor enters into such an agreement, as provided. The bill would authorize postsecondary educational institutions to apply to the designated entity for approval to operate under an interstate reciprocity agreement, as specified. (2) 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 requires an out-of-state private postsecondary educational institution to register with the bureau, pay a fee, and comply with additional delineated requirements. Existing law provides exemptions from the act for, among others, accredited, degree-granting, nonprofit, higher education institutions and degree-granting public higher education institutions. Beginning January 1, 2028, If the Governor enters into an interstate reciprocity agreement, this bill would subject any public or private entity without a physical presence in this state that offers a degree program through distance education to California students accredited, degree-granting, nonprofit, higher education institutions and degree-granting public higher education institutions to the act unless the entity is approved pursuant to an interstate reciprocity agreement. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Chapter 11.1 (commencing with Section 66910) is added to Part 40 of Division 5 of Title 3 of the Education Code, to read: CHAPTER 11.1. Administration of State Postsecondary Education Programs and Interstate Authorization Article 1. General Provisions 66910. For purposes of this chapter, the following definitions apply: (a) “Commission” means the Western Interstate Commission for Higher Education, including the Western State Authorization Reciprocity Agreement steering committee of the commission, committee, or another group of states or United States territories organized in an interstate reciprocity agreement. (b) “Interstate reciprocity agreement” means an interstate reciprocity agreement for the authorization and oversight of distance education. (c) “National coordinating council” means the National Council for State Authorization Reciprocity Agreements, or its successor. (d) “Participating institution” means an institution of higher education with a physical presence in the state that has been approved to operate under an interstate reciprocity agreement. (e) “Portal entity” means the agency, department, or office designated pursuant to Section 66911. Article 2. Education Coordination and Program Operations 66911. The Governor shall designate a state agency, department, or office for the implementation of an interstate reciprocity agreement, to serve as the portal entity if the Governor enters into an interstate reciprocity agreement pursuant to Section 66920. Article 3. State Authorization Reciprocity Agreement for Distance Education 66920. The On or before January 1, 2028, the Governor may enter into one or more interstate reciprocity agreements through a compact on behalf of the state, upon completion of both of the following: (a) Issuing a written finding of all of the following: (1) The interstate reciprocity agreement and its implementation will not interfere with, and does not affect, the authority of the Attorney General or any other state or local agency to enforce any statutes or regulations prohibiting consumer fraud and unfair or deceptive business practices or the authority of the state to suspend or terminate the operation in the state of any entity subject to the interstate reciprocity agreement pursuant to state law. (2) The interstate reciprocity agreement does not prevent the Attorney General or any other state or local agency from applying and enforcing Section 94897 with respect to out-of-state postsecondary educational institutions that participate in the reciprocity agreement. (3) The interstate reciprocity agreement allows the state, notwithstanding any reciprocal authorization, to require an out-of-state postsecondary educational institution, upon providing notice of at least six three months, to register and be subject to the provisions of Section 94801.5, in order to protect students, prevent misrepresentation to the public, or prevent the loss of funds paid from public resources or student tuition. (4) The interstate reciprocity agreement does not apply to a course offered onsite to students at a military installation in the state, even if the course at that physical location is offered to students in other locations. (5) The commission and national coordinating council are committed to preserving standards and protections that have been promulgated by the federal government and are the basis of the interstate reciprocity agreement, even if those standards or protections are subsequently diminished or withdrawn by federal law or action of the United States Department of Education, and the commission is committed to developing meaningful performance metrics and frameworks for best practices with regard to individual state authorization activities. (6) (5) Within one year of the effective date of the state’s entry into the interstate reciprocity agreement, the Bureau for Private Postsecondary Education will establish a process to ensure that postsecondary educational institutions that are exempt from the California Private Postsecondary Education Act of 2009 (Chapter 8 (commencing with Section 94800) of Part 59 of Division 10) pursuant to Section 94874, 94874 and exempt from Section 94801.5 pursuant to subdivision (c) of that section may participate in the interstate reciprocity agreement without impacting the postsecondary educational institution’s exempt status. (7) (6) Participating states have the necessary authority and resources to investigate complaints and take appropriate action. (8) (7) The reciprocity agreement does not prohibit the state from accepting complaints from California students that have not first been submitted to the institution that is the subject of the complaint. (9) (8) The interstate reciprocity agreement does not delegate independent legal authority over the state or its participating postsecondary educational institutions to any other entity or otherwise authorize assumption of that legal authority by any other entity other than the state or its subdivisions, including by providing any nonstate entity with the authority to reverse or veto a decision by the state to suspend or terminate an in-state’s institution’s certification to participate in a reciprocity agreement. (10) (9) The interstate reciprocity agreement may be modified by the commission only with the approval of the Governor. (b) After issuing Following a period of no fewer than 30 days after the findings required by subdivision (a), (a) are issued, during which time the public may provide written public comment to the Governor, a joint hearing on the agreement held by the Assembly Committee on Business and Professions, the Assembly Committee on Higher Education, the Senate Committee on Business, Professions and Economic Development, and the Senate Committee on Education at which a representative from the commission commission, or the governing body of an alternative interstate reciprocity agreement, shall testify and members of the public shall be encouraged to testify on the agreement and the Governor’s written findings. 66921. (a) A postsecondary educational institution may apply to the portal entity for approval to operate under an interstate reciprocity agreement using a standard application developed pursuant to the interstate reciprocity agreement. (b) The portal entity may establish a reasonable fee to be paid by a participating postsecondary educational institution. The amount of the fee shall be limited to the reasonable regulatory costs incurred by the portal entity in administering this chapter. 66922. (a) (1) The portal entity shall enter into a memorandum of understanding with the Chancellor of the California State University, the Chancellor of the California Community Colleges, the presidents of the independent California colleges and universities as represented by the state association representing the largest number of those members, and, if appropriate, the Bureau for Private Postsecondary Education. (2) Upon resolution of the Regents of the University of California, the portal entity shall enter into a memorandum of understanding with the President of the University of California. (3) A memorandum of understanding executed pursuant to this subdivision shall delegate functions and responsibilities among the parties and provide for reimbursement of expenses. The memorandum of understanding shall not weaken existing student privacy and confidentiality protections. (b) The Board of Governors of the California Community Colleges shall investigate and resolve complaints involving participating community colleges that may arise pursuant to the interstate reciprocity agreement. (c) The Bureau for Private Postsecondary Education shall investigate and resolve complaints that may arise pursuant to the interstate reciprocity agreement involving participating private postsecondary educational institutions that are either of the following: (1) Approved to operate pursuant to Section 94886 or 94874.8. (2) Exempt from the California Private Postsecondary Education Act of 2009 (Chapter 8 (commencing with Section 94800) of Part 59 of Division 10) pursuant to Section 94874, 94874 and exempt from Section 94801.5 pursuant to subdivision (c) of that section, but elect to participate in the interstate reciprocity agreement pursuant to terms and conditions established by the Bureau for Private Postsecondary Education to implement the memorandum of understanding understanding, as required by subdivision (a), and this chapter. 66923. (a) The portal entity shall ensure that it and participating postsecondary educational institutions have clear and well-documented policies for addressing catastrophic events in a manner that protects students as consumers, including the protection of student records. The California Private Postsecondary Education Act of 2009 (Chapter 8 (commencing with Section 94800) of Part 59 of Division 10), and regulations adopted pursuant to that act, shall constitute those policies for participating private postsecondary educational institutions approved to operate by the Bureau for Private Postsecondary Education. (b) The portal entity shall work cooperatively with other states in the interstate reciprocity agreement and the commission commission, or the governing body of an alternative interstate reciprocity agreement, to enable the success of the interstate reciprocity agreement. Each entity identified in subdivision (a) of Section 66922 shall document all formal complaints received, complaint notifications provided to participating postsecondary educational institutions and accrediting agencies, actions taken that are commensurate with the severity of the violations, and complaint resolutions. Each entity identified in subdivision (a) of Section 66922 shall promptly report a complaint or concern to the postsecondary educational institution, the portal entity, and, where appropriate, the accrediting agency. SEC. 2. Section 94801.5 of the Education Code is amended to read: 94801.5. (a) An out-of-state postsecondary educational institution shall register with the bureau, pay a fee pursuant to Section 94930.5, and comply with all of the following: (1) The institution shall provide the bureau with all of the following information, as applicable, for consideration of initial registration by the bureau pursuant to paragraph (2). (A) Evidence of institutional accreditation. (B) Evidence that the institution is approved to operate in the state where the institution maintains its main administrative location. (C) The agent for service of process consistent with Section 94943.5. (D) A copy of the institution’s catalog and, if the institution uses enrollment agreements, a copy of a sample enrollment agreement. (E) Whether or not the institution, or a predecessor institution under substantially the same control or ownership, had its authorization or approval revoked or suspended by a state or by the federal government, or, within five years before submission of the registration, was subject to an enforcement action by a state or by the federal government that resulted in the imposition of limits on enrollment or student aid, or is subject to such an action that is not final and that was ongoing at the time of submission of the registration. (F) Whether or not the institution, or a controlling officer of, or a controlling interest or controlling investor in, the institution or in the parent entity of the institution, had been subject to any education, consumer protection, unfair business practice, fraud, or related enforcement action, including, but not limited to, an investigation resolved via a settlement agreement, by a state or federal agency within five years before submitting the registration. If so, the institution shall provide the bureau a copy of th [Text truncated for display. Full text available on Congress.gov.]