BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1192


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          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,        |                     |








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          |                |     |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  








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            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  








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            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  








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            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  








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            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.










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          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