BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 2296| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 2296 Author: Block (D) Amended: 8/21/12 in Senate Vote: 21 SENATE EDUCATION COMMITTEE : 7-2, 6/20/12 AYES: Lowenthal, Alquist, Hancock, Liu, Price, Simitian, Vargas NOES: Blakeslee, Huff NO VOTE RECORDED: Runner, Vacancy SENATE BUSINESS, PROF & ECON. DEVELOP. COMM. : 6-2, 7/2/12 AYES: Price, Corbett, Correa, Hernandez, Negrete McLeod, Vargas NOES: Strickland, Wyland NO VOTE RECORDED: Emmerson SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/6/12 AYES: Kehoe, Alquist, Lieu, Price, Steinberg NOES: Walters, Dutton ASSEMBLY FLOOR : 47-26, 5/14/12 - See last page for vote SUBJECT : California Private Postsecondary Education Act of 2009 SOURCE : Author DIGEST : This bill expands the requirements to be met by private postsecondary educational institutions subject to CONTINUED AB 2296 Page 2 state oversight under the California Private Postsecondary Education Act (CPPEA) by expanding disclosures related to unaccredited programs; expanding disclosure requirements for all regulated institutions; establishing more stringent criteria for determining gainful employment and calculating job placement rates; and, increasing institutional documentation and reporting requirements around completion rates, job placement/license exam passage rates, and salary/wage information for graduates. Senate Floor Amendments of 8/21/12 extend the timeframe for the Bureau, from January 1, 2014 to July 1,2014, to define (by regulation) specific measures and standards for determining whether a student is gainfully employed in a full-time or part-time position for which the institution represents that the program prepares its graduates for purposes of determining the job placement rate of an institution. ANALYSIS : Existing law, until January 1, 2016, establishes the CPPEA, which provides for the approval, regulation, and enforcement of private postsecondary educational institutions by the Bureau of Private Postsecondary Education (BPPE). The CPPEA establishes fair business practices which prohibit a private postsecondary educational institution subject to its authority from, among other things, offering an unaccredited doctoral degree program without disclosing to prospective students that the degree program is unaccredited, and require disclosure of known limitations of a degree, such as whether it is recognized for licensure or certification in California and other states, whether a graduate of the degree program will be eligible to sit for the applicable licensure exam in California and other states, 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 that a student attending an unaccredited institution is not eligible for federal student financial aid programs. The CPPEA also establishes requirements regarding enrollment agreements and disclosures including that a CONTINUED AB 2296 Page 3 student enroll solely by executing an enrollment agreement and that prospective students be provided with a school catalog and a School Performance Fact Sheet. The CPPEA establishes minimum requirements and disclosures to be made in these documents. Existing law also establishes various disclosure and reporting requirements around completion, placement, licensure and salary of students/graduates and establishes various definitions for this purpose. Among other things, the CPPEA defines "graduates employed in the field" as graduates gainfully employed within six months of graduation in a position for which the skills obtained through the education and training provided by the institution are required or provided a significant advantage to the graduate in obtaining the position. It also requires that the information used to substantiate the reported job placement, license passage, and completion rates be documented and maintained by the institution for five years from the date of the publication of the rates and authorizes this information to be retained by the institution in an electronic format. The CPPEA also requires institutions to submit an annual report to the BPPE that includes specified information. This bill expands the requirements to be met by private postsecondary educational institutions subject to state oversight under CPPEA by expanding disclosures related to unaccredited programs; expanding disclosure requirements for all regulated institutions; establishing more stringent criteria for determining gainful employment and calculating job placement rates; and, increasing institutional documentation and reporting requirements around completion rates, job placement/license exam passage rates, and salary/wage information for graduates. Comments Accreditation . Accreditation is a voluntary, non-governmental peer review process utilized for the purpose of determining academic quality of higher education institutions and degree programs. Under federal law, the United States Department of Education (USDE) is required to publish a list of nationally recognized accrediting CONTINUED AB 2296 Page 4 agencies deemed to be 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. Generally speaking, professions that require certification or licensure as a prerequisite for employment (such as education, health care, or counseling), require degrees from an accredited institution of higher education. Cohort default rates . A cohort default rate is the percentage of a school's borrowers who enter repayment on federal loans during a particular fiscal year and default or meet other specified conditions prior to the end of the next fiscal year. These default rates are "officially" reported by the U.S Department of Education once per year. At the federal level, beginning in 2014, sanctions based upon the three year cohort default rate will begin, and schools meeting specified cohort default rate thresholds will lose eligibility for specified federal loan programs for the remainder of the fiscal year and for the following two fiscal years. At the state level, SB 70 (Budget Committee, Chapter 7, Statutes of 2011) established, as a condition for voluntary participation in the Cal Grant program, that each institution with more than 40 percent of its undergraduate enrollment borrowing federal student loans must have a three-year 2008 cohort default rate less than 24.6% to be eligible for new and renewal Cal Grant awards in the 2011-12 academic year, and less than 30% for each subsequent year. The Governor's proposed budget for 2012-13 proposes the reduction of the cohort default rate for Cal Grant participation from 30 percent to 15 percent beginning in the 2012-13 academic year. Employment information . Current regulations specify that the reported "graduates in the field" must be identified by those who work in the field in a single position that averages more and less than 32 hours per week. The author is concerned this standard, and the ambiguity in current law about the type of position which qualifies as gainful employment relative to the training received, lack the specificity to ensure accurate job placement, wage, and salary information is provided to prospective students. CONTINUED AB 2296 Page 5 Prior Legislation AB 611 (Gordon), Chapter 103, Statutes of 2011, established certain disclosure requirements pertaining to accreditation status, licensure, and related limitations for unaccredited doctoral programs. AB 2393 (Ammiano), 2010, would have required institutions regulated by the Bureau to comply with various placement rate calculations for specified programs. AB 2393 was vetoed by Governor Schwarzenegger whose message read: This bill would create varying standards for determining post-graduate placement rates from different vocational fields. California needs uniform standards in this area of law that can be consistently and fairly applied by the Bureau of Private Postsecondary Education, and that are predictable for consumers and schools. This bill proposes to put California on the same path to overly confusing statutes and guidelines that existed prior to the new Private Postsecondary Education Act. AB 48 (Portantino), Chapter 310, Statutes of 2009, revised and recasts the Private Postsecondary and Vocational Education Reform Act of 1989 into the California Private Postsecondary Education Act of 2009, provided for the transition to the BPPE, outlined its responsibilities, provided for the approval, regulation, and enforcement of private postsecondary educational institutions, established reporting requirements, and repeals the Act on January 1, 2016. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee: Potentially significant costs to the BPPE, within the Department of Consumer Affairs depending on the extent to which the BPPE is expected to review and enforce new standards beyond the complaint process. CONTINUED AB 2296 Page 6 The Department anticipates requiring one additional Associate Governmental Program Analyst position to fulfill this bill's requirements, at a cost of approximately $81,000 per year. This special fund position would be paid from the Private Postsecondary Education Administration Fund. SUPPORT : (Verified 8/14/12) The Advancement Project Asian Law Caucus California Civil Right Coalition California Faculty Association California Federation of Teachers California Labor Federation California Nurses Association California Physical Therapy Association California Psychological Association California State Commanders Veterans Council California State Students Association Center for Public Interest Law, University of San Diego School of Law Children's Advocacy Institute, University of San Diego School of Law Chinese for Affirmative Action Consumer Action Consumer Federation of California Consumers Union of United States, Inc. Institute for College Access and Success LAW Project of Los Angeles Legal Aid Foundation of Los Angeles Public Advocates Inc. Veterans of Foreign War, Department of California Vietnam Veterans of America, California OPPOSITION : (Verified 8/14/12) American Career Colleges/West Coast University ARGUMENTS IN SUPPORT : According to the author, this bill is intended to respond to issues raised in a joint hearing of the Assembly Higher Education Committee and the Senate Business, Professions and Economic Development Committee in February 2012. Specific issues raised included the need to CONTINUED AB 2296 Page 7 increase transparency among the private colleges and universities regulated by the BPPE and to ensure that prospective students have all the information necessary to make informed decisions about their pursuit of postsecondary education. ARGUMENTS IN OPPOSITION : American Career Colleges/West Coast University states in opposition, "When developing the regulations to implement AB 48 (Portantino) the panel that developed those regulations concluded that dictating hourly and weekly employment standards was not a workable option. Dictating that level of specificity for gainful employment actually hinders gainful employment, because it makes it more difficult for schools to place students. "Employers will not work with schools that make it difficult to hire their graduates. Requiring a school to go after employers and demand specific information about individual employees will create a burden for the employer and discourages them from hiring graduates. Former students will not want to be tracked by their school after graduation. They will not want to continue to provide specific data to their former school. This will make it very difficult for schools to comply and will hurt students seeking employment. It could actually increase the default rate rather than improve it." ASSEMBLY FLOOR : 47-26, 05/14/12 AYES: Alejo, Allen, Ammiano, Beall, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Galgiani, Gordon, Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza, Mitchell, Monning, Pan, V. Manuel Pérez, Skinner, Swanson, Torres, Wieckowski, Williams, Yamada, John A. Pérez NOES: Achadjian, Conway, Cook, Donnelly, Beth Gaines, Garrick, Gatto, Gorell, Grove, Hagman, Halderman, Harkey, Jeffries, Jones, Knight, Logue, Mansoor, Miller, Morrell, Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Wagner NO VOTE RECORDED: Atkins, Bill Berryhill, Fletcher, Perea, Portantino, Solorio, Valadao CONTINUED AB 2296 Page 8 PQ:n 8/22/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED