BILL ANALYSIS SENATE JUDICIARY COMMITTEE Senator Ellen M. Corbett, Chair 2009-2010 Regular Session AB 1971 (Lowenthal) As Introduced Hearing Date: June 10, 2010 Fiscal: Yes Urgency: No SK:jd SUBJECT California State University, University of California, and Hastings College of the Law: Disclosure of Alumni Personal Information DESCRIPTION This bill would extend the sunset date on current law which permits the California State University (CSU), the University of California (UC), and Hastings College of the Law (HCL), to disclose the names, addresses, and e-mail addresses of alumni to their "affinity partners" (nonaffiliated businesses with whom the university has a contractual agreement to, among other things, offer commercial products and services to alumni), subject to specified privacy requirements. These provisions are scheduled to sunset on January 1, 2011; this bill would extend the provisions to January 1, 2016. BACKGROUND This bill is a reintroduction of last year's AB 1222 (Lowenthal), which was vetoed by the Governor. In 2005, the Legislature passed and the Governor signed SB 569 (Torlakson, Ch. 498, Stats. 2005) which expressly allowed CSU, UC, and HCL to disclose the names, addresses, and e-mail addresses of alumni to businesses with whom the university has an affinity partner agreement. Tax-exempt organizations use affinity programs to generate revenue by permitting the use of their name or logo to endorse products or services. Both CSU and UC use affinity programs to partner with commercial entities so that alumni organizations can offer various financial products and services to alumni. As part of the agreement, the affinity partner pays (more) AB 1971 (Lowenthal) Page 2 of ? a fee to the alumni association in return for allowing access to alumni association mailing lists. Under SB 569, alumni information may only be shared for particular purposes, and the universities must meet specified privacy requirements including that they have a written contractual agreement with the affinity partner business that contains certain privacy protections. CSU, UC, and HCL may not disclose alumni information to affinity partners without first offering alumni an opportunity to opt out of the disclosure. Existing law provides a statutory notice form for this purpose and requires that the form be provided to alumni in certain communications, such as the alumni association magazine and Web site. These provisions sunset on January 1, 2011; this bill would extend this sunset date to January 1, 2016. This bill also contains related reporting requirements. CHANGES TO EXISTING LAW Existing law permits CSU, UC, and HCL to disclose the names, addresses, and e-mail addresses of alumni to businesses with whom the university has an affinity partner agreement. (Ed. Code Secs. 89090, 92630.) Existing law provides that alumni information may only be shared for the following specified purposes: (1) to provide alumni with commercial opportunities that are beneficial to the alumni or the university; (2) to provide alumni with informational materials relating to the university; and (3) to promote and support the educational mission of the university. (Ed. Code Secs. 89090(a), 92630(a).) Existing law requires CSU, UC, and HCL to meet specified privacy requirements including that they have a written contractual agreement with the affinity partner business that requires the business to maintain the confidentiality of the alumni information and provides that the business may not use the information for any purpose other than the three purposes permitted by the statute. (Ed. Code Secs. 89090(b)(1)(A), 92630(b)(1)(A).) Existing law provides that CSU, UC, and HCL may not disclose alumni information to affinity partners without first clearly and conspicuously notifying alumni that their personal information may be disclosed and giving the alumni an opportunity to opt out of the disclosure. If an alumni opts out of such sharing, his or her information may not be disclosed. (Ed. Code Secs. 89090(b)(2), 92630(b)(2).) AB 1971 (Lowenthal) Page 3 of ? Existing law prohibits CSU, UC, and HCL from disclosing information about any current students or an alumnus who, as a student, indicated pursuant to the federal Family Educational Rights and Privacy Act (FERPA) that he or she did not want his or her personal information disclosed. (Ed. Code Secs. 89090(b)(4), 92630(b)(4).) Existing law provides for a statutory notice form that CSU, UC, and HCL may use to provide alumni with the opportunity to opt out of sharing. (Ed. Code Secs. 89090(c)(1) and (2), 92630(c)(1) and (2).) Existing law requires that the form be provided to alumni in the following communications: (1) in the solicitation sent to graduating students encouraging them to join the alumni association; (2) in the alumni association magazine; (3) on the alumni association's Web site; (4) in a one-time mailing sent to all alumni on the university's list as of January 1, 2006; and (5) in an annual electronic communication. (Ed. Code Secs. 89090(c)(3)(B), 92630(c)(3)(B).) Existing law requires that alumni be provided at least two alternative cost-free means to communicate their privacy choices, such as calling a toll-free number or using electronic means. (Ed. Code Secs. 89090(c)(4), 92630(c)(4).) Existing law provides that an alumnus may opt out of sharing at any time and CSU, UC, and HCL must comply with this direction within 45 days of receipt. (Ed. Code Secs. 89090(c)(5)(A), 92630(c)(5)(A).) Existing law provides that the above described provisions sunset on January 1, 2011. (Ed. Code Secs. 89090.5, 92630.9.) This bill would extend this sunset date to January 1, 2016. This bill would provide for related reporting requirements to the Senate and Assembly Judiciary Committees and would require that the statutory notice form must be made available on the alumni association's Internet Web site, as specified. COMMENT 1. Stated need for the bill The author writes: Campus alumni associations have been established at all 23 AB 1971 (Lowenthal) Page 4 of ? California State University (CSU) campuses as well as the 10 University of California (UC) campuses. The primary purpose of these associations is to maintain relationships and build long-term connections to graduates with the ultimate goal to support the University in the form of donations, scholarships, and involvement. It is common practice among public universities throughout the country, and private institutions in California, to offer benefits and services through affinity partnerships with commercial vendors to alumni as one way to stay connected to their university. Examples of these affinity partnerships include group rates and discounts for home and auto insurance, mortgage programs and travel programs. In light of California's recent revenue shortfalls and budget reductions to public universities, the role of alumni associations and the need for private funding of public universities is more critical then ever to help University leaders get non-state dollars necessary to maintain program quality. . . . Affinity programs must continue to support CSU and UC with donations, scholarships, and community involvement. All 23 CSU campus associations currently use the funding they receive from these programs to further their programming and outreach to alumni as well as to provide both general and athletic scholarships to students. Co-sponsor the University of California writes that "affinity programs generated approximately $3.6 million for UC campuses in 2007-08. Revenues generated from UC campus affinity partnerships generally provide funding to supplement the operational costs of campus alumni programs. The revenues are also used by UC campus alumni associations to provide services and benefits to students. An example is the UC Irvine alumni association's affinity partnership revenues, of which almost 35 percent are used to support the cost of student programs and scholarships. The funds generated by affinity partnerships allow the UC campus alumni association to provide services and events to alumni and students that the campuses would otherwise not be able to offer." In support of last year's AB 1222, an identical measure, co-sponsor California State University noted that "[t]hroughout the first three years of implementation of this statute both public universities have held the privacy of their alumni in the AB 1971 (Lowenthal) Page 5 of ? highest regard, keeping meticulous record of all opt-out 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." 2. Veto of AB 1222 Last year, the Legislature passed AB 1222, which would have extended the sunset date on current law permitting CSU, UC, and HCL to disclose alumni personal information. In vetoing the measure, the governor stated: I am returning Assembly Bill 1222 without my signature. This bill extends the sunset date on a statute that is not expiring until January 1, 2011. Therefore, this bill is premature and unnecessary. For these reasons, I am unable to sign this bill. Given that current law sunsets on January 1, 2011, the author has reintroduced AB 1222. 3. Amendments taken last year in this Committee are included in this year's bill Existing law requires the Web site for each alumni association to include a link to the opt-out form. When this Committee heard AB 1222, it was determined that there was a lack of consistency regarding where the forms are located on the campuses' Web sites. In order to address the concern that alumni may have a difficult time locating the forms, this Committee amended the bill to require that the form be located either on the homepage of the alumni association or in the association's privacy policy. In addition, this Committee amended AB 1222 to also provide that information regarding the use of affinity partnership agreements and opt-out requirements be given to the Senate and Assembly Judiciary Committees by July 1, 2014. Both of the above-described amendments are contained in AB 1971. 4. Making the case for a sunset extension AB 1971 (Lowenthal) Page 6 of ? Last year, when this Committee heard AB 1222, a number of questions were raised regarding whether the sponsors of the measure had demonstrated that it was appropriate to extend existing law's sunset date to January 1, 2016, thus permitting CSU, UC, and HCL to share alumni information with affinity partners for another five years. In response to questions from Committee staff, the sponsors of AB 1222 provided extensive information that demonstrated both how the law was being used by the universities and the manner in which alumni personal information was being protected, as required by the statute. The following information was provided to the Committee last year with respect to AB 1222, and the sponsors indicate that this information is still accurate: a. CSU "Alumni Affinity Survey Results" The author provided this committee with a document entitled "CSU Alumni Affinity Survey Results." This document provides information on a campus-by-campus basis regarding the affinity partnership agreements each campus has entered into, including information on when the contract expires, the use of the revenue, and how many alumni have opted out. For example, CSU East Bay currently has two affinity partnerships, one with Marsh and another with Liberty Mutual. Both of these are insurance programs. The agreements bring in $10,000 which is used for alumni outreach. According to the survey, 11,000 alumni have opted out. CSU Fresno reported that it had four affinity partnerships-a credit card program with Bank of America and insurance programs offered by Marsh, Liberty Mutual, and AIA. Revenue from the Bank of America partnership was $1,621, Marsh $33,252, Liberty Mutual $70,000, and AIA $578. The university uses the revenue for programming, its alumni magazine, online social networking, and scholarships. The survey indicated that 4.1 percent of alumni opted out in the initial mailing and 22 alumni have opted out on a quarterly basis. CSU Long Beach reported that its two affinity partnerships-a Bank of America credit card program and Marsh insurance program-brought in $135,000 (Bank of America) and $30,000 (Marsh). The revenue was used to support alumni outreach, communications, and scholarships. 18,000 alumni, or nine percent, opted out. CSU San Diego has two affinity partnerships - an AIA insurance program and a GE Money credit card program. In 2008, 3,093 alumni participated in these programs, which raised $235,000. 27,000 alumni opted out. CSU Los Angeles has two programs - a Bank of America credit card program and a Marsh insurance program. In 2009, AB 1971 (Lowenthal) Page 7 of ? these programs raised $132,000 and 10,057 alumni participated. 3,200 alumni opted out of the sharing of their information. b. UC alumni association affinity programs In response to Committee staff requests last year, UC provided similar information concerning its alumni association affinity programs indicating that the UC campuses offer affinity programs for various products and services including credit card and insurance products and hotel, rental car, and jewelry discounts. At UC Berkeley, 35,000 alumni have opted out of disclosure, and the programs brought in $1.35 million which was used for operations. At UCLA, the Bank of America affinity program (credit cards) had 38,142 open accounts and brought in $1.17 million while the campus' affinity program with Marsh (insurance) had 6,247 policies in force and total annual revenue equaled $168,000. The revenue from the programs funded alumni and student programs, salaries of full-time alumni association staff, and technology and infrastructure improvements. UC Irvine's alumni association also has an affinity program for various products and services, including credit card, insurance, and travel programs. 5,054 alumni participate in the program and 15,386 opted out. The programs raise $111,000, which goes to fund programs and operations. c. Information relating to privacy protections When SB 569 was first considered in the Legislature it did not contain many of the privacy protections that are now included in the law. However, as a result of negotiations with legislative staff, the author, and interested parties, the bill was amended to include these various privacy protections. Those included expressly providing alumni with notice that their personal information may be disclosed to the university's affinity partner and giving them the opportunity to opt out of that disclosure. SB 569 was also amended to require a statutory notice form. In addition, CSU, UC, and HCL were required to provide the form to alumni in certain communications such as the alumni magazine and in a one-time mailing to alumni. Opt-out forms : In response to Committee staff inquiries when AB 1222 was being considered last year, CSU indicated that all new alumni receive the opt out form upon graduation and prior to the release of any of their information to third party AB 1971 (Lowenthal) Page 8 of ? vendors. Existing alumni who have received the initial opt out form also receive a notification annually. CSU also stated that all of its campuses that have magazines include the opt out form in those magazines on an annual basis. Those campuses which do not have magazines include the privacy and opt out information using the method they normally use to contact their alumni (e.g., e-mail, e-mail newsletters). UC stated that its alumni associations send out forms and notifications when they have addresses or contact information for alumni. UC also provided the committee with examples of opt out forms contained in alumni magazines. Annual electronic notice : CSU indicated last year that "all campuses send out an annual electronic notification to all addressable alumni in their database. For new alumni they also wait the 45 day waiting period prior to releasing any information to third party vendors and also remove any names that opt-out past the 45 day window with their vendors upon receipt of the opt-out." UC indicated that it notifies alumni of the affinity programs and their opt out rights "to the extent we have e-mail addresses." Statutory form : CSU indicated that its campuses are using a form that was developed through the Chancellor's Office of General Counsel that complies with the statutory requirements. CSU also provided committee staff with examples of these forms. UC stated that some campuses are using the statutory form while others are not. UC also provided the committee with an example of the alternative form which contains the required information. 5. Amendment regarding Hastings College of the Law In response to Committee staff inquiries, Hastings College of the Law indicates that it has not entered into any affinity partnership agreements and thus it is okay to remove HCL from the bill. As a result, the author has agreed to the following amendment, which would delete HCL's authority to disclose alumni information to affinity partners: On page 9, line 1, delete "or the Hastings College of the Law" On page 9, line 21, delete "or the Hastings College of the Law" AB 1971 (Lowenthal) Page 9 of ? On page 10, line 14, delete "or the Hastings College of the Law" On page 10, line 17, delete "or the Hastings College of the Law" On page 13, line 36, delete "and the Hastings College of the Law" Support : None Known Opposition : None Known HISTORY Source : California State University; University of California Related Pending Legislation : None Known Prior Legislation : See Background. Prior Vote : Assembly Higher Education Committee (Ayes 9, Noes 0) Assembly Judiciary Committee (Ayes 10, Noes 0) Assembly Appropriations Committee (Ayes 17, Noes 0) Assembly Floor (Ayes 74, Noes 0) **************