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
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          |Author:   |Holden                                                |
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          |Version:  |April 25, 2016                                        |
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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:  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.)







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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 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  








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               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  








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               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  








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            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  








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            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  








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             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  








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                    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  








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          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  








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          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.   









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             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  








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             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.   








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              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 --