Katie Lee Carey
October 1, 2020
Proposed changes to recognition of nonprofit and public institutions have been signed into law and will become effective January 1, 2022, just in time for the out-of-state registration process to become more complex.
Following up on our blog post of September 1, Governor Newsom has signed AB70 into law. This bill impacts how nonprofit and public institutions will be recognized under the California Private Postsecondary Education Act of 2009 (the Act) as enforced by the Bureau for Private Postsecondary Education (BPPE), and, now, the California Attorney General (AG).
As a refresher, this bill amends the Act by limiting, in certain circumstances, the authority of the BPPE to accept an institution’s nonprofit status when determining whether to verify an exemption from BPPE oversight (whether for an in-state institution or an out-of-state institution that might otherwise be required to register), or entering into a contract for complaint processing through the “independent institution” pathway provided for in SB81, a bill passed in 2015. AB70 adds new definitions to the Act for both “nonprofit corporation” and “public institution of higher education” and requires that the AG make the determination of nonprofit status for any institution that operated for-profit on or after January 1, 2010, based on specific criteria. (See the September 1st blog post for more details on the criteria.)
Under the new definitions, institutions that have been operating under a BPPE exemption for years might now have their status as a nonprofit questioned and put in the position of having to either prove to the AG that they are truly nonprofit, or face the task of applying for the applicable BPPE approval or registration. Anyone operating an institution in California can tell you how complex and expensive the regulatory structure is in the state, so a sudden loss of exemption may be particularly challenging for in-state institutions. But out-of-state institutions should also be aware of how AB70, in conjunction with a new law from last year, could impact them.