BILL ANALYSIS Ó
SB 1247
Page 1
SENATE THIRD READING
SB 1247 (Lieu)
As Amended August 18, 2014
Majority vote
SENATE VOTE :33-3
HIGHER EDUCATION 9-2 BUSINESS & PROFESSIONS 9-3
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|Ayes:|Williams, Bloom, Fong, |Ayes:|Bonilla, Campos, |
| |Fox, | |Dickinson, Eggman, |
| |Jones-Sawyer, Levine, | |Gordon, Holden, Mullin, |
| |Medina, Quirk-Silva, | |Skinner, Ting |
| |Weber | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Olsen, Wilk |Nays:|Jones, Maienschein, Wilk |
| | | | |
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APPROPRIATIONS 12-0
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|Ayes:|Gatto, Bocanegra, | | |
| |Bradford, | | |
| |Ian Calderon, Campos, | | |
| |Eggman, Gomez, Holden, | | |
| |Pan, Quirk, | | |
| |Ridley-Thomas, Weber | | |
| | | | |
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SUMMARY : Extends the sunset date for the Bureau for Private
Postsecondary Education (BPPE), under the California Private
Postsecondary Education Act (Act), from January 1, 2015, until
January 1, 2017; and, provides for statutory changes to the
protections provided to students and the requirements placed on
private postsecondary educational institutions (institutions).
Specifically, this bill :
1)Reestablishes BPPE until January 1, 2017 and provides for
various clarifying and technical changes throughout the Act.
2)Authorizes a currently operating institution, as specified,
that has had their application to operate denied, as
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specified, to continue operating during the appeal process.
Requires the institution to disclose to current and
prospective students that the application was denied and that
the loss of appeal may result in the institution's closure.
Requires BPPE to make an emergency decision if the BPPE
determines that the continued operation of the institution
poses a significant risk of harm to students.
3)Changes exemptions to the Act as follows:
a) Prohibits an institution, beginning January 1, 2016,
from claiming an exemption from the Act if the institution
is approved to participate in federal veterans' financial
aid programs, except that an institution, as specified,
that meets outlined requirements and student performance
standards may continue to claim an exemption.
b) Clarifies that an exempt flight school may not accept
prepayment of more than $2,500.
4)Clarifies that the director of the Department of Consumer
Affairs (DCA) is responsible for the implementation of the
Act.
5)Requires BPPE to contract with the Office of the Attorney
General to establish training that ensures staff is able to
fully investigate complaints.
6)Requires BPPE to institute training to ensure staff is
equipped to review and verify accuracy of data contained in
consumer disclosures.
7)Requires BPPE to post specified final civil or criminal cases
on the BPPE Web site and requires BPPE to post a list of all
institutions denied an approval to operate, describe the
reasons for the denial, and include a specified disclosure
that the institution is not compliant with law and that
students are discouraged from enrolling in unapproved
institutions.
8)Makes several changes to the BPPE Advisory Committee:
a) Increases the Advisory Committee to 14-members, adding
the following ex-officio members:
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i) The chair, or the designee of the chair, of the
policy committee of the Assembly with jurisdiction over
legislation relating to the bureau, appointed by the
Speaker of the Assembly;
ii) The chair, or the designee of the chair, of the
policy committee of the Senate with jurisdiction over
legislation relating to the bureau, appointed by the
Senate Committee on Rules;
iii) One attorney employed in the consumer law section of
the Office of the Attorney General, to be appointed by
the Attorney General; and,
iv) A representative employed in the career and college
transition division of the State Department of Education,
to be appointed by the Superintendent of Public
Instruction.
b) Prohibits a public member of the Advisory Committee from
having an interest in any institutions regulated by BPPE,
as specified.
c) Expands the Advisory Committee functions to include the
examination of the oversight functions and operational
policies of BPPE, specifically, the fee schedule and the
equity of the schedule relative to the way institutions are
structured, and the licensing provisions of this chapter.
Requires the Advisory Committee to make recommendations
with respect to policies, practices, and regulations
relating to private postsecondary education, and provide
any assistance as may be requested by BPPE.
d) Requires BPPE to seek input from the Advisory Committee
prior to the adoption, amendment, or repeal of its
regulations and take comments into consideration and
provide feedback to Advisory Committee members.
e) Requires the BPPE chief to attend all Advisory Committee
meetings and designate ongoing support staff.
f) Requires the DCA director to personally attend, and
testify and answer questions at, each meeting of the
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Advisory Committee.
g) Requires the Advisory Committee to have the same access
to records within DCA related to the operation and
administration of the Act as do members of constituent
boards of the DCA in regard to records related to their
functions.
h) Requires Advisory Committee meetings to be subject to
the Bagley-Keene Open Meetings Act (Act) and for meeting
materials to be posted on the Internet.
i) Requires the Advisory Committee to meet at least
quarterly and to appoint a member of the committee to
represent the committee for purposes of communicating with
the Legislature.
j) Requires DCA to review, and revise if necessary, the
conflicts of interest regulations to ensure that each
Advisory Committee member is required to disclose conflicts
of interest to the public.
9)Requires BPPE to establish a task force to identify standards
for educational and training programs specializing in
innovative subject matter and instructing students in high
demand technology fields and report to the Legislature, by
July 1, 2016, regarding appropriate levels of oversight of
these institutions.
10)Requires an institution seeking an approval to operate and to
offer a degree to either:
a) Be accredited by an accrediting agency recognized by the
United States Department of Education (USDE) to offer the
degree(s); or
b) Have an accreditation plan, approved by BPPE, for the
institution to become fully accredited within five years of
the BPPE issuance of a provisional approval to operate. An
institution in this category must comply with specified
student disclosure, visiting committee review and degree
limitation requirements.
11)Requires an unaccredited institution that is approved to
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operate and to offer degree programs by BPPE prior to January
1, 2015, to submit an accreditation plan to BPPE, to obtain
pre-accreditation by July 1, 2017, to obtain accreditation by
July 1, 2020, and to comply with various student disclosure
and visiting committee review requirements.
12)Requires BPPE to adopt application processing goals and
timelines, as specified.
13)Removes the requirement that an accredited institution
provide a School Performance Fact Sheet (SPFS) to a
non-California prospective student and removes the requirement
that the SPFS include data regarding non-California students.
14)Provides that the Student Tuition Recovery Fund (STRF) exists
to relieve or mitigate economic loss suffered by students in
educational programs at non-exempt institutions who, at the
time of enrollment was a California resident or was enrolled
in a California residency program, prepaid tuition, and
suffered economic loss.
15)Requires BPPE to adopt regulations that ensure specified
students, and any other students deemed appropriate, are
eligible for payment from STRF.
16)Authorizes BPPE to seek repayment to the STRF from an
institution found in violation of the Act for which a STRF
claim was paid. Provides that an institution may not renew
its approval to operate with BPPE if the repayment is not made
as requested.
17)Requires BPPE to define "economic loss" in regulation and
provides BPPE guidance on the definition.
18)Provides that if BPPE has temporarily stopped collecting STRF
assessments because the fund has approached the $25 million
limit, BPPE shall resume collecting assessments when the fund
falls below $20 million.
19)Provides that an otherwise eligible student who enrolled
during a period when institutions were not required to collect
STRF assessments is eligible for STRF payments despite not
having paid any STRF assessment.
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20)Requires BPPE to report to the Legislature by December 31,
2016, regarding how reporting requirements under the Act
should be altered to ensure accurate, useful, and consistent
reporting by private postsecondary institutions to the bureau
and students.
21)Removes authority for the Board to adjust annual fees for
individual institutions based on cost of providing oversight
of individual institutions.
22)Requires announced and unannounced compliance inspections to
be conducted at least every five years, rather than every two
years, and requires BPPE to adopt regulations that set forth
inspection policies to ensure that student protections are the
highest priority and that inspections are conducted based on
risk and potential harm to students.
23)Requires BPPE to, in consultation with the Advisory
Committee, establish priorities for enforcement resources and
complaints processing. Provides that institutions and
complaints of specified characteristics should be prioritized.
24)Provides that if BPPE has reason to believe that an
institution has engaged in a pattern or practice of violating
the provisions of the Act or any other applicable law that
involves multiple students or other claimants, BPPE shall
contract with the Attorney General for investigative and
prosecutorial services, as necessary.
25)Requires the DCA director to provide written updates to the
Legislature every six months and participate in oversight
hearings as requested.
26)Requires the DCA director to provide the Legislature with a
copy of the independent review of staffing resources within 30
days of the review, along with an overview of how the director
intends to ensure staffing is sufficient for purposes of
implementing the Act.
27)Requires the appointment of an independent monitor to monitor
and review BPPE operations and make recommendations to BPPE,
DCA and the Legislature regarding operations improvements, as
specified.
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EXISTING LAW provides for, until January 1, 2015, student
protections and regulatory oversight of institutions in the
state pursuant to the Act. The Act is enforced by BPPE within
DCA (Education Code Section 94800 et seq.).
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Extension of the Act's sunset by two years will continue
expenditures to implement the Act over this period. The
bureau's operating budget for 2014-15 is $11.1 million for 76
positions. The bureau's operating fund is projected to have a
fiscal year-end balance of $10.8 million. In addition, $2
million is estimated in payments from the STFR, which is
projected to have a balance of $31.4 million as of July 1,
2015.
2)In addition to the base budget, new requirements of the Act
will require nine permanent and four limited-term positions at
an estimated cost of $1.4 million in 2015-16, $1.2 million in
2016-17, and $800,000 annually thereafter, assuming the new
sunset date of January 1, 2017 is subsequently extended or
repealed.
3)These costs will be partially offset to the extent currently
exempt institutions register with the bureau in order to
continue participating in federal veterans educational
financial aid (Title 38) programs.
COMMENTS : On January 1, 2010, AB 48 (Portantino), Chapter 310,
Statutes of 2009, created the Act, establishing minimum
standards for institutions and an array of enforcement tools for
BPPE to ensure institutional compliance with the new law.
Specifically, BPPE:
1)Licenses approximately 1,200 non-exempt private postsecondary
educational institutions, serving over 300,000 students,
operating in California. The licensing process is designed to
ensure that institutions meet minimum operating standards.
Accredited institutions are provided approval by means of
their accreditation (meaning BPPE does not review these
institutions at the point of licensure).
2)Conducts announced and unannounced compliance inspections of
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licensed/approved institutions on a two-year cycle.
Inspections are designed to ensure institutions are in
compliance with minimum operating requirements. If a
compliance inspection uncovers a minor violation, the
institution is provided a notice and the opportunity to
correct. If a compliance inspection uncovers a material
(major) violation, the compliance inspector makes a referral
for an investigation of the violation.
3)Investigates complaints received from the general public and
internal investigative referrals. Most investigations are
handled internally by BPPE staff; however, BPPE does have
authority (and has utilized) the DCA Division of
Investigations for complaints that require undercover
investigations and/or the presence of a sworn peace officer.
4)Disciplines institutions that have been found in violation of
law through citations (handled by BPPE staff) and formal
actions (BPPE is represented by the Office of the Attorney
General).
5)Administers the STRF to provide refunds to students affected
by the closure of an institution.
6)Collects data through Annual Reports provided by
licensed/approved institutions.
Under the provisions of AB 48, BPPE and the Act are scheduled to
sunset on January 1, 2015.
The major changes to the Act proposed in this bill were
discussed on April 21, 2014, at a Joint Oversight Hearing that
included the Senate Business, Professions and Economic
Development Committee, the Senate Education Committee, the
Assembly Business, Professions and Consumer Protection
Committee, and the Assembly Committee on Higher Education
(Sunset Review Hearing).
According to the author, private postsecondary education
institutions can play an important role in providing access and
education for otherwise underserved students. This bill stems
from the Sunset Review Hearing process for the Bureau for
Private Postsecondary Education and seeks modest but important
improvements in the way these schools are regulated in
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California.
Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960
FN: 0005077