BILL ANALYSIS
Date of Hearing: March 18, 1997
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Ted Lempert, Chair
AB 71 (Wright) - As Amended: March 12, 1997
Urgency Statute. 2/3 Vote Requirement.
SUBJECT : Private Postsecondary and Vocational Education Reform
Act of 1989.
SUMMARY : Extends by five and a half years, from June 30, 1997 to
January 1, 2003, the sunset date for the Private Postsecondary and
Vocational Education Reform Act of 1989 (Reform Act) and the
Maxine Waters School Reform & Student Protection Act of 1989 (
Waters Act/Article 7), and makes numerous substantive and
technical nonsubstantive changes to the Act. The Reform Act also
created the Council on Private Postsecondary and Vocational
Education (CPPVE) and designated it the lead agency in
implementing and enforcing the Act. Specifically, this bill :
1) Makes substantive changes to the Reform Act that are intended
to bring about greater flexibility and efficiency, while also
reducing paperwork, administrative costs, fees, and
administrative requirements. Some of the changes include the
following: (a) allows the schools to use a less costly
process to appeal an administrative action to the Council in lieu
of an expensive and lengthy administrative hearing,(b) reduces
costly and
time-consuming administrative reporting requirements, (c)
increases the maximum
length of approvals for non-degree schools, simplifies the process
for
filing renewal applications which will also result in fee
reductions, and (d)
provides additional exemptions both from the Act and from
specified sections of the Act.
2) Exempts English language instruction programs from Article 7
that meet the following criteria: (a) exclusively enroll
international students who are not immigrants, refugees or
permanent residents, (b) prepare students for entrance exams at
accredited or approved postsecondary institutions, (c)
accept no federal or state financial aid, and (d) are not offered
to lead to occupational employment. These programs would
continue to be subject to the less rigorous requirements of the
Reform Act.
3) Relates regulation and student protection to type of program
as opposed to the entire institution so that schools offering a
variety of programs from certificates through doctoral degrees
are not required to apply the more restrictive vocational
program requirements.
4) Makes other minor, technical nonsubstantive and conforming
changes.
5) Requires CPEC to review and evaluate the effectiveness of
these acts and report its findings to the Legislature by January
1, 2001 and every five years thereafter.
6) Revises and specifies the scope and contents of an annual
report that the Council is required to submit to the Legislature
by January 1 of each year to include such items as: (a) data on
scope and operation of California private postsecondary and
vocational schools, (b) information on consumer complaints
received and action taken,(c) number of license appeals, and d)
enforcement information.
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FISCAL EFFECT : CPPVE is an independent, special fund agency and
the Council receives no general fund revenues. This bill would
result in minor absorbable costs to the Council and CPEC.
COMMENTS :
1) In 1989, the Legislature enacted the Private Postsecondary and
Vocational Education Reform Act of 1989 which establishes the
regulatory framework for all private postsecondary
educational institutions, including
degree-granting, vocational and non-degree granting schools.
Within the Reform
Act is the Maxine Waters School Reform and Student Protection Act
which establishes consumer protection and financial standards for
for-profit certificate- or diploma-granting schools (i.e. private
vocational schools).
2) These acts addressed two related problems: (a) diploma mills
that in essence sold academic degrees without adequate
educational programs, and (b) unscrupulous trade schools, or
those engaged in fraudulent recruitment and student loan
practices that left students with tremendous debt but no new
job skills and the government with escalating student loan
defaults.
This reform legislation was intended to resolve these issues by
significantly strengthening the standards for state licensure and
transferring licensure responsibility from the State Department of
Education
to the new Council.
3) To receive or keep a license, institutions must maintain and
disclose minimum rates for student program completion and job
placement as well as standards for financial responsibility.
The law also establishes a special fund to reimburse student
tuition losses when schools close and provide standards for
ownership, recruitment and advertising. The law is among
the most stringent in the United States and serves as a national
model. Following its enactment Congress passed similar
regulatory legislation in this area.
4) Currently a number of third-party funding agencies, including
worker's compensation, rehabilitation, and JTPA require Council
approval for a school as
a condition of funding.
5) The 20-member Council includes representatives from private
postsecondary schools, the public, state agencies, and appointees
from the Governor and the Legislature. The Council staff carry
out the administrative, research,
and regulatory responsibilities of the agency, which include: (a)
approval of degree and nondegree institutions; (b) assisting
consumers by investigating complaints and providing refunds in
special
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circumstances; (c) investigating schools operating without Council
approval;
(d) conducting research on private postsecondary education; and
(e) assessing licensure fees for schools.
Presently, there are nearly 2,500 approved institutions
educating over 400,000 students. Approximately eighty-five
percent of the schools are non-degree granting and fifteen
percent grant degrees. Approximately
twenty-one percent of the students are enrolled in degree
programs.
6) CPEC completed its review of the Reform Act in October 1995,
and formally
submitted its report the Legislature in a joint hearing of the
Senate Education Committee and Assembly Higher Education
Committee on February 28, 1996. CPEC conclusions
concerning the Reform Act included the
following: (a) consumers were sufficiently protected, (b) the
integrity of degrees
and diplomas were effectively protected, (c) student and
institutional protections and rights reflected a balanced view.
For these reasons,
CPEC recommended removal of the repeal date, allowing the law to
operate indefinitely.
7) At the end of the 1996 Legislative Session the Governor vetoed
a similar bill, AB 2960 (Firestone and Campbell). In the
Governor's Veto Message the following concerns were raised:
a) The level of fees required for compliance and the ability
of small schools to stay in business. Larger more
capitalized schools do not have the same problem as the
smaller schools that operate on a much smaller margin.
b) The manner in which the staff of the Council carry out
their responsibilities. There were reports from some
schools of alleged reprisals and vindictiveness by Council
staff. It was recommended that the council provide an
administrative appeal process short of litigation.
Both issues are addressed in this bill through substantive
changes, i.e. exemptions for small schools and an administrative
appeals process.
The author's intention in this bill is solely to address the
Governor's concerns listed in the veto message and to avoid the
expiration of the law on June 30, 1997. Both the author and
the Governor's staff have verbally agreed on compromise
language contained in this bill.
8) The Reform Act was the product of bipartisan efforts lead by
then Assemblywoman Maxine Waters (D) and Senator Becky
Morgan (R), and was signed
into law by Governor Deukmejian. Legislation in this area
continues to garner bipartisan support, i.e. last year AB 2960
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passed both the
Assembly and Senate with only one opposing vote.
9) Frequently, school owners argue that the Reform Act has
negatively impacted schools by quoting school closure
figures. According to the Council,
prior to the Act, in 1980-1982, 911 businesses closed compared to
1993-1995 when only 595 schools closed. Each year since 1993, more
schools have
opened than closed in California.
10) The Reform Act sunsets on June 30, 1997, and is repealed on
January 1, 1998.
Arguments In Support : CPEC contends that the Reform Act has
become a model for federal standards and other states, its
regulation of private postsecondary education is a major
improvement over the conditions that existed prior to its
creation. Consumers contend that oversight of the schools by the
Council has proved to be an effective means of ensuring that
scarce state and federal resources are paid only to legitimate
educational institutions from which students receive a verifiable
benefit.
The author states that student complaints still arise regarding
failure to pay refunds, quality of education and misrepresentation
in recruitment. Many schools contend that consumer protection and
minimum educational standards
have helped improve quality within the private postsecondary
vocational education sector, and they have benefited from a much
improved reputation as the number of problem schools has been
reduced.
Arguments In Opposition : Many schools argue that the Reform Act
and the Council promote and enforce excessive and costly
regulation over private institutions, and this discourages new
schools from investing in California.
REGISTERED SUPPORT / OPPOSITION :
Support
California Postsecondary Education Commission
Majors & Fox
Los Angeles Center for Law and Justice
Bet Tzedek Legal Services
McKinnon Institute
Legal Services of Northern California
University of California
Public Counsel Law Center
Proskauer, Rose, Goetz & Mendelson
William O'Hare, Attorney at Law
Beck, De Corso, Daly, Barrera & Oh
Jones, Day, Reavis & Pogue
Consumers Union
California Pacific University
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Maxine Waters, Member of the Congress of the United States
Katten, Muchin & Zavis
Body Mind College
Desert Resorts School of Somatherapy
Alive & Well
California Coast University
Mueller College
Oregon Office of Educational Policy and Planning
The Sturdevant Law Firm
Opposition
American College of Law
California Career College
Independent Law School Association
The Wilson Group, LLC
Western Sierra Law School
The Educational Small Business Association
Analysis prepared by : Rosa de Anda / ahed / (916) 324-4655