BILL ANALYSIS Ó SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT Senator Jerry Hill, Chair 2015 - 2016 Regular Bill No: AB 1835 Hearing Date: June 13, 2016 ----------------------------------------------------------------- |Author: |Holden | |----------+------------------------------------------------------| |Version: |April 25, 2016 | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Sarah Mason | |: | | ----------------------------------------------------------------- Subject: California Private Postsecondary Education Act of 2009: minimum operating standards: exemptions SUMMARY: Provides an exemption for five years from minimum operating standards and accreditation requirements for approval by the Bureau for Private Postsecondary Education (BPPE), to institutions that grant doctoral degrees in psychoanalysis, if all of the institution's students hold master's or doctoral degrees before they enroll in the institution and if all of the institution's students, other than research students regulated by the Medical Board of California, hold a valid professional license authorizing the individual to practice psychotherapy. Existing law: 1)Establishes the Act January 1, 2017, and requires BPPE 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 BPPE 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 BPPE shall administer the Student Tuition Recovery Fund (STRF) to provide refunds to students affected by the possible closure of an institution/school. (Education Code (EC) § 94800 et seq.) AB 1835 (Holden) Page 2 of ? 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 bona fide organization, association or council that offers preapprenticeship training programs on behalf of one or more Division of Apprenticeship Standards-approved labor-management or apprenticeship programs that is not on the Eligible Training Provider List (ETPL) currently but has met requirements for placement on the list, that is on the ETPL and that has not been removed from the ETPL for failure to meet performance standards. d) A postsecondary educational institution established, operated, and governed by the federal government or by this state or its political subdivisions. e) 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 BPPE, 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 f) 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 AB 1835 (Holden) Page 3 of ? 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 "associate of religious studies," "bachelor of religious studies," "master of divinity," or "doctor of divinity." g) 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. h) 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. i) 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. j) 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). aa) 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 AB 1835 (Holden) Page 4 of ? default rate on guaranteed student loans does not exceed 10 percent for the most recent three years, as published by the USDE; 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 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 BPPE 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. bb) 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. (EC § 94874) 1)Also provides an exemption from the Act and oversight by BPPE for an institution that is accredited by the ACSC and WASC, or ACCJC that has been accredited by a USDE recognized accrediting agency for at least 10 years and has not been placed on probation or on monitoring or sanctioned; is headquartered in California and has operated continuously for at least 25 years; is privately held and was previously granted an approval to operate by the BPPE or the former Bureau and has not changed ownership since its last approval; has not filed for bankruptcy protection; maintains an equity ratio composite score of at least 1.5; derives at least 12.5 percent of its revenues from sources other than state or federal student assistance like Title 38 and CalGrant monies; does not have a cohort default rate over 13 percent for the most recent 3 years; has a graduation rate that exceeds 60 percent; has not been subject to any legal or regulatory actions by a state AG that resulted in monetary settlement, fines or other documented violations; provides a pro rata AB 1835 (Holden) Page 5 of ? refund of unearned institutional charges to students who complete 75 percent or less of the period of attendance; complies with other reasonable criteria established by the California State Approving Agency for Veterans Education (CSAAVE); and verifies its exemption with BPPE. (EC § 94947) 2)Requires an institution seeking BPPE approval to operate and to offer a degree to either: a) Be accredited by an accrediting agency recognized by 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. (EC § 94885) 1)Requires an unaccredited institution that is approved to 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. (EC § 94885.1) 2)Under the Medical Board of California (MBC) authorizes graduates of the Southern California Psychoanalytic Institute, the Los Angeles Psychoanalytic Society and Institute, the San Francisco Psychoanalytic Institute, the San Diego Psychoanalytic Center or institutes deemed equivalent by MBC who have completed clinical training in psychoanalysis to engage in psychoanalysis as an adjunct to teaching, training, or research and hold themselves out to the public as psychoanalysts. Provides that students in those institutes may engage in psychoanalysis under supervision, if the students and graduates do not hold themselves out to the public by any title or description of services incorporating the words "psychological," "psychologist," "psychology," "psychometrists," "psychometrics," or "psychometry," or that they do not state or imply that they are licensed to practice psychology. Authorizes those students and graduates seeking to engage in psychoanalysis to register with MBC presenting AB 1835 (Holden) Page 6 of ? evidence of their student or graduate status. (Business and Professions Code § 2529) This bill: 1) Provides an exemption for five years from minimum operating standards and accreditation requirements for approval by the BPPE, to institutions that grant doctoral degrees in psychoanalysis, if all of the institution's students hold master's or doctoral degrees before they enroll in the institution and if all of the institution's students, other than research students regulated by the Medical Board of California, hold a valid professional license authorizing the individual to practice psychotherapy. 2) Requires the institution's students to hold a professional license throughout the period of enrollment at the institution and carry malpractice insurance in their respective fields. 3) Specifies that an institution can be exempt so long as the institution does not accept federal student aid, is a nonprofit entity and has obtained accreditation from, or has submitted a self-study application to the Accreditation Council for Psychoanalytic Education on or before July 1, 2018. FISCAL EFFECT: This bill is keyed "fiscal" by Legislative Counsel. According to the Assembly Committee on Appropriations analysis dated May 11, 2016, the bill will have negligible fiscal impact. COMMENTS: 1. Purpose. The Author is the sponsor of this bill. According to the Author, the bill is an attempt to assist credible, nonprofit graduate level psychoanalysis programs that were inadvertently caught up in prior Legislative reforms AB 1835 (Holden) Page 7 of ? targeting for-profit, low-quality, degree-granting institutions by providing a narrow exception to the accreditation requirements contained in SB 1247 for institutions offering qualified students doctoral degrees in psychoanalysis, provided that the institution seeks accreditation from the Accreditation Council for Psychoanalytic Education before July 1, 2018. 2. Background. a) The Act and BPPE. The Bureau for Private Postsecondary Education (BPPE or Bureau) is responsible for oversight of private postsecondary educational institutions operating with a physical presence in California. Established by AB 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 foundation for oversight and gave the BPPE enforcement tools to ensure schools comply with the law. AB 48 established BPPE's authority to regulate private postsecondary institutions and enforce the provisions of the new California Private Postsecondary Education Act (Act) and to respond to the major problems with the former laws governing the industry in California. The Act provides for 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 provides 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 AB 1835 (Holden) Page 8 of ? have their complaints resolved; Ensure that private postsecondary educational institutions offer accurate information to prospective students on school and student performance; and, Ensure that all stakeholders have a voice and are heard in the operations and rulemaking process of BPPE. BPPE is also tasked with actively investigating and combatting unlicensed activity, administering STRF and conducting outreach and education activities for students and private postsecondary educational institutions within the state. a) Exemptions in the Act. The Bureau has oversight of all of 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. The Act was amended through SB 1247 (Lieu, Chapter 840, Statutes of 2014) to prohibit an institution, beginning January 1, 2016, from claiming an exemption from the Act if the institution is approved to participate in Title 38 veterans financial aid programs. The Committees were concerned about multiple reports and hearings focused on the experience of veterans at private for-profit institutions, false and predatory advertising to veterans and the potential lack of accountability for the millions of dollars administered by the federal Veterans Administration (VA) and Department of Defense (DOD) spent at private postsecondary education institutions in California if schools are not regulated. Because neither DOD nor VA benefits originate through federal student financial aid, Title IV, money that institutions received through these programs was not counted as federal financial aid, thus not subject to a key federal regulatory requirement governing for-profit schools that no more than 90 percent of revenues come from federal financial aid. The Bureau has verified exemptions for 617 institutions, denied AB 1835 (Holden) Page 9 of ? exemptions for 363 institutions and is in the process of reviewing almost 90 more exemption requests. However, in order to remain eligible to continue receiving Title IV monies, a number of institutions previously verified as exempt under the Act have now sought voluntary approval by BPPE. The exemptions in the Act, and attempts to create additional exemptions, have been an ongoing source of consideration for the Legislature. It was not until a hearing in the Senate that AB 48 was amended to include a "good schools" exemption, as institutions pushing for this exemption (based on criteria like length of operation under one owner and nonprofit status) argued that a similar recognition had been included in all legislation related to private postsecondary institution regulation since 1991 and should be continued. During the discussion surrounding SB 1247 in 2014, the Author submitted a letter to the Senate Journal requesting that the Legislature strike the exemption outlined above for WASC accredited institutions to remain exempt and asked that all exemptions provided for in the Act be thoroughly examined by the Legislature to determine the merits of their continuation. Current pending legislation seeks to clarify that law schools approved by the Committee on Bar Examiners, which were exempt from the Act but would now have to receive Bureau approval in order to receive Title 38 monies, can still receive these monies without BPPE approval. Law schools in particular have been the source of scrutiny based on high rates of student debt, misleading employment figures and low state bar passage rates. The Act, as created by AB 48, attempted to correct many of the prior laws' structural problems, most especially the former acts' different standards and requirements for different categories of institutions that created complexities. The Act has one single category of institution and establishes the same standards and requirements for all of the institutions under the Bureau's oversight. Yet many of the institutions supportive of exemptions were exempt under the prior Bureau regulatory framework and seek to continue operating as they always have: subject to oversight by accreditors and state and federal oversight agencies responsible for approving the expenditure of public monies but not the BPPE. Licensing laws exist to protect the public from potentially harmful services rendered by unqualified businesses and AB 1835 (Holden) Page 10 of ? individuals. The intent of licensure is not to punish good actors or impose punitive requirements on businesses and individuals but rather to establish a baseline of licensee quality and competency and corresponding enforcement provisions for consequences of violating the regulatory framework. Professionals and businesses required to be licensed are not able to justify a lack of disciplinary action or sanctions to then skirt their licensure requirement. Exemptions in the Act may serve as an artificial measure of quality and in some cases, while the intention may have been to ensure that the Bureau's workload is focused on those schools that require attention, may not benefit the public and provide accountability for public monies utilized at these institutions. 1. Psychoanalysis Institutions, Studies and Accreditation. According to the Accrediting Council for Psychoanalytic Education (ACPE), "psychoanalysis is a specific form of individual psychotherapy that aims to bring unconscious mental elements and processes into awareness in order to expand an individual's self-understanding, enhance adaptation in multiple spheres of functioning, alleviate symptoms of mental disorder, and facilitate character change and emotional growth." According to the Author, "beginning in the early 1990's the field of psychoanalysis began to develop within the mental health community. Several non-profit educational institutions were established to provide medical professional post-graduate, continuing education training in the emerging field." SB 1247 required institutions offering degrees in California to obtain accreditation from a USDE-recognized accrediting agency. USDE recognition ensures that the accrediting agency meets outlined criteria to ensure educational quality. According to the Author, because of the relatively small nature of psychoanalytic training programs, there is no USDE-recognized programmatic accreditation agency. In order to comply with the requirements of SB 1247, institutions would likely need to seek regional accreditation from WASC. According to the Author and supporters of this measure, WASC-accreditation is an expensive and lengthy process that is unattainable for these small, narrow nonprofit institutions. ACPE is not a USDE-recognized accrediting agency. AB 1835 (Holden) Page 11 of ? Psychoanalysis institutions serve students who are already licensed as clinical psychologists, licensed clinical social workers, marriage and family therapists, research psychoanalysts, nurses and physicians and surgeons. 2. Arguments in Support. Supporters of this bill, psychoanalysis institutions that would likely be exempt under the measure's provisions, believe that this bill is an important response to the BPPE's regulatory efforts which would force these schools to undergo "the expensive and lengthy accreditation required for large undergraduate research universities". These institutions note that the Legislature prudently passed legislation to crackdown on so-called diploma mills, for-profit, typically unaccredited institutions that offer undergraduate degrees to young students while leaving graduates saddled with high debt loads and few meaningful job prospects. These institutions note that this narrowly crafted measure provides them with the flexibility to develop innovative curriculum while protecting younger students from costly diploma mills. The institutions note that they offer degree programs to "qualified individuals that prepare them to provide the most sophisticated contemporary mental health treatment for children and adults available today" and state that the articles published by Doctor of Psychoanalysis candidates of these institutions benefit the patient population and the professional sphere through adding to the body of knowledge about the human mind and the ways in which it can be traumatized and then treated successfully. 3. Related Legislation This Year. SB 1059 (Monning) exempts law schools accredited by the State Bar of California Committee on Bar Examiners from requirements that they be accredited by an accrediting agency recognized USDE in order to receive Title 38 veteran benefits if the institution complies with specified disclosure and compliance requirements. ( Status: The bill is pending in the Assembly Committee on Higher Education.) SB 1192 (Hill) is the sunset bill for BPPE and makes various changes to the Act intended to improve the effectiveness of BPPE and opportunities for student success, including authority for BPPE to give extensions on the timeline for unaccredited degree granting institutions to become AB 1835 (Holden) Page 12 of ? accredited according to certain evidence provided by the institution. ( Status: The bill is pending in the Assembly Committee on Higher Education.) SB 1194 (Hill) is the sunset bill for the Board of Psychology (Board) and makes various changes to the Psychology Act and Board operations, including requiring that applicants for licensure after January 1, 2020 graduate from a college or institution of higher education that is accredited by a regional accrediting agency recognized by USDE and authorizes the Board until January 1, 2020, to accept an applicant who possesses a doctorate degree from an institution that is not accredited by an accrediting agency recognized by USDE but is approved to operate by BPPE. ( Status: The bill is pending in the Assembly.) AB 1996 (Gordon) exempts JobTrain, Inc., from the Act and BPPE oversight if it maintains its status as a nonprofit institution that is WASC accredited and does not award degrees or diplomas, and is paid from state or federal student financial aid programs for fewer than 20 percent of its students who receive vocational training. ( Status: The bill is also pending before this committee on June 13, 2016.) 4. Prior Related Legislation. SB 410 (Beall, Chapter 258, Statutes of 2015) changed the definition of graduates for purposes of reporting student information as required under the Act. AB 509 (Perea, Chapter 558, Statutes of 2015) provided an exemption from the Act and BPPE oversight for a bona fide organization, association, or council that offers preapprenticeship training programs on behalf of one or more Division of Apprenticeship Standards -approved labor-management apprenticeship programs, provided that the entity meets the requirements for the ETPL and has not been removed from the ETPL for failure to meet performance standards. SB 1247 (Lieu, Chapter 840, Statutes of 2014) extended the operation of the Bureau until January 1, 2017; and, among other changes, set forth requirements for accreditation for institutions offering degrees. AB 1835 (Holden) Page 13 of ? 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. NOTE : Double-referral to Senate Committee on Education, second. SUPPORT AND OPPOSITION: Support: Institute of Contemporary Psychoanalysis Newport Center for Psychoanalytic Studies Psychoanalytic Center of California United States House of Representatives Member Ted Lieu Opposition: None on file as of June 7, 2016. -- END --