BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: AB 834
AUTHOR: Williams
AMENDED: June 25, 2013
FISCAL COMM: Yes HEARING DATE: July 3, 2013
URGENCY: No CONSULTANT:Kathleen Chavira
NOTE : This bill has been referred to the Committees on
Business, Professions, and Economic Development and
Education. This bill was recently amended to replace its
contents and was first heard in its current form in
Business, Professions, and Economic Development on July 1,
2013.
SUBJECT : School Performance Fact Sheet.
SUMMARY
This bill exempts a law school that meets specified
conditions from having to submit a School Performance Fact
Sheet to the Bureau for Private Postsecondary Education
(Bureau).
BACKGROUND
Current law, until January 1, 2016, establishes the
California Private Postsecondary Education Act (Act) of
2009, which provides for the approval, regulation, and
enforcement of private postsecondary educational
institutions by the Bureau for Private Postsecondary
Education (Bureau) within the Department of Consumer
Affairs (DCA). (Education Code § 94800-94950)
Among other things, the Act requires a regulated
institution to provide a prospective student with a School
Performance Fact Sheet containing information on completion
rates, placement rates, license examination passage rates,
salary or wage information, the most recent three-year
cohort default rate and the percentage of enrolled students
receiving federal student loans (if the institution
participates in federal financial programs) and other
specified information. (EC § 94910)
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Current law exempts the following entities from the Act:
a) An institution that offers solely vocational or
recreational educational programs.
b) An institution offering educational programs
sponsored by a bona fide trade, business,
professional, or fraternal organization, solely for
that organization's membership.
c) A postsecondary educational institution
established, operated, and governed by the federal
government or by this state or its political
subdivisions.
d) An institution offering either test preparation for
examinations required for admission to a postsecondary
educational institution or continuing education or
license examination preparation, as specified.
e) An institution owned, controlled, and operated and
maintained by a religious organization, as specified.
f) An institution that does not award degrees and that
solely provides educational programs for total charges
of two thousand five hundred dollars ($2,500) or less
when no part of the total charges is paid from state
or federal student financial aid programs.
g) A law school that is accredited by the Council of
the Section of Legal Education and Admissions to the
Bar of the American Bar Association or a law school or
law study program that is subject to the approval,
regulation, and oversight of the Committee of Bar
Examiners.
h) A nonprofit public benefit corporation that is
qualified under Section 501(c)(3) of the United States
Internal Revenue Code, is organized specifically to
provide workforce development or rehabilitation
services and is accredited by an accrediting
organization for workforce development or
rehabilitation services recognized by the Department
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of Rehabilitation.
i) An institution that is accredited by the
Accrediting Commission for Senior Colleges and
Universities, Western Association of Schools and
Colleges, or the Accrediting Commission for Community
and Junior Colleges, Western Association of Schools
and Colleges.
j) An institution that has been accredited, for at
least 10 years, by an accrediting agency that is:
recognized by the United States Department of
Education (USDE) and that meets other specified
criteria.
aa) Flight instruction providers or programs that
provide flight instruction pursuant to Federal
Aviation Administration (FAA) regulations, as
specified.
bb) An institution that is accredited by a regional
accrediting agency recognized by the USDE so long as
the institution complies with requirements related to
student tuition recovery. (EC § 94871)
ANALYSIS
This bill :
1) Exempts law schools from having to comply with the
requirements of the School Performance Fact Sheet, if
the school is:
a) Accredited by the Council of the
Section of Legal Education and Admissions to the
Bar of the American Bar Association (ABA).
b) Owned by an institution authorized
to operate by the Bureau for Private and
Postsecondary Education (Bureau), and reports
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graduate salary information and other information
to the National Association for Law Placement
(NALP).
2) Provides that notwithstanding any other law, a law
school that meets the criteria above shall be deemed
to satisfy the Fact Sheet requirements by doing both
of the following:
a) Complying with Standard 509 of the
2012-13 American Bar Association's Standards and
Rules of Procedure for Approval of Law Schools.
b) Providing completion, placement,
bar passage, and salary and wage information of
graduates to prospective students prior to
enrollment through the law school application
process administered by the Law School Admission
Council (LSAC).
STAFF COMMENTS
1) Clarification of the bill's intent . This bill is
sponsored by Education Management Corporation (EDMC).
According to the author, the U.S. Department of
Education (USDE) requirement that an institution have
"state authorization" in order to be eligible for
Title IV federal student financial aid is prompting at
least one law school in California, exempt from Bureau
approval, to seek Bureau approval to maintain Title IV
eligibility. As a result, that school will be subject
to the Bureau's Student Performance Fact Sheet (Fact
Sheet) requirements. This bill is specifically
designed to address an issue for the Western State
College of Law, owned by EDMC. This bill proposes an
exemption for a school which is voluntarily coming
under the California Private Postsecondary Education
Act of 2009 in order to meet the requirements for
state authorization and be allowed to participate in
federal financial aid programs.
2) State authorization . Federal regulations, among other
things, require that, in order to participate in Title
IV federal financial aid programs, an institution must
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be legally authorized by a state to operate
educational programs beyond secondary education and
have a process to review and act appropriately on
complaints concerning postsecondary institutions. Many
private postsecondary institutions exempt from
oversight of the Bureau were unable to satisfy these
requirements.
Schools were initially required to be in compliance
with the "state authorization" rule by July 1, 2011,
however U.S. Department of Education granted
extensions for compliance if an institution was able
to demonstrate that it was making progress toward
obtaining the necessary state authorization. In the
case of California, affected private institutions
submitted a letter from the Administration supporting
a request for an extension from having to comply with
the new rules while a process for securing state
authorization by these institutions was considered.
Extensions were authorized, however indications from
the U.S. Department of Education (USDE) were that no
further extensions would be granted and institutions
would have to meet the requirements by July 1, 2013.
However, in May 2013, the USDE announced that it would
extend the deadline for complying with a rule
requiring states to authorize colleges within their
borders by a year (July 1, 2014).
On Friday, June 7, 2013, the Bureau for Private and
Postsecondary Education (Bureau) notified the USDE of
its support for an additional one-year extension of
the implementation date of the changes to "state
authorization" regulations until July 1, 2014, for the
purpose of allowing the Bureau to review licensing
applications for otherwise exempt institutions that
choose to seek State authorization through the Bureau,
and to conduct compliance inspections for institutions
approved by the Bureau by means of accreditation.
3) Related budget action . In response to concerns from
institutions exempt from the California Private
Postsecondary Education Act (Act), on June 27, 2013,
as part of the 2013-14 Budget Act, Governor Brown
signed legislation (AB 76, Committee on Budget,
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Statutes of 2013) authorizing an institution currently
exempt from the Bureau's oversight to waive its exempt
status and voluntarily opt into the Bureau's
oversight. Under the new statutes, once an institution
chooses Bureau oversight, the institution is no longer
authorized to claim an exemption from the Bureau and
is subject to regulation through the full set of power
and duties that would apply to an institution that was
otherwise exempt from the Act. Institutions that
voluntarily waive exemption are able to satisfy the
federal "state authorization" requirements and
therefore, participate in and access Title IV federal
financial aid programs to assist their students in
meeting their costs for attendance at those
institutions.
4) School Performance Fact Sheets . This bill exempts law
schools from having to submit a School Performance
Fact Sheet (Fact Sheet) to the Bureau. As law schools
are generally exempt from the Act, this requirement
would only apply to a law school that voluntarily
chooses to come under the Bureau's oversight.
Recognizing that exempt institutions may not have this
information available, the new law does not require
the first Fact Sheet to report any data from the
period prior to the date of the issuance of the
approval to operate, but does require the institution
to disclose that the information is not available on
all documents required by the Act. In addition, the
institution is still required to report available data
collected and calculated in accordance with the
California Private Postsecondary Education Act (Act)
of 2009, regardless of the purpose for which the data
was collected. Upon receiving an approval to operate,
however, an institution is required to begin
collection and calculation of all information required
by the Act for the School Performance Fact Sheets
(Fact Sheets). The Fact Sheet must be provided to
prospective students, filed with the Bureau for
Private and Postsecondary Education (Bureau), and
posted on the institution's Web site no later than the
first August 1 after the institution is approved to
operate and annually thereafter.
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5) Is alternate reporting sufficient ? According to the
author, the Fact Sheet requirements would require
different calculations than those established by the
American Bar Association (ABA) and National
Association for Law Placement (NALP) and would
ultimately provide less data to students than they are
already provided through the Law School Admission
Council (LSAC) application process. The Law School
Admission Council (LSAC) is a nonprofit organization
whose members include more than 200 law schools
throughout the United States, Canada and Australia and
provides products and services to facilitate the
admission process for law schools and their applicants
worldwide.
This Assembly bill was only recently amended to
replace its contents. Given the limited time to review
the specific reporting requirements of these non-state
entities, it is unclear whether the data reported on
the Student Performance Fact Sheet is readily
available through these other sources. However, while
these entities may provide valuable information, they
do not necessarily have the consumer protection
perspective, nor the financial aid policy objectives
that would concern this committee. In addition, the
Legislature does not control how or whether
information is reported by these non-governmental
entities in a manner that serves the state's or
student's interests.
6) Premature ? This bill was recently gutted and amended
to propose an exception to recently enacted
legislation attempting to address complex issues
regarding the regulation of the private postsecondary
education sector, state authorization, and access to
federal financial aid programs. The committee may wish
to consider the following:
a) State Authorization. The Bureau has notified
the USDE of its support for an additional
one-year extension of the implementation date of
the changes to federal "state authorization"
regulations until July 1, 2014.
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b) Sunset Review. The Senate Business and
Professions Committee is scheduled to undertake a
comprehensive review of the Act and the Bureau
during the Sunset Review Process. The Bureau is
expected to submit a Sunset Report to the
Committee in November 2013, and there will a
Background Paper by Committee staff, hearings,
and sunset legislation during 2014.
c) Legislative Analyst Office (LAO) report.
Current law (EC § 94949) requires the LAO to
report to the Legislature and the Governor on the
appropriateness of the exemptions provided under
the California Private Postsecondary Education
Act (Act) of 2009 with particular attention to
the exemptions based on accreditation, by October
1, 2013. The report is specifically required to
examine and make recommendations regarding the
degree to which regional and national accrediting
agencies provide oversight of institutions and
protection of student interests, whether that
oversight results in the same level of protection
of students as provided by the Act, and whether
exemptions should be continued, adjusted, or
removed.
Is it prudent, or even necessary to implement
exceptions without adequate time to consider broader
policy implications? Given the extension of the
implementation of state authorization regulations,
shouldn't any further changes or exceptions await the
outcome of the review of the Bureau for Private and
Postsecondary Education and the statutorily required
report of the LAO?
SUPPORT
Education Management Corporation
OPPOSITION
None received.
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