BILL ANALYSIS Ó
SB 619
Page 1
Date of Hearing: July 5, 2011
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Marty Block, Chair
SB 619 (Fuller) - As Amended: June 22, 2011
AS PROPOSED TO BE AMENDED (RN#11 22362)
SENATE VOTE : 39-0
SUBJECT : California Private Postsecondary Education Act of
2009: exemptions.
SUMMARY : Exempts from the Private Postsecondary Education Act
(Act of 2009) and related oversight by the Bureau of Private
Postsecondary Education (Bureau) flight instruction providers or
programs that provide flight instruction pursuant to Federal
Aviation Administration (FAA) regulations and do not require
students to enter into a contract of indebtedness nor require
the upfront payment of instruction-related costs in excess of
$2500. Declares this bill an urgency statute and provides that
the provisions of the bill shall take effect immediately.
EXISTING LAW :
1)Under the Act of 2009, establishes the Bureau within the
Department of Consumer Affairs (DCA) and provides for Bureau
oversight and regulation of California private postsecondary
institutions. (Education Code §94820)
2)Provides for numerous exemptions from oversight by the Bureau
(EC §94874), including:
a) An institution that offers solely avocational or
recreational educational programs.
b) An institution offering test preparation for
examinations required for admission to a postsecondary
educational institution or continuing education or license
examination preparation, if the institution or the program
is approved, certified, or sponsored by a government
agency, a state-recognized professional licensing body, or
a bona fide trade, business, or professional organization.
c) An institution that does not award degrees and that
solely provides educational programs for total charges less
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than $2500, when no part of the total charges is paid from
state or federal student financial aid programs.
3)Specifies that the Bureau shall not enforce the Act of 2009
against an institution that offers flight instruction or an
institution that offers FAA certified educational programs in
aircraft maintenance until July 1, 2010. Requires an
institution described above to notify the Bureau of
operations. (EC § 94874.3)
4)Requires the Legislative Analyst's Office (LAO), by October 1,
2013, to report to the Legislature and the Governor on the
appropriateness of the exemptions provided by the bill. (EC
§94949)
5)Sunsets the provisions of the Act on January 1, 2015. (EC
§94950)
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : Double-referral : This bill was heard and approved
by the Assembly Business, Professions and Consumer Protection
Committee on June 28, 2011.
Background : Under the former Private Postsecondary and
Vocational Education Act (Former Act), flight schools were
regulated under a memorandum of understanding (MOU) with the
FAA. The MOU delineated the responsibilities of the
former-Bureau and the FAA for the approval and monitoring of
flight programs. With the expiration of the Former Act, in
2007, the MOU also expired.
Decision to regulate flight schools : The Act of 2009 did not
initially provide any full or partial exemption from Bureau
oversight for FAA-approved flight schools. The decision to
include flight schools under the Bureau's regulatory structure
was largely in response to high-profile cases, including Silver
State Helicopters and the American School of Aviation, which
identified inadequate oversight and student protections provided
by the FAA. Silver State Helicopters, which at one time had
flight schools located in 34 cities around the nation and
charged students upwards of $70,000, was known throughout the
industry for using aggressive sales tactics to recruit students.
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In February of 2008, the company abruptly shut its doors,
leaving more than 800 employees without jobs and more than 2,500
flight students with millions of dollars in debt. American
School of Aviation (ASA) was a commercial flight school that
operated in Atwater, California and trained international
students from India. In May of 2008, the school was forced to
close due to a lack of insurance. Soon after, students living
in the school's dorms were evicted because the school failed to
pay its water bill and the water was shut off. Approximately
100 students were left without their licenses despite paying the
tuition.
Response from flight programs : In early 2010, the California
flight instruction community began expressing concerns about
their inclusion under the Bureau's regulatory structure. After
years of partial exclusion from the Former Bureau's oversight,
under the provisions of the MOU with the FAA, flight program
owners argued that the tremendous burden placed on them by
having to meet requirements of Bureau oversight, specifically a
costly application fee and a requirement to submit audited
financial statements, would force them to shut down their
operations. Flight program owners reached out to members of the
Legislature and Governor's Office in 2010, attempting to obtain
an exemption from the requirements of the Act. Towards the end
of the 2009-10 Legislative Session, SB 856 (Senate Budget
Committee, Chapter 719, Statutes of 2010), a Budget Act trailer
bill, was amended to provide a one-year exemption from Bureau
regulation for institutions that offer flight instruction or
aircraft maintenance, to allow the Legislature additional time
to examine issues surrounding the regulation of flight
instruction programs.
Purpose of this bill : This bill provides an exemption from
Bureau regulation for FAA-compliant flight instruction providers
and programs that do not require students to enter into a
contract of indebtedness and do not require prepayment of more
than $2,500 in advance of instruction. The author notes that a
primary goal of the Bureau is to protect students from financial
harm; therefore, this bill proposes an exemption that ensures
only those flight programs that place the individual student at
financial risk are subject to Bureau regulation.
REGISTERED SUPPORT / OPPOSITION :
Support
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National Air Transportation Association (Sponsor)
Aircraft Owners and Pilots Association
Association of California Airports
California Airports Council
California Pilots Association
Executive Flyers, Inc.
Southwest American Association of Airport Executives
Opposition
None on File
Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960