BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:   April 29, 2014

                           ASSEMBLY COMMITTEE ON JUDICIARY
                                Bob Wieckowski, Chair
                   AB 1584 (Buchanan) - As Amended: April 22, 2014

                                  PROPOSED CONSENT
           
          SUBJECT  :   Pupil Records: Privacy: Third Party Contracts

           KEY ISSUE  :  Should contractors that provide schools with digital  
          storage or educational software be contractually prohibited from  
          using student information for purposes unrelated to the contract  
          and required to take reasonable steps to protect the privacy of  
          student information? 

                                      SYNOPSIS

          This bill seeks to ensure that, when schools contract with third  
          parties to provide digital storage and educational software  
          services, that student privacy is properly protected.  According  
          to recent news reports, where schools have entered into  
          agreements with providers of educational software packages,  
          including Google's "Apps for Education" tool suite, the students  
          who use the services have allegedly been the subjects of  
          targeted advertising.  The author believes that the growing use  
          of online and cloud-based services for providing educational  
          software and record management "has put student privacy at  
          risk."  This bill would authorize schools to enter into such  
          contracts, but only if the contracts require third-party  
          providers to ensure the security of student information and  
          prohibit the third-party from using student information for  
          commercial and advertising purposes, or indeed for any purpose  
          beyond the requirements of the contract.  The bill would also  
          require the contracts to contain other protections, including a  
          means by which a parent, guardian, or student could review and  
          correct information, a certification that student information  
          will not be retained by the third party after the student is no  
          longer enrolled in the district, and a description of how the  
          third party and the school will ensure compliance with federal  
          and state privacy and notification laws.  Any contract that  
          fails to comply with these requirements will be voidable and any  
          records or information in possession of the third party shall be  
          returned to the school.  This bill passed out of the Assembly  
          Education Committee on a 7-0 vote.  There is no opposition to  








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          this measure. 

           SUMMARY  :  Authorizes a local educational agency to enter into a  
          contract with a third party to provide digital record  
          management, so long as the contract prohibits certain uses of  
          the information and ensures the privacy of student records, as  
          specified.  Specifically,  this bill  :  

          1)Authorizes a local educational entity to enter into a contract  
            with a third party for either or both of the following  
            purposes:

             a)   To provide cloud-based services for the digital storage,  
               management, and retrieval of student records.
             b)   To provide digital educational software that authorizes  
               a third-party provider of digital educational software to  
               access and acquire student records. 

          1)Requires a local educational agency that enters into a  
            contract for purposes of the above to ensure that the contract  
            contains all of the following:

             a)   A statement that student records shall continue to be  
               the property and under the control of the local educational  
               agency.
             b)   A prohibition against the third party using information  
               in individual student records for commercial or advertising  
               purposes. 
             c)   A prohibition against the third party from using any  
               information in the student record for any purpose other  
               than for the requirements of the contract. 
             d)   A description of the procedures by which a parent, legal  
               guardian, or eligible student may review the students  
               records and correct erroneous information. 
             e)   A description of the actions the third party will take,  
               including the designation and training of responsible  
               individuals, to ensure security of records; however,  
               compliance with this requirement will not absolve the  
               third-party of liability for unauthorized disclosure of  
               student records.
             f)   The assignment of liability and the procedures for  
               notifying the affected parent, legal guardian, and eligible  
               student in the event of an unauthorized disclosure of  
               student records. 
             g)   A certification that a student's records shall not be  








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               retained or available to the third party when that student  
               is no longer enrolled in the local educational agency and a  
               description of how that certification will be enforced. 
             h)   A description of how the local educational agency and  
               the third party will jointly ensure compliance with federal  
               privacy law. 

          2)Provides that any contract that fails to comply with the above  
            requirements shall be voidable and student records in  
            possession of the third party shall be returned to the local  
            educational agency.  

          3)Specifies that if the provisions of this bill conflict with  
            the terms of an agreement in effect before January 1, 2015,  
            the provisions of this bill shall not apply until the  
            expiration, amendment, or renewal of that agreement. 

           EXISTING LAW  :

          1)Prohibits a school district from permitting access to student  
            records to any person without written parental consent or  
            pursuant to a judicial order, subject to specified exceptions.  
             (Education Code Section 49076.)

          2)Provides, notwithstanding the above, that access to particular  
            records relevant to the legitimate educational interest of the  
            requester  shall  be permitted to the following:

             a)   Members of a school attendance review board, and  
               designated school officials and employees, for the purpose  
               of providing follow up services to students referred to the  
               board.
                
             b)   Officials or employees of other public schools or school  
               systems for purposes of transfer of enrollment, subject to  
               parental notification, as specified.

             c)   Other federal, state, and local officials as authorized  
               by federal or state law. 

             d)   A student 16 years of age or older, or who has completed  
               grade 10, and who requests access. 

             e)   A district attorney, judge, or probation officer who is  
               participating in or conducting a truancy mediation program  








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               or participating in the presentation of evidence in a  
               truancy petition, as specified. 

             f)   A prosecuting agency for consideration of prosecution  
               against a parent or guardian for failure to comply with  
               compulsory education laws.

             g)   A probation officer or district attorney for the  
               purposes of conducting a criminal investigation or an  
               investigation in regards to declaring a person a ward of  
               the court, or involving a violation of a condition of  
               probation. 

             h)   A county agency engaged in the placement of foster youth  
               for the purpose of fulfilling case management  
               responsibilities.  (Education Code Section 49076 (a)  
               (1)-(11).)

          3)Provides that a school district  may  release information from  
            student records to the following: 

             a)   Appropriate persons in connection with an emergency if  
               the knowledge of the information is necessary to protect  
               the health or safety of a student or other persons.

             b)   Agencies or organizations in connection with the  
               application of a student for financial aid, as necessary to  
               determine financial aid eligibility.

             c)   County election officials for the purpose of identifying  
               students eligible to register to vote, as specified. 

             d)   Accrediting associations as necessary to carry out  
               accrediting functions.

             e)   A contractor or consultant with a legitimate educational  
               interest who has a formal written agreement or contract  
               with the school district regarding the provision of  
               outsourced institutional services or functions by the  
               contractor or consultant.

             f)   Organizations conducting studies on behalf of  
               educational agencies or institutions, relating to the  
               development, validation, or administration of predictive  
               tests, the administration of student aid programs, or the  








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               improvement of instruction. 

             g)   Officials and employees of private schools for purposes  
               of transferring enrollment, subject to parental  
               notification, as specified.  (Education Code Section 49076  
               (b).)

          4)Permits a school district to participate in an interagency  
            data information system that permits access to a computerized  
            database within and between government agencies, subject to  
            certain security protections.  (Education Code Section 49076  
            (c).)

          5)Notwithstanding the above provisions, a school district shall  
            release information relating to a student's identify and  
            location, as it relates to a student's transfer to another  
            school, to a designated peace officer when a proper police  
            purpose exists for that information.  (Education Code Section  
            49076.5.)

          6)Provides, under the federal Family Educational Rights and  
            Privacy Act (FERPA), that no federal funds shall be made  
            available to any educational agency or institution which has a  
            policy or practice of permitting the release of educational  
            records (or personally identifiable information contained  
            therein) of a student without express written parental  
            consent, except as provided.  (20 U.S.C. Section 1232g (b); 34  
            CFR Part 99.)

          7)Prohibits, as of January 1, 2015, an operator of an Internet  
            Web site or online service from knowingly using, disclosing,  
            compiling, or allowing a third party to use, disclose, or  
            compile the personal information of a minor for the purpose of  
            marketing specified products that a minor could not legally  
            use or purchase.  (Business & Professions Code Section 22580.)  


           FISCAL EFFECT  :  As currently in print this bill is keyed  
          non-fiscal. 

           COMMENTS  :  Protecting the privacy of a student's educational  
          records and personal information has long been a priority of  
          both federal and state law.  The federal Family Educational  
          Rights and Privacy Act (FERPA) protects the privacy of students  
          by prohibiting a person from having access to a student's  








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          records without written parental consent, subject to narrow  
          exemptions.  FERPA applies to all schools that receive funds  
          from the United States Department of Education (USDE) and  
          prohibits the disbursement of funds to any school that does not  
          meet FERPA privacy criteria.  The California Education Code  
          contains parallel protections that at least meet and, in some  
          ways, exceed the requirements of federal law.  FERPA, that is,  
          sets a minimum baseline for student privacy that states must  
          meet in order to continue receiving federal funds.  States may  
          enact measures that offer more privacy protection than FERPA  
          without creating a preemption problem. 

          FERPA and the parallel provisions in the California Education  
          Code focus primarily on student records and the responsibilities  
          of the school or school district to protect those records from  
          unauthorized disclosures; however, these statutes have less to  
          say about the responsibilities of private parties that may gain  
          access to student records when they contract to perform some  
          service that would otherwise be performed by the school.   
          Indeed, California law expressly permits a school to release  
          information to a "contractor or consultant with a legitimate  
          educational interest who has a formal written agreement or  
          contract with the school district regarding the provision of  
          outsourced institutional services or functions by the contractor  
          or consultant." (Education Code Section 49076(b)(G)(i).)  These  
          third party contractors and consultants are  not  subject to FERPA  
          regulations or their state law corollaries.  

          In theory, nothing would prevent a school from requiring,  
          contractually, that the third party adopt certain privacy  
          protections or refrain from using or disclosing student  
          information for certain purposes.  But there is nothing in law  
          that requires it, and the Committee lacks adequate information  
          to know if existing contracts contain such requirements as a  
          matter of practice.  However, news reports about third party  
          software providers using student information for commercial and  
          advertising purposes would suggest that at least some school  
          districts do not impose such requirements in the contract.  This  
          bill would require that when a "local education agency" (LEA) -  
          a school district, county office of education, or charter school  
          - enters into an agreement with a third party provider for  
          digital storage or educational software services, that the third  
          party provider be limited in the ways that it can use student  
          information and that it take affirmative steps to protect the  
          privacy of student records.  








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          Structurally, this bill proceeds in two parts.  First, the bill  
          authorizes a LEA to enter into a contract with a third party to  
          do either or both of the following: (1) to provide services for  
          the digital storage, management, and retrieval of student  
          records, including cloud-based services; (2) to provide digital  
          educational software that authorizes the third-party provider to  
          access and acquire student information.  The bill appears to  
          create an after-the-fact "authorization" given that many schools  
          are already contracting for these services, hence the need for  
          the bill.  Second, and more substantively, this bill would  
          require the contract to include a statement that student records  
          will continue to be the property and under the control of the  
          school agency.  The contract would prohibit the third party from  
          using student information for commercial or advertising  
          purposes, or indeed for any purpose other than fulfilling the  
          requirements of the contract.  The contract would be required to  
          describe all of the following: how the third party and the LEA  
          will jointly ensure compliance with FERPA; the procedures by  
          which a parent, guardian, or student may review and correct  
          records; and the actions that the third party will take to  
          ensure the security of the information and who shall be  
          responsible for notifying the parent, guardian, or student in  
          the event of a security breach.  The contract will also certify  
          that student records shall not be retained by or available to  
          the third party after the student is no longer enrolled in the  
          school.  A contract that fails to comply with these requirements  
          shall be voidable and all student records shall be returned to  
          the LEA.  

           Background  :  This bill reflects a growing concern over the  
          tendency of schools to contract with companies that provide  
          digital record-keeping services, including "cloud-computing," or  
          that provide schools with online and digital educational  
          software services.  The virtues of high-tech, data-driven  
          education have been touted by political leaders, school  
          officials, and the high-tech industry.  President Obama recently  
          announced that industry leaders have pledged more than $750  
          million to give students and classrooms greater access to the  
          Internet, electronic devices, and software. (New York Times,  
          February 20, 2014.)  Digital storage and management provide  
          schools with alternatives to bulky, wasteful, and inefficient  
          paper storage.   Digital and online educational software allows  
          students and teachers to work collaboratively in the classroom  
          or at home, access an almost infinite array of data and  








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          documents, submit assignments, or interact with other students  
          and teachers on blogs or discussion boards.  Other services may  
          provide access to more traditional educational material in  
          digital form, including images, historical documents, or  
          interactive graphs and maps.  Some of these products - like  
          Google's "Apps for Education" - provide a "suite of tools" that  
          provide "free web-based email, calendar & documents for  
          collaborative study anytime, anywhere."  (See "Google Apps for  
          Education" page at http://www.google.com/edu/apps/)

          While these new products may create the potential for more  
          interactive and engaging approaches to education, they also pose  
          potential risks to student privacy, both in the case of  
          cloud-based storage, which essentially hands over student  
          records to a private entity, and interactive educational  
          software that may give the service provider access to student  
          records and personal information, depending on the nature of the  
          service.  Given the business model of Internet commerce, it  
          seems likely, if not inevitable, that information will be used  
          to target advertisements to students who use the products for  
          educational purposes and to complete class assignments.  Indeed,  
          a pending lawsuit against Google alleges that the company  
          scanned millions of e-mail messages sent by college student  
          users of Google's "Apps for Education" tool suite.  It is well  
          known that Google uses a software program that scans the e-mail  
          of its "Gmail" users to search for keywords, which are in turn  
          used to provide targeted advertising on other Google products,  
          such Google Search, Google+, and YouTube; however, it was  
          generally assumed that Google did not scan e-mails of student  
          users of Apps for Education.  Google still maintains, according  
          to one report, that "ads in Gmail are turned off by default for  
          Google Apps for Education and we have no plans to change that in  
          the future." ("Google under Fire for Data-Mining Student Email  
          Messages," Education Week March 13, 2014.)  Whether Google  
          turns off its screening software when students use the "Apps for  
          Education" tool suite or not, it is nonetheless apparent that a  
          school's reliance on private, outside parties to provide digital  
          storage and educational software services exposes student  
          information in ways that might necessitate new forms of privacy  
          protection.  

           Bill Would Likely Apply to Any Agreement, Including One That  
          Provides "Free" Services:   Because this measure would apply to  
          any contract between a LEA and a third-party provider, it would  
          appear to apply to contracts between schools and "free"  








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          services, such as Google's "Apps for Education" tool suite.  For  
          example, according to a report in Education Week, even though  
          "Apps for Education" is nominally "free," school districts adopt  
          the tool suite by agreement.  Indeed, some of these agreements  
          may already contain restrictions on the use of data for the  
          purpose of serving ads to students. (Education Week, March 13,  
          2014.)  The "consideration" granted to the company in such  
          contracts is presumably the opportunity for product exposure and  
          development.
           
          Comparison to Related Pending Legislation  :  Reports of schools  
          entering agreements with digital storage and software providers  
          has prompted at least three bills this session.  In addition to  
          the bill under consideration, SB 1177 (Steinberg) would prohibit  
          the operator of an Internet Web site, online service, or  
          application with "actual knowledge" that its site, service, or  
          application is used by students for "K-12 [educational]  
          purposes" from using, sharing, or disclosing student information  
          for commercial or advertising purposes.  Like the bill under  
          consideration, SB 1177 would also require the operator to secure  
          the information in its possession, a requirement that can be met  
          by adopting National Institute of Standards and Technology  
          (NIST) standards.  A key difference between the bill under  
          consideration and SB 1177 is that the bill under consideration  
          is much more specific in that it applies to a contract between a  
          school district and a provider, while SB 1177 applies to any  
          operator that has "actual knowledge" that its site, service, or  
          application is being used for "K-12 purposes," regardless of  
          whether there is a contract between the LEA and the service  
          provider.  On the other hand, while SB 1177 is wider in scope,  
          it is arguably more ambiguous as to when it would apply,  
          depending on how one determines "actual knowledge" or  
          understands the definition "K-12 purposes."    

           ARGUMENTS IN SUPPORT  :  According to the author, the "growing use  
          of online and cloud- based services for providing instructional  
          software and assessment and for maintaining student records has  
          put student privacy at risk.  Private companies are currently  
          acquiring access to student records without parental consent or  
          knowledge and with little oversight to ensure the  
          confidentiality of those records.  At least one company is known  
          to have used information mined from the use of free  
          instructional software to target ads.  K-12 education agencies  
          in California are subject to the requirements of the federal  
          Family Educational Rights and Privacy Act (FERPA) and related  








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          state law.  FERPA allows education agencies to grant access to  
          student records to private for-profit and not-for-profit  
          entities for evaluation or auditing purposes or to perform a  
          function that would otherwise be performed by the education  
          agency's own employees.  In these cases, private entities can be  
          granted access to student records without the prior written  
          consent-or even knowledge-of parents or guardians.  Neither  
                state nor federal law provides sufficient safeguards to ensure  
          that the privacy of student records will be assured and that  
          student records will not be misused when they are released to  
          private entities."
                    
           Pending Related Legislation  :  AB 1442 (Gatto) requires a LEA  
          that considers a program to gather or maintain in its records  
          personal information obtained through social media on any  
          student enrolled in the school district shall notify students,  
          parents, and guardians about the proposed program and provide an  
          opportunity for public comment prior to the adoption of any such  
          program and to take other specified steps.  (The bill passed in  
          the Assembly Judiciary on a 9-0 vote and in the Assembly  
          Education Committee on a 7-0; it is currently pending on the  
          Assembly Floor.)

          AB 2504 (Chau) requires a school district contract with a cloud  
          service provider to specify the types of data transferred or  
          collected and include a limit or prohibition on the  
          re-disclosure of student data.  (The bill is pending in the  
          Assembly Education Committee.)

          SB 1177 (Steinberg) prohibits K-12 online educational sites,  
          services, and applications from compiling, sharing, or  
          disclosing student personal information and from facilitation,  
          marketing, or advertising to K-12 students.  (The bill passed in  
          the Senate Education on a 9-0 vote and is scheduled to be heard  
          today in the Senate Judiciary Committee.)
           
           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          None on file

           Opposition 
           
          None on file








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          Analysis Prepared by  :   Thomas Clark / JUD. / (916) 319-2334