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 ----------------------------------------------------------------- |Author: |Beall | |----------+------------------------------------------------------| |Version: |April 6, 2015 | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Sarah Mason | |: | | ----------------------------------------------------------------- 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 SB 410 (Beall) Page 2 of ? (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, SB 410 (Beall) Page 3 of ? 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 SB 410 (Beall) Page 4 of ? 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 SB 410 (Beall) Page 5 of ? 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 SB 410 (Beall) Page 6 of ? 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 SB 410 (Beall) Page 7 of ? 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 SB 410 (Beall) Page 8 of ? 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 SB 410 (Beall) Page 9 of ? 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 SB 410 (Beall) Page 10 of ? 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 SB 410 (Beall) Page 11 of ? 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 SB 410 (Beall) Page 12 of ? 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: SB 410 (Beall) Page 13 of ? 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. -- END --