BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1889|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 1889
Author: Portantino (D)
Amended: 8/17/10 in Senate
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 6-1,
6/28/10
AYES: Negrete McLeod, Calderon, Corbett, Correa, Florez,
Yee
NOES: Aanestad
NO VOTE RECORDED: Wyland, Walters
SENATE APPROPRIATIONS COMMITTEE : 7-4, 8/12/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
NOES: Ashburn, Emmerson, Walters, Wyland
ASSEMBLY FLOOR : 50-24, 6/1/10 - See last page for vote
SUBJECT : Private postsecondary education: California
Private
Postsecondary Education Act
SOURCE : Author
DIGEST : This bill enacts several changes to the
California Private Postsecondary Education Act and the
related oversight provided by the Bureau for Private
Postsecondary Education.
ANALYSIS :
CONTINUED
AB 1889
Page
2
Existing law:
1. Establishes the Bureau for Private Postsecondary
Education (Bureau) within the Department of Consumer
Affairs (DCA) and provides for Bureau oversight and
regulation of California private postsecondary
institutions.
2. Specifies that, notwithstanding the inoperative status
or repeal of the former Private Postsecondary and
Vocational Education Reform Act of 1989 (Former Act) on
or after July 1, 2007, any claim or cause of action in
any manner based on the act that was commenced on or
before June 30, 2007, whether or not reduced to a final
judgment, shall be preserved, and any remedy that was or
could have been ordered to redress a violation of the
act on or before June 30, 2007, may be ordered or
maintained thereafter.
3. Defines "ability-to-benefit student" (ATB) as a student
who does not have a certificate of graduation from a
school providing secondary education, or a recognized
equivalent of that certificate. Provides that before an
ATB student may execute an enrollment agreement, the
institution shall have the student take an independently
administered examination from the list of examinations
prescribed by the United States Department of Education
(USDE). Specifies that the student may not enroll
unless he or she achieves a score demonstrating that the
student may benefit from the education and training
being offered.
4. 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
AB 1889
Page
3
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.
5. Establishes numerous fair business practices for
institutions covered by the California Private
Postsecondary Education Act (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.
6. 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.
7. Sets forth certain disclosure requirements pertaining to
completion, placement, licensure, and salary. Provides
AB 1889
Page
4
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.
8. 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.
9. 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.
10.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
Legislature and the Governor.
11.Appropriates $580,000 from the Private Postsecondary and
Vocational Education Administration Fund (Fund) to for
the purpose of funding five private postsecondary
education specialist and senior specialist positions.
Includes these positions in the annual budget for the
Bureau.
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
AB 1889
Page
5
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 ATB students, if the USDE 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 based in the Sacramento
office of the Bureau.
7. Provides that this bill is contingent upon enactment of
AB 1140 (Niello).
Background
Enactment of AB 48 (Portantino), 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 Act. 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
AB 1889
Page
6
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.
Prior to the enactment of AB 48, California was without a
regulatory body for private postsecondary institutions.
The previous Bureau for Private Postsecondary Institutions
(BPPVE) sunset in July 2008, leaving approximately 1,500
private postsecondary institutions that had been previously
approved by BPPVE to operate in California without state
oversight. The former BPPVE registered approximately 700
private institutions providing short-term career/seminar
training, continuing education, intensive English language
programs, and license exam preparation courses. Those
schools had an estimated student enrollment of
approximately 400,000. Of those students, approximately
280,000 students attended non-degree-granting institutions
and the remaining 120,000 attended degree-granting
institutions. BPPVE approved institutions served a
significant portion of students seeking postsecondary
educational and vocational training services. In 2006,
BPPVE approved institutions served as many students as were
served by the entire California State University system.
It is generally believed that BPPVE institutions,
especially the vocational schools, tend to serve segments
of the population that are underserved by the traditional
public and private postsecondary education institutions.
Concerns about Private Postsecondary Schools . Media
outlets and efforts at the Federal level have recently
highlighted unease about the operations and functions of
private postsecondary schools. This Committee, at its
March 2009 hearing entitled "The Role of Private Education
Institutions in Preparing California's Diverse Workforce:
Meeting the Challenges of our Workforce and Job Training
Needs." examined the ability of private postsecondary
institutions to fill the career preparation needs of
California's workforce and evaluate policy options that
allow them to expand their workforce development programs
AB 1889
Page
7
with the requisite amount of oversight required to protect
students. While the sector serves upwards of ten percent
of postsecondary students and provides a path to higher
education that may not always be available for all
students, there are increased questions about these
institutions' accurate representation of what they are able
to offer students. There are also concerns that schools
provide training at a steep cost that does not balance the
earnable income an individual may be eligible for, based on
that training or upon completion of a program. Recent
budgetary and capacity issues in California's public
postsecondary schools, coupled with the current economic
crisis may lead to a worsening of the current situation, as
employees are increasingly out of work and more inclined to
enter training programs in the hopes of obtaining gainful
employment, at a cost they may not be able to make up once
they are employed.
A recent New York Times article and piece that aired on
Frontline explored complaints against these schools,
particularly the practice of reliance on federal loans and
grants and questionable recruiting practices. Advocates
believe that tuition at private postsecondary institutions
is extremely high, forcing students to take out private
loans to supplement the limitations of those offered by the
Federal government. The rising debt to income ratio has
led to USDE action, including proposed stricter rules and
oversight to protect students from debt resulting from high
student loans. The private postsecondary school sector
responds that career colleges are an essential part of the
solution for restoring this country's global educational
and economic standing, citing the role these schools play
in helping lower unemployment, boost global
competitiveness, fill jobs in key industries, and increase
the number of college graduates by 2020.
Flight Schools
Exemptions and Requirements for Flight Schools under the
Former Act . Section 94930 of the Education Code 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
AB 1889
Page
8
operated in California on December 31, 1990, receive
approval from the BPPVE for a period not to exceed three
years. It also required that on or before June 30, 1999,
the BPPVE work in cooperation with the FAA to review each
of these institutions to determine whether the institution
is in compliance with the requirements of the Act. It
provided that it is the intent of the Legislature that all
institutions whose cumulative gross student loan default
rate is above 40 percent, as determined by the Student Aid
Commission, be reviewed by the FAA and the BPPVE to
determine if these institutions are in compliance with the
requirements of the Act and should continue to be approved
to offer educational programs in California. It was
further stated that it is the intent of the Legislature
that the BPPVE develop a Memorandum of Understanding (MOU)
with the FAA to delineate the responsibilities of each
agency for the approval and monitoring of these
institutions that were operating on December 31, 1990,
under the prior authority of the Act.
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 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.)
AB 1889
Page
9
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.
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 (FAR) 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.
AB 1889
Page
10
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Travel costs $200 $200 $200
Special*
* Private Postsecondary and Vocational Education and
Administration Fund
SUPPORT : (Verified 8/16/10)
Association for Private Postsecondary Education in
California
California Nurses Association
National Nurses Organizing Committee
Service Employees International Union
OPPOSITION : (Verified 8/16/10)
California Association of Private Postsecondary Schools
Career Education College
ARGUMENTS IN SUPPORT : The California Nurses Association
and National Nurses Organizing Committee believe that this
bill would stop an unfair business practice by ensuring
that the skills obtained through the education or training
AB 1889
Page
11
provided be required for the position.
ARGUMENTS IN OPPOSITION : The California Association of
Private Postsecondary Schools (CAPPS) writes in opposition
to this measure, primarily surrounding the provisions
relating to remedies. CAPPS believes that by adding new
claims during the sunset period and allowing retroactive
new lawsuits, the bill unfairly creates liability for
institutions that had no legal responsibility to comply
with expired laws.
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Bass, Beall, Block, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
Calderon, Carter, Chesbro, Coto, Davis, De La Torre, De
Leon, Eng, Evans, Feuer, Fong, Fuentes, Furutani,
Galgiani, Hall, Hayashi, Hernandez, Hill, Huber, Huffman,
Jones, Lieu, Bonnie Lowenthal, Ma, Mendoza, Monning,
Nava, V. Manuel Perez, Portantino, Ruskin, Salas,
Saldana, Skinner, Solorio, Swanson, Torlakson, Torres,
Torrico, Yamada, John A. Perez
NOES: Adams, Anderson, Bill Berryhill, Blakeslee, Conway,
Cook, DeVore, Fletcher, Fuller, Gaines, Garrick, Gilmore,
Hagman, Jeffries, Knight, Logue, Miller, Nestande,
Niello, Nielsen, Norby, Smyth, Tran, Villines
NO VOTE RECORDED: Tom Berryhill, Emmerson, Harkey, Silva,
Audra Strickland, Vacancy
JJA:mw 8/16/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****