BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1140|
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THIRD READING
Bill No: AB 1140
Author: Niello (R), et al
Amended: 8/30/10 in Senate
Vote: 27 - Urgency
SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 6-1, 8/9/10
AYES: Negrete McLeod, Wyland, Aanestad, Corbett, Correa,
Florez
NOES: Yee
NO VOTE RECORDED: Calderon, Walters
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : Not relevant
SUBJECT : Flight schools and aircraft maintenance
programs
SOURCE : National Air Transportation Association
DIGEST : This bill provides for a one-year delay in
implementation of the California Private Postsecondary
Education Act of 2009, beginning July 1, 2010, for
institutions that offer flight instruction or an
institution that offers Federal Aviation Administration
certified educational programs in aircraft maintenance.
NOTE: This bill is nearly identical to AB 1889
(Portantino), which passed the Senate (23-13) on
August 24, 2010.
CONTINUED
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ANALYSIS :
Existing law:
1. Establishes the Bureau for Private Postsecondary
Education (Bureau) within the Department of Consumer
Affairs and provides for Bureau oversight and regulation
of California private postsecondary institutions.
2. Exempts the following from oversight by the Bureau:
A. An institution that offers solely avocational or
recreational educational programs.
B. An institution offering educational programs
sponsored by a bona fide trade, business,
professional, or fraternal organization, solely for
that organization's membership.
C. A postsecondary educational institution
established, operated, and governed by the federal
government or by this state or its political
subdivisions.
D. An institution offering test preparation for
examinations required for admission to a
postsecondary educational institution or continuing
education or license examination preparation, if the
institution or the program is approved, certified, or
sponsored by:
(1) A government agency, other than the Bureau,
that licenses persons in a particular profession,
occupation, trade, or career field.
(2) A state-recognized professional licensing
body, such as the State Bar of California, that
licenses persons in a particular profession,
occupation, trade, or career field.
(3) A bona fide trade, business, or professional
organization.
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3. Establishes numerous fair business practices for
institutions covered by the California Private
Postsecondary Education Act of 2009 (Act), including
prohibiting an institution from promising employment or
otherwise overstating the availability of jobs or making
untrue or misleading statements regarding student
completion, placement or expected salary rates.
4. Specifies certain requirements pertaining to
cancellations, refunds and withdrawals for an
institution that does not participate in the federal
student financial aid programs, including one that
provides for a refund of 100 percent of the amount paid
for institutional charges, less a reasonable deposit or
application fee not to exceed $250, if notice of
cancellation is made through attendance at the first
class session, or the seventh class day after
enrollment, whichever is later.
5. Sets forth certain disclosure requirements pertaining to
completion, placement, licensure, and salary. Provides
that, for the purposes of determining placement rates,
"graduates employed in the field" means graduates who
are gainfully employed within six months of graduation
in a position for which the skills obtained through the
education and training provided by the institution are
required or provided a significant advantage to the
graduate in obtaining the position.
6. Requires the Bureau to provide annual progress updates
to the Legislature, as specified, in the form of
oversight hearings by appropriate policy and fiscal
committees.
7. Requires the Legislative Analyst's Office, by October 1,
2013, to report to the Legislature and the Governor on
the appropriateness of the exemptions provided by the
bill.
8. Requires the Bureau to contract with the Bureau of State
Audits (BSA), by August 1, 2013, to conduct a
performance audit to evaluate the effectiveness and
efficiency of the Bureau operations. Specifies that BSA
is required to report the results of the audit to the
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Legislature and the Governor.
This bill:
1. Provides for a one-year delay in implementation of the
Act, beginning July 1, 2010, for institutions certified
to offer educational programs in flight instruction and
aircraft maintenance by the Federal Aviation
Administration (FAA) and requires an institution to
notify the Bureau if it operates between July 1, 2010
and July 1, 2011.
2. Specifies that an institution offering an unaccredited
doctoral degree program must disclose to prospective
students that the degree program is unaccredited, and
any known limitations of the unaccredited degree
including whether the degree is recognized for licensure
or certification in other states.
3. Allows the Bureau to publish a list of eligible
examinations for ability-to-benefit students, if the
United States Department of Education does not have an
approved examination relevant to the specific
occupational training program.
4. Ensures students are provided until the first class day
or the seventh day after enrollment, whichever is later,
to cancel a program and receive a refund.
5. Alters the definition of "graduates employed in the
field" to require that graduates be gainfully employed
within six months of graduation in a position for which
the skills obtained through the education and training
provided by the institution are required or are utilized
to perform the purpose or objective of the position or
the major responsibilities of the position.
6. Clarifies that the education specialist and senior
specialist positions established within the Bureau are
full-time, permanent positions to perform work in
conformity with the classification specifications as
directed by the Bureau chief.
Background
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Enactment of AB 48 (Portantino and Niello), Chapter 310,
Statutes of 2009 . After numerous legislative attempts to
remedy the laws and structure governing regulation of
private postsecondary institutions, AB 48 was enacted in
January 1, 2010, to make many substantive changes that both
created a new, solid foundation for oversight and responded
to the major problems with the former Private Postsecondary
and Vocational Education Reform Act of 1989 (Former Act)
which expired on July 1, 2007. The Act, as created by AB
48, requires all unaccredited colleges in California to be
approved by the new Bureau, and all nationally accredited
colleges to comply with numerous student protections. It
also establishes prohibitions on false advertising and
inappropriate recruiting. The Act requires disclosure of
critical information to students such as program outlines,
graduation and job placement rates, and license examination
information, and ensures colleges justify those figures.
The Act also guarantees students can complete their
educational objectives if their institution closes its
doors, and, most importantly, it gives the Bureau an array
of enforcement tools to ensure colleges comply with the
law.
Flight Schools
Exemptions and requirements for flight schools under the
Former Act . Section 94930 of the Education Code, which
contained provisions of the Former Act, specifically
referenced the regulation of flight training providers in
California and provided certain exemptions. It specified
that all institutions that were certified to offer flight
instruction by the FAA, and that operated in California on
December 31, 1990, receive approval from the former Bureau
for Private Postsecondary and Vocational Education (BPPVE)
for a period not to exceed three years. It also required
that, on or before June 30, 1999, the BPPVE to work in
cooperation with the FAA on reviewing each of these
institutions to determine whether the institution was in
compliance with the requirements of the Former Act. It
provided Legislative intent that all institutions whose
cumulative gross student loan default rate was above 40
percent, as determined by the Student Aid Commission, be
reviewed by the FAA and the BPPVE to determine if these
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institutions were in compliance with the requirements of
the Act and eligible for approval to offer educational
programs in California.
Section 94930 further provided that institutions certified
to offer flight instruction by the FAA, or its successor
agency, shall comply with certain specified student
protection requirements of the Act, but shall not be
required to file any materials with the BPPVE that are not
required by the FAA or its successor agency, except those
minimally necessary to administer the student Tuition
Recovery Fund as determined by the BPPVE. The
responsibility for monitoring and enforcing institutional
compliance for these instructions was the responsibility of
the BPPVE.
While the Former Act provided legislative intent for the
BPPVE to enter into a memorandum of understanding (MOU)
with the FAA to "delineate the responsibilities of each
agency for the approval and monitoring of these
institutions," the statute did make clear that flight
schools would be subject to the following requirements:
Operations and maintenance standards (financially
capable, issues some type of degree or certificate upon
completion, and provides instruction as part of the
educational program).
Specified requirements for written contract.
Catalog or brochure requirements.
School performance fact sheet.
60 percent pro rata refund policy.
Alternate refund policy.
Tuition refund upon cancellation prior to first day of
instruction.
Written refund policy.
Timely refunds.
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Schedule of charges.
Alternative refund calculation.
Right to withhold transcript for non payment.
Maintenance of student records.
The MOU with the FAA has expired . The most recent MOU
between the Western-Pacific Region of the FAA and Former
Bureau, signed in 2000, established that the FAA would
"assume full responsibility for oversight, regulation and
consumer protection authority for nondegree-granting
private postsecondary institutions operating under Federal
Aviation Regulations parts 141, 142, 65 and 147 of the
FAA". The MOU went on to clarify that:
The FAA would be the entity with the exclusive authority
to certificate institutions to provide approved pilot
training courses.
Certification by the FAA constituted the approval and
requirement to engage in education and training.
The FAA would maintain exclusive jurisdiction over
approval and renewal.
FAA certified private institutions were not required to
comply with the requirements and standards of the Act but
shall endeavor to use those requirements and standards as
guidance in their operations.
Reimbursement of tuition in the event of early
termination or training or closure of an institution
would not be guaranteed by the FAA or the Former Bureau.
With the sunset of the Former Bureau in 2008, the MOU
expired.
Prior/related legislation . AB 2746 (Niello), 2007-08
Session, was similar to AB 48, but it specifically exempted
"an institution certified to offer educational programs in
flight instruction and aircraft maintenance by the FAA"
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from regulation. The bill was held in the Assembly
Appropriations Committee.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/30/10)
National Air Transportation Association (source)
ARGUMENTS IN SUPPORT : This bill is sponsored by the
National Air Transportation Association (NATA). According
to the author's office, the former Bureau had a Memorandum
of Understanding (MOU) with the FAA that exempt flight
instructors and flight schools from most of the regulatory
authority of the Bureau. AB 48 did not renew this
agreement with the FAA, although there are provisions in AB
48, including an exemption for 'recreational or
avocational' instruction that would likely exempt many
individual flight instructors and flight schools.
The author's office believes that there is confusion on the
part of the Bureau and the flight instruction industry over
how broadly this exemption can be applied. The author's
office notes that many instructors and schools are
concerned that if they do not file an application with the
Bureau (applications were due on August 1, 2010), they
could be fined by the State for failure to operate with
Bureau authority.
NATA argues that, "The Act is structured to provide
oversight for typical 'brick and mortar' private
postsecondary educational institutions. That structure is
not well suited to provide oversight for an industry as
diverse and unique as ours. As a result, AB 48 and the
regulations being promulgated by the BPPVE threaten to
irreparably harm the aviation industry in the state as many
flight training facilities will be forced to close. The job
losses and overall economic harm caused by such a fate
would devastate the already fragile California economy."
JJA:mw 8/30/10 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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