BILL ANALYSIS
AB 48
Page 1
ASSEMBLY THIRD READING
AB 48 (Portantino and Niello)
As Amended June 1, 2009
Majority vote
HIGHER EDUCATION 8-0 BUSINESS & PROFESSIONS
10-0
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|Ayes:|Portantino, Conway, |Ayes:|Hayashi, Emmerson, |
| |Block, Fong, Galgiani, | |Conway, Eng, Hernandez, |
| |Huber, Ma, Ruskin | |Niello, John A. Perez, |
| | | |Price, Ruskin, Smyth |
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APPROPRIATIONS 12-0
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|Ayes:|De Leon, Ammiano, Charles |
| |Calderon, Davis, Fuentes, |
| |Hall, John A. Perez, Price, |
| |Skinner, Solorio, |
| |Torlakson, Krekorian |
| | |
| | |
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SUMMARY : Renames the Bureau for Private Postsecondary and
Vocational Education (Former Bureau) as the Bureau for Private
Postsecondary Education (Bureau) within the Department of
Consumer Affairs (DCA) and provides for Bureau oversight and
regulation of private postsecondary institutions operating in
California. Specifically, this bill :
1)Requires the Bureau to disclose on its internet website
information on suspensions and revocations of an institution's
approval to operate, as well as any enforcement action,
including the issuance of a notice to comply, taken against an
institution by the Bureau.
2)Authorizes the Bureau to take specified action to cease
unlawful advertising including disconnecting the telephone
services of an institution if the Bureau finds that the
institution is advertising in a telephone directory without an
approval to operate issued by the Bureau.
3)Removes the Former Bureau from provisions of law requiring
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ongoing review by the Joint Committee on Boards, Commissions,
and Consumer Protection.
4)Establishes the California Private Postsecondary Education Act
of 2009 (Act) and provides that any statutory or regulatory
reference to the Private Postsecondary and Vocational
Education Reform Act (Former Act) or Former Bureau shall be
construed as referring to the Act and Bureau.
5)Makes various findings and declarations regarding the
importance of private postsecondary institutions, previous
failures to regulate these institutions, the importance of
Bureau oversight of private postsecondary institutions, and
the need for ongoing review of Bureau activities by the
Legislature.
6)Provides for a transition to the provisions of the Act,
including:
a) Any institution approved to operate by the Former Bureau
on June 30, 2007, shall maintain that approval for three
years after the expiration date of the approval.
b) An institution that had an application to renew an
approval to operate pending before the Former Bureau prior
to January 1, 2006, shall be granted approval until 2012,
and an institution that submitted an application to renew
an approval to operate after January 1, 2006, shall be
granted approval to operate until 2013; students enrolling
in these institutions are required to be notified in
writing by the institution that the institution's renewal
application was not reviewed by the Bureau.
c) The Bureau shall adopt emergency regulations that
conform to the provisions of the Act, including repealing
provisions no longer relevant, by February 1, 2010, and
these regulations shall become permanent through the
regular rulemaking process within one year of the date of
enactment of the Act.
d) The Bureau shall have possession and control of all
records, supplies, and real property used by the Former
Bureau.
e) The Private Postsecondary and Vocational Education
Administration Fund be continued and renamed to the Private
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Postsecondary Education Administration Fund (PPEAF).
f) The Student Tuition Recovery Fund (STRF) be continued
and provides that processing of claims pending before STRF
that were received prior to July 1, 2007, or any claims
received between July 1, 2007, and December 31, 2009.
Provides that a student's right to recover from STRF shall
be based on the law that was in effect at the time the
student enrolled in the institution and paid a STRF fee.
g) An institution that had an application for an approval
to operate pending before the Former Bureau on July 1,
2007, and an institution that did not have a pending
application filed with the Former Bureau on June 30, 2007,
that began operations on or after July 1, 2007, may
continue to operate but must comply with the Act and submit
an application for approval to operate within six months of
the application becoming available; students enrolling in
these institutions must be notified in writing by the
institution during the enrollment process that the
institution's application for approval to operate was not
reviewed by the Bureau; and these institutions shall not
use the terms "approval," "approved," "approval to
operate," or "approved to operate" without clearly stating
that the application for approval to operate has not yet
been reviewed by the Bureau.
h) Any matter, except a STRF claim, submitted to the Former
Bureau prior to July 1, 2007, shall remain pending, and
with respect to deadlines, no time shall be deemed elapsed
from July 1, 2007 through January 1, 2010. Provides that
student complaints received from July 1, 2007 through
December 31, 2008, shall continue to be duly recorded and
investigated by the Bureau.
i) For any claim or cause of action that arose prior to
June 30, 2007, notwithstanding the inoperative status or
repeal of the Former Act, final judgments and/or legal
remedies available under the Former Act will be continued.
7)Provides that the Bureau shall adopt a process whereby an
institution exempt under this article may request and obtain
verification of their exempt status and allows the Bureau to
charge a fee to the institution to cover any costs associated
with the Bureau verifying the exemption. Exempts from the
requirements of the Act and from the oversight of the Bureau:
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a) Institutions offering solely vocational or recreational
educational programs.
b) Institutions offering programs sponsored by trade,
business, professional, or fraternal organizations solely
for that organization's members.
c) Institutions operated by the federal or state government
or their subdivisions.
d) Institutions offering test preparation for examinations
required for admission to postsecondary institutions and
continuing education or license and examination preparation
where the institution or program is certified or sponsored
by a government agency licensing persons in a particular
field, a state-recognized professional licensing body, or a
trade, business, or professional organization.
e) Institutions owned, controlled, and operated and
maintained by a church or religious institution that meets
several other outlined requirements.
f) Institutions that provide solely educational programs
for total charges of $2500 or less, with no part of the
charges paid by state or federal student financial aid
programs. Allows the Bureau to adjust this cost threshold
based upon the California Consumer Price Index.
g) Institutions that offer solely educational programs in
law leading to a Juris Doctor, Master of Laws, Doctor of
Jurisprudence degree or similar degrees in law that are
regulated by the Committee on Bar Examiners.
h) Institutions accredited by the Accrediting Commission
for Senior Colleges and Universities or the Accrediting
Commission for Community and Junior Colleges and
Universities of the Western Association of Schools and
Colleges.
8)Provides the Bureau with powers and duties, including:
a) Provides the Director of DCA (Director) with the powers
set forth in the Act; allows the Director to delegate the
duties to a bureau chief, appointed by the Governor and
exempt from the State Civil Service Act; provides that the
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bureau chief may delegate any powers and duties to a
designee; and provides that the Director may, in accordance
with the State Civil Service Act, appoint and fix
compensation of personnel.
b) Requires the Bureau to, in accordance with the
Administrative Procedures Act, adopt regulations by January
1, 2010 necessary to implement the Act in accordance with
existing law; requires the Bureau to develop and implement
an enforcement program to implement the Act, including a
plan for investigating complaints filed with the Bureau;
and requires the Bureau to develop a program to proactively
identify unlicensed institutions and take all appropriate
legal action.
c) Requires the Bureau to maintain a Web site, to be kept
current, with information provided by the institutions and
establishes that the website shall include a directory of
all approved institutions, the status of the institution's
approval to operate, the information provided by the
institution in the annual report and the Student
Performance Fact Sheet, the disciplinary history of the
institution, a notice to students that they may receive a
summary of all complains within the last five years against
the institution upon request, and an explanation of the
Bureau's transition plan and scope of authority.
d) Requires the Bureau to conduct outreach to secondary and
postsecondary school students about how to make informed
decisions when selecting an institution, requires the
Bureau to appoint an advisory committee consisting of
representatives of institutions, student representatives,
and employers who hire students, and allows the Bureau to
conduct workshops to assist institutions in complying with
the provisions of the Act.
e) Allows the Bureau to empanel visiting committees to
assist in evaluating institutional applications, requires
visiting committee members to serve at no expense to the
state, establishes that the Bureau may facilitate
reimbursements from an institution under evaluation to
cover travel and per diem, and entitles visiting committee
members to defense and indemnification.
f) Provides that, for complaints against an institution
that have reached final disposition, the Bureau shall make
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a summary of the nature and disposition of complaints
within the last five years available to the public upon
request.
9)Provides that, except for any institutions exempt from the
Act, all private postsecondary institutions operating in
California must have the approval of the Bureau and requires
the Bureau, by January 1, 2011, to establish minimum operating
standards for institutions. Establishes that approvals to
operate shall be for five-year terms. Establishes a process
for the Bureau to issue institutional approvals to operate,
and to renew approvals to operate.
10)Requires prior authorization from the Bureau for institutions
wishing to make substantive changes, such as a change in
ownership or educational objectives, among other outlined
changes. Provides that the institution's approval may be
suspended or revoked for failing to obtain prior approval.
Requires the Bureau to adopt regulations by January 1, 2011,
establishing a process for reviewing requests for
authorization to make substantive changes. Provides that an
institution granted approval to operate by means of its
accreditation shall make substantive changes in accordance
with accreditation standards and shall notify the Bureau of
the changes.
11)Establishes fair business practices, including:
a) Prohibits institutions from: using the seal of the state
on a diploma, promising employment or otherwise overstating
the availability of jobs in the local economy upon
graduation, presenting or advertising specified information
including inaccurate information, failing to include
distance education information in advertisements,
inaccurately advertising approval or accreditation status,
using "help wanted" ads to solicit students, compensating
or providing gifts to students for recruitment activities,
making untrue or misleading statements, willfully
falsifying or destroying documents, improperly implying
approval or licensure or failing to completely disclose
what approval or licensure means, directing an individual
to violate the Act or persuading a student not to file a
complaint, compensating an employee by bonus or commission
for recruitment or student assistance except as specified,
and requiring prospective students to provide personal
contact information before being granted access to
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educational program information via the institution's
internet website, among other outlined prohibited
practices.
b) Prohibits institutions from merging classes unless
students receive the same amount of instruction; prohibits
institutions from, after a student has enrolled, making
unscheduled suspensions of classes unless caused by
circumstances beyond institutional control; and prohibits,
during the period of attendance, changing the day or time
of the class unless certain other requirements are met;
prohibits institutions from moving the location of classes
more than 25 miles without meeting certain requirements;
and prohibits converting the means of delivery of
instruction.
c) Provides that, for career fields that require licensure
by the state, institutions offering educational programs
must have approval to conduct that educational program.
d) Allows institutions, when offering courses with a term
of four months or less, to require payment of all tuition
and fees on the first day of instruction; prohibits an
institution from requiring more than one term (up to four
months) of advance payment at a time until 50% of
coursework has been completed; provides exemptions from the
aforementioned requirements for the purposes of federal and
state financial aid payments; and allows, under certain
conditions, students to choose to pay all fees and tuition
upon enrollment. Requires that institutions providing
private loan funding ensure that a student is not obligated
for indebtedness that exceeds the total cost of the current
term of enrollment.
12)Requires an institution to maintain specified student and
educational program records for not less than five years.
Provides that the recordkeeping requirements do not apply to
accredited institutions so long as the institution is required
to abide by similar recordkeeping requirements under the
accreditation.
13)Stipulates that students shall enroll solely by signing an
enrollment agreement, and prescribes contents of the agreement
and specifies other materials to be provided to the student,
including a school catalog and a School Performance Fact
Sheet.
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14)Requires an institution extending credit or lending money for
educational costs to a student, to place a notice in the
lending documents informing the student that they may assert
against the holder of the promissory note all of the claims
and defense that could be asserted against the institution up
to the amount already paid under the promissory note; provides
that such a lending note is not enforceable unless the
institution held an approval to operate at the time of
execution; and provides that institutional loans to students
must comply with the Federal Truth in Lending Act.
15)Establishes specified requirements for student cancellations,
withdrawals, and refunds.
16)Provides that the Bureau shall adopt regulations governing
the administration and maintenance of STRF, including
requirements related to assessments on students and student
claims against STRF; provides that STRF monies are continually
appropriated to the Bureau; and provides that STRF may not
exceed $25 million at any time.
17)Establishes specified requirements for institutional closures
and teach-outs.
18)Requires each institution to annually report to the Bureau
and to annually publish specific data, such as completion
rates and job placement rates, in its School Performance Fact
Sheet.
19)Establishes a specified fee schedule and provides that all
fees collected are to be, upon appropriation by the
Legislature, used for Bureau expenditure to cover the cost of
administering the Act. Provides that the Bureau may change
fee amounts under specified circumstances. Provides for late
payment penalties to be assessed against institutions failing
to submit fee payments within the Bureau-specified timeline.
20)Establishes processes and penalties in regards to compliance
with and enforcement of the Act, including:
a) Establishes that the Bureau shall determine any
institution's compliance with the Act, and that the Bureau
shall have the authority to require additional reports be
filed by an institution, to send staff for institutional
site visits, and to require documents and responses from
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any institution in order to monitor compliance. Provides
that when the Bureau has reason to believe that an
institution is out of compliance, it shall conduct an
investigation of that institution, and if the Bureau finds
the institution has violated any applicable law or
regulation, requires the Bureau to take appropriate action.
b) Provides that the Bureau shall impose penalties,
including mandating a specified timetable for remedying
noncompliance, imposing fines, placing the institution on
probation, or suspending or revoking approval, as deemed
appropriate by the Bureau and depending on the severity of
the violation.
c) Requires an institution to submit an annual report by
July 1 to the Bureau, in a format prescribed by the Bureau,
that includes: the total number of students enrolled,
degrees awarded, degrees offered, educational program
completion rates, and the total charges for each
educational program, including a statement indicating
whether the institution is current in remitting STRF
assessments, along with any other information deemed
necessary by the Bureau.
d) Requires Bureau staff who detect a minor violation of
the Act during inspection, to issue a notice to comply
before leaving the institution; establishes a process for
the issuance of a notice to comply, and requires the Bureau
to take administrative enforcement action against an
institution that fails to correct the issues raised in a
notice to comply within the specified time period.
e) Requires, as a consequence of an investigation and upon
a finding that the institution has committed a violation,
the Bureau to issue a citation for noncompliance of the Act
or regulations found during an investigation, and provides
that the citation may contain an order of abatement that
may require the demonstration of future compliance, and/or
an administrative fine not to exceed $10,000 per violation.
Provides specific criteria for the Bureau to consider when
assessing the amount of administrative fines. Provides
that the citation shall be in writing and shall contain
specified information regarding the violation and the
institution's right to a hearing within 30 days. Provides
that an administrative fine is due either 30 days from
citation or 30 days from the final judgment following a
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hearing. Provides that all administrative fines are to be
deposited into PPEAF.
f) Allows the Bureau to suspend or revoke an institution's
approval to operate for fraud or for repeated violations of
the Act that have caused harm to students. Provides that
the Bureau shall adopt regulations governing probation and
suspension of an approval to operate and that the Bureau
may seek reimbursement for the costs of an investigation.
Provides that an institution shall not be responsible for
paying the cost of an investigation to more than one
agency.
g) Provides that if the Bureau determines the need to make
an emergency decision to protect students, prevent
misrepresentation to the public, or prevent the loss of
public funds or monies paid by students, it may do so
pursuant to an outlined process and in accordance with
Bureau-adopted regulations.
h) Provides that the Bureau may bring an action for
equitable relief for violations of the Act, including
restitution, a temporary restraining order, the appointment
of a receiver, and a preliminary or permanent injunction,
and that the action may be brought in the county in which
the defendant resides or in the county in which any
violation has occurred or may occur; and provides that
these remedies supplement and do not supplant any other
remedies and penalties provided under law.
i) Provides any individual who believes an institution has
violated the Act or subsequent regulations may file a
complaint with the Bureau and that the Bureau shall take
action to verify the complaint, and provides the Bureau
with authority to take appropriate administrative
enforcement action upon discovering the facts in regards to
the complaint.
j) Provides that if the Bureau finds that an institution's
violation of the Act or subsequent regulations has caused
damage or loss to a student or group of students, the
Bureau may order the institution to pay appropriate refunds
or restitution to that student or group of students.
aa) Establishes that knowingly operating an institution
without approval or knowingly providing false information
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to the Bureau on an application shall be considered
infractions and are public offenses.
bb) Requires an institution to maintain an agent for service
of process within the state and provide the agent's name
and contact information to the Bureau; makes the
aforementioned information available to the public upon
request.
cc) Provides that the Bureau may not subject any person to a
fine exceeding $50,000 for operating an institution without
Bureau approval.
dd) Provides that each institution subject to the Act shall
be deemed to have authorized the Bureau or accrediting
agency to provide the Attorney General (AG), district
attorney, or city attorney copies of all documents and
other materials concerning the institution. Requires an
accrediting agency to provide such materials free of charge
within 30 days of receiving written notice to share
documents.
ee) Provides that nothing in the Act shall preclude the
enforcement of rights or remedies under any other
applicable statute, or limit or preclude the AG, a district
attorney, or a city attorney from taking any action
otherwise authorized under any other applicable statute or
law.
21)Provides for severability of the Act, in that, if any
provisions in this Act are held as invalid, that invalidity
shall not affect other provisions, so long as those provisions
do not require the invalid provisions in order to be applied.
22)Requires the Bureau to provide annual progress updates to the
Legislature, in the form of oversight hearings by the
committee(s) with jurisdiction, regarding the enforcement of
the Act and subsequent regulations, and requires the
Legislative Analyst's Office (LAO) to provide the Legislature
and the Governor by July 1, 2012, a comprehensive review on
the extent to which the Bureau has implemented the provisions
of the Act, and the appropriateness of the exemptions provided
in the Act.
23)Repeals the Act on January 1, 2016, unless a later statute is
enacted to extend this date.
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24)Appropriates $580,000 from the Former Act to the Bureau for
the purpose of funding five education administrator positions,
and provides that these positions shall be included in the
annual budget for the Bureau.
EXISTING LAW relating to the regulation of private postsecondary
education is inoperative. Recently inoperative statute
expressed the intent of the Legislature to provide for the
protection and interests of students and institutions that have
matters pending under the Former Act, which became inoperative
on July 1, 2007; provided for the continuation of all matters
pending before the Former Bureau on July 1, 2007, until July 1,
2008; and allowed, until July 1, 2008, limited state oversight
of private postsecondary schools by the DCA. The statutes
became inoperative on July 1, 2008.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)DCA preliminary estimate indicates that the Bureau will
require 31.5 positions in 2009-10, at a cost of $3.2 million,
and 63 positions in the 2010-11 and thereafter at a cost of $8
million. DCA expects to have a more detailed cost estimate in
the near future. These costs will be supported by fees paid
by the regulated schools, though start-up costs will likely
come from a loan from another DCA bureau.
2)One-time appropriation of $580,000 from the Private
Postsecondary and Vocational Education Administration Fund to
the new Bureau.
COMMENTS : Purpose of this bill : According to information from
DCA, there are approximately 1,500 private postsecondary
institutions that had been approved by the Former Bureau to
operate in California. This includes approximately 1,200
vocational training schools and 300 branch satellites, as well
as, approximately 300 degree-granting institutions with an
estimated student enrollment of approximately 400,000. The
Former Bureau also registered approximately 700 private
institutions providing short-term career/seminar training,
continuing education, intensive English language programs, and
license exam preparation courses. The author intends for this
bill to establish the Bureau's authority to regulate private
postsecondary institutions and enforce the provisions of the
Act.
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Overview of previous private postsecondary regulatory attempts :
During the late 1980s, when regulation of the private
postsecondary education industry was carried out by a division
within the State Department of Education, the state developed a
reputation as the "diploma mill capital of the world." As a
result of concerns over the integrity and value of the degrees
issued by these institutions, the Former Act was enacted to
overhaul the state's regulatory program, transferring oversight
responsibility for the program to a 20-member Council.
Concurrently, the Maxine Waters School Reform and Student
Protection Act (Waters Act) was enacted. The regulatory
framework established by the merging of the Waters Act and the
Former Act led to duplicative and conflicting statutory
provisions, plaguing California's oversight of these
institutions with problems that continued through the sunset of
the law on January 1, 2007.
In 2004, in response to the persistent problems with the Former
Bureau, the Legislature enacted SB 1544 (Figueroa), Chapter 740,
Statutes of 2004, which required the appointment of an
Enforcement Monitor (Monitor) to provide an in-depth and
impartial examination of the Former Bureau's operations. The
Monitor's report, presented to the Joint Committee on Boards,
Commissions and Consumer Protection on December 7, 2005,
outlined a "twenty-year record of repeatedly identified,
fundamental problems in every one of the Bureau's key
operations." The report found that the Former Bureau both
inadequately protected consumers and impeded the expansion of
quality postsecondary and vocational educational opportunities.
The concerns and recommendations raised by the Monitor were
generally consistent with concerns raised by the California
Postsecondary Education Commission in 1995, an independent
report from Price Waterhouse in 1997, a Bureau of State Audit's
report in 2000, and the DCA's own internal investigation in
2002. The Former Bureau, by the time of its sunset, had not
addressed many of its fundamental problems with oversight and
enforcement; however, as the Monitor's report identifies, many
of the root causes of enforcement and oversight failures can be
traced back to deficiencies within the Former Act.
Does this bill meet overall goals for the regulation of private
postsecondary education ? In determining the overall degree to
which the regulatory design proposed in this bill responds to
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the problems of the Former Bureau, there are several overriding
policy issues that the author and the Legislature should
consider:
1)Sufficient student protections : The paramount goal of any
such law is the protection of students, both to prevent abuse
and to ensure quality. This bill contains an array of
requirements aimed at protecting students, including:
a) Requiring an institution to obtain an approval to
operate issued by the Bureau, and requiring the Bureau to
determine, prior to granting an approval to operate to
examine educational program content, qualifications of
faculty, institutional financial stability, among other
specified criteria.
b) Establishes numerous "fair business practices" that
institutions are required to follow, including: prohibiting
an institution from promising employment or otherwise
overstating the availability of jobs in the local economy
upon graduation; using "help wanted" ads to solicit
students; requiring prospective students to provide
personal contact information before being granted access to
educational program information via the institution's
internet website; requiring that, for career fields that
require licensure by the state, institutions offering
educational programs must have approval to conduct that
educational program; and numerous other outlined "fair
business practices."
c) Requiring institutions to provide the school catalog,
school performance fact sheet, and enrollment agreement to
students prior to enrollment, and specifying numerous
specific disclosures to students regarding educational
program content, transferability of credits, refundable and
non-refundable charges, graduation, placement and license
examination passage rates, and information regarding the
buyer's right to cancel, among others.
d) Establishing standards that institutions must abide by
that guarantee students the right to cancel, withdraw, and
receive refunds.
e) Establishing Bureau enforcement procedures that provide
for a student complaint process and, among other
provisions, a process whereby the Bureau may order an
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institution to pay appropriate restitution to a student or
group of students that suffered loss due to an
institution's violation of the Act.
While this bill outlines numerous specific student
protections, a majority of oversight and enforcement
activities are left to Bureau discretion and reliant upon the
adoption of implementing regulations by the Bureau. Until
those regulations are implemented, it is difficult to know how
well students will be protected and how adequately
institutions will be monitored. The degree to which these
outlined protections will result in sufficient protection for
students will depend largely on the degree to which the Bureau
and the students themselves can and do take action to ensure
institutional compliance with the Act.
2)Appropriate exemptions for accredited institutions: A major
challenge is deciding which institutions need state oversight
and which do not. This policy question facing the author and
the Legislature is whether it is appropriate to exempt
institutions based on their accreditation.
Accreditation is a voluntary, non-governmental peer review
process utilized for the purpose of determining academic
quality of higher education institutions and programs. Under
federal law, United States Department of Education (USDE) is
required to publish a list of recognized accrediting agencies
deemed reliable authorities on the quality of education or
training provided by their accredited institutions. Only
those institutions accredited by a USDE-recognized accrediting
organization are eligible to participate in the federal
student financial assistance programs. The USDE recognizes
both regional and national accrediting agencies.
The Former Act, at the time of its sunset, provided a full
exemption for institutions accredited by the Western
Association of Schools and Colleges (WASC), one of 6 regional
accrediting agencies. The Former Act also partially exempted
non-WASC regionally accredited institutions from the Bureau's
approval process. This bill currently allows all institutions
that are accredited by a USDE-approved accrediting agency to
be granted approval to operate via their accreditation but
provides a full exemption only for those institutions
accredited by WASC.
The U.S. Secretary of Education has recognized all accrediting
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agencies as reliable authorities to ensure an institution
meets minimum educational quality levels. Last October, in
granting the defendant's motion for summary judgment in Saro
Daghlian v. DeVry University, a District Court wrote that it
is a violation of interstate commerce to treat WASC-accredited
schools differently than schools accredited by other regional
accrediting agencies; this decision is currently on appeal.
One of the principal arguments made for not exempting all
accredited institutions from the Act is that the Bureau's
roles and responsibilities are complementary to those of
accrediting agencies; the Bureau provides for operating
standards and student protections, while the accrediting
agency generally reviews educational program content.
Additionally, accrediting agencies have no legal control over
educational institutions or programs. Proponents of exempting
accredited institutions argue that accredited institutions are
subject to more rigorous oversight by USDE and the accrediting
agency, and the Bureau's efforts should be focused on
institutions that are not being fully reviewed by any other
accrediting or regulatory agency. Several reports previously
prepared on the issue of whether or not accrediting agencies
provide a sufficient level of protection in the state's
interest in ensuring that students are treated fairly have not
definitively answered this question.
3)Adequate Bureau oversight and enforcement : The degree to
which the student protections outlined in this bill will
result in greater protection for students will depend largely
on the degree to which the Bureau takes action to ensure
institutional compliance with this Act. This bill attempts to
provide a clear and concise law for the Bureau to enforce,
strong authority for the Bureau to pursue unapproved schools,
requires reporting to the Legislature and the Governor on the
progress of the Bureau's enforcement program, and requires the
LAO to provide the Legislature and the Governor a
comprehensive review on the extent to which the Bureau has
implemented the provisions of the Act, and the appropriateness
of the exemptions provided in the Act by January 1, 2012.
Does this bill respond to specific prior findings and
recommendations ? The Monitor's report included various specific
findings and recommendations for overhauling the Former Act;
this bill attempts to address many of those findings and
recommendations as follows:
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1)Licensing: The Monitor found that numerous schools operated
for years under "temporary" licenses; in 2005, over a quarter
(75) of approved degree-granting schools were operating on
temporary approvals, and of those 29 operated on such
approvals for more than two years, and seven for more than
four years.
This bill responds to licensing problems by requiring the
Bureau to establish a process whereby an application for
approval to operate is either approved or denied by the
Bureau. If the Bureau denies an application, the Bureau is
required to establish a process whereby the institution may
appeal the denial.
2)Enforcement: The Monitor found that the Former Bureau did not
conduct unannounced site visits as required by law, never
revoked the license of a school, and had never placed a school
on probation. The Monitor further found that the fine amounts
for unapproved schools ($2,500) were too low to promote
compliance, and fines were rarely assessed. The Monitor noted
that inadequate staffing levels led to complaints that
unapproved schools were not being investigated, and when
investigated, the investigations largely relied on documents
generated by the schools themselves. The Monitor noted that
even with better investigative resources, the remedies at the
Former Bureau's disposal were inadequate; the Former Bureau
did not have the power to order refunds or restitution to a
student or group of students.
This bill establishes a compliance and enforcement program
that directs the Bureau to take specified actions for
violations of the Act, requiring the Bureau to cite unapproved
schools with fines of up to $50,000, take specified
investigative actions, and provides the Bureau with the power
to order refunds and restitution to a student or group of
students.
3)Reporting: The Monitor found that a significant number of the
reports required from schools by law, including reports
showing how many students actually obtain jobs six months
after graduation, were past due and chronically late, and the
Former Bureau never verified the data.
This bill requires that the institution submit the annual
report to the Bureau under penalty of perjury, and requires
the report be submitted by July 1 of each year. To ensure the
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accuracy of reported data, the author may wish to consider the
Monitor's recommendation that the Bureau review all reports
for completeness and validate the data provided for a
significant random sample of institutions and programs each
year.
4)STRF Program: The Monitor reported that claims for payment
sometimes lingered for more than two years; the Former Bureau
rarely ensured that institutions were paying the right amount
of fees, and the staff believed that only about half of the
legally required fees were being paid. Due to these STRF
shortages, the Former Bureau routinely used fees paid by
degree-granting institutions to pay claims of students from
non-degree granting schools.
This bill requires an institution to report annually to the
Bureau regarding the status of STRF remittances. This bill
requires the Bureau to establish regulations regarding STRF
oversight and functions; therefore, it is unknown at this time
how the Bureau regulations will respond to the Monitor's
recommendations. This bill requires the Bureau to provide
regular updates to the Legislature regarding the adoption and
implementation of Bureau regulations; theoretically, this
would provide the Legislature with the information necessary
to determine if statutory revisions and updates to STRF
provisions are necessary.
5)Bureau Insolvency: The Monitor's report identified
significant problems with the fee structure; the
statute-imposed study found that revenue was "insufficient to
support ongoing operations," but the Former Bureau failed to
recommend raising fees.
This bill establishes a fee structure but has left blank fee
amounts. The author has indicated intent to place fee amounts
in statute and provide the Bureau with the authority to adjust
fee amounts through regulation if necessary. The author
indicates that he is working with DCA on specific fee amounts
to be amended into the bill at a later date.
6)Regulatory Burden and Arbitrary Practices: The Monitor found
that the Former Bureau's regulatory practices were
unpredictable; creating a financially risky environment for
schools seeking to open in California that potentially impeded
educational opportunities. Specifically, the Monitor found
that the Former Bureau assessed fees on schools without the
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statutory or regulatory authority to do so. Due to the gross
deficiencies in the enforcement program, the Former Bureau
attempted to pursue enforcement by forcing schools to agree to
conditions before granting approval and the Former Bureau
inappropriately required schools to submit re-approval
applications beyond what was required by law.
This bill attempts to provide a clear directive to the Bureau,
while providing the Bureau with appropriate discretion over
specific regulations and processes. History has proven that
without rules and regulations students will be mistreated;
therefore, the goal of any such Act must be to provide for
strong regulation and oversight of institutions while
preventing excessive burden. This bill attempts to improve
upon the Former Act by creating a more clear and concise law,
easing the approval process, providing clear deadlines for the
adoption of regulations so that schools know exactly the rules
they will be expected to follow, and allowing for workshops to
be conducted by the Bureau to help schools navigate the
approval process and requirements of the Act.
The Monitor's report identified three major structural
deficiencies within the Former Act and made recommendations for
addressing those deficiencies:
1)The Monitor indicated that the Former Act's different
standards and requirements for different categories of
institutions were inherently complex and recommended a
consolidated system that would apply to all institutions.
This bill provides for the creation of a single category of
institution and establishes the same standards and
requirements for all institutions.
2)The Monitor noted the 9 to 12 month time frame for granting
approval to new institutions was insufficient, leading the
Former Bureau to heavily relying on temporary approvals. The
Monitor recommended establishing an approval process for
institutions similar to the process for institutions to obtain
accreditation, lasting two to three years, and allowing the
Bureau to monitor the institution as it matures and
demonstrates its ability to comply with the state's standards
and requirements.
This bill establishes overall areas for the Bureau to examine
when reviewing an application for approval to operate but
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leaves many of the details regarding the approval to operate
process to Bureau regulations; therefore it is unknown whether
the Bureau will respond to the Monitor's recommendations
regarding the approval to operate process. As noted above,
this bill requires the Bureau to provide regular updates to
the Legislature. Theoretically, this would provide the
Legislature with the information necessary to determine if
statutory revisions and updates to the approval to operate
provisions are necessary.
3)The Monitor found that the Former Act's sanctions and
penalties were insufficient to deter future misconduct by
industry participants and recommended providing the Bureau
with the authority to issue formal warning notices, increase
fine amounts, and separate enforcement and renewal processes.
This bill increases penalties, provides the Bureau with the
authority to issue a notice to comply, and generally separates
the enforcement process from the renewal process.
The Monitor made several other recommendations, which this bill
seeks to include, such as: allowing consumers to access
enforcement and other public documents via the Bureau's Web
site; establishing a proactive enforcement program to target
unapproved schools; revising the annual reporting statutes to
more clearly outline the Legislature's expectations of the
Bureau; requiring unannounced inspections; and allowing public
access to school complaint information via the Bureau's Web
site.
Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960
FN: 0001311