BILL ANALYSIS                                                                                                                                                                                                    



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          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.









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          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  








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               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.   








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            (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.








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          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. 









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           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  








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          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 








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