BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 509 Hearing Date: June 22,
2015
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|Author: |Perea |
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|Version: |April 23, 2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Sarah Mason |
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Subject: California Private Postsecondary Education Act of
2009: exemptions.
SUMMARY: Creates an exemption from the California Private Postsecondary
Education Act for preapprenticeship programs offered by a bona
fide organization, association or council that offers
preapprenticeship training programs on behalf of one or more
apprenticeship programs approved by the Division of
Apprenticeship Standards, if certain conditions are met.
Existing law:
1)Establishes the California Private Postsecondary Education Act
(Act) of 2009 until January 1, 2015, and requires the Bureau
of Private Postsecondary Education (Bureau) within the
Department of Consumer Affairs to, among other things, to
review, investigate and approve private postsecondary
institutions, programs and courses of instruction pursuant to
the Act and authorizes the Bureau to take formal actions
against an institution/school to ensure compliance with the
Act and even seek closure of an institution/school if
determined necessary. The Act also provides for specified
disclosures and enrollment agreements for students,
requirements for cancellations, withdrawals and refunds, and
that the Bureau shall administer the Student Tuition Recovery
Fund to provide refunds to students affected by the possible
closure of an institution/school. (Education Code (EC) §
94800 et seq.)
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2)Exempts the following from oversight by the Bureau:
a) An institution that offers solely avocational 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, if the institution or the program
is approved, certified, or sponsored by a government
agency, other than the Bureau, that licenses persons in a
particular profession, occupation, trade, or career field,
a state-recognized professional licensing body, such as the
State Bar of California, that licenses persons in a
particular profession, occupation, trade, or career field
or a bona fide trade, business, or professional
organization
e) An institution owned, controlled, and operated and
maintained by a religious organization lawfully operating
as a nonprofit religious corporation whose instruction is
limited to the principles of that religious organization
and the diploma or degree granted is limited to evidence of
completion of that education. The institution is only
eligible to offer degrees and diplomas in the beliefs and
practices of the church, religious denomination, or
religious organization and shall not award degrees in any
area of physical science. Any degree or diploma granted by
an institution owned, controlled, and operated and
maintained by a religious organization lawfully operating
as a nonprofit religious corporation shall contain on its
face, in the written description of the title of the degree
being conferred, a reference to the theological or
religious aspect of the degree's subject area. The degree
must reflect the nature of the degree title, such as
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"associate of religious studies," "bachelor of religious
studies," "master of divinity," or "doctor of divinity."
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 of Rehabilitation.
i) An institution that is accredited by the Accrediting
Commission for Senior Colleges (ACSC) and Universities,
Western Association of Schools and Colleges (WASC), or the
Accrediting Commission for Community and Junior Colleges
(ACCJC).
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); has operated
continuously in this state for at least 25 years and has
not filed for bankruptcy protection pursuant to Title 11 of
the United States Code during its existence; has a cohort
default rate on guaranteed student loans does not exceed 10
percent for the most recent three years, as published by
the DOE; maintains a composite score of 1.5 or greater on
its equity, primary reserve, and net income ratios, as
provided under Section 668.172 of Title 34 of the Code of
Federal Regulations; provides a pro rata refund of unearned
institutional charges to students who complete 75 percent
or less of the period of attendance; provides to all
students the right to cancel the enrollment agreement and
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obtain a refund of charges paid through attendance at the
second class session, or the 14th day after enrollment,
whichever is later; submits to the Bureau copies of its
most recent IRS Form 990, the institution's Integrated
Postsecondary Education Data System Report of the USDE, and
its accumulated default rate; and is incorporated and
lawfully operates as a nonprofit public benefit corporation
and is not managed or administered by an entity for profit.
aa) Flight instruction providers or programs that provide
flight instruction pursuant to Federal Aviation
Administration (FAA) regulations and do not require
students to enter into written or oral contracts of
indebtedness and do not require or accept prepayment of
instruction-related costs in excess of $2,500.
bb) An institution that is accredited by a regional
accrediting agency, recognized by DOE, other than WASC, so
long as the institution complies with requirements related
to student tuition recovery. (EC § 94874)
This bill:
1) Creates an exemption from the California Private
Postsecondary Education Act for preapprenticeship programs
offered by a bona fide organization, association or council
that offers preapprenticeship training programs on behalf of
one or more apprenticeship programs approved by the Division
of Apprenticeship Standards, if the following conditions are
met:
a) It is not on the Eligible Training Provider List (ETPL)
established and maintained by the California Workforce
Investment Board (CWIB) but has met the requirements for
placement on the list.
b) It is on the ETPL established and maintained by the CWIB
and meets the requirements for continued listing.
2)Provides that if an organization, association, or council has
been removed from the ETPL for failure to meet performance
standards, it is not exempt until it meets all applicable
performance standards.
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FISCAL
EFFECT: This bill is keyed "fiscal" by Legislative Counsel.
According to the Assembly Committee on Appropriations analysis
dated May 6, 2015, any costs to the Bureau will be minor and
absorbable.
COMMENTS:
1. Purpose. The California Workforce Association is the Sponsor
of this bill. According to the Author, who represents the
Fresno Regional Workforce Investment Board which has
multi-craft pre-apprentice training being conducted by the
Fresno Madera Tulare Kings Building Trades Council (FMTK
BTC), Workforce Investment Act (WIA) Funds cannot be used to
operate the pre-apprenticeship programs because these
programs are not on the ETPL required by WIA. According to
the Author, these pre-apprenticeship programs are unable to
prove eligibility based on the exemption for apprenticeship
programs in the Private Postsecondary Education Act because
under Section 94892 of the BPPE Act of 2009 because legal
counsel at the Department of Industrial Relations, Division
of Apprenticeship Standards opined that pre-apprentice
programs are not under their jurisdiction. According to the
Author, this situation leaves the pre-apprenticeship training
programs in limbo.
The Author believes that without an avenue for these programs
to be eligible for WIA funding, the programs go largely
unfunded and local WIBs are unable to use funding for these
programs to meet their minimum 25 percent training
expenditure requirement (current law requires local WIBs to
expend a minimum of 25 percent of funds on training, which
increases to 30 percent on July 1, 2016.) The Author states
that by creating an exemption for a bona fide organization,
association, or council that offers pre-apprenticeship
training programs on behalf of one or more apprenticeship
programs that are approved by the Division of Apprenticeship
Standards from the Private Postsecondary Education Act of
2009 as this bill does, WIBs can utilize WIA funding for
pre-apprenticeship programs.
The Author states that "pre-apprenticeship programs are vital
to maintaining a healthy workforce in California.
Pre-apprenticeship programs prepare students for entrance
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into state approved apprenticeship programs. In fact,
California currently has over 500 state approved
apprenticeship programs in many fields. The vast majority of
apprentices are enrolled in the Building and Construction
Trades apprenticeship programs. Joint-Labor management
programs make up 90% of the approved programs.
Labor-management programs invest over $100 million annually
on training the next generation of skilled workers to meet
California's infrastructure demands, and the use of
apprentices is required on public works projects."
According to the Author, exempting pre-apprenticeship
programs from the Act as this bill does will ensure
California continues to have a skilled labor workforce.
2. Background.
a) The California Private Postsecondary Education Act and
Bureau for Private Postsecondary Education. After numerous
legislative attempts to remedy the laws and structure
governing regulation of private postsecondary institutions
in California, AB 48 (Portantino, Chapter 310, Statutes of
2009), established the Act and created the Bureau within
the Department of Consumer Affairs for the purpose of
regulating private postsecondary educational institutions
that provide educational services in California. The Act
made many substantive changes that both created a new,
solid foundation for oversight and responded to the major
problems with the Former Act. The Act requires all
unaccredited colleges in California to be approved by the
Bureau, sets timelines by which unaccredited schools
offering degrees shall become accredited, and requires all
nationally accredited colleges to comply with numerous
student protections. It is important to note that not all
private institutions are covered by the provisions of the
Act; full and partial exemptions are provided for low-cost
programs, recreational schools, schools accredited by
regional accrediting agencies, among other types of
institutions. The Act establishes prohibitions on false
advertising and inappropriate recruiting and 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
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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;
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.
The Bureau is required to actively investigate and combat
unlicensed activity, administer the STRF, and conduct
outreach and education activities for private postsecondary
educational institutions and students within the state.
The Act establishes processes for penalties for
non-compliance, providing the Bureau authority to perform
site visits and investigations, order fines and student
tuition refunds, and ultimately suspend or revoke an
institution's approval to operate.
a) Exemptions. The Bureau has oversight of all the
non-exempt, private postsecondary institutions located in
California. AB 48 contained numerous exemptions to
state-level oversight, the most notable of which is an
exemption from BPPE authority and regulation under the Act
granted to for-profit and nonprofit regionally accredited
institutions. Currently, construction trades unions that
are registered with the Joint Apprenticeship and Training
Committee of the State of California, Department of
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Industrial Relations, Division of Apprenticeship Standards
for purposes of their apprentice training, are exempt from
the Bureau for purposes of apprenticeship programs.
b) Workforce Innovation and Opportunity Act (WIOA). The
federal Workforce Innovation and Opportunity Act (WIOA),
formerly known as the federal Workforce Investment Act
(WIA) of 1998, provides for workforce investment
activities, including activities in which states may
participate and also contains various programs for job and
employment investment, including work incentive programs,
as specified. WIOA was signed into law in 2014 and
generally takes effect July of this year. WIOA supersedes
WIA and also authorizes the Job Corps, YouthBuild, Indian
and Native Americans, and Migrant Seasonal Farmworker
programs, in addition to the core programs. The new
federal WIOA aims to modernize our workforce development
system bringing together and enhancing several key
employment, education, and training programs. WIOA also
seeks to make the workforce system more comprehensive in
its approach to service delivery and more responsive to the
demands of our economy.
Following passage of the federal WIA in 1998, the state
established the California Workforce Investment Board (CWIB) and
charged the board with the responsibility of developing a
unified, strategic planning process to coordinate various
education, training, and employment programs into an integrated
workforce development system that supports economic development.
Local chief elected officials in a local workforce development
area were required to form, pursuant to specified guidelines, a
Local Workforce Investment Board (Local WIB) to plan and oversee
the workforce investment system at the local level. Under WIA,
funds were distributed to the states based on formulas that
consider unemployment rates and other economic and demographic
factors. WIA required that 85 percent of federal funds go to
the Local WIBs, with the remainder allocated for state
discretionary purposes. Local WIBs created one or more One-Stop
Centers in the local workforce area, which provide access to
career information, counseling, funding for education, training
and supportive services. Job training programs include
classroom training, customized training, and on-the-job training
(also known as incumbent worker training). Training funds are
often distributed through vouchers to job seekers to enroll in
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eligible training programs. Local WIBs determine which training
programs are eligible to receive the vouchers.
California's ETPL was established in compliance with WIA for the
purpose of providing customer-focused employment training for
adults and dislocated workers. Training providers who are
eligible to receive Individual Training Accounts (ITAs) through
WIA Title I-B funds are listed on the ETPL. EDD is responsible
for accepting information on training providers from local
boards, compiling a single statewide list of eligible training
providers and disseminating the statewide ETPL to local boards
for distribution to their One-Stop Career Centers. Programs are
required to be periodically determined as eligible to continue
on the ETPL. This determination is to be made within 18 to 24
months of their initial listing and annually thereafter.
EDD's policy and procedure document on the ETPL provides
additional background and sets out requirements for approval
that includes, among other things, the following:
In order to be listed on the ETPL, training
providers must submit an application to the local board
in any Local Workforce Investment Area in which the
training provider desires to offer programs and services.
It is important to note that initial eligibility is
determined based on criteria that relates to a
provider/program's approval authority and/or
authorization to operate. Performance is not considered
in making initial eligibility determinations. Providers
are encouraged to submit information on performance
outcomes to facilitate customer choice but this is not a
requirement and the information provided cannot be used
to determine their initial eligibility for listing.
Local boards are responsible for reviewing and
verifying applications submitted by training providers,
determining if the applicant meets the State's criteria
for initial eligibility and forwarding the information to
EDD for those training providers and programs that meet
the criteria.
EDD will accept applications for the ETPL from local
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boards on any working day of the year. Approved
applications will appear on the list within 30 days of
their submission by the local board to the State. The
local boards are responsible for submitting changes to
EDD for programs or training providers already listed on
the statewide ETPL to ensure that the information remains
current.
1. Related Legislation This Year. SB 410 (Beall) changes the
definition of graduates for purposes of reporting student
information as required under the Act. ( Status: The bill is
currently pending in the Assembly Committee on Higher
Education.)
2. Prior Related Legislation. SB 1247 (Lieu, Chapter 840,
Statutes of 2014) extended the operation of the Bureau until
January 1, 2017; and, among other changes, clarified the
conditions upon which a flight school could be exempt from
the Act.
SB 71 (Committee on Budget and Fiscal Review, Chapter 28,
Statutes of 2013) enacted various budget-related items,
including a provision allowing exempt institutions to
voluntarily seek operating approval from the Bureau. The
bill provided a temporary delay in those institutions
reporting certain information on the Student Performance Fact
Sheet.
SB 619 (Fuller, Chapter 309, Statutes of 2011) exempted
flight instructors and flight schools that do not require
students to enter into contracts of indebtedness and do not
require prepayment of fees in excess of $2,500 from
regulation by the Act and BPPE.
3. Arguments in Support. The California Workforce Association
(CWA) believes that this bill will create parity between
pre-apprenticeship and apprenticeship programs offered by the
same institutions, as apprenticeship programs are already
exempt from the BPPE process. The CWA asserts that this bill
will simply extend the exception to pre-apprenticeship
programs operated in conjunction with high-quality
apprenticeship programs, ensuring efficiency and continuity
in institutions' pre-apprenticeship and apprenticeship
offerings.
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Also writing in support of the bill, the State Building and
Construction Trades Council of California and Building and
Construction Trade Councils of Stanislaus, Merced, Tuolumne &
Mariposa Counties, and of Fresno, Madera, Kings & Tulare
Counties state that pre-apprenticeships programs are vital to
maintaining a healthy workforce in California, prepare
students for entrance into sate approved apprenticeship
programs and that exempting them from the Act will ensure
California continues to have a skilled labor workforce.
4. Staff Comments. This bill creates the first exemptions to
the Act since 2011 when flight schools subject to FAA
approval that do not require students to enter into contracts
of indebtedness and do not require prepayment of fees in
excess of $2,500 were explicitly granted an exemption from
the Bureau's oversight authority. The issue of
appropriateness of exemptions within the Act has been
discussed since the Act was established in 2009 and
subsequently as a piece of multiple policy discussions
surrounding the Bureau's operations, legislative proposals to
explore further exemptions, in a 2013 Legislative Analyst
Office (LAO) report to the Legislature and most recently as
part of the comprehensive Sunset Review process undertaken by
Legislative Committees with jurisdiction for the Bureau and
Act. The Bureau is again subject to Sunset Review beginning
in the fall of this year, culminating with legislation in
2016 that will very likely again explore in depth the
exemptions outlined in the Act, the necessity to continue to
provide for certain exemptions and whether additional
exemptions from Bureau oversight are necessary, such as those
proposed in this bill.
NOTE: Double-referral to Senate Committee on Education, second.
SUPPORT AND OPPOSITION:
Support:
California Workforce Association (Sponsor)
Building and Construction Trades of Fresno, Madera, Kings and
Tulare Counties
Building and Construction Trades of Stanislaus, Merced, Tuolumne
and Mariposa
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Counties
Opposition:
None on file as of June 16, 2015.
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