BILL ANALYSIS
SB 967
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Date of Hearing: July 1, 2003
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Lou Correa, Chair
SB 967 (Burton) - As Amended: June 23, 2003
SENATE VOTE : 37-0
SUBJECT : Postsecondary education: Private Postsecondary Reform
Act of 1989: regionally accredited institutions.
SUMMARY : Exempts degree-granting institutions accredited by
specified regional bodies from programmatic and institutional
review and approval by the Bureau for Private Postsecondary and
Vocational Education (Bureau), while remaining subject to all
the other regulatory oversight
provisions of the Postsecondary and Vocational Reform Act of
1989 (Reform Act). Specifically, this bill :
1)Modifies the definitional exclusion of private postsecondary
educational institutions to exclude all for-profit
institutions accredited by the Western Association of Schools
and Colleges (WASC).
2)Defines "non-WASC regional accrediting agency" and "non-WASC
regional accredited institution."
3)Requires the Bureau to report to the Legislature its finding
and recommendations relative to institutions that have secured
institutional approval.
4)Requires a non-WASC regional accredited institution to submit
certification of accreditation by a non-WASC regional
accrediting agency when applying to operate in this state.
5)Requires the Bureau to determine that a non-WASC regionally
accredited institution meets prescribed requirements before
granting the institution approval to issue degrees.
6)Requires that, prior to approving a regionally accredited
institution to offer degrees, diplomas or certificates in
California, the Bureau determines that the institution:
a) Meets financial responsibility requirements, as
currently specified in the Reform Act.
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b) Demonstrates a cohort default rate on guaranteed student
loans that does not exceed 15% for the most recent three
years.
c) Submits copies of its most recent Integrated
Postsecondary Education Data System Report of the U.S.
Department of Education (USDE) and its accumulated default
rate.
d) Pays fees in accordance with the existing fee provisions
of the Reform Act.
e) Submits an application for operation or renewal, as
specified, consistent with specified provisions of the
current Reform Act.
7)Eliminates existing provisions that require the Bureau to
conduct specified programmatic and institutional reviews of
regionally accredited institutions prior to approval to issue
degrees, diplomas or certificates in California.
8)Exempts regionally accredited institutions from specified
approval processes and requirements, and qualitative reviews
and assessments that are otherwise required for
degree granting, non-degree granting or registered
institutions subject to provisions of the
Reform Act.
9)Allows an institution that is not approved to operate pursuant
to this bill's provisions to apply for approval to operate in
California pursuant to current law regarding degree-granting
institutions.
10) Specifies procedures for notifying the Bureau of new
degree programs adopted after a regionally accredited
institution has been approved to operate in California.
11) Makes other technical and conforming changes.
EXISTING LAW , the Private Postsecondary and Vocational Reform
Act of 1989:
1)Provides for the approval and regulation of private
postsecondary and vocational educational institutions and
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their educational programs, courses, and instruction in
California with extensive requirements, prohibitions, student
protections and disclosures.
2)Provides that (a) public educational institutions accredited
by the Western Association of Schools and Colleges, and (b)
for-profit institutions accredited by WASC where the
institution exclusively confers degrees upon completion of a
course of study of two or more years, are not considered to be
private postsecondary educational institutions covered by any
of the Reform Act's provisions.
3)Provides that non-profit WASC accredited institutions that do
not meet the previous criteria (#2 above) but which have been
incorporated as specified and have been in continuous
operation since April 1, 1997, are exempt from most provisions
of the Reform Act except specified prohibitions and
enforcement actions.
4)Establishes the Bureau in the Department of Consumer Affairs
for the purpose of approving and regulating private
postsecondary and vocational educational institutions in
California.
5)Subjects the Bureau to sunset review by the Joint Legislative
Sunset Review Committee (JLSRC). Requires, in 2002 and every
four years thereafter, that the JLSRC, in cooperation with the
California Postsecondary Education Commission (CPEC), hold a
public hearing to
receive testimony regarding the Bureau, evaluate and review
the effectiveness and efficiency of the Bureau based on
specified statutory standards, and report its findings and
recommendations as specified in the sunset review law.
FISCAL EFFECT : Unknown
COMMENTS :
Background . This bill is sponsored by the Accredited
Out-of-State Colleges and Universities in California (AOCUC).
This bill is intended, as a two-year pilot project, to remove
degree granting private postsecondary colleges and universities
from the institutional, program, and instructor approval
requirements of the Reform Act administered by the Bureau. This
bill maintains the applicability of all the other regulatory and
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oversight provisions of the Reform Act - notably its provisions
regarding fees, information reporting, and participation in the
Student Tuition Recovery Fund, student protections, and
enforcement.
The Bureau of Private Postsecondary and Vocational Education was
established on January 1, 1998, pursuant to the enactment of AB
71 (Wright), Chapter 78, Statutes of 1997), for the purpose of
approving and regulating private postsecondary and vocational
educational institutions located in California. AB 71 also
provided that the Bureau is subject to the sunset review process
every four years commencing in 2002.
In November 2002, the JLSRC and the Department of Consumer
Affairs began their re-review of the Bureau. A number of
deficiencies and problems with the current regulation and
administration of the Reform Act were presented to the JLSRC,
and found in two audits that had been performed on the Bureau.
These included deficiencies in management practices, data
processing and dissemination backlogs in approval of
institutions, educational courses and instructors, deficiencies
in complaint handling and enforcement and fiscal procedures
including operation of the Student Tuition Recovery Fund.
In particular the sunset process revealed that there could be
significant delay in obtaining the Bureau's approval for
degree-granting schools, new campuses, educational course
offerings and changes thereto, and qualification of instructors.
In fact, the Bureau indicated that a backlog in its
degree-granting approval program still existed despite two years
of additional efforts during which the backlog had been reduced
but not eliminated.
Regional and national accreditation of schools . The Bureau
regulates and approves, or registers, approximately 3000
institutions, including 300 private postsecondary
degree-granting institutions. Current law exempts certain
private degree-granting institutions from Bureau regulation and
oversight. These include (1) WASC accredited institutions that
are either incorporated as a nonprofit public benefit
corporation or exclusively confer degrees upon completion of a
course of study of two or more years, (2) religious institutions
whose degrees pertain to its religious beliefs, and (3)
institutions that comply with specified criteria and are
approved by an accrediting agency recognized by the USDE.
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The California Postsecondary Education Commission is mandated to
examine how, and to what extent, institutional accreditation
might be utilized in lieu of part or all of the state licensing
review. In its 1991 report, the Commission found that the
state's standards relating to institutional stability,
institutional integrity and consumer protection, were more
stringent than those required by the accrediting agencies. The
Commission therefore advised against the state's relying
directly on regional and national accrediting agency processes
in lieu of the state's licensure processes.
In 1998, in response to requests by accredited out-of-state
institutions to offer teacher credential
programs in California, the Professional Services Division of
the Commission on Teacher Credentialing (CTC) conducted a
comparative analysis of the standards and practices of regional
accrediting associations. CTC was concerned that the standards
of the other five regional bodies (or their application of
standards) were not as rigorous as those of WASC, or not as
focused on issues important to California as those of WASC. The
report was based upon an analysis of written standards, policies
and the organization of the six regional associations, with WASC
being used as a benchmark.
The CTC study made note that although participation in regional
accreditation associations is voluntary, most postsecondary
institutions seek institutional accreditation in order to
qualify for government loan programs and qualify for
professional accreditation or program accreditation by state
agencies and national organizations. The six regional agencies
that do institutional accreditation make no claims about the
quality of specific programs offered by institutions that they
accredit. Such determinations are left to state and national
accrediting bodies.
CTC acknowledges that the analysis was not exhaustive, but their
staff concluded that the six regional accrediting bodies do not
appear to have significant differences in their standards,
organizational structures, or decision and sanction options.
However, it has been 13 years since the last review and analysis
comparing California's licensure and approval standards to those
of the regional accrediting agencies was conducted. The
Committee may want to consider a more thorough review and
analysis prior to accepting regional accreditation in lieu of
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state licensure processes .
Support . AOCUC supports this bill. AOCUC notes that the
current state regulatory process includes both programmatic and
institutional review, as well as various consumer affairs
functions such as addressing student complaints, reviewing
accreditation documentation, and sanctioning institutions as
necessary. AOCUC states that the bill would streamline the
regulatory process of the Bureau for regionally accredited
degree granting institutions by relieving the Bureau from having
to review those institutions or programs, while maintaining the
Bureau's complete regulatory authority over these same
institutions for all consumer protection related provisions in
the Reform Act.
AOCUC argues that because regionally accredited institutions are
already subject to extensive regulatory oversight by their
accrediting bodies, redirecting the Bureau's responsibilities at
the current fee level will enable the Bureau to better manage
their limited resources and provide more thorough review of
institutions that have no external oversight. In addition,
AOCUC states that by eliminating duplicative oversight, this
bill would enable the Bureau to increase enforcement activities
and enhance student protections for institutions having no
external oversight. AOCUC also argues that this bill would
ensure that students at non-WASC accredited institutions
continue to have significantly more consumer protections than
their counterparts at California-based institutions.
Some claims have been made that this bill creates a competitive
disadvantage for non-regionally accredited schools still subject
to BBPVE regulation. AOCUC responds that by stating, in terms
of a true competitive disadvantage, a competitive disadvantage
has always existed versus WASC accredited institutions because
those institutions, which include National University, Chapman
and Golden Gate, among others, are unregulated. The purpose of
this bill is not to level the playing field but instead to
increase efficiencies and eliminate redundancies. Even with
this bill, WASC schools will still theoretically have an
advantage because this bill only calls for a partial
deregulation.
Support if amended . Corinthian Colleges, a California-based
education corporation with 67 schools and approximately 44,000
students in 21 states (16 schools and approximately 8,500
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students in California), supports this bill if amended. They
argue that in 1998 when state regulation changed to allow
out-of-state regionally accredited schools (essentially the
University of Phoenix) to offer teacher credentialing in
California, the regulation was changed on the basis of the
state's conclusion that the six regionally accredited bodies
were similar. Corinthian agrees with this comparison.
Accreditation is a voluntary review process necessary for
schools to be eligible for USDE Title IV funds to pay for
education cost such as tuition, fees and living expenses. USDE
approved schools are the gatekeepers of institutional quality as
measured by a number of indicators such as financial soundness,
student default rates, faculty qualifications, and
administrative capability. There are six regional accrediting
agencies and four major national accrediting agencies authorized
to grant USDE funds.
Corinthian Colleges argues that this bill does not go far
enough. As written, it would exempt a few schools such as
University of Phoenix headquartered in Phoenix, DeVry University
headquartered in Chicago, Nova Southeastern University
headquartered in Florida and the Union Institute from Cincinnati
from BPPVE programmatic oversight. Nationally accredited
schools, many headquartered in California, who are similarly
authorized and reviewed by USDE would be treated differently.
They would continue to submit and pay for programmatic
pre-approval while this handful of out-of-state schools would
get a pass.
According to Corinthian Colleges, this bill should be amended to
include in its reach nationally accredited schools that are
authorized to grant Title IV funds since these nationally
accepted schools are held to even stricter standards of
accountability than the more collegially-oriented and
administered regionals. Corinthian Colleges gives the example
that, in addition to all of the outcome measures applied to
regional entities and the programs they offer, nationally
accredited schools are required to report on such outcomes as
student retention, student completion, and student placement in
the field of study for each and every program offered. These
schools are also required to submit all new programs and
substantive program changes to their accrediting agency prior to
advertising and program implementation. These measures help to
insure additional levels of institutional and academic
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effectiveness desired by students, parents, lawmakers and
consumers.
Opposition . The California Association of Private Postsecondary
Schools (CAPPS) has taken an opposed unless amended position on
this bill. CAPPS states that it does not believe that pure
exemptions are good public policy or provide California
residents with adequate safeguards. CAPPS recommends that
instead of just exempting regionally accredited institutions,
this bill should be amended to allow any regionally or
nationally accredited school to substitute specific accrediting
commission approval for the currently required state approval.
CAPPS believes that this approach would be sound public policy
and poses no substantial risk if the state develops a close
working relationship with the individual accrediting
commissions. CAPPS recommends including schools accredited by
seven specific national accrediting bodies, which CAPPS states
are the only national accrediting bodies that provide
accreditation similar to regional accrediting associations.
CAPPS argues that one of the main distinctions between regional
and national accreditation is that national accreditation
focuses on student outcomes while regional accreditation focuses
on institutional makeup. Further, CAPPS states that national
accrediting bodies base their
accreditation compliance measurements around graduation,
placement and retention statistics because the schools they
accredit largely offer academic and occupational degrees that
focus on careers. In contrast, CAPPS notes that regionally
approved institutions offer career degrees and general education
degrees.
CAPPS states that timely approval of institutions, educational
programs or instructors by the Bureau can be difficult to obtain
and can harm a school's ability to offer courses and programs.
And it notes that a school can gain up to a year in
implementation time, and accelerate its ability to attract
students if it can bypass the Bureau's approval process. CAPPS
argues that the bill's exemption from this approval process
would give a tremendous competitive advantage to a number of
private, for-profit schools at the expense of many nationally
approved private postsecondary schools.
Related legislation .
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1)SB 359 (Figueroa) - Implements various recommendations of the
JLSRC to improve the state's regulation of the private
postsecondary and vocational educational institutions that
resulted from the JLSRC's 2002-2003 sunset review of the
Bureau and its administration of the provisions of the Reform
Act. (Currently in the Assembly Business and Professions
Committee.)
2)SB 542 (Murray) - Shifts the authority for: (a) regulating and
approving degree-granting private postsecondary institutions
and (b) administering and approving Title 38 Veterans
education programs from the Bureau to CPEC. (Currently in the
Senate Business and Professions Committee, a 2-year bill.)
3)AB 655 (Liu) - Proposes the consolidation of the Bureau, the
California Student Aid Commission, and CPEC under a newly
created California Higher Education Policy and Finance
Commission, to become operative on January 1, 2005.
(Currently in the Senate Rules Committee.)
4)SB 1017 (Speier) - Requires the Bureau to gather and maintain
student transcripts and records in the event of a school
closure. (Currently in the Senate Business and Professions
Committee, a 2-year bill.)
REGISTERED SUPPORT / OPPOSITION :
Support
Accredited Out-of-State Colleges and Universities in California
(AOCUC)
Opposition
California Association of Private Postsecondary Schools (CAPPS)
Analysis Prepared by : David Pacheco / B. & P. / (916)
319-3301