BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON
          BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
                              Senator Jerry Hill, Chair
                                2015 - 2016  Regular 

          Bill No:            SB 410          Hearing Date:    April 27,  
          2015
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          |Author:   |Beall                                                 |
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          |Version:  |April 6, 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.


          SUMMARY:  Changes the definition of graduates for purposes of  
          reporting student  information as required under the California  
          Private Postsecondary Education Act.    

           NOTE:  This bill was referred to the Senate Committee on  
          Education, first, and was passed out of that Committee on April  
          22, 2015 by a vote of 9-0.   

          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 (DCA) 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 (STRF) to provide refunds to students affected by the  
            possible closure of an institution/school.   (Education Code  







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            (EC) § 94800 et seq.)

          2)Defines "graduate" as an individual who has been awarded a  
            degree or diploma.  (EC § 94842)

          3)Requires the Bureau to institute training to ensure that the  
            staff are equipped to review and verify the accuracy of the  
            data contained in consumer disclosures required by schools  
            under the Bureau's oversight, including, but not limited to,  
            the School Performance Fact Sheet.  (EC § 94877 (c))

          4)Specifies requirements regarding enrollment agreements and  
            disclosures including that a student enroll solely by  
            executing an enrollment agreement and that prospective  
            students be provided with a school catalog and a School  
            Performance Fact Sheet (Fact Sheet).  The Act establishes  
            minimum requirements and disclosures to be made in these  
            documents.  (EC §§ 94902-94912)

          5)Specifies various disclosure and reporting requirements around  
            completion, placement, licensure and salary of  
            students/graduates and establishes various definitions for  
            this purpose.  Requires that the information used to  
            substantiate the reported job placement, license passage, and  
            completion rates be documented and maintained by the  
            institution for five years from the date of the publication of  
            the rates and authorizes this information to be retained by  
            the institution in an electronic format.  Requires  
            institutions to submit an annual report to the Bureau that  
            includes specified information.  (EC §§ 94928-94929.9)

          6)For purposes of calculating completion, placement, licensure,  
            and salary disclosure requirements, defines "Graduates" as the  
            number of students who complete a program within 100 percent  
            of the published program length.  An institution may  
            separately state completion information for students  
            completing the program within 150 percent of the original  
            contracted time, but that information may not replace  
            completion information for students completing within the  
            original scheduled time. Completion information shall be  
            separately stated for each campus or branch of the  
            institution.  (EC § 94928 (c))

          7)For purposes of calculating completion, placement, licensure,  








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            and salary disclosure requirements, defines "Graduates  
            employed in the field" as graduates who are gainfully employed  
            in a single position for which the institution represents the  
            program prepares its graduates within six months after a  
            student completes the applicable educational program.  For  
            occupations for which the state requires passing an  
            examination, the period of employment shall begin within six  
            months of the announcement of the examination results for the  
            first examination available after a student completes an  
            applicable educational program.  (EC § 94928 (e)(1))

          8)Requires an institution to annually report to the Bureau, as  
            part of the annual report, and publish in its Fact Sheet, the  
            completion rate for each program.  Authorizes an institution  
            to report graduation data reported to, and calculated by, the  
            Integrated Postsecondary Education Data System of the United  
            States Department of Education in lieu of calculating the  
            completion rate.  Also requires reporting of an institution's  
            job placement rate, license examination passage rates for the  
            immediately preceding two years for programs leading to  
            employment for which passage of a state licensing examination  
            is required, salary and wage information, if applicable, the  
            most recent official three-year cohort default rate reported  
            by the United States Department of Education for the  
            institution and the percentage of enrolled students receiving  
            federal student loans.  States that the Bureau is not limited  
            from being authorized to collect information from an  
            institution to ensure that the information is useful to  
            students, useful to policymakers, based upon the most credible  
            and verifiable data available and that does not impose undue  
            compliance burdens on an institution.  (EC §§ 94929 and  
            94929.5)

          9)Requires information used to substantiate the rates and  
            information calculated above to be documented and maintained  
            by the institution for five years from the date of the  
            publication of the rates and information and be retained in an  
            electronic format and made available to the bureau upon  
            request.  (EC § 94929.7)

          10)Requires the Bureau to consider the graduate salary and other  
            outcome data and reporting requirements that are utilized by  
            the United States Department of Education, the Student Aid  
            Commission, accrediting agencies, and student advocate  








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            associations.  Requires the Bureau to consider the reporting  
            requirements of public postsecondary institutions in  
            California to evaluate the feasibility of adopting these  
            reporting requirements for private postsecondary institutions  
            and to make recommendations to the Legislature, on or before  
            December 31, 2016, on how reporting requirements under this  
            Act should be altered to ensure accurate, useful, and  
            consistent reporting by private postsecondary institutions to  
            the Bureau and students.  (EC § 94929.9)
          
          This bill:

          1) Replaces "Graduates" with "On-time graduates" in the  
             definition above for the number of students who complete a  
             program within 100 percent of the published program length in  
             lieu of classifying this group as "graduates" for the purpose  
             of making a distinction between those who graduate on-time  
             and all other graduates as defined in EC § 94842 in #2 above.  


          2) Requires an institution to use "on-time graduates" for  
             calculating completion rates for each program.

          3) Makes one technical change.
          

          FISCAL EFFECT:  Unknown.  This bill is keyed "fiscal" by  
          Legislative Counsel.  

          
          COMMENTS:
          
          1. Purpose.  This bill is sponsored by the  Center for Employment  
             Training (CET)  and  Children's Advocacy Institute  .  According  
             to the Author, this bill aims to capture the total number of  
             students who graduated in a reporting year, for purposes of  
             reporting to the Bureau.  The Author states that currently  
             there is a distinction between disclosure requirements and  
             placement rate calculation and this bill is addressing a  
             placement rate miscalculation that is impacting vocational  
             training programs. According to the Author, this change will  
             not interfere with disclosure requirements. 
             
             The Author notes that "besides meeting disclosure  








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             requirements, vocational training programs also must meet  
             certain criteria from the Employment Development Department  
             (EDD) to be listed on the Eligible Training Provider List  
             (ETPL)."  The Center for Employment Training (CET) in the  
             Author's district has been struggling in obtaining EDD  
             referrals because of the calculation.  According to the  
             Author, if CET is able to count all their graduating students  
             in a reporting year, their placement rate numbers will be  
             accurately calculated.  The Author notes that currently, only  
             students that graduate in the 100% program length are  
             accounted for, but not those that graduate past the 100%  
             which includes students who need more time in their  
             coursework.  According to the Author, the majority of these  
             students who are not captured experience barriers such as  
             poverty, limited English proficiency, a lack of access to  
             childcare and disabilities which mean they then graduate at a  
             much later pace.  According to the Author, vocational  
             training programs that are eligible to be listed for referral  
             on the ETPL are able to receive funds through the federal  
             Workforce Investment Act. The Author states that these WIA  
             funds are used to pay for tuition, coursework materials,  
             instructors and improvement of facilities, among other items.  
              According to the Author, CET has been losing out on between  
             two and three hundred thousand dollars in federal funding as  
             a result of not being able to meet the EDD requirements.

          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  
               DCA 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  








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               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 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  








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               site visits and investigations, order fines and student  
               tuition refunds, and ultimately suspend or revoke an  
               institution's approval to operate. 

             a)   Disclosures.  As noted above, the Act requires a number  
               of disclosures aimed at providing students with the  
               information and tools to make an informed decision about  
               their education.  Job placement numbers, license exam  
               passage rates, salary information and cohort default rates  
               are some of the items institutions are required to provide  
               to students as they evaluate whether or not to attend a  
               particular school.   (CDR is the percentage of a school's  
               borrowers who enter repayment on federal loans during a  
               particular fiscal year and default or meet other specified  
               conditions prior to the end of the next fiscal year and  
               provided to USDE in draft form, offering schools two  
               appeals before the information becomes "official".)  The  
               Act also requires a series of disclosures about  
               unaccredited programs offering degrees, such as whether the  
               degree is issued in a field that requires licensure in  
               California, whether or not a graduate of the degree program  
               will be eligible to sit for the applicable licensure exam  
               in California and other states, information acknowledging  
               that a degree from an unaccredited institution is not  
               recognized for some employment positions and a statement  
               that students attending an unaccredited institution are  
               ineligible for federal financial aid programs.  

               The Act also specifies requirements regarding enrollment  
               agreements and requirements that students be provided a  
               school catalog and a School Performance Fact Sheet (Fact  
               Sheet), including minimum requirements and disclosures  
               required in these documents such as information about  
               program completion, placement, licensure and salary of  
               students/graduates.  The Act outlines formulas for  
               calculating rates reported on the Fact Sheet, including a  
               job placement rate (calculated by dividing the number of  
               graduates employed in the field by the number of graduates  
               available for employment in each program), completion rate  
               (calculated by dividing the number of graduates by the  
               number of students available for graduation, the very rate  
               this bill seeks to change by requiring an institution to  
               use "on-time" graduates rather than "graduates"), license  
               examination passage rate (calculated for the immediately  








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               preceding two years by dividing the number of graduates who  
               pass an exam by the number of graduates who take an  
               licensing exam the first time after completing an  
               educational program and salary and wage information  
               (consisting of the total number of graduates employed in  
               the field and the annual wages or salaries of those  
               graduates). 

               Under the Act, institutions are also required to submit the  
               most recent three-year cohort default rate reported by the  
               United States Department of Education for the institution  
               and the percentage of enrolled students receiving federal  
               student loans.  The Bureau is also authorized to ensure  
               that information is useful to students, useful to  
               policymakers, based on the most credible and verifiable  
               data available but also does not impose undue compliance  
               burdens on an institution.

             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  








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          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  
          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  








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                      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 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 634  (Block) authorizes DCA  
             to                                             enter into a  
             regional state authorization reciprocity agreement with other  
             states through a compact on behalf of this state. The compact  
             would provide that an entity regulated in one member state  
             would be able to provide distance education in other member  
             states. The bill would require the Bureau, before entering  
             into a compact, to establish a process to ensure that certain  
             educational institutions that are exempt from the Act may  
             participate in the state authorization reciprocity agreement  
             without impacting their exempt status. The bill would require  
             the Bureau to enter into a memorandum of understanding with  
             certain educational officials for the purpose of establishing  
             and implementing the state authorization reciprocity  
             agreement, as specified.  The bill would authorize the Bureau  
             to establish a reasonable fee to be paid to the Department of  
             Consumer Affairs by a participating postsecondary  
             institution, as specified.  (  Status:   The bill is currently  
             pending in the Senate Committee on Education.)

              AB 752  (Salas) requires, if the Bureau publishes a list of  








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             relevant occupational ability-to-benefit examinations and  
             passing scores, the list shall include the Comprehensive  
             Adult Student Assessment System examination.  (  Status:   The  
             bill is currently pending in the Assembly Committee on Higher  
             Education.)

              AB 509  (Perea) exempts from the Act and related oversight by  
             the Bureau a bona fide organization, association, or council  
             that offers pre-apprenticeship training programs, on behalf  
             of one or more Division of Apprenticeship Standards approved  
             apprenticeship programs.  (  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, provided statutory changes to the  
             protections provided to students and the requirements placed  
             on private postsecondary educational institutions under the  
             Act.   
           
               AB 2296  (Block, Chapter 585, Statutes of 2012) expanded the  
             disclosure requirements for institutions under the Bureau  
             related to unaccredited programs; expanded disclosure  
             requirements for all regulated institutions; established more  
             stringent criteria for determining gainful employment and  
             calculating job placement rates; and increased institutional  
             documentation and reporting requirements around completion  
             rates, job placement/license exam passage rates, and  
             salary/wage information for graduates.

              AB 611  (Gordon, Chapter 103, Statutes of 2011) set forth  
             certain disclosure requirements pertaining to accreditation  
             status, licensure, and related limitations for unaccredited  
             doctoral programs.
              
             AB 1889  (Portantino) of 2010 contained provisions regarding  
             doctoral degrees offered by unaccredited institutions, the  
             calculation of placement rates, and Bureau employment  
             requirements.  (  Status:   The bill was vetoed by the Governor  
             due to concerns over Bureau employment requirements.)
              
             AB 2393  (Ammiano) of 2010 would have altered the definition  
             of "graduates employed in the field" for apprenticeship and  
             nursing programs.  (  Status:   The bill was vetoed by the  








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             Governor, who indicated that it put the state on the same  
             path to overly confusing statutes and guidelines that existed  
             prior to the new Act.)
          
          3. Arguments in Support.  Supporters like the  Center for  
             Employment Training (CET)  (Co-Sponsor),  Central Valley  
             Opportunity Center, Inc.  ,  La Cooperativa  , and  Proteus, Inc.  ,  
             recognize barriers faced by students in "hard to serve  
             populations" in being able to graduate within 100% of the  
             scheduled training time.  The organizations note that these  
             individuals face challenges like "limited English language,  
             disabilities, legal issues, lack of resources for child care,  
             transportation, housing, medical and others."  They believe  
             that under this bill, these "special population students  
             would not be excluded from the count of graduates during a  
             reporting period" and training programs would continue their  
             open door policies of providing quality training to  
             hard-to-serve populations in low income communities.
             
             The  Children's Advocacy Institute  ,  Center for Public Interest  
             Law  and  Veterans Legal Clinic at the University of California  
             San Diego Law School  (Co-Sponsors) note that the current  
             definition of graduate as one who graduates within 100% of  
             the originally scheduled completion time of a program, when  
             applied for job placement, salary and licensing data, skews  
             the results because it only includes those graduates who  
             graduated within 100% of the scheduled time period, not all  
             graduates.  According to these organizations, the simple  
             change proposed in this bill corrects this issue by using the  
             term "on-time" graduates to tell how many graduated on time  
             during a given reporting year but "graduates" to report job  
             placement, salaries and license passage for all graduates  
             during the given reporting year.

             According to  Public Advocates  , current law does not give a  
             full and complete picture of the success of for-profit and  
             other private institutions.  Public Advocates notes that  
             application of the current definition results in misleading  
             job placement rates, salary and licensing data, as well as  
             less accurate and confusing information for students.     
          

          SUPPORT AND OPPOSITION:
          








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           Support:  

          Center for Employment Training (CET) (Co-Sponsor)
          Central Valley Opportunity Center, Inc.
          Center for Public Interest Law (Co-Sponsor)
          Children's Advocacy Institute (Co-Sponsor)
          La Cooperativa
          Proteus, Inc.
          Public Advocates
          Veterans Legal Clinic at the University of San Diego School of  
          Law (Co-Sponsor)

           Opposition:  

          None on file as of April 22, 2015.





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