BILL ANALYSIS Ó SB 1192 Page 1 SENATE THIRD READING SB 1192 (Hill) As Amended August 19, 2016 Majority vote SENATE VOTE: 37-0 -------------------------------------------------------------------- |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+-----------------------+---------------------| |Higher |10-0 |Medina, Bloom, Chávez, | | |Education | |Irwin, Jones-Sawyer, | | | | |Levine, Low, Santiago, | | | | |Weber, Williams | | | | | | | |----------------+-----+-----------------------+---------------------| |Business & |12-2 |Salas, Bloom, Campos, |Baker, Gatto | |Professions | |Chávez, Dodd, Eggman, | | | | |Gomez, Holden, Jones, | | | | |Mullin, Ting, Wood | | | | | | | |----------------+-----+-----------------------+---------------------| |Appropriations |16-1 |Gonzalez, Bloom, |Gallagher | | | |Bonilla, Bonta, | | | | |Calderon, Chang, Daly, | | | | |Eggman, Eduardo | | | | |Garcia, Holden, | | SB 1192 Page 2 | | |Obernolte, Quirk, | | | | |Santiago, Weber, Wood, | | | | |McCarty | | | | | | | | | | | | -------------------------------------------------------------------- SUMMARY: Extends the sunset date and provides for various changes to the California Private Postsecondary Education Act of 2009 (Act) and the oversight of the Act provided by the Bureau for Private Postsecondary Education (BPPE). Specifically, this bill: 1)Requires the director of the Department of Consumer Affairs to receive complaints from consumers concerning student concerns related to the Bureau for Private Postsecondary Education's (bureau) performance of its responsibilities, including concerns related to the administration of the Student Tuition Recovery Fund (STRF). 2)Requires the director to include in his or her bi-annual report to the Legislature a summary of information received under 1) above, including the total number of student complaints received, the general nature of these complaints, and the outcome of these student complaints. 3)Requires an out of state online institution to comply with specified provisions, including registering with the BPPE, with registrations valid for two years; authorizes BPPE to adopt emergency regulations to establish an application process; requires an out-of-state institution to pay an application fee of $1500, specifies that an institution that fails to comply is not authorized to operate in this state. 4)Removes two positions from the Advisory Committee and specifies that a quorum be comprised of a majority of those SB 1192 Page 3 appointed members; authorizes the chairs of policy committees of the Senate and Assembly with jurisdiction over legislation relating to the BPPE to designate a representative to attend the Advisory Committee meetings if he or she is unable to attend; and, requires the Chief of the Office of Student Assistance and Relief (OSAR) to attend and report at all Advisory Committee meetings. 5)Extends the sunset date for a degree-granting institution that is not accredited by an accrediting agency recognized by the United States Department of Education to obtain accreditation and provides BPPE the authority to give extensions on the timeline for unaccredited degree granting institutions to become accredited according to certain evidence. 6)Requires during the enrollment process that an institution offering educational programs designed to lead to positions in a profession, occupation, trade, or career field where voluntary licensure by a government agency is available, to provide all students seeking to enroll in those programs with a written copy of the voluntary government agency licensure requirements. 7)Increases the penalty for operating an institution without BPPE approval from $50,000 to $100,000. 8)Authorizes a student who has obtained legal counsel that resulted in the cancellation of student loans to seek reimbursement from the Student Tuition Recovery Fund (STRF) of services rendered, not to exceed $500; requires BPPE to obtain evidence of student loan debt being "paid in full" when negotiating student loan obligations with loan servicers or debt holders; and, limits the timeframe for a written application that to be received by the BPPE to four years after the date of the action that made the student eligible SB 1192 Page 4 for recovery from the STRF, except that a student whose loan is subsequently revived by a loan holder or debt collector to re-apply for recovery from STRF. 9)Provides that a student who was enrolled at a California campus of Corinthian Colleges, Inc. (CCI), or was a California student enrolled in an online program offered by an out-of-state campus of a CCI institution, who also meets all of the other eligibility requirements, if the student was enrolled as of June 20, 2014, is eligible for STRF. 10)Authorizes the BPPE to use evidence collected during a compliance inspection in support of issuing a citation or pursuing an action. 11)Requires institutions to notify BPPE of investigations by other governmental agencies, as specified. 12)Reduces the annual fee calculation from 0.75% to 0.45% of an institution's revenue derived from California students, increase the annual fee cap from $25,000 to $60,000; establishes the annual fee calculation for branch campuses; and, establish an overall cap for institutions of $750,000. 13)Establishes Legislative intent that the aforementioned fees be evaluated in the 2017-18 state budget process and, if necessary, adjusted by subsequent legislation based upon the information provided to the Legislature by the department and the bureau; however, provides that the annual fee calculation shall automatically increase to .55 on July 1, 2018, in the absence of Legislative action. 14)Establishes an OSAR to provide outreach and individualized SB 1192 Page 5 assistance to students impacted by the unlawful activities or closure of a BPPE-approved institution, including support for students affected by the closure of Corinthian Colleges, Inc., and to serve as a primary point of contact to address the needs of private postsecondary education students. Specifies that a Chief will be appointed by the director of Department of Consumer Affairs (DCA). 15)Extends the BPPE sunset date from January 1, 2017 to January 1, 2021. 16)Makes various technical changes. EXISTING LAW: Establishes the Act until January 1, 2017, and requires BPPE, within the DCA to, among other things, review, investigate and approve private postsecondary institutions (or 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 requires unaccredited degree granting institutions to be accredited by an accrediting agency recognized by the United States Department of Education (USDE) by 2020. The Act also provides for specified disclosures and enrollment agreements for students, requirements for cancellations, withdrawals and refunds, and that the 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 Section 94800 et. seq.) FISCAL EFFECT: According to the Assembly Appropriations Committee: 1)Out-of-State Registration and Enforcement. The BPPE estimates SB 1192 Page 6 approximately 500 out-of-state institutions will register with the Bureau to provide online education to California students. Ongoing cost will be around $170,000 for two positions to register these institutions and to work with students and the out-of-state institution's home regulatory body or accrediting agency to ensure compliance with the Act. [BPPE Administration Fund] 2)OSAR. Ongoing costs will be $600,000 for six positions to fulfill the new office's responsibilities. [BPPE Administration Fund] 3)Corinthian Students. The Bureau estimates it would receive 720 STRF claims, of which 39 percent (281 cases) would be approved, for a total STRF payout of almost $1.1 million [STRF]. The number of applications and approvals could be larger, however, with the assistance provided to nonprofits under contract to OSAR. The Bureau will also require $190,000 for two years for two positions to administer this assistance. [BPPE Administration Fund] 4)Office Space. The BPPE indicates that the additional positions described above will require larger office space, resulting in $1 million in one-time moving costs and $250,000 annually in increased rental charges. [BPPE Administration Fund] 5)Increased Revenue. Increasing, from $50,000 to $100,000, the fine that may be issued to a person for operating an institution without proper approval to operate will increase revenues by about $300,000 per year to the BPPE Administrative Fund. Restructuring the operating fees will increase annual revenues by $5.3 million. SB 1192 Page 7 COMMENTS: Existing law sunsets the Act on January 1, 2017. Legislation is necessary to extend the sunset date of the Act and the oversight provided by the BPPE. On March 28, 2016, the Assembly Higher Education Committee and the Senate Business, Professions and Economic Development Committee were joined by the Senate Education Committee and the Assembly Business and Professions Committee to conduct a Sunset Review hearing of the BPPE. This bill is intended to implement legislative changes as discussed and recommended during the Sunset Review process. Additional information regarding the BPPE and recommended changes to the law can be found in the Background Paper prepared by Committee staff, available on the Committee Web site. Analysis Prepared by: Laura Metune / HIGHER ED. / (916) 319-3960 FN: 0004623