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.

                                      -- END --