BILL ANALYSIS
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|Hearing Date:April 20, 2009 |Bill No:SB |
| |489 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC
DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: SB 489Author:Liu
As Amended:April 1, 2009 Fiscal: Yes
SUBJECT: Private postsecondary education: Private Postsecondary
and Vocational Education Reform and Student Consumer Protection
Act of 2009.
SUMMARY: Establishes a Bureau for Private Postsecondary
Education (BPPE) in the California Postsecondary Education
Commission (CPEC) and authorizes CPEC to establish policies and
guidelines and to adopt regulations necessary to provide
oversight for private postsecondary schools operating in
California.
Existing law:
1)Created the Private Postsecondary and Vocational Education
Reform Act of 1989 (Reform Act), which became inoperative on
July 1, 2007, which expressed legislative intent to ensure
minimum standards of instructional quality and institutional
stability and required the Bureau of Private Postsecondary and
Vocational Education (BPPVE) to, among other things, review
and investigate all institutions, programs and courses of
instructions approved under the Act.
2)Provides for the Department of Consumer Affairs (DCA) within
the State and Consumer Services Agency (SSCA) to house
specified boards, bureaus and commissions, including the
BPPVE, for the purpose of regulating private businesses and
professions under their jurisdiction to protect the health,
safety and welfare of California's consumers.
3)Expressed legislative intent through other recently
inoperative statute which expired on July 1, 2008, to protect
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the interests of students and institutions that have matters
pending under the Reform Act, continued all of the matters
pending before the BPPVE an additional year to July 1, 2008,
and allowed limited DCA oversight of private postsecondary
schools until July 1, 2008.
4)Establishes the California Postsecondary Education Commission
(CPEC) to integrate policy and create fiscal and programmatic
analyses about California's postsecondary education system.
Requires CPEC to identify and recommend policies to meet the
state's educational, research and public service needs.
This bill:
1)Creates the Private Postsecondary and Vocational Education
Reform and Student Consumer Protection Act of 2009 (Act) which
transfers oversight of private postsecondary institutions from
the DCA to the CPEC and requires CPEC to develop policies and
regulations and provide oversight of the administration of
policies for the approval and regulation of private
postsecondary institutions in California.
2)States legislative intent to do a number of things, the most
notable of which include:
a) To promote effective integration of private
postsecondary education into all aspects of California's
educational system and to foster and improve the
educational programs and services of private postsecondary
education institutions while protecting the citizens of the
state from fraudulent or substandard operations.
b) To recognize the enormous diversity and quality of
California's private postsecondary educational expertise
and the role they have in training California's workforce,
approximately 400,000 students a year.
c) To assure graduates of state approved schools are
eligible to sit for state licensure exams for the Board of
Behavioral Sciences and Board of Psychology.
d) To provide for the protection, education and welfare of
Californians, postsecondary institutions and students by
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ensuring minimum standards of instructional quality and
institutional stability to provide students equal
opportunities for equal accomplishment and ability;
establish minimum standards for educational, ethical and
business practices, health and safety and fiscal
responsibility to protect against substandard, transient,
unethical, deceptive or fraudulent institutions and
practices and prohibit the granting of false or misleading
educational credentials, misleading literature,
advertising, solicitation or representations by these
institutions or their agents.
e) To protect consumers and students against fraud,
misrepresentation or other practices that may lead to an
improper loss of funds, whether financed through personal
resources or financial aid.
f) To provide an administrative agency staffed with
knowledgeable individuals who are responsible for
developing policies and procedures for the oversight and
approval of private postsecondary and vocational education.
3)For purposes of this chapter, defines "Bureau" as the Bureau
for Private Postsecondary Education and "Commission" means the
California Postsecondary Education Commission (CPEC).
4)Requires the CPEC to establish a Bureau for Private
Postsecondary Education (BPPE) to serve as the licensing and
enforcement agency for all private postsecondary and
vocational institutions in the state and requires the BPPE to:
a) Appoint staff and a director for BPPE.
b) Establish policies to administer the provisions of this
chapter.
c) Establish minimum approval criteria for private
postsecondary and vocational institutions to operate in
California and award degrees or diplomas and for the
approval of institutions that meet the criteria.
d) Publish an Internet Website directory of all approved
institutions.
e) Monitor all institutions covered by this statute in the
Integrated Postsecondary Education Data System (IPEDS)
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reporting system.
f) Create special committees of technically qualified
individuals to assist the BPPE in the development of
standards for education and educational institutions and
the evaluation of an application or intuitions subject to
this chapter.
g) Working with the CPEC and in consultation with the
Attorney General, to adopt the necessary and appropriate
regulations to exercise its authority on minimum state
standards for contracts, attendance policies, financial
responsibility and consumer disclosures.
5)Specifies that the BPPE's highest priority shall be the
protection of the public when exercising its licensing,
regulatory and disciplinary functions and public protection is
the BPPE's paramount concern when conflicts arise.
6)Requires the BPPE to take possession and control of all
records and papers previously held for the benefit or use of
the BPPVE.
7)Requires all private postsecondary institutions seeking to
operate in the state to apply for BPPE licensure and requires
the application to include, at a minimum, the following:
a) The institutions' published catalog, or proposed
published catalog, containing specified information meeting
the criteria that is to be developed by the BPPE.
b) Copies of all media advertising and promotional
literature.
c) Copies of all student enrollment agreements or contract
forms and instruments evidencing indebtedness.
d) The name and California address of the institution's
designated agent upon whom any process, notice or demand
may be served and specifies that the agent's address must
be different from the institution's:
e) The institution's most current financial report and
proof of insurance or certificate of liability coverage
8)Requires institutions licensed under this Act to comply with
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all of the following minimum standards (starts on Page 6):
a) Be financially fulfilling its commitment to its
students.
b) Provide students who have satisfactory completed their
study or training the appropriate degree or certification
which indicates they have satisfactorily completed the
program.
c) Provide quality instruction as a part of its education
programs.
9)Requires each licensed institution licensed to participate and
report in the U.S. Department of Education's (USDOE)
Integrated Postsecondary Education Data System (IPEDS) through
the Commission, the following information for its educational
programs:
a) The total number of enrolled students; by degree
level or type of diploma program.
b) The number of degrees and diplomas awarded; by level of
degree.
c) The degree levels offered.
d) The tuition and fee schedules required for each term,
program, instruction or offered degree.
e) Institutional financial information.
10)Requires all licensed institutions to provide the BPPE copies
of all accrediting agency reports, including preliminary
reports and reports of visiting committees, all audit reports
prepared by the USDOE and student loan guaranty agencies,
including preliminary reports and the institution's written
responses to these reports.
11)Specifies that any written contract or agreement with a
licensed institution signed by a prospective student is not
operative until the student attends the first class or
instructional session.
12)Requires the institution, prior to enrollment, to provide to
the student and other interested parties a catalog or brochure
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containing, at a minimum the following information:
a) Descriptions of the instruction provided under each
offered course, including the length of the program
offered.
b) The number of credit hours or clock hours of instruction
or training per unit or training required for completion of
the degree or certification program.
c) The attendance, dropout and leave of absence policies.
d) The faculty and their qualifications.
e) The schedule of tuition payments, fees and all other
charges and expenses necessary for the term of instruction
and the completion of course study.
f) The cancellation and refund policies.
g) For institutions that participate in federal and state
financial aid programs, all consumer information that the
institution is required to disclose to students.
h) All other material facts concerning the institution and
the program or course of instruction that are likely to
affect students' decision to enroll, as prescribed by the
CPEC.
i) A description of the institution's placement assistance,
if any.
13)Requires licensed institutions offering degrees or diploma
programs designed to prepare students for a particular
vocational, trade or career field to provide prospective
students with a school performance fact sheet that discloses
all of the following information:
a) The number and percentage of students who begin the
institution's program and successfully complete it.
b) Graduates' passage state licensure or certification
examination rates for the most recent calendar year.
c) The number and percentage of students who begin the
program and secure employment in the field for which they
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were trained.
d) The average annual starting wages or salary of the
institution's graduates.
e) Permits the BPPE to add additional disclosure
requirements.
14)Requires licensed institutions to provide students a written
statement containing its refund policy, along with examples of
the application of the policy, before students sign the
enrollment contract and to make the policy known to currently
enrolled students.
15)Specifies that if, after an investigation, the BPPE
determines a licensed institution has violated the Act or
regulations adopted pursuant to this Chapter, it may order the
institution to pay costs and expenses incurred in connection
with the investigation and any civil or administrative
proceeding involving the investigated violation, including the
Attorney General's charges and any charges incurred by a
district attorney.
16)Specifies that the costs of implementing this Act will be
covered by school licensure revenues to the BPPE in
accordance with the Act's fee schedule.
17)Requires the CPEC, along with the BPPE director, to determine
annually the funding level needed for the BPPE's effective
approval and oversight of the private postsecondary industry
in California and to seek legislation to change school
licensure fees, if needed, to provide the appropriate revenue
levels to fulfill the duties of the Act.
18)Specifies that on or after January 1, 2011, a minimum of 50
percent of BPPE funds shall be used to pay for the following:
a) Enforcing the Act by taking actions against violators
while ensuring due process for all licensed institutions.
b) Ensuring independent onsite evaluations and random and
targeted inspections audits of licensed institutions are
conducted and that students have easy access to information
concerning their rights to contract cancellation,
withdrawal, refunds and remedies.
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19)Provides that any institution that is more than 30 days late
in the payment of any fee or cost and expenses recovery order
under this Act may be assessed penalty fee by the BPPE.
20)Permits the CPEC to impose a school licensure fee on
institutions seeking approval to operate in the state, but
does not specify a fee schedule.
21)Requires the Legislative Analyst's Office to report to the
Legislature and the Governor, by January 1, 2013, the BPPE's
effectiveness in implementing this Act. Requires this review
to include any specific changes to the Act or in the
operations of the CPEC, BPPE or both and the reasons for any
recommended changes.
22)For schools granted approval to operate in California by the
BPPVE as of June 30, 2007,recognizes their approval and
provides authority to operate in the state an additional two
years of past the end of their initial approval date
FISCAL EFFECT: Unknown. This measure is keyed "fiscal" by
Legislative Counsel.
COMMENTS:
1.Purpose. The Author reports that this measure is sponsored by
the Association for Private Postsecondary Education in
California to re-establish state oversight for the private
postsecondary sector. Since the termination of the Reform Act
and the absence of new statute to replace it provisions, no
current law exists to establish either minimum quality
standards to be met by private colleges and universities or
consumer protection standards for the students.
2.The Private Postsecondary Education Sector. 2006 BPPVE data
suggest there were about 400,000 students were enrolled at
BPPVE approved private postsecondary institutions (both
accredited and approved). Of those students, approximately
280,000 students attended non-degree-granting institutions and
the remaining 120,000 attended degree-granting institutions.
The BPPVE approved institutions serve 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
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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. However, this perception is changing as more
and more working professionals are attending these
institutions, particularly the degree granting ones, to obtain
education credentials and job training.
3.Issues Faced by Schools in the Absence of a State Law. The
absence of the state law has no impact on private
postsecondary institutions that are accredited by either a
national or regional accrediting association. These
institutions continue to operate in California and are not
adversely impacted by the absence of a state law. Moreover,
they are not required to comply with any state consumer
protection provisions, because there are none.
However, the absence of the state law has significant impact
on the state approved colleges and the students who attend
these institutions. Students attending these institutions may
need to take and pass state licensure exams offered by the
Board of Psychology and the Board of Behavioral Sciences.
Those Boards have taken action that, for the next three years,
allows graduates of state approved schools that were approved
under state BPPVE law in July 2008, to sit for the licensure
exam after they graduate. While that is welcome policy for
current or former students, this means the ability of these
colleges to enroll new students during the next two years is
severely impacted as those students will not be able to sit
for exams in the absence of a state law.
The absence of the state law for approved schools has lead to
significant problems for those approved colleges whose
licensure ends in 2009. In the absence of a state oversight
agency and a state law, these institutions will not be able
re-new their approved status in 2009 and possibly future
years. The state of Oregon maintains a website to identify
degree mills operating in the United States and has decided
that any California college approved under the previous law
whose approval status expires in 2009, will be classified as a
degree mill on their website. Therefore, legitimately
approved colleges under California law, which have complied
with all of the provisions of that law, will now be labeled as
a degree mill when their current period of approval ends
unless a new law is enacted.
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4.Senate Business, Professions and Economic Development
Committee Informational Hearing. On March 23rd, this
Committee held an informational hearing entitled "The Role of
Private Education Institutions in Preparing California's
Diverse Workforce: Meeting the Challenges of our Workforce and
Job Training Needs." The hearing examined the ability of
private postsecondary institutions to fill the career
preparation needs of California's workforce and evaluate
policy options that would allow them to expand their workforce
development programs with the requisite amount of oversight
required to protect students. The hearing's chief findings
were that:
California will receive $488 million federal ARRA
funds to supplement, not supplant the state's workforce
development activities.
Key industries are facing shortages in hiring
workers with the minimum skills needed for entry into
the field.
Private postsecondary schools face difficulty in
expanding their educational and vocational programs
because of the lack of state regulation and would like
to see a clear, streamlined regulatory framework
re-established.
CPEC does not have access to private postsecondary
intuitions' performance data and are, therefore, unable
at this time to evaluate the efficacy and role of those
institutions in preparing skilled workers.
1.History of California's Regulation of Private Postsecondary
Education. The state's program for regulation of private
postsecondary and vocational education institutions has been
plagued by problems for the past 20 years. During the late
1980's, the state developed a reputation as the "diploma mill
capital of the world." During this period, State Department of
Education regulated the private postsecondary education
industry. As a result of concerns about the integrity and
value of the degrees and diplomas issued, widely varying
standards, the lack of enforcement provisions, and exemptions
from oversight authorized in the statute, a comprehensive
reform bill was enacted. SB 190 (Morgan) created the Private
Postsecondary and Vocational Education Reform Act of 1989
(Reform Act) to overhaul the state's regulatory program and
transferred oversight responsibility for the program to the
20-member Private Postsecondary and Vocational Council
(Council). Concurrently, the Maxine Waters School Reform and
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Student Protection Act (Waters Act) was enacted. The
provisions of the Reform Act and the Waters Act were merged,
but doing so created a fragmented structural framework for
regulation of private postsecondary and vocational education
institutions with numerous duplicative and conflicting
statutory provisions which would plague California's oversight
of these institutions until the law sunset on January 1, 2007.
In the years following enactment of the Reform Act, concerns
were expressed about the Council's implementation of the Act.
In 1995, CPEC found there were potentially up to 1,000
unapproved institutions operating in California and the
Council lacked the enforcement powers or punitive measures
needed to address these violations. While CPEC recommended
amending the Act to provide the Council with the authority and
other resources to ensure that all institutions operate in
compliance with the Act," no action was taken on this
proposal.
In 1997, AB 71 (Wright) was enacted to create the BPPVE within
DCA, transferred responsibility for administration of the
Reform Act to the Bureau and extended the Reform Act's sunset
date to January 1, 2005.
In 2000, the Bureau of State Audits (BSA) conducted an audit
of the DCA determine whether the Department was properly
overseeing its regulatory boards and bureaus. The BSA reviewed
four board and bureaus in detail, including the Bureau of
Private Postsecondary and Vocational Education and found that
the DCA was not fulfilling its oversight responsibilities and
was allowing weaknesses in licensing and complaint processing
to continue.
In 2002, the DCA's Internal Audit Office completed a review of
the BPPVE, programs and operations. The DCA's Internal Audit
Office made a number of recommendations for the BPPVE to
modify and improve its operations.
During 2002, the BPPVE completed its first Sunset Review
before the Joint Legislative Sunset Review Committee (JLSRC).
As part of this review, the BPPVE committed to reestablish the
Bureau's Advisory Board, simplify and streamline its appeal
procedures, sponsored legislation to change current statutes
and adopt regulations to ensure comprehensive and effective
application approval procedures, enforcement and disciplinary
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actions and address deficiencies noted in the BSA audit.
In 2003, SB 364 (Figueroa) required the BPPVE work with JLSRC
staff to streamline the Reform Act, determine the cost and
staffing needed to meet its statutory obligations, improve its
data collections and dissemination systems and to report to
the Legislature on a number of the changes requested.
In 2004, the Joint Committee on Boards, Commissions and
Consumer Protection (Joint Committee) held a special hearing
regarding the BPPVE and recommended the following:
the Reform Act needs to be revised to make it
intelligible and enforceable.
the Administration and the DCA should consider
restoring, at least temporarily, the Bureau's staffing
resources to clear out existing backlogs.
The Joint Committee also recommended that the DCA appoint an
Operations and Enforcement Monitor to complete an objective
assessment of California's regulation of private postsecondary
and vocational education institutions, including both the
administrative operations of the BPPVE and the provisions of
the Reform Act.
In 2004, in response to the persistent problems with the
BPPVE, the Legislature enacted SB 1544 (Figueroa, Chapter 740,
Statutes of 2004), which required the appointment of an
Enforcement Monitor (Monitor) to provide an in-depth and
impartial examination of the Former Bureau's operations. The
Monitor's report, presented to the Joint Committee on Boards,
Commissions and Consumer Protection on December 7, 2005,
outlined a "twenty-year record of repeatedly identified,
fundamental problems in every one of the Bureau's key
operations." The Report found that the BPPVE both
inadequately protected consumers and impeded the expansion of
quality postsecondary and vocational educational opportunities
The concerns and recommendations raised by the Monitor were
generally consistent with concerns raised by the CPEC in 1995,
the 2000 BSA report and the DCA's own 2002 internal
investigation. At the time of its sunset, the BPPVE had not
addressed many of its fundamental problems with oversight and
enforcement. The Monitor's report stated many of the root
causes of enforcement and oversight failures can be traced
back to deficiencies within the Reform Act.
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1.Findings and Recommendations of the Enforcement Monitor. The
Monitor's report included various specific findings and
recommendations for overhauling the Reform Act. Listed below
are some of those findings and recommendations and how this
bill seeks to address them.
a. Licensing: The Monitor found that numerous schools
operated for years under "temporary" licenses. in 2005,
over a quarter (75) of approved degree-granting schools
were operating on temporary approvals and of those, 29
operated on such approvals for more than two years and
seven for more than four years.
This bill responds to licensing problems by requiring the
BPPE to license institutions that meet specified minimum
criteria but does not explicitly proscribe the licensing
process, including timelines for licensure.
b. Enforcement: The Monitor found that BPPVE did not
conduct unannounced site visits as required by law, never
revoked the license of a school and had never placed a
school on probation. The Monitor also found that the fine
amounts for unapproved schools ($2,500) were too low to
promote compliance and fines were rarely assessed. The
Monitor noted that inadequate staffing levels led to
complaints that unapproved schools were not being
investigated and when investigated, the investigations
largely relied on documents generated by the schools
themselves. The Monitor noted that even with better
investigative resources, the remedies at the BPPVE's
disposal were inadequate as it did not have the power to
order refunds or restitution to a student or group of
students.
This bill requires the BPPE to, by January 1, 2011, to use
50 percent of its funds to enforce the provisions of this
Act and to conduct onsite evaluations, random and targeted
site inspections and audits of licensed institutions. The
bill does not specify fees for unapproved schools or fines
for noncompliance with provisions of the Act but does allow
the BPPE to assess penalties for late payments and recover
costs and expenses incurred for the investigation of
noncompliant schools. Other than to mention the BPPE
director and CPEC must annually determine the funding
levels needed to ensure the effective implementation of
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this Act, the bill is silent on staffing levels. The
measure also does not give the BPPE authority to order
restitution payments to students.
c. Reporting: The Monitor found that a significant number
of the reports required from schools by law, including
reports showing how many students actually obtain jobs six
months after graduation, were past due and chronically late
and the BPPVE never verified the data.
This bill requires reports of all licensed institutions to
provide a number of specified reports to the BPPE and the
institution's responses to those reports, but does not
provide any sanctions to licensees for failing to submit
the required reports.
d. Student Tuition Recovery Program (STRF): The Monitor
reported that claims' payments sometimes lingered for more
than two years, the BPPVE rarely ensured institutions were
paying the right amount of fees and the staff believed that
only about half of the legally required fees were being
paid. Due to these STRF shortages, the BPPVE routinely
used fees paid by degree-granting institutions to pay
claims of students from non-degree granting schools.
This bill is silent on the STRF.
e. Bureau Insolvency: The Monitor's report identified
significant problems with the fee structure and the
statute-imposed study found that revenue was "insufficient
to support ongoing operations," but the BPPVE failed to
recommend raising fees.
This bill establishes a fee structure but has left blank
fee amounts. It does however require the BPPE director and
CPEC to determine the funding levels needed to ensure the
effective implementation of this Act and seek legislative
authority to adjust the licensing fees to pay for program
implementation.
f. Regulatory Burden and Arbitrary Practices: The Monitor
found the BPPVE's regulatory practices were unpredictable
creating a financially risky environment for schools
seeking to open California and which could potentially
impede educational opportunities. Specifically, the
Monitor found the BPPVE assessed fees on schools without
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the statutory or regulatory authority to do so. Due to the
gross deficiencies in its enforcement program, the BPPVE
attempted to pursue enforcement by forcing schools to agree
to conditions before granting approval and it
inappropriately required schools to submit re-approval
applications beyond what was required by law.
Other than to create a rudimentary regulatory framework
calling for the licensure for these institutions that
mandates compliance with minimal standards, reporting
requirements and student disclosures, this bill lacks
specificity and detail on the regulation of these schools.
1.The Reform Act's Structural Issues. The Monitor's report also
identified three major structural deficiencies within the
Reform Act and made recommendations for addressing those
deficiencies.
a. The Monitor indicated that the Reform Act's different
standards and requirements for different categories of
institutions were inherently complex and recommended a
consolidated system that would apply to all institutions.
This bill provides for the creation of a single category of
institution and establishes the same standards and
requirements for all institutions.
b. The Monitor noted the 9 to 12 month timeframe for
granting approval to new institutions was insufficient
which resulted in the BPPVE having to heavily rely on
temporary approvals. The Monitor recommended establishing
an approval process for institutions similar to the process
for institutions to obtain accreditation, lasting two to
three years and allowing the BPPVE to monitor the
institution as it matures and demonstrates its ability to
comply with the state's standards and requirements.
This bill establishes general areas for the BPPE to examine
when reviewing an application for approval to operate but
is either silent on or leaves many of the details regarding
the approval to operate process to Bureau regulations.
Therefore, it is unknown whether the BPPE will respond to
the Monitor's recommendations regarding the approval to
operate process.
c. The Monitor found the Reform Act's sanctions and
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penalties were insufficient to deter future misconduct by
industry participants and recommended providing the Bureau
with the authority to issue formal warning notices,
increase fine amounts and separate enforcement and renewal
processes.
Other than to require 50 percent of the BPPE's resources to
be spent on enforcement activities by January 1, 2001, this
bill is silent on the enforcement process. Additionally,
it does not include any specific provisions for sanctions
and penalties.
The Monitor also made other recommendations which include
allowing consumers to access enforcement and other public
document and school complaint information via the BPPVE's
website, establishing a proactive enforcement program to
target unapproved schools, requiring unannounced
inspections and revising the annual reporting statutes to
more clearly outline the Legislature's expectations of the
BPPVE.
1.The California Postsecondary Education Commission. The
California Postsecondary Education Commission (CPEC) was
established in 1974 as the state's planning and coordinating
body for higher education and consists of the following 16
members: nine members of the general public, one member from
each of California's major education systems (the California
Community Colleges, California State University, University of
California, independent colleges and universities and the
State Board of Education) and two student representatives.
One of CPEC's primary statutory purposes is to identify and
recommend policies to meet the state's educational, research
and public service needs. Its external affairs staff interacts
on a daily basis with legislators and their staff,
administrative offices, governmental officials and media
representatives. Its research staff prepares analyses, briefs
and numerous CPEC publications. CPEC also engages in various
continuing activities such as reviewing proposed academic
programs, new campuses or centers, conducting data analysis of
student flow and responding to requests of the Legislature and
Governor. CPEC lists the following on its website:
Among the duties and responsibilities of the Commission are
the following:
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Provide independent, comprehensive and timely
information about student enrollment, educational
outcomes and other educational policy issues.
Conduct long-range planning of the needs for new
college or university campuses in light of projected
enrollment demand.
Review proposals from public colleges and
universities for new degree programs.
Serve as the State's primary information
clearinghouse for postsecondary education.
Evaluate budget requests of State-supported colleges
and universities.
Develop policy recommendations regarding financial
aid programs for California students.
Seek strategies for greater efficiency and cost
containment in postsecondary education.
Administer federal programs that improve teacher
training by facilitating collaboration between K-12 and
higher education faculties
Recommend to the Legislature and the Governor
legislation the Commission deems necessary or appropriate
to improve postsecondary education in California
Encourage greater cooperation and collaboration
between and among California educational systems.
To date CPEC has completed very little examination of the
state's private postsecondary industry. While CPEC's website
concedes that, "The private sector is a vital part of meeting
the postsecondary educational needs of the State and should be
a major component of the State's efforts to provide high
quality education and address future enrollment needs," the
Commission lacks an active role in the review and development
of this sector.
1.CPEC as a Regulatory Agency? As described above, CPEC was
created to integrate policy and create fiscal and programmatic
analyses about California's entire system of postsecondary
education. It is primarily a policy analysis and advisory
body. It does not have, nor has it ever had, any regulatory
authority. In its current capacity, CPEC does not engage in
the rulemaking process commonly used in industry regulation
and as such, has no experience with the Administrative
Procedure Act (APA) requirements and has not worked with the
Office of Administrative Law (OAL), the entity responsible for
ensuring agency regulations are clear, necessary, legally
valid and available to the public.
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Regulation of private postsecondary institutions was
transferred to the DCA because of its experience as a
regulatory entity. The DCA has a legal department with
attorneys who are familiar with the statutes governing the
entities under their jurisdiction, enforcement actions and the
APA rulemaking process. Furthermore, all of the reports that
higlighted the shortcomings of the BPPVE state that the
failures are directly attributable to deficiencies and
contradiction in law governing the Bureau and not the DCA's
inability to regulate an industry.
The policy question before the Committee is whether the CPEC,
an entity with no previous regulatory authority or experience,
is better suited to regulate the private postsecondary
industry than the DCA .
2.Legislation Affecting CPEC's Scope. Last year, the
Legislature approved and the Governor signed SB 361 (Scott,
Chapter 514, Statutes of 2008) to prioritize CPEC's workload
and delete obsolete reporting requirements in light of the
agency's decreased funding. CPEC's budget declined from $3.8
million General Fund (GF) appropriation and 43 positions in
2000-01 to $2.2 million GF allocation and 22 positions in
2007-08. As a result of these reductions, CPEC
self-prioritized meeting its statutory responsibilities.
Senator Scott introduced the bill to ensure CPEC's limited
resources be used to support the Legislature's highest
priorities by more clearly focusing on the CPEC's priorities
and activities.
Given that the Legislature and Administration have recently
approved reductions to CPEC's scope during the state's fiscal
crisis, it is not clear whether they would support an
expansion of the CPEC's authority at this time. If CPEC were
to be given authority to regulate the private postsecondary
industry, there is nothing in this bill that could prevent
them from using funds designated for that purpose to subsidize
its other activities.
3.The Administration's Government Efficiency Proposals. Over
the past five years, the Administration has worked to
eliminate outdated functions, become more efficient, eliminate
redundancy and reduce costs. Earlier this year, Governor
Schwarzenegger released his 2009-10 budget proposal and
indicated that the Administration will submit legislative
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proposals to reduce costs and eliminate redundancies in state
government, primarily through the elimination, consolidation
or reorganization of state agencies and programs. The
Administration indicated that the proposals follow-up on the
work of the California Performance Review (CPR) conducted in
Governor Schwarzenegger's second year in office.
Included in the Administration's streamlining proposals was a
plan to consolidate the CPEC and the California Student Aid
Commission (CSAC), which the Administration claims would
result in an annual savings of $2 million. To date,
legislation has not been introduced to consolidate the
functions and responsibilities of the CPEC and CSAC and it is
not known if the Administration intends to pursue this
proposal. It is also unclear how this legislation would
impact the consolidation of the two entities if pursued by the
Administration and approved by the Legislature.
4.Related Legislation this Session. SB 599 (Negrete McLeod),
among other things, requires the successor entity to the BPPVE
to provide school performance data for all the licensees under
its jurisdiction to the CPEC for review and policy analysis.
The measure will be heard in this Committee on April 27th.
AB 48 (Portantino and Niello) creates the Bureau for Private
Postsecondary Education (Bureau) within the DCA to provide
Bureau oversight and regulation of private postsecondary
institutions operating in California. The measure was
approved 8-0 in the Assembly Committee on Higher Education on
March 31st and is scheduled to be heard in the Assembly
Committee on Business and Professions on April 21st.
5.Prior Related Legislation.
2007-08 Legislation: SB 361 (Scott, Chapter 514, Statutes of
2008) deleted a variety CPEC's review and reporting
requirements in order to prioritize workload.
SB 823 (Perata), which was vetoed by the Governor, would have
re-established the Bureau with specified functions and student
protections. AB 2746 (Niello), which was held in the Assembly
Appropriations Committee, would have revised and recast the
provisions of the Reform Act and expanded state regulation of
private postsecondary schools in California until January 1,
2015. AB 1897 (Emmerson, Chapter 489, Statutes of 2008)
requires the Board of Behavioral Sciences to recognize
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marriage and family therapist applicants with degrees from
institutions that were approved by the BPPVE on June 30, 2007.
AB 1182 (Niello), which was held in the Assembly Committee on
Higher Education, was similar to AB 2746. AB 1525 (Cook,
Chapter 67, Statutes of 2007) stated legislative intent
regarding the protection of students, allowed for the
continuation of matters pending before the BPPVE and provided
for minimal oversight of institutions by DCA until February 1,
2008. SB 45 (Perata, Chapter 635, Statutes of 2007) extended
limited state oversight of private postsecondary schools from
February 1, 2008 to July 1, 2008.
2005-06 Legislation: AB 2381 (Dymally), which was held in
this Committee, would have provided that an institution that
willfully violated minimum requirements of the Reform Act
would be required to refund all tuition and fees paid by a
student.
AB 2810 (Liu) which was vetoed by the Governor, would have
extended the sunset date of the Reform Act for one year and
established a working group to develop recommendations for
changes in the Reform Act. SB 1473 (Figueroa) which was held
in the Senate Appropriations Committee, would have revised and
recast the provisions of the Reform Act based on the Monitor's
recommendations. SB 1568 (Dunn, Chapter 534, Statutes of
2006), transferred the regulation and oversight of
unaccredited law schools from the BPPVE to the Committee of
Bar Examiners.
AB 827 (Goldberg, Chapter 815, Statutes of 2006) enacted
consumer loan protections for students attending private
institutions. SB 767 (Romero) would have eliminated the
exemption from the Reform Act for WASC accredited vocational
schools in response to media coverage of those schools
committing misrepresentation about starting salaries and job
placement to students. The measure was subsequently amended
to address a different topic.
2003-2004 Legislation: SB 1544 (Figueroa, Chapter 740,
Statutes of 2004) required the DCA Director to appoint the
Monitor to assess the bureau's administrative operations and
to report to the Legislature. SB 967 (Burton, Chapter 340,
Statutes of 2003) exempted degree-granting institutions
accredited by regional accrediting agencies from specific
programmatic and institutional review and approval by the
BPPVE. SB 364 (Figueroa, Chapter 789, Statutes of 2003)
required the BPPVE report to the Legislature regarding
corrective actions to resolve deficiencies found in its
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operations.
2001-2002 Legislation: AB 2967 (Wright, Chapter 581, Statutes
of 2002) was primarily technical clean-up to the reform Act.
AB 201 (Wright, Chapter 621, Statutes of 2001) made various
changes to address concerns regarding administration and
solvency of STRF. AB 1720 (Committee on Higher Education,
Chapter 399, Statutes of 2001) specified that the Joint
Legislative Sunset Review Committee cooperate with CPEC in
evaluating and reviewing the Reform Bureau. AB 1898 (Wright,
Chapter 273, Statutes of 2000) exempted private security guard
training schools that met certain specified requirements from
BPPVE Bureau oversight.
Pre-2001 Major Legislation: AB 71 (Wright, Chapter 78,
Statutes of 1997) transferred administration of the Reform Act
from a Council for Private Postsecondary and Vocational
Education (Council) to the BPPVE. AB 190 (Morgan, Chapter
1307, Statutes of 1989) established the Reform Act and created
the 20-member Private Postsecondary and Vocational Council to
oversee private postsecondary institutions operating in
California. AB 1402 (Waters, Chapter 1239, Statutes of 1989)
established the Waters Act.
6.Arguments in Opposition. The Accredited Out of State Colleges
and Universities in California (AOCUC) appreciates the need to
create a new Private Postsecondary Act, but opposes this
measure for number of reasons and that since this bill is a
work in progress, believes should not advance this year. The
following summarizes AOCUC's opposition to the bill.
CPEC Regulation. AOCUC states "CPEC has no existing
regulatory staff, expertise or infrastructure and as such
we fail to understand why CPEC should be vested with the
regulatory authority, especially for consumer affairs
issues which is why the previous Reform Act fell under
the purview on the DCA. CPEC is a data-gathering entity
and should remain as such."
Exemption Based on Accreditation. While the measure
does not have an exemptions from regulation based on
accreditation by the Western Association of Schools and
Colleges (WASC) at this time, AOCUC believes, based on
legislative intent language, the measure will be amended
to exempt WASC accredited institutions from regulation.
AOCUC contends that there is insufficient evidence that
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WASC accreditation is superior to other USDOE approved
regional accreditation agencies and cites a legal opinion
(Daghlian v. DeVry) which opined that it is a violation
of the Commerce Clause to treat WASC accredited
institutions differently than other regionally accredited
non-WASC entities.
Conflict with previous legislation. AOCUC states
provisions of SB 489 are contrary to SB 967 (Burton,
Chapter 340, Statutes of 2003), which exempted
degree-granting institutions accredited by regional
accrediting agencies from specific programmatic and
institutional review and approval by the BPPVE. AOCUC
believes that measure found that the state should not a
play a role in evaluating or approving educational
content at regionally accredited institutions as the
state has no expertise in those matters. Additionally,
they cite the sheer number and types of programs offered
by regionally and nationally accredited institutions
would require hundreds of staff to review a multitude of
programs ranging from truck driving to Masters of
Business Administration, to nursing to dog grooming.
IPEDS data. AOCUC charges that the IPEDS data,
which this measure requires all licensed institutions to
use, is discriminatory towards adult education providers
because it excludes students with prior credits from
calculation. It also asserts that the California State
University (CSU) system lists multiple graduation
calculations to address the IPEDS's shortcomings.
Additionally, AOCUC argues that if this bill is amended
to include a WASC exemption, it will place the regulated
schools at a competitive disadvantage because they would
be required to provide artificially low completion and
graduation rates, which would allow the unregulated
schools to advertise their "superior" graduation rates.
AOCUC believes that fact would also be contrary to the
Daghlian v. DeVry ruling.
Reciprocity in coursework and degrees. AOCUC
asserts provisions of the bill "erroneously suggest
public and private institutions do not recognize
coursework and degrees from private postsecondary
institutions, even if those institutions are regionally
accredited. " AOCUC again refers to the Daghlian v.
DeVry case in which the court concluded that DeVry's
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credits were transferable to public and private
institutions and believes that the provisions of the bill
regarding "equal opportunities for equal accomplishment
and access" perpetuate negative misconceptions about the
private postsecondary industry.
Ambiguous language. AOCUC states provisions
relating to the schedule of fees and the provisions of
fact sheets are "nebulous" and will lead to litigation.
They assert that the fact sheet provision was litigated
under the Reform Act because it was not clear as to which
institutions it applied.
Due Process Violations. AOCUC also states that the
provisions that permits the BPPE to impose penalties and
charges for violations without providing due process to
regulated institutions, including adherence to the APA.
The California Association of Private Postsecondary Schools
(CAPPS) also wants to re-establish regulation of the private
postsecondary sector by January 1, 2010, but opposes SB 489 as
they claim it does not have a comprehensive statutory
structure to regulate the industry. CAPPS also opposes the
effort to transfer the regulatory authority to the CPEC
because it does not have the following:
Licensing and approval expertise.
Familiarity with the Boards and Commission our
sector's schools use to license their graduates.
Enforcement staff and investigators as well as
attorney services that can initiate compliance checks and
investigations
Regulatory writing and implementation experience.
Management expertise in moving initial application,
renewal applications and other documents needed for
thousands of schools.
CAPPS believes it would be better for all interested parties,
who have invested over two years crafting new statutes, to
focus on AB 48 jointly authored by Assemblymembers Portantino
and Niello. They state that the only way to achieve a bill
that the Governor will sign is to have all interested parties
focus one bill and that since Portantino and Niello have
extensive knowledge and experience on the issue, the focus
should be on their legislation.
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NOTE : Double-referral to Education Committee
SUPPORT AND OPPOSITION:
Support: None received as of April 15th.
Opposition:
Accredited Out of State Colleges and Universities in
California (AOCUC)
California Association of Private Postsecondary Schools
(CAPPS)
Consultant:Sieglinde Johnson