BILL ANALYSIS S.B. 1228 By: Barrientos (Gutierrez) 05-05-95 Committee Report (Unamended) BACKGROUND In 1993, Congress enacted legislation requiring the governor of each state to establish a State PostSecondary Review Program to reduce student loan defaults and to eliminate fraud, waste, and abuse in certain student programs. The Texas Higher Education Coordinating Board was designated by the governor as the State Postsecondary Review Entity, and is responsible for reviewing postsecondary institutions. Each review helps determine whether an institution may continue to participate in federal student financial aid programs. Existing state and federal laws affecting the State Postsecondary Review Entity (entity) do not provide institutions protection against premature or inappropriate disclosure of unfounded allegations about an institution under review, nor do they grant the entity any enforcement authority. PURPOSE If enacted, S.B. 1228 amends sections of the Education Code relating to actions by the State Postsecondary Review Entity. RULEMAKING It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SUBCHAPTER Q. STATE POSTSECONDARY REVIEW PROGRAM Sec. 61.791. DEFINITIONS. Defines "entity" and "program." Sec. 61.792. AGREEMENT. Authorizes the governor to enter into an agreement with the United States Secretary of Education under 20 U.S.C. Chapter 28, Subchapter IV, Part G, Subpart 1, to participate in the program. Requires the agreement to designate the entity to administer the program. Sec. 61.793. NOTICE. Requires the entity to notify an institution of higher education (institution) whose activities are being reviewed under the program that the review has begun as soon as practicable after beginning the review. Requires the notice to describe the acts and circumstances giving rise to the review in sufficient detail to provide the institution with notice of the allegations made. Sec. 61.794. CIVIL INVESTIGATIVE DEMAND. (a) Authorizes an authorized employee or agent of the entity to execute in writing and serve on an institution under review a civil investigative demand requiring the institution to produce documents and records or permit inspection and copying of such documents and records. (b) Requires a civil investigative demand to perform certain responsibilities. (c) Authorizes the entity to serve a civil investigative demand on an institution's president, chief financial officer or registered agent for service of process. (d) Authorizes service of a civil investigative demand to be made by personal service of an executed copy of the demand or mailing of an executed copy of the demand by certified mail. (e) Requires an institution to produce documents or records demanded under this section during normal business hours at the institution's normal place of business or at the time and place on which the institution and the staff of the entity agree. (f) Authorizes the entity to file a petition for an order of enforcement in a district court in the county in which the institution is located, and serve the petition on a person designated in Subsection (c) if an institution does not comply with a civil investigative demand under this section. Authorizes the court to enter any order necessary to enforce the demand. Provides that failure to comply with a final order entered under this subsection is punishable by contempt. Provides that a final order entered under this subsection is subject to appeal to the Texas Supreme Court. Sec. 61.795. JUDICIAL REVIEW. (a) Authorizes an institution to appeal a decision rendered by the entity in a contested case brought under the program. Requires the court to determine the appeal under the substantial evidence rule. (b) Requires an action brought under the program to be brought in a district court in Travis County, except as provided by Section 61.794. Sec. 61.796. CONFIDENTIALITY. (a) Provides that investigative information obtained by the entity or an employee or agent of the entity as a result of the review of an institution, including complaints received, investigation files and reports, and documentary material produced under Section 61.794, is privileged and confidential. Prohibits investigative information obtained during the review of an institution from being disclosed to a person other than the entity or an authorized employee or agent of the entity, except as provided in Subsections (c), (d), or (e). (b) Authorizes the entity to use investigative information obtained during a review of an institution in an enforcement action brought under the program. Prohibits the entity from being required to produce investigative reports or memoranda, attorney-client communications, attorney-work product, or other materials protected by a privilege or to disclose the identity of nontestifying complaints while an action against an institution is pending, except as provided by the Texas Rules of Civil Procedure or the Texas Rules of Civil Evidence. Provides that the investigative information obtained during the review is available as provided by Chapter 552, Government Code, on final adjudication of an action brought by the entity against an institution or on completion of a review of the institution without any action being taken against the institution. (c) Authorizes investigative information in the possession of the entity or an authorized employee or agent of the entity to be disclosed to an appropriate law enforcement authority if it relates to an investigation of an institution in another state, territory, or country if that institution has a branch campus or home office in this state. (d) Requires the entity to report the information to the appropriate law enforcement agency in accordance with law if investigative information in the possession of the entity or an authorized employee or agent of the entity indicates that a crime may have been committed. Provides that confidential information disclosed by the entity to a law enforcement agency remains confidential and may not be disclosed by the investigating agency except as necessary to further the investigation or prosecute a criminal violation. (e) Authorizes the entity to disclose relevant investigative information to the institution's governing board if investigative information in the possession of the entity or an authorized employee or agent of the entity indicates a potential violation of another law for which the institution may be liable. Sec. 61.797. IMMUNITY. Provides that a person who, in good faith, assists the entity in the performance of the program is immune from suit by a private party. SECTION 2. Effective date: September 1, 1995. SECTION 3. Emergency clause. SUMMARY OF COMMITTEE ACTION S.B. 1228 was considered by the committee in a formal meeting on May 5, 1995. The bill was reported favorably without amendment, with the recommendation that it do pass and be printed, by a record vote of 7 ayes, 0 nays, 0 pnv, 2 absent.