BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1192|
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UNFINISHED BUSINESS
Bill No: SB 1192
Author: Hill (D), et al.
Amended: 8/19/16
Vote: 21
SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 8-0, 4/11/16
AYES: Hill, Berryhill, Block, Galgiani, Hernandez, Jackson,
Mendoza, Wieckowski
NO VOTE RECORDED: Bates
SENATE EDUCATION COMMITTEE: 9-0, 4/20/16
AYES: Liu, Block, Hancock, Huff, Leyva, Mendoza, Monning, Pan,
Vidak
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/27/16
AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen
SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 7-2, 8/25/16
(pursuant to Senate Rule 29.10)
AYES: Hill, Block, Galgiani, Hernandez, Jackson, Mendoza,
Wieckowski
NOES: Bates, Gaines
SENATE FLOOR: 37-0, 5/31/16
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson,
Leno, Leyva, Liu, McGuire, Mendoza, Monning, Moorlach,
Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone, Vidak,
Wieckowski, Wolk
NO VOTE RECORDED: Lara, Mitchell, Runner
ASSEMBLY FLOOR: 62-9, 8/23/16 - See last page for vote
SUBJECT: Private postsecondary education: California Private
SB 1192
Page 2
Postsecondary Education Act of 2009
SOURCE: Author
DIGEST: This bill makes various changes to the California
Private Postsecondary Education Act (Act) of 2009 intended to
improve the effectiveness of the Bureau for Private
Postsecondary Education (BPPE or Bureau) and opportunities for
student success and extends the Act and BPPE's operations for
four years.
Assembly Amendments rewrite the provisions of the bill as it was
approved by the Senate.
ANALYSIS: Existing law establishes the Act until January 1,
2017, and requires BPPE within the Department of Consumer
Affairs (DCA) to, among other things, review, investigate and
approve private postsecondary 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 to include 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 the BPPE is
required to administer the Student Tuition Recovery Fund (STRF)
to provide refunds to students affected by the possible closure
of an institution/school. (Education Code § 94800 et seq.)
This bill:
1) Requires the DCA director to receive complaints from
students related to BPPE'S performance of its
responsibilities, including concerns related to the
administration of the STRF.
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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 BPPE Advisory Committee
(Advisory Committee) and specifies that a quorum be comprised
of a majority of those 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
USDE 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, 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.
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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 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 to be received by the
BPPE to four years after the date of the action that made the
student eligible 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 percent to 0.45
percent of an institution's revenue derived from California
students, increases the annual fee cap from $25,000 to
$60,000, establishes the annual fee calculation for branch
campuses and establishes an overall cap for institutions of
$750,000.
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13)Establishes legislative intent that the fees in 12) above 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 DCA and the BPPE.
Provides that the annual fee calculation shall automatically
increase to 0.55 percent on July 1, 2018, in the absence of
legislative action.
14)Establishes the OSAR to provide outreach and individualized
assistance to students impacted by the unlawful activities or
closure of a BPPE-approved institution, including support for
students affected by the closure of CCI 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 DCA.
15)Extends the BPPE sunset date from January 1, 2017, to
January 1, 2021.
16)Makes various technical changes.
Background
This bill is one a number of "sunset bills" the author is
sponsoring this year. According to the author, this bill is
necessary to make changes to the Act in order to ensure
continued oversight of private postsecondary institutions that
supports quality, innovative programs which are approved in a
timely manner, while also making sure a robust government
structure prevents predatory practices and promotes student
success. According to the author, the focus of any conversation
about the Bureau and the Act should be about finding balance
between a thoughtful regulatory structure that allows good
schools to thrive while at the same time establishing meaningful
opportunities for students. The author notes that "we must
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Page 6
continue to ensure that the Californians working to better their
lives through education and skills based training have some
confidence in the quality of education and training they
receive. It is also important for us to find ways to increase
accountability for California students, as well as for the
significant amount of public and private resources spent on
educational and training endeavors." According to the author,
most significantly, it is important to ensure that students are
provided proper recourse through the Bureau and the vast array
of tools the Bureau has to help students in the event that they
are not provided all of the opportunities they were promised.
Bureau for Private Postsecondary Education. The BPPE is
responsible for oversight of private postsecondary educational
institutions operating with a physical presence in California.
Established by AB 48 (Portantino, Chapter 310, Statutes of 2009)
after numerous legislative attempts to remedy the laws and
structure governing regulation of private postsecondary
institutions, the bill took effect January 1, 2010, to make many
substantive changes that created a foundation for oversight and
gave the BPPE enforcement tools to ensure schools comply with
the law.
2015-16 sunset review. Beginning in 2015, the Senate Business
and Professions Committee and the Assembly Business and
Professions Committee (Committees) conducted joint oversight
hearings to review 12 regulatory entities. The Committees
conducted two hearings in March and joined with the Senate
Committee on Education and Assembly Committee on Higher
Education to review BPPE. This bill and the accompanying sunset
bills are intended to implement legislative changes as
recommended by staff of the Committees and which are reflected
in the Background Papers prepared by Committee staff for each
agency and program reviewed this year.
In response to concerns that the BPPE has focused significant
efforts to provide outreach to schools, including new workshops
to assist with application completion and web-based tools to
allow institutions to better understand how they can be
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compliant with the Act and BPPE regulations, but has not focused
similar efforts on student outreach to inform students about the
BPPE's work and available recourse for students, this bill
establishes an OSAR to provide outreach and individualized
assistance to students impacted by the unlawful activities or
closure of a BPPE-approved institution, including support for
students affected by the closure of CCI and to serve as a
primary point of contact to address the needs of private
postsecondary education students. This bill also requires the
director of the DCA to receive complaints from consumers
concerning student concerns related to BPPE'S performance of its
responsibilities, including concerns related to the
administration of the STRF and requires the director to include
in his or her bi-annual report to the Legislature a summary of
information received under This bill 1) above, including the
total number of student complaints received, the general nature
of these complaints, and the outcome of these student
complaints. The bill also authorizes a student who has obtained
legal counsel that resulted in the cancellation of student loans
to seek reimbursement from the 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 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.
In response to concerns about the ability of students enrolled
at a California campus of CCI when it abruptly closed in 2015 to
make their lives whole, this bill provides that a student who
was enrolled at a California campus of 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.
In response to concerns that California students enrolled in
distance education programs may not be protected under
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provisions in the Act, this bill 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 $1,500, specifies that
an institution that fails to comply is not authorized to operate
in this state.
In response to opportunities to strengthen the Act to ensure
students receive training necessary for employment and
licensure, this bill requires, during the enrollment process, 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.
In response to issues remaining about concerns that unaccredited
degree granting programs may not be able to meet current
statutory requirements for accreditation, this bill extends the
sunset date for a degree-granting institution that is not
accredited by an accrediting agency recognized by USDE 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.
In response to issues raised about unlicensed activity,
compliance inspections conducted by BPPE, the BPPE's complaint
investigations backlog and enforcement problems, this bill
increases the penalty for operating an institution without BPPE
approval from $50,000 to $100,000, authorizes the BPPE to use
evidence collected during a compliance inspection in support of
issuing a citation or pursuing an action and requires
institutions to notify BPPE of investigations by other
governmental agencies, as specified.
SB 1192
Page 9
In response to concerns that the Bureau lacks adequate resources
to effectively perform its duties, since the BPPE's fee were
established by AB 48 and have not been adjusted since the BPPE
became operative in 2010, and that the current fee structure is
disparate, this bill reduces the annual fee calculation from
0.75 percent to 0.45 percent of an institution's revenue derived
from California students, increases the annual fee cap from
$25,000 to $60,000, establishes the annual fee calculation for
branch campuses and establishes an overall cap for institutions
of $750,000. While this change will result in an increase for a
school earning tens of millions of dollars, that school will pay
a smaller percent of revenue than they are today while a small
school will pay thousands of dollars less than they are today.
Close to 40 percent of schools regulated by BPPE will see a
decrease in fees. This bill also establishes legislative intent
that the fees above 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 DCA
and the BPPE. This bill provides that the annual fee
calculation shall automatically increase to 0.55 percent on July
1, 2018, in the absence of legislative action.
FISCAL EFFECT: Appropriation: Yes Fiscal
Com.:YesLocal: Yes
According to the Assembly Appropriations Committee, the BPPE
estimates costs of approximately $170,000 related to
out-of-state institutions registering with the Bureau, ongoing
costs of $600,000 for six positions to fulfill the new OSAR's
responsibilities, an estimated STRF payout of almost $1.1
million, $1 million in one-time moving costs and $250,000
annually in increased rental charges. The Bureau's revenue
would increase by about $300,000 per year as a result of the
increase in the fine from $50,000 to $100,000 for operating an
institution without proper approval to operate. At the time of
the Appropriations Committee analysis, this bill did not include
the fee adjustments as currently proposed, which are intended to
provide the Bureau with the resources it needs to effectively
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operate.
SUPPORT: (Verified8/25/16)
Center for Public Interest Law
Children's Advocacy Institute
Consumer Federation of California
Housing and Economic Rights Advocates
Public Counsel
Public Law Center
SEIU California
Veterans Legal Clinic
OPPOSITION: (Verified8/25/16)
None received
ARGUMENTS IN SUPPORT: A coalition of organizations including
the Center for Public Interest Law, Children's Advocacy
Institute, Consumer Federation of California, Housing and
Economic Rights Advocates, Public Counsel, Public Law Center,
SEIU California, and Veterans Legal Clinic are supportive of
this bill. The groups note that "Californians have been
disproportionately harmed by for-profit education businesses
that fail to deliver on their promises to students. Strong state
oversight will help protect students, so that fewer Californians
are harmed in the future. A vigorous BPPE is needed more than
ever."
ASSEMBLY FLOOR: 62-9, 8/23/16
AYES: Achadjian, Alejo, Arambula, Atkins, Baker, Bloom,
Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chávez,
Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman,
Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gordon, Gray, Hadley, Roger Hernández,
Holden, Irwin, Jones-Sawyer, Kim, Lackey, Levine, Lopez, Low,
Maienschein, Mathis, McCarty, Medina, Mullin, Nazarian,
SB 1192
Page 11
O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
Mark Stone, Thurmond, Ting, Wagner, Weber, Wilk, Williams,
Wood, Rendon
NOES: Travis Allen, Brough, Chang, Beth Gaines, Gallagher,
Grove, Harper, Melendez, Obernolte
NO VOTE RECORDED: Bigelow, Dahle, Jones, Linder, Mayes, Olsen,
Patterson, Steinorth, Waldron
Prepared by:Sarah Mason / B., P. & E.D. / (916) 651-4104
8/25/16 18:00:23
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