BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 619
                                                                  Page  1

          Date of Hearing:   August 17, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                     SB 619 (Fuller) - As Amended:  July 7, 2011 

          Policy Committee:                              Business and 
          Professions  Vote:                            9-0
                        Higher Education                      8-0

          Urgency:     Yes                  State Mandated Local Program: 
          No     Reimbursable:               

           SUMMARY  

          This bill exempts, from state regulation under the California 
          Private Postsecondary Act of 2009, flight instruction providers 
          or programs providing instruction pursuant to FAA regulations 
          and that:

          1)Do not require students to enter into written or oral 
            contracts of indebtedness, and

          2)Do not require prepayment in excess of $2,500 for 
            instruction-related costs.

           FISCAL EFFECT  

          Negligible fiscal impact to the Bureau of Private Postsecondary 
          Education, which administers and enforces the Act.

           COMMENTS  

           Background and Purpose  . Under the former Private Postsecondary 
          and Vocational Education Act (Former Act), flight schools were 
          regulated under a memorandum of understanding (MOU) with the FAA 
          that delineated the respective responsibilities of the 
          former-Bureau and the FAA. This MOU expired when the Former Act 
          expired in 2007.

          The replacement Act of 2009 did not initially provide any full 
          or partial exemption from Bureau oversight for FAA-approved 
          flight schools, largely in response to high-profile cases where 
          flight schools abruptly closed, leaving students with 








                                                                  SB 619
                                                                  Page  2

          significant debt. In 2010, the California flight instruction 
          community began expressing concerns about their inclusion under 
          the Bureau's regulatory structure.  After years of partial 
          exclusion from the Former Bureau's oversight, flight program 
          owners argued that the tremendous burden of having to meet 
          requirements of Bureau oversight, specifically a costly 
          application fee and a requirement to submit audited financial 
          statements, would force them to shut down their operations.

          In response, SB 856 (Senate Budget Committee)/Chapter 719 of 
          2010, a budget trailer bill, provided a one-year exemption from 
          Bureau regulation (until July 1, 2011), for institutions 
          offering flight instruction or aircraft maintenance, to allow 
          the Legislature additional time to examine issues surrounding 
          the regulation of these programs. This bill exempts flight 
          instruction providers and programs that do not require students 
          to enter into a contract of indebtedness and do not require 
          prepayment of more than $2,500 in advance of instruction. The 
          author notes a primary goal of the Act is to protect students 
          from financial harm, thus SB 619 ensures that those flight 
          programs placing individual students at financial risk will 
          remain subject to Bureau regulation.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081