BILL ANALYSIS Ó ----------------------------------------------------------------------- |Hearing Date:April 28, 2014 |Bill No:SB | | |1247 | ----------------------------------------------------------------------- SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT Senator Ted W. Lieu, Chair Bill No: SB 1247Author:Lieu As Introduced: February 20, 2014 Fiscal: Yes SUBJECT: Private postsecondary education: California Private Postsecondary Education Act of 2009. SUMMARY: Extends the operation of the Bureau for Private Postsecondary Education (BPPE) until January 1, 2019. Existing law: Establishes the California Private Postsecondary Education Act of 2009. (Education Code (EC) § 94700 et seq.) This bill: Extends the operation of BPPE until January 1, 2019. FISCAL EFFECT: Unknown. This bill is keyed "fiscal" by Legislative Counsel. COMMENTS: 1. Purpose. This bill is sponsored by the Author . This bill is one of six "sunset bills" the Author is sponsoring this session. According to the Author, this bill is necessary to extend the sunset date of BPPE in order to ensure continued oversight of private postsecondary institutions that supports quality, innovative programs which are approved in a timely manner, while also making sure a robust government structure prevents predatory practices and promotes student success. 2. Oversight Hearings and Sunset Review of Licensing Boards and Programs. In 2014, the Senate Business and Professions Committee and the Assembly Business, Professions and Consumer Protection SB 1247 Page 2 Committee (Committees) conducted joint oversight hearings to review 9 regulatory entities: Bureau of Automotive Repair; Bureau of Home Furnishings and Thermal Insulation; Bureau for Private Postsecondary Education (BPPE); California Massage Therapy Certification program; California Board of Acupuncture; California Tax Preparers Program; Dental Hygiene Committee of California; Professional Fiduciaries Bureau; and Structural Pest Control Board. This Committee also reviewed the performance and effectiveness of the Community Interest Development Manager's Certification Program. The Committees began their review of the aforementioned licensing agencies in March and conducted two days of hearings and then more recently held a hearing on the BPPE. This bill, and the accompanying sunset bills, are intended to implement legislative changes as recommended by staff of the Committee's and which are reflected in the Background Papers prepared by Committee staff for each agency and program reviewed by the Committees for this year. 3. Background on the Bureau for Private Postsecondary Education (BPPE). BPPE is responsible for oversight of private postsecondary educational institutions operating with a physical presence in California. Established by Assembly Bill 48 (Portantino, Chapter 310, Statutes of 2009), after numerous legislative attempts to remedy the laws and structure governing regulation of private postsecondary institutions, the bill took effect January 1, 2010, to make many substantive changes that created a new, solid foundation for oversight and gave the new BPPE an array of enforcement tools to ensure schools comply with the law. The state's program for regulation of private postsecondary and vocational education institutions has historically been plagued by problems. During the late 1980's, the state developed a reputation as the "diploma mill capital of the world." During this period, the State Department of Education regulated the private postsecondary education industry. SB 190 (Morgan) created the Private Postsecondary and Vocational Education Reform Act of 1989 (Reform Act) to overhaul the state's regulatory program and transferred oversight responsibility for the program to the 20-member Private Postsecondary and Vocational Council (Council). Concurrently, the Maxine Waters School Reform and Student Protection Act (Waters Act) was enacted. The provisions of the Reform Act and the Waters Act were merged, but doing so created a fragmented structural framework for regulation of private postsecondary and vocational education institutions with numerous duplicative and conflicting statutory provisions which would plague SB 1247 Page 3 California's oversight of these institutions. In the years following enactment of the Reform Act, concerns were expressed about the Council's implementation of the Act. In 1997, AB 71 (Wright) was enacted to create the former Bureau for Private Postsecondary and Vocational Education (BPPVE) within the Department of Consumer Affairs (DCA), transferred responsibility for administration of the Reform Act to BPPVE and extended the Reform Act's sunset date to January 1, 2005. In 2004, the Joint Committee on Boards, Commissions and Consumer Protection (Joint Committee) held a special hearing regarding BPPVE and recommended that the Reform Act be revised to make it intelligible and enforceable and that the Administration and the DCA should consider restoring, at least temporarily, the Bureau's staffing resources to clear out existing backlogs. The Legislature enacted SB 1544 (Figueroa, Chapter 740, Statutes of 2004), which required the appointment of an Enforcement Monitor (Monitor) to provide an in-depth and impartial examination of BPPVE's operations. The Monitor's report, presented to the Joint Committee on December 7, 2005, outlined a "twenty-year record of repeatedly identified, fundamental problems in every one of the Bureau's key operations." The Report found that BPPVE both inadequately protected consumers and impeded the expansion of quality postsecondary and vocational educational opportunities. The law and BPPVE were allowed to Sunset on January 1, 2008. AB 48 established a new BPPE with the authority to regulate private postsecondary institutions and enforce the provisions of the new California Private Postsecondary Education Act (Act) and responded to the major problems with the former laws governing the industry in California. The Act requires all unaccredited colleges in California to be approved by BPPE, and all nationally accredited colleges to comply with numerous student protections. It also establishes prohibitions on false advertising and inappropriate recruiting. The Act requires disclosure of critical information to students such as program outlines, graduation and job placement rates, and license examination information, and ensures colleges justify those figures. The Act also guarantees students can complete their educational objectives if their institution closes its doors while providing BPPE with enforcement powers necessary to protect consumers. The Act directs BPPE to: Create a structure that provides an appropriate level of oversight, including approval of private postsecondary educational institutions and programs; SB 1247 Page 4 Establish minimum operating standards for California private postsecondary educational institutions to ensure quality education for students; Provide students a meaningful opportunity to have their complaints resolved; Ensure that private postsecondary educational institutions offer accurate information to prospective students on school and student performance, thereby promoting competition between institutions that rewards educational quality and employment success; and, Ensure that all stakeholders have a voice and are heard in the operations and rulemaking process of BPPE. BPPE also actively investigates and combats unlicensed activity, administers the Student Tuition Recovery Fund (STRF), and conducts outreach and education activities for private postsecondary educational institutions and students within the state. 1. Extension of the Sunset Date for BPPE. At a time when California's public institutions have reduced enrollments due to major budget cuts, private postsecondary education institutions are in a position to play a role in providing access and education for otherwise underserved students. As the number of students served by private postsecondary institutions has increased, so has the focus on fraudulent practices and low academic standards. There have been numerous high-profile federal investigations into the practices of for-profit institutions in recent years. Among the most notable are the United States Government Accountability Office (GAO) series of investigations raising concerns regarding the amount of federal student aid dollars directed to for-profit institutions, the misleading and deceptive recruitment practices at certain institutions, and substandard academic performance expectations in some for-profit programs. The challenge for the Legislature is to ensure the continuance of an oversight structure that supports innovative programs while also preventing predatory practices, which this bill aims to do by extending the operative date for the Act. 2. Related Legislation This Session. SB 1242 (Lieu) of 2014 amends the Automotive Repair Act and updates the sunset provisions for the Bureau of Automotive Repair. ( Status : This bill will also be heard before this Committee during today's hearing.) SB 1247 Page 5 SB 1243 (Lieu) of 2014 extends until January 1, 2017, the term of the Veterinary Medical Board, which provides for the licensing and registration of veterinarians and registered veterinary technicians and the regulation of the practice of veterinary medicine by the Veterinary Medical Board. The bill also extends the terms of the executive officer of the Veterinary Medical Board. This bill also extends to January 1, 2019, the law regulating the practice of common interest development managers, and the law establishing the California Tax Education Council, which provides for the Council to register and regulate tax preparers. This bill also subjects the Board and programs to be reviewed by the appropriate policy committees of the Legislature. ( Status: This bill will also be heard before this Committee during today's hearing.) SB 1244 (Lieu) of 2014 extends until January 1, 2019 the term of the Structural Pest Control Board which provides for the licensing and regulation of individuals and business involved in the structural pest control industry in California. The bill also extends the term of the Board's executive officer and subjects the Board to be reviewed by the appropriate policy committees of the Legislature. ( Status: This bill will also be heard before this Committee during today's hearing.) SB 1245 (Lieu) of 2014 extends until January 1, 2019 the term of the Dental Hygiene Committee of California which provides for the licensing and regulation of dental hygienists. The bill also extends the term of the Committee's executive officer and subjects the Committee to be reviewed by the appropriate policy committees of the Legislature. ( Status: This bill will also be heard before this Committee during today's hearing.) SB 1246 (Lieu) of 2014 extends until January 1, 2019 the term of the Acupuncture Board which provides for the licensing and regulation of doctors of acupuncture under the Acupuncture Licensure Act and subjects the Board to be reviewed by the appropriate policy committees of the Legislature. ( Status: This bill will also be heard before the BP&ED Committee during today's hearing.) SB 1069 (Torres) of 2014 requires BPPE to adopt regulations to make students who utilize a Cal Grant, a Pell Grant, or both, eligible to apply for payment from the STRF. ( Status: This bill will also be heard before this Committee during today's hearing.) AB 330 (Chau) of 2013 requires postsecondary educational SB 1247 Page 6 institutions to provide their net price calculators and average student debt per graduate to the California Student Aid Commission (CSAC) as a condition of eligibility for the Cal Grant Program, requires CSAC to provide this information on its website in a searchable database, and requires a for-profit institution to include this information in its School Performance Fact Sheet. ( Status: This bill is pending in the Senate Committee on Education.) AB 634 (Gomez) of 2013 requires BPPE to clarify the definition of "avocational education" through regulations. ( Status: The bill is pending in this Committee.) AB 834 (Williams) of 2013 authorizes a law school accredited by the American Bar Association, and owned by an institution operating under BPPE to satisfy the current disclosure requirements of the School Performance Fact Sheet by instead doing the following: complying with ABA disclosure requirements; reporting to the National Association for Law Placement; and making completion, Bar passage, placement, and salary and wage data available to prospective students prior to enrollment through the application process administered by the Law School Admission Council. ( Status: This bill is pending in the Senate Committee on Education.) 3. Prior Related Legislation. AB 2296 (Block, Chapter 585, Statutes of 2012) expanded the disclosure requirements for institutions under the Bureau related to unaccredited programs; expanded disclosure requirements for all regulated institutions, established more stringent criteria for determining gainful employment and calculating job placement rates and increased institutional documentation and reporting requirements around completion rates, job placement/license exam passage rates, and salary/wage information for graduates. SB 498 (Liu) of 2011 would have abolished the Bureau and transferred the Bureau's powers and duties under the Act to the California Postsecondary Education Commission. ( Status: The bill was held by the Senate Committee on Business, Professions and Economic Development.) SB 619 (Fuller, Chapter 309, Statutes of 2011) exempted from Bureau regulation flight instructors or flight schools that do not require the upfront payment of tuition or fees, and that do not require students to enter into a contract of indebtedness in order to receive training. SB 1247 Page 7 SB 675 (Wright) of 2011 would have required that private postsecondary institutions subject to the Act administer a test of English language proficiency to a nonnative speaker of English, as defined, prior to enrolling the student. ( Status: The bill failed passage in the Senate Committee on Business, Professions and Economic Development.) AB 611 (Gordon, Chapter 103, Statutes of 2011) set forth certain disclosure requirements pertaining to accreditation status, licensure, and related limitations for unaccredited doctoral programs. AB 773 (Block) of 2011 would have allowed the Bureau to revoke an exemption of an institution which was exempt based on accreditation, but still required to comply with the Student Tuition Recovery Fund requirements, if it determined that the institution had not in fact complied with those requirements. ( Status: The bill was never heard in a policy committee.) AB 797 (Conway) of 2011 would have exempted schools of cosmetology, as defined, from the Act. ( Status: The bill was held in Assembly Committee on Higher Education.) AB 1013 (Assembly Committee on Higher Education, Chapter 167, Statutes of 2011) made clarifying changes to the Act and related Bureau oversight. AB 1889 (Portantino) of 2010 contained provisions regarding doctoral degrees offered by unaccredited institutions, the calculation of placement rates, and Bureau employment requirements. ( Status: The bill was vetoed by the Governor due to concerns over Bureau employment requirements.) AB 2393 (Ammiano) of 2010 altered the definition of "graduates employed in the field" for apprenticeship and nursing programs. ( Status: The bill was vetoed by the Governor, who indicated that it put the state on the same path to overly confusing statutes and guidelines that existed prior to the new Act.) AB 48 (Portantino, Chapter 310, Statutes of 2009) established the California Private Postsecondary Education Act of 2009. SUPPORT AND OPPOSITION: Support: American Career College/West Coast University SB 1247 Page 8 California Association of Private Postsecondary Schools (CAPPS) Opposition: None on file as of April 23, 2014. Consultant:Sarah Mason