BILL ANALYSIS
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|Hearing Date:July 6, 2009 |Bill No:AB |
| |48 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND
ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: AB 48 Author:Portantino
As Amended:June 29, 2009 Fiscal: Yes
SUBJECT: Private postsecondary education: California Private
Postsecondary Education Act of 2009.
SUMMARY: Renames the Bureau for Private Postsecondary and Vocational
Education (BPPVE) as the Bureau for Private Postsecondary Education
(BPPE) within the Department of Consumer Affairs (DCA) and provides
for Bureau oversight and regulation of private postsecondary
institutions operating in California.
Existing law:
1)Created the Private Postsecondary and Vocational Education Reform Act of
1989 (Reform Act), which became inoperative on July 1, 2007, which
expressed legislative intent to ensure minimum standards of
instructional quality and institutional stability and required the
Bureau of Private Postsecondary and Vocational Education (BPPVE) to,
among other things, review and investigate all institutions,
programs and courses of instructions approved under the Act.
2)Provides for the Department of Consumer Affairs (DCA) within the State
and Consumer Services Agency (SSCA) to house specified boards,
bureaus and commissions for the purpose of regulating private
businesses and professions under their jurisdiction to protect the
health, safety and welfare of California's consumers.
3)Expressed legislative intent through other recently inoperative statute
which expired on July 1, 2008, to protect the interests of students
and institutions that have matters pending under the Reform Act,
continued all of the matters pending before BPPVE an additional year
to July 1, 2008, and allowed limited DCA oversight of private
postsecondary schools until July 1, 2008.
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This bill:
1)Requires BPPE 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 BPPE.
2)Authorizes BPPE to take specified action to cease unlawful
advertising including disconnecting the telephone services of an
institution if BPPE finds that the institution is advertising in a
telephone directory without an approval to operate issued by BPPE.
3)Removes BPPVE from provisions of law requiring 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 BPPVE shall be construed as referring to the Act and
BPPE.
5)Makes various findings and declarations regarding the importance of
private postsecondary institutions, previous failures to regulate
these institutions, the importance of BPPE oversight of private
postsecondary institutions, and the need for ongoing review of BPPE
activities by the Legislature.
6)Provides for a transition to the provisions of the Act, including:
6) Any institution approved to operate by BPPVE on June 30, 2007,
shall maintain that approval for three years after the expiration
date of the approval.
6) An institution that had an application to renew an approval to
operate pending before BPPVE 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 BPPE.
6) BPPE 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
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permanent through the regular rulemaking process within one year
of the date of enactment of the Act.
6) BPPE shall have possession and control of all records,
supplies, and real property used by BPPVE.
6) The Private Postsecondary and Vocational Education
Administration Fund be continued and renamed to the Private
Postsecondary Education Administration Fund (PPEAF).
6) The Student Tuition Recovery Fund (STRF) be continued and
provides for 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.
6) An institution that had an application for an approval to
operate pending before BPPVE on July 1, 2007, and an institution
that did not have a pending application filed with BPPVE 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 BPPE; 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 BPPE.
6) Any matter, except a STRF claim, submitted to BPPVE 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 BPPE.
6) 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 definitions for various terms used in the Act.
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8)Provides that BPPE shall adopt a process whereby an institution
exempt under this article may request and obtain verification of
their exempt status and allows BPPE to charge a fee to the
institution to cover any costs associated with BPPE verifying the
exemption. Exempts from the requirements of the Act and from the
oversight of BPPE:
8) Institutions offering solely vocational or recreational
educational programs.
8) Institutions offering programs sponsored by trade, business,
professional, or fraternal organizations solely for that
organization's members.
8) Institutions operated by the federal or state government or
their subdivisions.
8) 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.
8) Institutions owned, controlled, and operated and maintained by
a church or religious institution that meets several other
outlined requirements.
8) 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 BPPE
to adjust this cost threshold based upon the California Consumer
Price Index.
8) 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.
8) A nonprofit public benefit corporation that qualifies under
Section 501 (c)(3) of the United States Internal Revenue Code and
is organized specifically to provide workforce development or
rehabilitation services as well as accredited for those services
by an accrediting organization recognized by the Department of
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Rehabilitation.
8) Institutions that are accredited by the Accrediting Commission
for Senior Colleges and Universities, Western Association of
Schools and Colleges or the Accrediting Commission for Community
and Junior Colleges, Western Association of Schools and Colleges
(WASC).
9)Provides BPPE with the following powers and duties:
9) 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 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.
9) Requires BPPE 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 BPPE
to develop and implement an enforcement program to implement the
Act, including a plan for investigating complaints filed with
BPPE; and requires BPPE to develop a program to proactively
identify unlicensed institutions and take all appropriate legal
action.
9) Requires BPPE to maintain a website, 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 complaints within the last five years against the
institution upon request, and an explanation of BPPE's transition
plan and scope of authority.
9) Requires BPPE to conduct outreach to secondary and
postsecondary school students about how to make informed
decisions when selecting an institution.
9) Requires BPPE to appoint an advisory committee consisting of
representatives of institutions, student representatives, and
employers who hire students.
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9) Allows BPPE to conduct workshops to assist institutions in
complying with the provisions of the Act.
9) Allows BPPE to empanel visiting committees to assist in
evaluating institutional applications, requires visiting
committee members to serve at no expense to the state,
establishes that BPPE may facilitate reimbursements from an
institution under evaluation to cover travel and per diem, and
entitles visiting committee members to defense and
indemnification.
9) Provides that, for complaints against an institution that have
reached final disposition, BPPE shall make a summary of the
nature and disposition of complaints within the last five years
available to the public upon request.
10)Provides that, except for any institutions exempt from the Act, all
private postsecondary institutions operating in California must have
the approval of BPPE and requires BPPE, 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 BPPE to issue institutional approvals to operate, and
to renew approvals to operate.
11)Requires prior authorization from BPPE 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 BPPE 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 BPPE of the changes.
12)Establishes the following fair business practices:
12) 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,
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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 educational program information
via the institution's internet website, among other outlined
prohibited practices.
12) 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.
12) Provides that, for career fields that require licensure by the
state, institutions offering educational programs must have
approval to conduct that educational program.
12) 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.
13)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.
14)Provides for the following in regards to disclosures and enrollment
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agreements:
14) Students shall enroll solely by signing an enrollment
agreement; an enrollment agreement is not enforceable unless the
student has first received the institution's catalog and School
Performance Fact Sheet and, at the time of execution of the
enrollment agreement, the institution had a valid approval to
operate; a student must receive a copy of the signed enrollment
agreement, regardless of whether total charges are paid by the
student; and an enrollment agreement shall become operative when
the student attends the first class session.
14) Students may not waive any term or receipt of any disclosure
required by the Act.
14) An "ability to benefit student" (defined as a student without
a certificate of graduation from a school providing secondary
education) is required to take a U.S. Department of Education
prescribed examination and achieve a score specified by USDE
showing that the student may benefit from the training offered
before executing an enrollment agreement.
14) Requires institutions offering programs in professions that
require licensure to, during enrollment, exercise reasonable care
to determine if a student will be eligible to obtain licensure by
providing the student with a written copy of the requirements for
licensure established by this state. Prohibits the institution
from executing an enrollment agreement with a student that is
known to be ineligible for licensure unless the student's stated
objective is other than licensure; and allows an institution to
discuss internships or student job availability during the
enrollment process with certain limitations and disclosure
requirements.
14) Requires an enrollment agreement to be written in a language
that is easily understood, and if English is not the student's
primary language and the student is unable to understand the
terms and conditions of the agreement, then the student is
entitled to a clear explanation of the terms in his/her primary
language. Provides that if recruitment was conducted in a
language other than English, the enrollment agreement and related
disclosures shall be in that language.
14) Prohibits an enrollment agreement from containing a provision
that requires a student to invoke internal institutional dispute
procedures before enforcing any contractual or other legal rights
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or remedies.
14) Provides that all information or statements required by the
Act to be included in the catalog, School Performance Fact Sheet,
or enrollment agreement shall be printed in at least the same
size font as the majority of the text in that document.
14) Requires an institution to provide to a student prior to
enrollment, and make content available on the institution's
website, a school catalog that includes at least the following:
14) Name, address, telephone number, and website of the
institution;
14) A statement that the institution is a private institution
and that it is approved to operate by BPPE;
14) Specified statements with the contact information for BPPE
that encourages the student to review all catalog information
and the School Performance Fact Sheet before signing an
enrollment agreement;
14) Address where class sessions will be held;
14) A description of the programs offered and specified
information regarding completion requirements for each program;
14) If the educational program is designed to lead to a
position in a profession, occupation, trade, or career field
requiring state licensure, a notice to that effect and a list
of the qualifications required by this state for licensure;
14) Information regarding faculty and their qualifications;
14) A detailed description of institutional admission and
acceptance of credits policies, cancellation, withdrawal and
refund policies, probation and dismissal policies, attendance
policies, leave-of-absence policies, and existing transfer or
articulation agreements;
14) The total schedule of charges for tuition, fees, and other
expenses;
14) A statement reporting whether the institution participates
in federal and state financial aid programs, and if so, a
statement concerning student eligibility;
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14) A statement specifying a student's responsibility to repay
any student loan obtained by the student;
14) A statement specifying whether the institution has a
pending petition in bankruptcy or has had a petition in
bankruptcy filed against it within the preceding five years;
14) If an institution provides placement services, a
description of the nature of those services;
14) A description of the student's rights and responsibilities
with respect to STRF; and,
14) A specified statement notifying the student that the
transferability of credits or degree earned at the institution
is at the discretion of the institution to which the student
seeks to transfer.
14) Requires an institution to provide a prospective student,
prior to enrollment, a School Performance Fact Sheet containing
completion rates, placement rates, license examination passage
rates, if applicable, and starting salaries if the school makes
claims regarding starting salaries. Provides that if an
institution is too new to provide the Student Performance Fact
Sheet data, an institution shall state so. Provides that an
institution shall include a description of how the data was
calculated or a statement informing the reader where a
description may be obtained.
14) Requires an enrollment agreement to include the following:
14) The name and specified information regarding the
educational program;
14) The schedule of total charges, including a list of
non-refundable charges, the student's obligations to STRF
clearly identified as nonrefundable charges, and on the same
page as where the student will sign, underlined and in capital
letters, the total charges;
14) A clear and conspicuous statement that the enrollment
agreement is legally binding when signed by the student and
accepted by the institution;
14) A notice of the buyer's right to cancel, including an
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explanation that a student has the right to cancel up until the
first day of class or the seventh day after enrollment,
whichever is later; a notice of the refund policy and a
statement that if the student has received federal financial
aid funds the student is entitled to a refund of moneys not
paid from federal financial aid program funds; and, a
description of the procedures the student must follow to cancel
the enrollment agreement or withdraw from the institution;
14) A statement specifying that if the student obtains a loan
to pay for the educational program, the student is responsible
for repaying the full amount of the loan plus interest, less
the amount of any refund;
14) A statement specifying that if the student defaults on a
state or federally guaranteed loan, the state or federal
government or loan guarantee agency may take certain action
against the student, and the student may not be eligible for
any other financial aid or government assistance until the loan
is repaid;
14) Specified statements with the contact information for
BPPE, and encouraging the student to review all catalog
information and the School Performance Fact Sheet before
signing an enrollment agreement; and,
14) Specified disclosure language regarding a student's
understanding of rights and responsibilities, requiring the
student's signature.
15)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.
16)Establishes the following requirements for cancellations,
withdrawals, and refunds:
1) Requires an institution that participates in and complies with
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federal student aid program regulations under Title IV of the
Higher Education Act of 1965, to advise students that
cancellation notices must be in writing and that a withdrawal may
be noticed by a student in writing or by the student not
attending courses; and requires the institution to provide a pro
rata refund to students who completed 60% or less of the period
of attendance.
1) Provides for the following for institutions not participating
in the federal student financial aid program:
1) Requires the institution to advise students that
cancellation notices must be in writing and that a withdrawal
may be noticed by a student in writing or by the student's
conduct including lack of attendance.
1) Requires the institution to refund 100% of the amount paid
less a reasonable deposit not to exceed $250 if notice of
cancellation is made through attendance at the first class or
the seventh class day after enrollment, whichever is later.
1) Allows BPPE to adopt regulations establishing a different
method of calculating refunds for instruction delivered by
other means such as distance education.
1) Requires the institution to establish a refund policy and
entitles students who have completed 60% or less of the period
of attendance to a pro rata refund.
1) Requires the institution to pay or credit refunds within
45 days of a student's cancellation or withdrawal.
1) Allows an institution offering educational programs for
which the aforementioned refund calculations cannot be utilized
to petition BPPE for alternative methods of calculating tuition
refunds.
1) Provides that a student may not waive any of the
aforementioned provisions.
17)Provides that BPPE 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 BPPE; and
provides that STRF may not exceed $25 million at any time.
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18)Establishes the following requirements for institutional closures
and teach-outs:
18) Requires an institution to notify BPPE in writing at least 30
days prior to closing, and requires the notice to include a
closure plan that speaks to, at least, providing teach-outs of
educational programs or arrangements for making appropriate
refunds, a plan for providing students information on federal
financial aid programs and institutional closures if the
institution is a participant in these programs, and a plan for
the disposition of student records.
18) Provides that an institution will be in default of an
enrollment agreement if an institution closes prior to completion
of the program. If BPPE finds that the institution has made
arrangements for the student to complete their program at another
institution for the same cost to the student, the student's
institutional charges may be refunded on a pro rata basis; if the
institution does not make such a provision, the student is
entitled to receive a total refund of all institutional charges.
18) Requires an institution to provide BPPE with information
including student records and transcripts.
19)Establishes the following requirements regarding completion and
placement rates:
19) Establishes definitions for the various terms used in this
section.
19) Requires an institution to annually report to BPPE, as part of
the annual report, and publish in its School Performance Fact
Sheet:
19) Completion rates for each program and that the completion
rate is calculated by dividing the number of graduates by the
number of students available for graduation. Provides that an
institution may substitute for the aforementioned calculation
requirement the graduation data as reported to and calculated
by the Integrated Postsecondary Education Data System of the
USDE.
19) Job placement rates, calculated by dividing the number of
graduates employed in the field by the number of graduates
available for employment for each program that is either (a)
designed or advertised to lead to a particular career or (b)
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advertised or promoted with any claim regarding job placement
rates.
19) The total number of graduates employed in the field and
the percentage of those who earned salaries at or above the
claimed level, if the institution or representative of the
institution makes any express or implied claim about the salary
that may be earned after completing a program.
19) Provides that the information used to substantiate job
placement and salary rates shall be documented and maintained by
the institution, and an institution must provide a list of
employment positions determined to be within the field for which
a student received education and training for the calculation of
placement rates.
20)Establishes a fee schedule according to the following:
a) Five thousand dollars ($5000) for an application to obtain
approval to operate
b) Three thousand dollars ($3000) for an application to obtain
approval to operate a new branch of the institution
c) Seven hundred fifty dollars ($750) for an application to
obtain approval to operate by means of accreditation
d) Three thousand five hundred dollars ($3500) for renewal of
approval to operate a main campus of the institution
e) Three thousand dollars ($3000) for renewal of approval to
operate a branch of the institution
f) Five hundred dollars ($500) for renewal of approval to operate
by means of accreditation
g) Five hundred dollars ($500) for processing authorization of a
substantive change to an approval to operate
h) Two hundred fifty dollars ($250) for processing authorization
of a substantive change to an approval to operate by means of
accreditation
21)Provides that all fees collected are to be, upon appropriation by
the Legislature, used for BPPE expenditure to cover the cost of
administering the Act. Provides that BPPE may change fee amounts
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under specified circumstances. Provides for late payment penalties
to be assessed against institutions failing to submit fee payments
within BPPE-specified timeline.
22)Establishes the following processes and penalties in regards to
compliance with and enforcement of the Act:
22) Establishes that BPPE shall determine any institution's
compliance with the Act, and that BPPE 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 any institution in order to monitor compliance.
Provides that when BPPE has reason to believe that an institution
is out of compliance, it shall conduct an investigation of that
institution, and if BPPE finds the institution has violated any
applicable law or regulation, requires BPPE to take appropriate
action.
22) Provides that BPPE 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 BPPE and depending on
the severity of the violation.
22) Requires an institution to submit an annual report by July 1
to BPPE, in a format prescribed by BPPE, that includes: the total
number of students enrolled, degrees awarded, of 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 BPPE.
22) Requires BPPE 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 BPPE 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.
22) Requires, as a consequence of an investigation and upon a
finding that the institution has committed a violation, BPPE 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, or an administrative fine not to exceed
$10,000 per violation. Provides specific criteria for BPPE to
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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 hearing. Provides that
all administrative fines are to be deposited into PPEAF.
22) Allows BPPE 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 BPPE shall adopt
regulations governing probation and suspension of an approval to
operate and that BPPE 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.
22) Provides that if BPPE 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 BPPE-adopted regulations.
22) Provides that BPPE 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.
22) Provides any individual who believes an institution has
violated the Act or subsequent regulations may file a complaint
with BPPE and that BPPE shall take action to verify the
complaint, and provides BPPE with authority to take appropriate
administrative enforcement action upon discovering the facts in
regards to the complaint.
22) Provides that if BPPE finds that an institution's violation of
the Act or subsequent regulations has caused damage or loss to a
student or group of students, BPPE may order the institution to
pay appropriate refunds or restitution to that student or group
of students.
22) Establishes that knowingly operating an institution without
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approval or knowingly providing false information to BPPE on an
application shall be considered infractions and are public
offenses.
22) Requires an institution to maintain an agent for service of
process within the state and provide the agent's name and contact
information to BPPE; makes the aforementioned information
available to the public upon request.
22) Provides that BPPE may not subject any person to a fine
exceeding $50,000 for operating an institution without BPPE
approval.
22) Provides that each institution subject to the Act shall be
deemed to have authorized BPPE 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.
22) 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.
23)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.
24)Requires BPPE 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 BPPE has
implemented the provisions of the Act, and the appropriateness of
the exemptions provided in the Act.
25)Repeals the Act on January 1, 2016, unless a later statute is
enacted to extend this date.
26)Appropriates $580,000 from the Former Act to BPPE for the purpose
of funding five education administrator positions, and provides that
these positions shall be included in the annual budget for BPPE.
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FISCAL EFFECT: According to the Assembly Appropriations Committee
Analysis dated May 20, 2009:
1.DCA preliminary estimate indicates that BPPE 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 BPPE.
2.One-time appropriation of $580,000 from the Private Postsecondary
and Vocational Education Administration Fund to the new BPPE.
COMMENTS:
1.Purpose. According to the Author, there are approximately 1,500
private postsecondary institutions that had been approved by BPPVE
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. BPPVE 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 BPPE's authority to regulate
private postsecondary institutions and enforce the provisions of the
Act.
2.The Private Postsecondary Education Sector. 2006 BPPVE data suggest
there were about 400,000 students enrolled at BPPVE approved private
postsecondary institutions (both accredited and approved). Of those
students, approximately 280,000 students attended
non-degree-granting institutions and the remaining 120,000 attended
degree-granting institutions. BPPVE approved institutions serve a
significant portion of students seeking postsecondary educational
and vocational training services. In 2006, BPPVE approved
institutions served as many students as were served by the entire
California State University system. It is generally believed that
BPPVE institutions, especially the vocational schools, tend to serve
segments of the population that are underserved by the traditional
public and private postsecondary education institutions. However,
this perception is changing as more and more working professionals
are attending these institutions, particularly the degree granting
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ones, to obtain education credentials and job training.
3.Issues Schools Face in the Absence of a State Law. Private
postsecondary institutions that are accredited by either a national
or regional accrediting association are not currently impacted by
the fact that California is without a law regulating these
institutions. While these particular institutions may not directly
be affected, the lack of a bureau means that they are not required
to comply with any state consumer protection provisions.
In contrast, the absence of state law has a significant impact on
approved colleges and the student population of these schools.
Students attending these institutions may need to take and pass
state licensure exams offered by boards and bureaus within DCA,
including the Board of Psychology and the Board of Behavioral
Sciences. In those two cases, the Boards have taken specific
action, valid for the next three years, that allows graduates of
approved schools (that were considered approved under state BPPVE
law in July 2008) to sit for the licensure exam after they graduate.
This benefits current or former students but in essence means that
new students will not be able to sit for licensing exams offered by
those Boards in the absence of a state law. The approved schools
then have less of an ability to enroll new students in certain
programs.
There are also challenges for approved schools whose licensure
expires in 2009 without specific state oversight and a designated
agency. These institutions will not be able renew their approved
status in 2009 and possibly future years given the ramifications of
that status going away. According to a website maintained by the
state of Oregon designed to identify degree mills operating in the
United States, any California school approved under the previous law
whose approval status expires in 2009, will be classified as a
degree mill. This defining of entities that are legitimately
approved under California law, which have complied with all of the
provisions of that law, is damaging and not preventable unless a new
law is enacted.
4.Senate Business, Professions and Economic Development Committee
Informational Hearing. On March 23rd, this Committee held an
informational hearing entitled "The Role of Private Education
Institutions in Preparing California's Diverse Workforce: Meeting
the Challenges of our Workforce and Job Training Needs." The
hearing examined the ability of private postsecondary institutions
to fill the career preparation needs of California's workforce and
evaluate policy options that would allow them to expand their
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workforce development programs with the requisite amount of
oversight required to protect students. The hearing's chief
findings were that:
California will receive $488 million federal ARRA funds
to supplement, not supplant the state's workforce development
activities.
Key industries are facing shortages in hiring workers
with the minimum skills needed for entry into the field.
Private postsecondary schools face difficulty in
expanding their educational and vocational programs because of
the lack of state regulation and would like to see a clear,
streamlined regulatory framework re-established.
CPEC does not have access to private postsecondary
intuitions' performance data and are, therefore, unable at
this time to evaluate the efficacy and role of those
institutions in preparing skilled workers.
5.History of California's Regulation of Private Postsecondary
Education. The state's program for regulation of private
postsecondary and vocational education institutions has been plagued
by problems for the past 20 years. During the late 1980's, the state
developed a reputation as the "diploma mill capital of the world."
During this period, State Department of Education regulated the
private postsecondary education industry. As a result of concerns
about the integrity and value of the degrees and diplomas issued,
widely varying standards, the lack of enforcement provisions, and
exemptions from oversight authorized in the statute, a comprehensive
reform bill was enacted. SB 190 (Morgan) created the Private
Postsecondary and Vocational Education Reform Act of 1989 (Reform
Act) to overhaul the state's regulatory program and transferred
oversight responsibility for the program to the 20-member Private
Postsecondary and Vocational Council (Council). Concurrently, the
Maxine Waters School Reform and Student Protection Act (Waters Act)
was enacted. The provisions of the Reform Act and the Waters Act
were merged, but doing so created a fragmented structural framework
for regulation of private postsecondary and vocational education
institutions with numerous duplicative and conflicting statutory
provisions which would plague California's oversight of these
institutions until the law sunset on July 1, 2008.
In the years following enactment of the Reform Act, concerns were
expressed about the Council's implementation of the Act. In 1995,
CPEC found there were potentially up to 1,000 unapproved
institutions operating in California and the Council lacked the
enforcement powers or punitive measures needed to address these
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violations. While CPEC recommended amending the Act to provide the
Council with the authority and other resources to ensure that all
institutions operate in compliance with the Act," no action was
taken on this proposal.
In 1997, AB 71 (Wright) was enacted to create BPPVE within DCA,
transferred responsibility for administration of the Reform Act to
BPPVE and extended the Reform Act's sunset date to January 1, 2005.
In 2000, the Bureau of State Audits (BSA) conducted an audit of the
DCA determine whether the Department was properly overseeing its
regulatory boards and bureaus. The BSA reviewed four board and
bureaus in detail, including the Bureau of Private Postsecondary and
Vocational Education and found that the DCA was not fulfilling its
oversight responsibilities and was allowing weaknesses in licensing
and complaint processing to continue.
In 2002, the DCA's Internal Audit Office completed a review of
BPPVE, programs and operations. The DCA's Internal Audit Office
made a number of recommendations for BPPVE to modify and improve its
operations.
During 2002, BPPVE completed its first Sunset Review before the
Joint Legislative Sunset Review Committee (JLSRC). As part of this
review, BPPVE committed to reestablish the Bureau's Advisory Board,
simplify and streamline its appeal procedures, sponsored legislation
to change current statutes and adopt regulations to ensure
comprehensive and effective application approval procedures,
enforcement and disciplinary actions and address deficiencies noted
in the BSA audit.
In 2003, SB 364 (Figueroa) required BPPVE work with JLSRC staff to
streamline the Reform Act, determine the cost and staffing needed to
meet its statutory obligations, improve its data collections and
dissemination systems and to report to the Legislature on a number
of the changes requested.
In 2004, the Joint Committee on Boards, Commissions and Consumer
Protection (Joint Committee) held a special hearing regarding BPPVE
and recommended the following:
the Reform Act needs to be revised to make it intelligible
and enforceable.
the Administration and the DCA should consider restoring,
at least temporarily, the Bureau's staffing resources to clear
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out existing backlogs.
The Joint Committee also recommended that the DCA appoint an
Operations and Enforcement Monitor to complete an objective
assessment of California's regulation of private postsecondary and
vocational education institutions, including both the administrative
operations of BPPVE and the provisions of the Reform Act.
In 2004, in response to the persistent problems with BPPVE, 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
BPPVE'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 BPPVE 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 CPEC in 1995, the
2000 BSA report and the DCA's own 2002 internal investigation. At
the time of its sunset, BPPVE had not addressed many of its
fundamental problems with oversight and enforcement. The Monitor's
report stated many of the root causes of enforcement and oversight
failures can be traced back to deficiencies within the Reform Act.
6.Findings and Recommendations of the Enforcement Monitor. The
Monitor's report included various specific findings and
recommendations for overhauling the Reform Act. Listed below are
some of those findings and recommendations and how this bill seeks
to address them.
a. 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 BPPE to
establish a process whereby an application for approval to
operate is either approved or denied by BPPE. If BPPE denies an
application, the Bureau is required to establish a process
whereby the institution may appeal the denial.
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b. Enforcement: The Monitor found that BPPVE 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 also 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 BPPVE's disposal were inadequate as it 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 BPPE 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
BPPE with the power to order refunds and restitution to a student
or group of students.
c. 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 BPPVE never
verified the data.
This bill requires that the institution submit the annual report
to BPPE under penalty of perjury, and requires the report be
submitted by July 1 of each year. To ensure the accuracy of
reported data, the Author may wish to consider the Monitor's
recommendation that BPPE review all reports for completeness and
validate the data provided for a significant random sample of
institutions and programs each year.
d. Student Tuition Recovery Program (STRF): The Monitor reported
that claims' payments sometimes lingered for more than two years,
BPPVE rarely ensured 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,
BPPVE 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 BPPE
regarding the status of STRF remittances. This bill requires
BPPE to establish regulations regarding STRF oversight and
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functions; therefore, it is unknown at this time how BPPE
regulations will respond to the Monitor's recommendations. This
bill requires BPPE 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..
e. Bureau Insolvency: The Monitor's report identified
significant problems with the fee structure and the
statute-imposed study found that revenue was "insufficient to
support ongoing operations," but BPPVE failed to recommend
raising fees.
This bill establishes a schedule of higher fees to support BPPE's
activities.
f. Regulatory Burden and Arbitrary Practices: The Monitor found
BPPVE's regulatory practices were unpredictable creating a
financially risky environment for schools seeking to open
California and which could potentially impede educational
opportunities. Specifically, the Monitor found BPPVE assessed
fees on schools without the statutory or regulatory authority to
do so. Due to the gross deficiencies in its enforcement program,
BPPVE attempted to pursue enforcement by forcing schools to agree
to conditions before granting approval and it inappropriately
required schools to submit re-approval applications beyond what
was required by law.
This bill attempts to provide a clear directive to BPPE, 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 BPPE to help
schools navigate the approval process and requirements of the
Act.
7.The Reform Act's Structural Issues. The Monitor's report also
identified three major structural deficiencies within the Reform Act
and made recommendations for addressing those deficiencies.
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a. The Monitor indicated that the Reform 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.
b. The Monitor noted the 9 to 12 month timeframe for granting
approval to new institutions was insufficient which resulted in
BPPVE having to heavily rely 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 BPPVE 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 BPPE to examine when
reviewing an application for approval to operate but leaves many
of the details regarding the approval to operate process to
Bureau regulations; therefore it is unknown whether BPPE will
respond to the Monitor's recommendations regarding the approval
to operate process. As noted above, this bill requires BPPE 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.
c. The Monitor found the Reform Act's sanctions and penalties
were insufficient to deter future misconduct by industry
participants and recommended providing BPPE 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 BPPE's website; establishing a
proactive enforcement program to target unapproved schools; revising
the annual reporting statutes to more clearly outline the
Legislature's expectations of BPPE; requiring unannounced
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inspections; and allowing public access to school complaint
information via BPPE's website.
8.Relationship of BPPVE to DCA Boards and Bureaus. Nine boards within
DCA have a direct connection to BPPVE. While some are required to
review the curriculum and often institutions offering programs,
others require BPPVE approval in order to meet educational
requirements for licensure, certification or registration. The
Board of Barbering and Cosmetology (BBC) for example, approves
curriculum, facilities, equipment and textbooks for schools offering
training programs for eventual licensees and as such, the BBC
believes it can better protect students than BPPE. The Board of
Vocational Nursing and Psychiatric Technicians (BVNPT) staff grants
approval and ultimately accreditation of Vocational Nursing and
Psychiatric Technician programs but does not have oversight of
institutions offering these programs. As there are licensing exams
offered by Boards and Bureaus that require licensees to confirm they
attended a Board or Bureau accredited program, consumer confusion is
often a result - was the approved program offered at an accredited
institution? Was the accredited program offered at a state approved
or accredited institution?
The current lack of a bureau also leads to student confusion about
where to dispute fees, file claims, or register complaints. Boards
and Bureaus within DCA cite workload issues and staff pressure due
to time spent answering calls, letters and questions from students
currently enrolled in programs or attempting to take classes at
private postsecondary institutions.
Staff recommends that this Committee hold an Informational Hearing
to comprehensively review the role DCA Boards and Bureaus play in
the accreditation and approval of schools and programs, particularly
focusing on the issue of dual oversight and consumer confusion.
9.Committee Fee Bill Worksheet. Included with this analysis is a Fee
Background Information Questionnaire which was completed by the
Author's office and DCA. This Questionnaire is required by the
Committee to justify any fee increases and provide background
information on requested fee increases. The Questionnaire is to
include fund condition statements displaying 5 years of actual and 5
years of projected expenditures and revenues with (a) current
statutory maximum fee amounts and (b) proposed statutory maximum fee
amounts. It also is to include a schedule of fee revenue by various
fee "categories" displaying 5 years of actual and 5 years of
projected revenue based on (a) current fees and (b) proposed fees
and includes the workload (e.g., number of licensees) and fee
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charged per category. It is to provide a schedule displaying 2
years of expenditures by program component. It is to provide a
table of comparison of existing and proposed fees which includes the
percentage by which the fee will change. Lastly, it should provide
the history for the past 10 years of legislative fee increase
authorizations.
There are concerns that the fees being charged to schools in this
proposed schedule are considerably higher than in years past, but
that in light of the Monitor's recommendations, these fees may be
necessary. The attachments to the Worksheet attempt to set forth the
justification for the fee schedule established in the bill, showing
that the projected $10.3 million dollars in revenue will cover the
$9.1 million operating costs while maintaining a reserve for
economic uncertainties. However, the rationale for current expenses
and the fees to cover those expenses has not yet provided.
10. Related Legislation.
SB 489 (Liu) generally stated legislative intent regarding the
regulation of private postsecondary education. The measure was set
for hearing in this committee in April but was not heard.
SB 823 (Perata) of 2008, which was vetoed by the Governor, was
similar to this bill and would have re-established the Bureau with
specified functions and student protections.
AB 2746 (Niello) of 2008, which was held in the Assembly
Appropriations Committee, was similar to this bill.
AB 1897 (Emmerson) Chapter 489, Statutes of 2008, requires the Board
of Behavioral Sciences to recognize marriage and family therapist
applicants with degrees from institutions that were approved by
BPPVE on June 30, 2007.
AB 1182 (Niello) of 2007, which was not heard in committee, was
similar to this bill.
AB 1525 (Cook), Chapter 67, Statutes of 2007, stated legislative
intent regarding the protection of students, allowed for the
continuation of matters pending before BPPVE, and provided for
minimal oversight of institutions by DCA until February 1, 2008.
SB 45 (Perata), Chapter 635, Statutes of 2007, extended limited
state oversight of private postsecondary schools from February 1,
2008 to July 1, 2008.
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AB 2381 (Dymally) of 2006, which was not heard in the Senate
Business and Professions Committee, would have provided that an
institution that willfully violated minimum requirements of the
Former Act would be required to refund all tuition and fees paid by
a student.
AB 2810 (Liu) of 2006, which was vetoed by the Governor, in its
final form, would have extended the sunset date of the Former Act
for one year and established a working group to develop
recommendations for changes in the Former Act.
SB 1473 (Figueroa) of 2006, which was held in the Senate
Appropriations Committee, would have revised and recast the
provisions of the Former Act based on the Monitor's recommendation.
SB 1568 (Dunn), Chapter 534, Statutes of 2006, transferred the
regulation and oversight of unaccredited law schools from BPPVE to
the Committee of Bar Examiners.
AB 827 (Goldberg), Chapter 815, Statutes of 2006, enacted consumer
loan protections for students attending private institutions.
SB 767 (Romero) of 2005 would have eliminated the exemption from the
Former Act for WASC accredited vocational schools in response to
media coverage of those schools committing misrepresentation about
starting salaries and job placement to students. SB 767 was
subsequently amended to address a different topic.
SB 1544 (Figueroa), Chapter 740, Statutes of 2004, required the
Director of DCA to appoint the Monitor.
SB 967 (Burton), Chapter 340, Statutes of 2003, exempted
degree-granting institutions accredited by regional accrediting
agencies from specific programmatic and institutional review and
approval by BPPVE.
SB 364 (Figueroa), Chapter 789, Statutes of 2003, required BPPVE to
report to the Legislature regarding corrective actions to resolve
deficiencies found in BPPVE operations.
AB 2967 (Wright), Chapter 581, Statutes of 2002, was primarily
technical clean-up to the Former Act. AB 201 (Wright), Chapter 621,
Statutes of 2001, made various changes to address concerns regarding
administration and solvency of STRF.
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AB 1720 (Committee on Higher Education), Chapter 399, Statutes of
2001, specified that the Joint Legislative Sunset Review Committee
cooperate with CPEC in evaluating and reviewing BPPVE.
AB 1898 (Wright), Chapter 273, Statutes of 2000, exempted private
security guard training schools that met certain specified
requirements from BPPVE oversight.
AB 71 (Wright), Chapter 78, Statutes of 1997, transferred
administration of the Former Act from a Council for Private
Postsecondary and Vocational Education (Council) to BPPVE.
AB 190 (Morgan), Chapter 1307, Statutes of 1989, established the
Former Act and established the Council to oversee private
postsecondary institutions operating in California.
AB 1402 , Chapter 1239, Statutes of 1989, established the Waters Act.
11. Arguments in Support. American Massage Therapy Association -
California Chapter notes in its support of the measure that the lack
of a regulatory agency in California for private postsecondary
schools creates a "legal quagmire" and further adds that it is
imperative a new bureau be established.
According to Faculty Association of California Community Colleges
(FACC), "In order to ensure student protection there should be
regulation of private postsecondary educational institutions
offering or providing educational services in California."
License Instruction Schools notes that AB 48 is a "well-thought out
measure that will ensure the protection of all students attending
private post-secondary schools."
Western Career College states that it supports AB 48 due to the
provision that exempts all WASC accredited institutions.
12. Arguments in Opposition.
Civil Justice Association of California (CJAC) believes that a
provision in the bill to allow any student to sue a school
retroactively for conduct that at the time was not illegal is a
violation of due process.
13. Concerned Parties. Career Education Corporation and its seven
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California schools support the bill but believe that a number of
issues need to be clarified prior to final Legislative approval
including: the three-day waiting period prior to students signing an
enrollment agreement; high fees; criteria to meet job placement
rates; definitions of recruiter and recruitment; limit to the use of
internal dispute resolution and; exemption for nationally accredited
schools.
Coleman College, Cleveland Chiropractic College and Life
Chiropractic College West request that the bill be amended to
include a "good school" exemption whereby institutions meeting
certain criteria are not subject to regulation by BPPE. They argue
that this recognition has been included in all legislation related
to private postsecondary institution regulation since 1991.
Department of Consumer Affairs notes that the bill is a vast
improvement over the Former Act but currently contains an exemption
that has faced legal challenges in the past. DCA suggests amending
the bill to exempt all regionally accredited institutions.
In a letter from Elena Ackel of the Legal Aid Foundation of Los
Angeles , numerous comments are made about the measure, the most
paramount of which details the need for a state education entity to
maintain responsibility for regulation of private postsecondary
institutions. She argues that DCA is incapable of regulating
schools and these functions would far better serve consumers if
undertaken by "an independent agency and staff that have higher
education experience."
ITT Educational Services , Inc. states that it supports the bill but
believes certain provisions would "create difficulty for schools in
California". ITT is especially concerned that Section 94928 (c),
which defines "graduates" as the number of students who complete a
program within 100 percent of the published program length, directly
conflicts with the requirements of their accrediting bodies which
allow for 150 percent. ITT requests specifying that an accredited
institution complies with this definition by complying with
accrediting standards of their accrediting body.
Laureate Education raises issue with: the three day notice
provision; allowance for loans in excess of direct institutional
charges to cover living expenses; lack of clarity in student refunds
of federal financial aid money; lack of clarity in the definition of
refund; prohibitive fee schedule; lack of clarity in the formal
recourse for a "Notice to Comply."
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Savannah College of Art and Design and Park University are concerned
about exempting WASC accredited schools without also exempting
institutions accredited by other regional accrediting agencies.
They state interest in a level playing field and note that such an
exemption is "legally required, good for the students, good for the
institutions and good for the state." They further contend that
students attending regionally accredited institutions already
receive strong protection through the normal operation of
California's court system, existing statutes and common law.
"Regional accreditation means a rigorous approval process and review
of curricula, facilities, records, faculty and staff qualifications
and student success levels".
14. Suggested Amendments.
(1) One of the primary functions of BPPE within DCA is to ensure
fundamental consumer protections for the thousands of students who
attend private postsecondary institutions.
Suggested amendment : On page 10, between lines 19 and 20 insert:
(6) Prevention of the deception of the public that results from
conferring, and use of, fraudulent or substandard degrees
(2) Many of the institutions seeking approval of the new BPPE have
already submitted applications to the BPPVE. Requiring new
applications from every school could cause workload issues for BPPE
staff and potentially delay the process by which institutions are
approved.
Suggested amendment : One page 12, between lines 34 and 35, insert:
(2) If the bureau determines that the application for approval to
operate that was pending with the former Bureau for Private
Postsecondary and Vocational Education on June 30, 2007, satisfies
the requirements of the new application for an approval to operate,
the submission of the previous application shall be deemed to
satisfy the requirements of this subdivision
(3) The bill specifies that institutions already regulated by the
Committee of Bar Examiners are not subject to BPPE regulation.
Duplicative oversight of these institutions may arise without
clarifying proper code section references.
Suggested amendment: On page 20, strike out lines 35 to 40,
inclusive, on page 21, strike out lines 1 to 3 inclusive and insert:
(g) A law school that is accredited by the Council of the Section
of Legal Education and Admissions to the Bar of the American Bar
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Association or a law school or law study program that is subject to
the approval, regulation and oversight of the Committee of Bar
Examiners, pursuant to Sections 6046.7 and 6060.7 of the Business
and Professions Code.
(4) Regional accreditation is a voluntary, non-governmental peer
review process utilized for the purpose of determining academic
quality of higher education institutions. Regional accrediting
organizations operate in six different regions of the country and
conduct institutional accreditation. Under federal law, the USDE is
required to publish a list of nationally recognized accrediting
agencies deemed reliable authorities on the quality of education or
training provided by their accredited institutions.
The former Act and all previous legislation dealing with BPPVE
contained a specific exemption for schools accredited by the Western
regional accrediting agency, WASC. According to information from
the BPPVE, about 30 of the approximately 300 private degree-granting
institutions which they regulated are accredited by a regional body
other than WASC. Challenges to this exemption arose and in 2007,
the US District Court in Daghlian v. DeVry ruled that the practice
in California of exempting WASC accredited schools from state
oversight by the Bureau is a violation of the Commerce Clause of the
federal Constitution. While the case is still on appeal, oral legal
opinion from Legislative Counsel provided to Committee Staff
consistently note that naming one regional accrediting agency such
as WASC and granting certain privileges is discriminatory. With a
pathway to exemption based on geography, not all institutions are
eligible to qualify for exemption. Continuing the historical
precedence and granting only a WASC exemption may make BPPE subject
to further lawsuits and potentially invalidate this exemption.
Overall, most other states either authorize certain accrediting
bodies to certify operations in the state or provide a process by
which the state itself approves each institution. As institutions
accredited by national accrediting agencies continue to play a
prominent role in providing valuable job training services to
students, California may be forced to level the playing field and
create parity in the exemption process.
Suggested amendment : On page 21, line 19, insert:
94874.1 (a) An institution that is accredited by a regional
accrediting agency recognized by the United States Department of
Education, and is not an agency described in subdivision (i) of
Section 94874, is exempt from this chapter, except Article 14
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(commencing with Section 94923).
(b) On or before January 1, 2013, the Legislative Analyst's Office
shall report to the Governor and the Legislature regarding the
exemption provided in subdividision (a) and shall make one of the
following recommendations:
(1) Continue the exemption
(2) Remove the exemption
(3) Adjust the exemption to exclude institutions accredited by
regional accrediting agencies that do not provide sufficient
oversight of institutions and protection of student interests, as
determined by the California Postsecondary Education Commission
based on evidence collected by the commission.
(c) This section shall remain in effect only until January 1, 2015
and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2015, deletes or extends that
date.
(5) Consumer groups play an important role in advancing protections
for students and should be a part of the BPPE advisory committee.
Suggested amendment : One page 23, line 33, after the second comma
insert: consumer advocates.
(6) The measure contains language that allows a student to cancel
their enrollment agreement up until the first class session or seven
days, whichever date comes later. The three day waiting period in
Section 9487, paragraph (p) may prove to be burdensome to students
and not necessarily the best mechanism to bring about student
protections.
Suggested amendment : On page 29, line 36, strike out lines 36 to 40
inclusive.
(7) The measure does not clarify if students who receive federal or
state financial aid will have full access to these funds and be able
to make requisite payments without schools potentially holding the
monies.
Suggested amendment : On page 31, line 29, after "to" insert: any
funds received by an institution through
On page 31, line 30, strike out "financial aid payments received by
an institution" and insert: student financial aid grant and loan
programs, or through any other federal or state programs
On page 31, between lines 30 and 31, insert: (d) An institution
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that provides private institutional loan funding to a student shall
ensure that the student is not obligated for indebtedness that
exceeds the total charges for the current period of attendance.
On page 31, line 32, after "fees" insert: including any funds
received through institutional loans
On page 31, strike out lines 35 to 37, inclusive.
(8) The bill specifies a refund policy for institutions that are
not eligible for Title IV funding but does not apply the same
standard to Title IV financial institutions.
Suggested amendment : On page 41, between lines 4 and 5, insert:
(d) Institutions shall refund 100 percent of the amount paid for
institutional charges, less a reasonable deposit or application fee
not to exceed two hundred fifty dollars ($250), if notice of
cancellation is made through attendance at the first class session,
or the seventh class day after enrollment, whichever is later.
(9) As certain accrediting agencies make arrangements for
institutions to transfer transcripts to another school in a
situation where the institution closes, there needs to be clarity in
what BPPE requires in the same situation to ensure institutions are
not in violation of requirements set forth by their accrediting
agency.
Suggested amendment : On page 43, line 13, strike out lines 1 to 7
inclusive and insert:
94927.5 (a) Prior to closing, an institution shall provide the
bureau with the following:
(1) Pertinent student records, including transcripts, as determined
by the bureau pursuant to regulations adopted by the bureau
(2) If the institution is an accredited institution, a plan for the
retention of records and transcripts, approved by the accrediting
agency, that provides information as to how a student may obtain a
transcript or any other information about the student's coursework
and degrees completed.
(b) Subdivision (a) applies to all private postsecondary
institutions, including institutions that are otherwise exempt from
this chapter pursuant to Article 4 (commencing with Section 94874).
(10) In defining reporting requirements for institutions, the bill
requires "graduates employed in the field" acknowledge a period of
at least 60 days of employment in the field for which they received
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education and training. This 60 day requirement may be burdensome
to students who have to report all of their job changes to a school,
considering that a student may forge a completely different career
path upon completion of a program in one area. The requirement may
also result in harassment of students by schools trying to obtain
the data.
Suggested amendment : On page 43, line 30, strike "and that remain
employed for a period of at least 60 days"
(11) Accredited schools are not the only entities providing
services; institutions approved by BPPVE are still operating in the
state.
Suggested amendment: On page 43, line 36, between accredited and
postsecondary, insert: or bureau-approved
(12) The Legislature has the authority to establish statutory fee
ceilings and the Legislature also gives state agencies the ability
to set fees. In establishing increases to existing fees, it makes
sense for the Legislature to weigh in and determine whether fees are
equitable relative to the activities a particular agency carries
out. In this instance, BPPE will regulate institutions that serve
millions of California residents so there should be transparency in
the process that alters these fees.
Suggested Amendment : On page 45, line 13, strike out "fees
established by this" strike out lines 14 to 15 inclusive and insert:
fees. However, the bureau shall not implement any increase in any
fee established by this article without express legislative
approval.
(13) Unlimited fees may be cost prohibitive to private
postsecondary institutions doing business in California and an
appropriate cap on fees should be established.
Suggested Amendment : On page 46, line 8, after "California" insert:
, but not exceeding twenty-five thousand dollars ($25,000) annually
(14) BPPE should have the authority to lower fees when it deems
appropriate.
Suggested Amendment : On page 46 between lines 11 and 12, insert:
(d) If the bureau determines that the annual cost of providing
oversight and review of an institution, as required by this chapter,
is less than the amount of any fees required to be paid by that
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institution pursuant to this article, the bureau may decrease the
fees applicable to that institution to an amount that is
proportional to the bureau's costs associated with that institution
(15) Current law, Section 129.5 of the Business and Professions
Code, sets five thousand dollars ($5000) as a sufficient amount for
administrative fines issued by DCA boards and bureaus. BPPE should
act in accordance with other boards and bureaus to ensure
consistency, while still taking into consideration the Monitor's
recommendation of higher fees than the former Act.
Suggested Amendment : On page 48, line 40, strike out "ten thousand"
on page 49 line 1, strike out "dollars ($10,000) and insert: five
thousand dollars ($5,000)
(16) Current law establishes a sunset review process in which a
board or bureau is required to provide a sunset report to the Joint
Legislative Committee on Sunset Review. The sunset report is due 22
months before the inoperative date. In the interim recess after the
report has been filed, the Joint Legislative Committee on Sunset
Review will hold hearings and in the following year, any clarifying
legislation may be considered prior to the repeal.
Previous legislation amending the Act and provisions of BPPVE was
directly impacted by timing, as meaningful changes were not able to
be enacted prior to BPPVE becoming inoperative.
The measure makes BPPE inoperative in January 2016, thus the report
should be due to the Legislature in the fall of 2013.
Suggested Amendment : On page 52, line 17 strike out "July 1, 2012"
and insert: October 1, 2013.
NOTE : Double-referral to Senate Committee on Education. Any
amendments recommended to be taken in this bill should be taken in the
next policy committee.
SUPPORT AND OPPOSITION
Support:
American Massage Therapy Association - California Chapter
Corinthian Colleges
Faculty Association of California Community Colleges (FACCC)
Goodwill Industries
License Instruction Schools
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Western Career College
Support if Amended: Laureate Education
Neutral If Amended : Department of Consumer Affairs
Oppose Unless Amended: Civil Justice Association of California
Opposition: One individual
Consultant:Sarah Mason