BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 2296
                                                                  Page  1

          Date of Hearing:   April 17, 2012

                       ASSEMBLY COMMITTEE ON HIGHER EDUCATION
                                 Marty Block, Chair
                     AB 2296 (Block) - As Amended:  April 9, 2012
           
          SUBJECT  :   Private Postsecondary Education Act of 2009: 
          disclosures.

           SUMMARY  :   Requires institutions regulated by the Bureau for 
          Private Postsecondary Education (Bureau) to provide additional 
          disclosures to prospective students.  Specifically,  this bill  :  

          1)Requires institutions regulated by the Bureau to disclose in 
            the school catalogue whether the institution is accredited by 
            an accrediting agency approved by the United States Department 
            of Education (USDE), and, if an institution is unaccredited 
            and offering associate, baccalaureate, masters, or doctoral 
            degrees, requires disclosure of the known limitations of the 
            degree, including, but not limited to:

             a)   Whether the degree is recognized for licensure or 
               certification in California and other states;

             b)   Whether a graduate of the degree program will be 
               eligible to sit for the applicable licensure exam in 
               California and other states; 

             c)   That a degree from an unaccredited institution is not 
               recognized for some employment positions, including, but 
               not necessarily limited to, positions with the State of 
               California; and,

             d)   That a student attending an unaccredited institution is 
               not eligible for federal student financial aid programs.

          2)Provides for various changes to the Student Performance Fact 
            Sheet, required to be disclosed to students prior to 
            enrollment, including:

             a)   Requires placement rates to be calculated for each 
               program that is designed to lead to, or the institution 
               makes a claim related to preparing students for a 
               recognized career, occupation, vocation, job, or job title.









                                                                  AB 2296
                                                                  Page  2

             b)   Requires the disclosure of salary data, regardless of if 
               the institution makes claims as to salaries that may be 
               earned upon graduation.  Removes the requirement that 
               institutions disclose Employment Development Department 
               (EDD) wage data.  

             c)   Requires each institution to provide the Bureau with 
               data that sufficiently identifies graduates of each 
               program, to enable the Bureau, in collaboration with other 
               agencies, to verify employment and wages for graduates. 

             d)   Requires, if the institution participates in federal 
               financial aid programs, to disclose the most recent 
               three-year cohort default rate reported by the USDE and the 
               percentage of enrolled students receiving federal student 
               loans.

          3)Requires an institution to provide to the Bureau, in the 
            annual report, a list of the occupations for which each of the 
            institution's programs are intended to train students using 
            the United States Department of Labor Standard Occupational 
            Classification codes.

          4)Establishes a new definition for "graduates employed in the 
            field" to mean graduates who are gainfully employed in a 
            position for at least 13 weeks and working at least 17.5 hours 
            per week in one of the occupations identified by the 
            institution.  For occupations not requiring passage of a 
            licensure examination, employment must begin within six months 
            of graduation.  For occupations that require passage of a 
            licensing examination, employment must begin within six months 
            after the announcement of the examination results for the 
            first examination available after a student completes a 
            program.

          5)Requires that the information used to substantiate Student 
            Performance Fact Sheet data be documented and maintained by 
            the institution for five years and to include specific records 
            of employment, such as contact information for employers, job 
            descriptions, starting dates and hours worked, and contact 
            information for graduates.  Requires this information to be 
            made available to the Bureau upon request.

          6)Requires an institution that maintains an internet website to 
            provide the school catalog, school performance fact sheet, 








                                                                  AB 2296
                                                                  Page  3

            student brochures, a link to the Bureau's website, the most 
            recent annual report submitted to the Bureau, and information 
            concerning where students may access the Bureau's website 
            anywhere the institution identifies itself as being approved 
            by the Bureau.
           
           EXISTING LAW  establishes the Private Postsecondary Education Act 
          (Act) which, among its numerous provisions, requires numerous 
          program performance and student outcome data disclosures and 
          prohibits certain conduct on the part of private postsecondary 
          education institutions.  The Act establishes the Bureau within 
          the Department of Consumer Affairs (DCA) to provide oversight 
          and regulation of private postsecondary institutions.   

           FISCAL EFFECT  :  Unknown 

           COMMENTS  :   Double-referral .  This bill has been double-referred 
          to the Business, Professions and Consumer Protection Committee.

           Background  .  On February 14, 2012, the Assembly Higher Education 
          Committee conducted a joint legislative oversight hearing with 
          the Senate Business, Professions and Economic Development 
          Committee to evaluate California's regulatory structure for 
          private postsecondary education.  This hearing included a 
          discussion of the Act and the Bureau's implementation of its 
          provisions.  As outlined in the hearing, the Act includes 
          numerous provisions that together establish a regulatory 
          structure for private postsecondary institutions.  Institutions 
          that are covered by the Act are required to follow an evaluation 
          and approval process, to abide by numerous "fair business 
          practices" aimed at protecting students, to disclose information 
          to students in enrollment agreements and catalogs, to 
          participate in a Student Tuition Recovery Fund, and to pay fees 
          to the Bureau to support the oversight structure.  The Act also 
          establishes various penalties for non-compliance: providing the 
          Bureau authority to perform site visits and investigations, 
          order fines and student refunds, and suspend or revoke an 
          institution's approval to operate.  The Act requires evaluation 
          and reporting from the Legislative Analyst's Office and the 
          Bureau of State Audits, and the provisions of the Act are 
          scheduled to Sunset in 2015.    

           Purpose of this bill  .  According to the author, this bill is 
          intended to respond to several of the concerns raised in the 
          Committee oversight hearing.  Specifically, this bill aims to 








                                                                  AB 2296
                                                                  Page  4

          increase transparency among private colleges and universities 
          and ensure that prospective students have all of the information 
          necessary to make informed decisions about where to pursue 
          postsecondary education.      
           
           Unaccredited degrees  .  This bill would require institutions to 
          disclose to students whether the institution is accredited and 
          the various limitations of unaccredited degrees.  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, USDE 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 USDE-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. 
          Degrees from unaccredited institutions are not recognized for 
          employment with the State of California.  Further, students 
          attending unaccredited institutions are not eligible to 
          participate in federal financial aid programs.

          Existing law requires institutions offering unaccredited 
          doctoral degrees to disclose to students that the degree is 
          unaccredited, along with any known limitations of the degree, 
          including whether the degree is recognized for licensure in 
          California or other states.  

          This bill would expand upon the current requirement by including 
          associate, bachelor's and master's level degrees in the 
          disclosure requirement, and would establish the following 
          specific disclosure requirements:

          1)Whether the degree is recognized for licensure or 
            certification in California and other states and whether a 
            graduate of the program will be eligible to sit for the 
            applicable licensure exam in California and other states.  
            These provisions may be somewhat duplicative for California, 
            as it appears that all licensure programs require passage of 
            an examination.  However, it is unclear if licensure programs 
            that require an accredited degree, but not passage of a 








                                                                  AB 2296
                                                                  Page  5

            licensure examination, exist in other states. 

          2)That a degree from an unaccredited institution is not 
            recognized for some employment positions, including positions 
            with the State of California.  Committee staff understands 
            that it is the policy of the state to require that, for 
            positions that require a degree, the degree be from an 
            accredited institution.

          3)That a student attending an unaccredited institution is not 
            eligible for federal financial aid programs.  Both federal and 
            state financial aid programs require eligible institutions to 
            be accredited by a recognized USDE accreditation agency.  The 
            author may wish to consider an amendment to clarify that 
            students are ineligible for both state and federal aid.

           Student Performance Fact Sheet  .  Existing law requires 
          institutions to provide prospective students with a Student 
          Performance Fact Sheet.  The Fact Sheet includes data on 
          graduation rates, job placement, salary and wage information, 
          and licensure examination passage rates.  The Fact Sheet is 
          designed to give students the information necessary to help make 
          informed educational choices.  This bill would make several 
          changes to the Fact Sheet.

           1)Job placement  .  Existing law and regulation requires placement 
            rates to be calculated for each program that is designed to 
            lead to, or prepare students for, a specific career or 
            occupation.  To be counted as a placement, students must 
            self-identify as gainfully employed within six months of 
            graduation in a position for which the skills obtained through 
            their education "provided a significant advantage to the 
            student in obtaining the position."  Institutions must report 
            placements for (1) graduates working less than 34 hours per 
            week in a single position, and, (2) graduates working more 
            than 34 hours per week in a single position.  Institutions are 
            required to make available to students a list of the 
            employment positions used to calculate the job placement 
            rates.
             
             This bill would make several changes to the way placement 
            rates are calculated and reported:

             a)   Institutions would be required to identify the specific 
               occupations for which each program is designed to lead, 








                                                                  AB 2296
                                                                  Page  6

               using the United States Department of Labor's Standard 
               Occupational Classification codes.  Only graduates who 
               obtain positions in these occupations could be counted in 
               the educational program placement rates.   Committee staff 
               understands this change is in response to concerns that 
               placement rates that count occupations that are unrelated 
               to an education program may be misleading to a prospective 
               student.         

             b)   Institutions would be required to only count placements 
               for graduates employed in a single position for at least 13 
               weeks, working at least 17.5 hours per week in one of the 
               identified occupations.  Committee staff understands that 
               the 13 week requirement is consistent with the recently 
               enacted federal regulations governing gainful employment 
               and placement data.  The author reports that the 17.5 hour 
               per week requirement was contained in the former law 
               governing private postsecondary education.  The single 
               position requirement is consistent with current 
               regulations.   

             c)   In response to concerns from institutions that delays in 
               the availability of licensure examinations affects a 
               student's ability to find employment within six months of 
               graduation, this bill would clarify that for occupations 
               requiring a licensing examination, placements must begin 
               employment within six months after the announcement of the 
               examination results for the first examination available 
               after graduation.

           2)Cohort default rate  .  This bill would require institutions to 
            disclose on the Fact Sheet (1) the percentage of students 
            receiving federal loans and (2) the percentage of student loan 
            defaults (three-year cohort default rate, as reported by the 
            USDE).  According to the author, federal loan defaults are a 
            key indicator of institutional quality.  This information is 
            readily available from the USDE.  This change appears in line 
            with recent Legislative actions (SB 70, 2011) to link Cal 
            Grant institutional participation to loan default rates.   

           3)Salary and wage data  .  Existing law requires salary data to be 
            disclosed only if an institution makes a claim regarding the 
            potential salary of a graduate.  This bill would require all 
            institutions to disclose salary and wage data.  Supporters of 
            this bill argue that nearly all schools suggest to prospective 








                                                                  AB 2296
                                                                  Page  7

            students that they will 'earn a good living' upon graduation, 
            but few make specific salary representations, yet under 
            existing law these institutions would not be required to 
            disclose salary data.  This bill would also require salary and 
            wage disclosures to be based in the actual salary and wage 
            data reported by graduates.   

           4)Data collection and reporting  .  This bill would require the 
            collection and documentation of specific data that justifies 
            the information contained in the Student Performance Fact 
            Sheet.  Institutions would be required to provide these 
            records to the Bureau upon request.  These provisions appear 
            consistent with regulations recently adopted by the Bureau.
           
          Website disclosure  .  Existing law requires the Bureau to post 
          institutional information such as School Performance Fact Sheets 
          and school catalogs on the Bureau website.  However, supporters 
          of this bill argue that many students look to institutional 
          websites for information regarding programs and performance 
          data.  This bill would require institutions to post on their 
          websites specific school and program performance data.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Faculty Association 
          California Psychological Association
          Children's Advocacy Institute
          Consumer Federation of California
          Consumers Union
          Public Advocates
          The Institute for College Access and Success
          University of San Diego, School of Law, Center for Public 
          Interest Law

           Opposition 
           
          California Association of Private Postsecondary Schools
           
          Analysis Prepared by  :    Laura Metune / HIGHER ED. / (916) 
          319-3960 











                                                                  AB 2296
                                                                  Page  8