BILL ANALYSIS Ó ----------------------------------------------------------------------- |Hearing Date:June 6, 2011 |Bill No:AB | | |611 | ----------------------------------------------------------------------- SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT Senator Curren D. Price, Jr., Chair Bill No: AB 611Author:Gordon As Amended:March 22, 2011 Fiscal:Yes SUBJECT: Private postsecondary education: unaccredited doctoral degree program. SUMMARY: Sets forth certain disclosure requirements pertaining to accreditation status, licensure, and related limitations for unaccredited doctoral programs. Existing law: 1)Establishes the Bureau of Private Postsecondary Education (Bureau) within the Department of Consumer Affairs (DCA) and provides for Bureau oversight and regulation of California private postsecondary institutions under the California Private Postsecondary Education Act of 2009 (Act). (Business and Professions Code(BPC) § 101 and Education Code (EC) § 94820) 2)Prohibits institutions from: using the seal of the state on a diploma, promising employment or otherwise overstating the availability of jobs in the local economy upon graduation, presenting or advertising specified information including inaccurate information, failing to include distance education information in advertisements, inaccurately advertising approval or accreditation status, using "help wanted" ads to solicit students, compensating or providing gifts to students for recruitment activities, making untrue or misleading statements, willfully falsifying or destroying documents, improperly implying approval or licensure or failing to completely disclose what approval or licensure means, directing an individual to violate the Act or persuading a student not to file a complaint, compensating an employee by bonus or commission for recruitment or student assistance except as specified, and requiring AB 611 Page 2 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. (EC § 94897) 3)Provides that for career fields that require licensure by the state, institutions offering educational programs must have approval to conduct that educational program. (EC § 94899) 4)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. (EC § 94905) This bill: 1)Prohibits an institution from offering an unaccredited doctoral degree program without disclosing to prospective students prior to enrollment that the degree program is unaccredited, whether the degree issued is in a field that requires licensure in California, and any known limitation of the degree, including, but not limited to, whether the degree is recognized for licensure or certification in California and other states. FISCAL EFFECT: According to the Assembly Committee on Appropriations analysis dated May 4, 2011, this bill will result in minor absorbable enforcement-related costs to the Bureau. COMMENTS: 1. Purpose. The Author is the Sponsor of this bill. According to the Author, ensuring unaccredited doctoral degree programs disclose certain information, including any known limitations of the unaccredited degree and whether the degree is recognized for licensure or certification in other states will further protect consumers who decide to participate in these programs. Currently, unaccredited doctoral programs are not required to disclose their accreditation status and related limitations in California or in other states. The Author believes that this bill will improve access to information for potential consumers before they make AB 611 Page 3 investments in their education. The Author also cites recent reports and hearings on the abuses and pitfalls in the for-profit postsecondary education industry as rationale for a need for greater transparency. According to information provided by the Author, from 1998 to 2008, enrollment in for-profit schools jumped 236%, far outpacing growth in public and nonprofit private schools which grew by around 20%. On average, only 22% of students at for-profit schools will earn degrees from those institutions within six years, compared to 55% and 65% at public and private nonprofit colleges and universities, respectively. The Author also notes that a quarter of borrowers who attended for-profit colleges and entered repayment on their loans in 2008 defaulted within three years; a higher rate than any other sector in postsecondary education and states that with more information, potential students can make fully informed decisions concerning their education before entering into costly loan agreements for programs that may not be recognized in the field of intended employment. 2. Background. After numerous legislative attempts to remedy the laws and structure governing regulation of private postsecondary institutions, AB 48 (Portantino, Chapter 310, Statutes of 2009), established the Act and created the Bureau within DCA for the purpose of regulating private postsecondary educational institutions that provide educational services in California. The Act made many substantive changes that both created a new, solid foundation for oversight and responded to the major problems with the Former Act. The Act as created by AB 48 requires all unaccredited colleges in California to be approved by the new Bureau, and all nationally accredited colleges to comply with numerous student protections. It is important to note that not all private institutions are covered by the provisions of the Act; full and partial exemptions are provided for low-cost programs, recreational schools, schools accredited by regional accrediting agencies, among other types of institutions. For those institutions that are covered by the Act, they are required to follow a Bureau evaluation and approval process, required to abide by numerous "fair business practices" aimed at protecting students, required to disclose information to students in enrollment agreements and catalogs, required to participate in a Student Tuition Recovery Fund (STRF), and required to pay application and annual fees to the Bureau to support the oversight structure. The Act also establishes processes for penalties for non-compliance, providing the Bureau authority to perform site visits and investigations, order fines and student tuition refunds, and AB 611 Page 4 ultimately suspend or revoke an institution's approval to operate. Finally, the Act requires evaluation and reporting from the Legislative Analyst's Office (LAO) and the Bureau of State Audits (BSA). 3. Concerns Regarding Private Postsecondary Institutions. Media outlets, efforts at the Federal level and increased scrutiny by state legislatures have recently highlighted unease about the operations and functions of private postsecondary schools. While the sector serves upwards of ten percent of postsecondary students and provides a path to higher education that may not always be available for all students, there are increased questions about these institutions and their accurate representation of what they are able to offer students. There are also concerns that schools provide training at a steep cost that does not balance the earnable income an individual may be eligible for based on that training or upon completion of a program. Last fall, the U.S. Department of Education (DOE) adopted new rules to rein in the recruiting practices of for-profit colleges by changing standards for students to use federal Title IV money at these institutions. The effort gained momentum following a report by the U.S. Government Accountability Office (GAO) that found potential deception by schools to students about graduation and job placement rates in the process of getting them to enroll and sign up for state and federal loans. Using undercover testing, GAO found some schools encouraging students to falsify their financial aid applications in order to qualify for federal grants. Other schools misrepresented their programs' graduation rates, job-placement rates and costs while recruiting students. According to the National Conference of State Legislatures (NCSL), 17 states are considering legislation to further regulate these institutions. In California, for-profit schools now face restriction on the ability to receive state monies in the form of Cal Grants, which provide over $20 million more annually to the schools than to community colleges. Just recently, Maryland's House and Senate enacted measures that would eliminate all state aid to for-profit schools, ban commissions or bonuses for student recruiting, and make all for-profit schools in the state contribute to a fund to protect students if any college in their group breaches a contract. Recent budgetary and capacity issues in California's public postsecondary schools, coupled with the current economic crisis have led to growth in enrollment at private postsecondary schools, AB 611 Page 5 as employees are increasingly out of work and more inclined to enter training programs in the hopes of obtaining gainful employment, at a cost they may not be able to make up once they are employed. This Committee, at its March 2009 hearing entitled "The Role of Private Education Institutions in Preparing California's Diverse Workforce: Meeting the Challenges of our Workforce and Job Training Needs" examined the ability of private postsecondary institutions to fill the career preparation needs of California's workforce and evaluated policy options that allow them to expand their workforce development programs with the requisite amount of oversight required to protect students. The private postsecondary school sector has responded to additional regulation and oversight proposals by noting that career colleges are an essential part of the solution for restoring this country's global educational and economic standing, citing the role these schools play in helping lower unemployment, boost global competitiveness, fill jobs in key industries, and increase the number of college graduates by 2020. According to federal data, more than 2.2 million students enrolled in a private for-profit institution in the fall of 2009, almost 25 percent more than the previous year. 4. Accreditation. Accreditation is a voluntary, non-governmental peer review process utilized for the purpose of determining academic quality of higher education institutions and programs. Under federal law, DOE is required to publish a list of recognized accrediting agencies deemed reliable authorities on the quality of education or training provided by their accredited institutions. Only those institutions accredited by a DOE-recognized accrediting organization are eligible to participate in the federal student financial assistance programs. Unaccredited degrees can limit a student's career options. Some career fields and employers require degrees from accredited colleges; this is especially true in professions like education and health care, where certification or licensure is a pre-requisite for employment. While California licensure requirements in the health care field vary, physicians, dentists, clinical social workers, optometrists, and chiropractors must obtain their required degrees from accredited institutions or institutions approved by their respective licensing boards. 5. Similar and Related Legislation. This bill contains the same technical, clarifying provisions as AB 1889 (Portantino, 2010). In addition, AB 1889 contained provisions regarding doctoral degrees offered by unaccredited institutions, the calculation of placement rates, and Bureau employment requirements. AB 1889 was vetoed by Governor Schwarzenegger due to concerns over Bureau employment requirements. AB 611 Page 6 AB 1013 (Assembly Committee on Higher Education) of 2011 makes clarifying changes to the Act and related Bureau oversight. This bill is set for hearing in this Committee on June 6, 2011. SB 498 (Liu) of 2011 abolishes the Bureau and transfers the Bureau's powers and duties under the Act to the California Postsecondary Education Commission. The bill is a two-year bill pending hearing in this Committee. SB 619 (Fuller) of 2011 exempts flight instructors or flight schools that do not require the upfront payment of tuition or fees, and that do not require students to enter into a contract of indebtedness in order to receive training, from Bureau regulation. The bill is pending in the Assembly. SB 675 (Wright) of 2011 requires that private postsecondary institutions subject to the Act administer a test of English language proficiency to a nonnative speaker of English, as defined, prior to enrolling the student. The bill failed passage in this Committee. AB 797 (Conway) of 2011 exempts schools of cosmetology, as defined, from the Act. The bill has not been set for hearing in the Assembly Committee on Higher Education. AB 2393 (Ammiano, 2010) altered the definition of "graduates employed in the field" for apprenticeship and nursing programs. The bill was vetoed by the Governor. 6. Arguments in Support. According to the California Psychological Association (CPA), this bill is "a step in the right direction to re-affirm current law ensuring that students who attend approved schools will know the limitations of their degrees once they enter the workplace." CPA also believes that graduates from non-accredited institutions with state approval have faced problems in obtaining full employment and that these individuals were never aware of any barriers to practice. The California Physical Therapy Association (CPTA) writes in support of this bill, noting that this bill is necessary to protect prospective students from enrolling in a doctoral degree program they believe is accredited when in fact it is not. NOTE: Double-referral to Education Committee (second). AB 611 Page 7 SUPPORT AND OPPOSITION: Support: California Psychological Association (CPA) California Physical Therapy Association (CPTA) Opposition: None on file as of May 31, 2011 Consultant:Sarah Mason