BILL ANALYSIS AB 1222 Page 1 Date of Hearing: April 27, 2009 ASSEMBLY COMMITTEE ON JUDICIARY Mike Feuer, Chair AB 1222 (Lowenthal) - As Amended: April 13, 2009 PROPOSED CONSENT (As Proposed to be Amended) SUBJECT : CALIFORNIA STATE UNIVERSITY AND UNIVERSITY OF CALIFORNIA ALUMNI: DISCLOSURE KEY ISSUE : SHOULD CURRENT LAWS, WHICH ALLOW CALIFORNIA STATE UNIVERSITY (CSU) AND THE UNIVERSITY OF CALIFORNIA (UC) TO DISCLOSE NAMES AND ADDRESSES OF ALUMNI UNDER LIMITED CIRCUMSTANCES, BE EXTENDED AN ADDITIONAL FIVE YEARS FROM THE DATE THEY ARE CURRENTLY SCHEDULED TO EXPIRE? FISCAL EFFECT : As currently in print this bill is keyed fiscal. SYNOPSIS Current law permits California State University and the University of California to release the names and addresses of their alumni to businesses with whom the universities have an affinity partner agreement. However, the universities are only allowed to release such information if certain privacy requirements are met, and if alumni are given multiple cost-free opportunities to opt out and not have their information released. The current provisions will sunset on January 1, 2011. This non-controversial bill seeks to extend an additional five years the current sunset date. SUMMARY : Extends for an additional five years from the date they are currently scheduled to expire laws that permit California State University (CSU) and the University of California (UC) to release the names and addresses of their alumni to businesses with whom the universities have an affinity partner agreement, providing certain privacy requirements are met. Specifically, this bill : 1)Extends by five years the repeal dates for the current statutes that allow CSU and UC to release the names and addresses of their alumni to businesses with whom the universities have an affinity partner agreement. AB 1222 Page 2 2)Continues to provide that, in order to release alumni information to their affinity business partners, the universities must meet certain privacy requirements and offer alumni multiple opportunities to opt out of having their information shared. EXISTING LAW : 1)Contains a body of statutes, known as the California Information Practices Act of 1977, which prohibits an individual's name and address from being distributed for commercial purposes, or being sold or rented by a state office, officer, department, division, bureau, board, commission, or other state agency, unless such action is specifically authorized by law. (Civil Code section 1798.60.) 2)Requires that a financial institution, when it has an agreement with an affinity partner to issue a credit card or financial product or service, to provide its customers with an annual written opportunity to opt out of the disclosure of the customer's nonpublic personal information. (Financial Code sections 4053(b), 4053(d), 4054.6.) 3)Requires the State Bar to give its members, in the annual dues statement, an opportunity to opt out of the sale or disclosure of member information not reasonably related to regulatory purposes. (Business and Professions Code section 6001.) 4)Permits the trustees, regents, directors, and alumni association of CSU and UC to distribute the names, addresses, and email addresses of alumni for the following purposes: a) To provide informational materials relating to the university; b) To provide commercial opportunities; or c) To promote and support the educational mission of the university. (Education Code sections 89090(a), 92630(a).) 5)Permits the names, addresses, and email addresses of CSU and UC alumni to be distributed to a business with whom the universities have a contractual agreement as long as: a) The business must maintain the confidentiality of alumni names and addresses; b) CSU and UC must retain the right to approve or reject AB 1222 Page 3 any purpose for which the information is to be used; c) CSU and UC must retain the right to review and approve the text of mailings; and d) The agreement must prohibit the business from using the information for any purposes other than those specifically allowed in the bill. (Education Code sections 89090(b)(1)(A), 92630(b)(1)(A).) 6)Prohibits the disclosure of the following: a) Names, addresses, and email addresses of alumni who have directed the trustee or an alumni association not to disclose their names or addresses; b) Any information regarding current students of CSU or UC; and c) Any information regarding alumni who as students indicated they did not want their information disclosed. (Education Code sections 89090(b)(3)-(4), 92630(b)(3)-(4).) 7)Requires CSU and UC to provide notice to the alumni (which can be satisfied using a form in the statute). (Education Code sections 89090(c)(2), 92630(c)(2).) 8)Requires CSU and UC to provide alumni with multiple opportunities to opt out of having their information shared with affinity partners, including: a) Upon graduation; b) In the alumni association magazine or newsletter on an annual basis; c) A one-time mailing to all alumni on the university mailing list as of January 1, 2006; d) A website link; and e) An annual electronic email notice to alumni whose email addresses are available. (Education Code sections 89090(c)(3)(B), 92630(c)(3).) 9)Requires CSU to provide at least two cost-free means for alumni to communicate their privacy choice. (Education Code sections 89090(c)(4), 92630(c)(4).) 10)Provides that the provisions relating to UC (which include UC Hastings College of Law as well as other UC campuses) apply only to the extent that the UC Regents or UC Hastings Board of Directors act by resolution to make them applicable. AB 1222 Page 4 (Education Code section 92630.5.) 11)Provides that the information-sharing provisions shall remain in effect until January 1, 2011, and as of that date is repealed, unless a later enacted statute deletes or extends that date. (Education Code sections 89090.5, 92630.9.) COMMENTS : The previous bill, SB 569 (Torlakson) 2005, provided authority to CSU and UC to allow the controlled disclosure of alumni names and addresses to businesses that are "affinity partners" of those universities. In support of that bill, CSU states that use of affinity programs help generate much needed funds for the university. What are affinity programs ? An affinity program provides a means whereby a tax-exempt organization may generate funds by allowing the use of its name and/or logo to endorse products or services. In the case of UC and CSU, through partnerships with commercial entities, affinity programs allow alumni organizations to offer a variety of financial products to graduates and alumni members, such as group rates and discounts for home and auto insurance, mortgage programs, credit cards, and other credit lines. In return for allowing access to alumni association mailing lists, the affinity partner pays a fee to the campus association. In support of the previous bill, SB 569, CSU stated that funds were needed because of serious cuts to their programs, and that affinity program funds could help provide scholarships, mentoring, career advising and placement, public service, and recognition of outstanding teaching and research, all vital programs. The other sponsor of that bill, UC, stated that its alumni associations received about $5 million annually from affinity programs and that UC used the funds to support operations and a number of programs and services. Opponents argued that personal information should only be provided on an opt-in (rather than opt-out) basis, and that consumers object to having their information shared without consent. Other opponents voiced concern over the potential of identity theft. Sponsors argued that an opt-in provision would be too expensive. Amendments were made to address the strong privacy concerns, including requirements that CSU and UC annually provide alumni with the opportunity to opt out. AB 1222 Page 5 The provisions allowing UC and CSU to share alumni information with their affinity partners and requiring numerous privacy protections will sunset as of January 1, 2011. This bill seeks to eliminate those sunset dates, thus extending the provisions indefinitely. Privacy Concerns Appear to Have Been Met by Opt-Out Requirements . The opt-out requirements in the current law have been carefully followed by CSU and UC during the years the information-sharing provisions have been in place. The author provided documentation from both CSU and UC that demonstrates that they are taking the opt-out requirements very seriously and are mindful of the need to adhere closely to the statutory privacy and opt-out requirements. Supporters of this bill, CSU, state that they required all campuses to use a uniform opt-out letter to alumni that was approved by their general counsel, to ensure that the correct information was given and that alumni were provided sufficient opportunities to opt out. CSU states that it also encouraged campuses to provide as many options as possible beyond the minimum requirement of two opt-out opportunities. CSU states that although no specific period of time was statutorily required to receive the opt-out notices back, they advised all campuses to give 30-45 days at a minimum for alumni to return their opt-out forms. They also required campuses to immediately remove alumni who had opted out from lists within the 45 days as required by the statutes. In addition, CSU states that is has required campuses to report (and continues to require annual reporting) on affinity contracts already in place, as well as potential future contracts. They required all current contracts to be modified as required by the statute to ensure alumni information would only be used for permissible purposes. CSU General Counsel must approve all new contracts. Campuses also keep track of all of their opt-out numbers and responses to notifications. The Affinity Program Reportedly Provides Necessary Funds to the Universities . Sponsors CSU and UC state that the program has provided important funding for their programs and that without the affinity programs they would face serious problems in supporting their activities, sustaining and attracting membership, and facilitating future donations worth millions of dollars. AB 1222 Page 6 Funding Generated by the Current Provisions . CSU states that it does not yet have a complete breakdown of funding data. The system currently allows each campus flexibility in how it spends the affinity funds. However, CSU states that the Chico campus has about $45,000 in annual affinity revenue and uses 2/3 of this for alumni outreach and the remaining is used to pay for alumni outreach staff salaries. Fresno State receives about $105,000 in revenue and about $15,000 of this went out as scholarships, whereas the rest went to alumni outreach including the magazine, online social networking, and alumni programming. CSU states in support of this bill that any dollars collected from affinity programs is a dollar saved for the campus, suggesting that it may not be crucial to track where all of the revenue is going. CSU states there have thus far been no security breaches and no complaints. CSU states that none of their 23 campuses have reported any security breach and there have been no complaints from alumni who asked for their information to be removed or who did not receive an opt-out form. Campuses send out annual opt-out notifications through email, alumni magazines, and mailings. The number of opt-outs have declined from 4-10% (in the initial opt-out period) to under 5% (in the annual opt-outs). ARGUMENTS IN SUPPORT : The author states that it is common practice for public universities nationwide, as well as private institutions in California, to offer benefits and services to alumni through affinity partnerships with commercial vendors, as a way to stay connected with alumni. Affinity partnerships include group rates and discounts for home and auto insurance, mortgage programs, and travel programs. The ultimate goal of these programs is to support the university in the form of donations, scholarships, and involvement. The author states that in light of recent revenue problems in California, the need for private funding through programs such as these is more critical than ever so that universities can maintain the quality of their programs. The author states that the campuses that have these programs use the funding to further their programming and outreach to alumni, as well as to provide both general and athletic scholarships to students. The author states that for the three years the statute has been in place, CSU and UC "have held the privacy of their alumni in the highest regard, keeping meticulous record of all opt-out AB 1222 Page 7 information obtained from alumni as well as continually following the letter of the law by ensuring ample opportunities for alumni to have their information removed from records." Consumer Groups : Privacy Rights Clearinghouse state that although they don't oppose the bill they wish to have the 5 year sunset to ensure there is sufficient information available to make sure CSU and UC comply with the current law's provisions and protect alumni's personal information and privacy. Prior Related Legislation . SB 1 (Speier), Chapter 241, 2003: Established the California Financial Information Privacy Act (IPA), which focused on privacy and broader consumer protections and inadvertently impacted the ability of public university alumni associations to develop these affinity programs. Specifically, the IPA prohibited public institutions (including CSU) from distributing the names or contact information for any individuals, including their alumni. SB 569 (Torlakson), Chapter 498, 2005: Until January 1, 2011, permits the California State University (CSU), the University of California (UC), and Hastings College of the Law (HCL) to release the names and addresses of their alumni to businesses with whom they have affinity-partner agreements (i.e. commercial vendors that have contracts with the institutions to offer alumni commercial products and services, often at discounted rates). The bill requires certain privacy requirements to be met, including requiring the businesses to maintain the confidentiality of the names and addresses of the alumni. The institutions must provide their alumni with the opportunity to opt-out of having their information shared. REGISTERED SUPPORT / OPPOSITION : Support University of California California State University Opposition None on file Analysis Prepared by : Drew Liebert and Rachel Anderson / JUD. / (916) 319-2334 AB 1222 Page 8