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