BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: SB 1247
AUTHOR: Lieu
INTRODUCED: February 20, 2014
FISCAL COMM: Yes HEARING DATE: April 30, 2014
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : California Private Postsecondary Education Act.
SUMMARY
This bill extends the California Private Postsecondary
Education Act of 2009, which governors the regulation of
private postsecondary educational institutions and the
operation of the Bureau for Private Postsecondary Education
(BPPE), until January 1, 2019.
BACKGROUND
Current law, until January 1, 2015, establishes the
California Private Postsecondary Education Act (Act) of
2009, which provides for the approval, regulation, and
enforcement of private postsecondary educational
institutions by the Bureau for Private Postsecondary
Education (BPPE) within the Department of Consumer Affairs
(DCA). (Education Code � 94800-94950)
ANALYSIS
This bill extends the California Private Postsecondary
Education Act (Act) of 2009 (currently set to expire on
January 1, 2015) until January 1, 2019.
STAFF COMMENTS
1) Need for the bill . According to the author, this bill
is necessary to extend the sunset date of the BPPE in
order to ensure continued oversight of private
postsecondary institutions that supports quality,
innovative programs which are approved in a timely
manner, while also making sure a robust government
structure prevents predatory practices and promotes
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student success. The author plans to substantially
amend this bill to incorporate changes as outlined in
the Business, Professions and Economic Development
Committee (BPED Committee) background paper for the
recent BPPE Sunset Hearing.
2) History . The state's program for regulation of private
postsecondary and vocational education institutions
has historically been plagued by problems. During the
late 1980's, the state developed a reputation as the
"diploma mill capital of the world." During this
period, the State Department of Education regulated
the private postsecondary education industry. 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 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. In the years following
enactment of the Reform Act, concerns were expressed
about the Council's implementation of the Act. In
1997, AB 71 (Wright) was enacted to create the former
Bureau for Private Postsecondary and Vocational
Education (BPPVE) within the Department of Consumer
Affairs (DCA), transferred responsibility for
administration of the Reform Act to the BPPVE and
extended the Reform Act's sunset date to January 1,
2005.
In 2004, the Joint Committee on Boards, Commissions
and Consumer Protection held a special hearing
regarding BPPVE and recommended that the Reform Act be
revised to make it intelligible and enforceable and
that the Administration and the DCA should consider
restoring, at least temporarily, the BPPVE 's staffing
resources to clear out existing backlogs. The
Legislature enacted SB 1544 (Figueroa, Chapter 740,
Statutes of 2004), which required the appointment of
an Enforcement Monitor (Monitor) to provide an
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in-depth and impartial examination of the BPPVE's
operations. The Monitor's report, presented to the
Joint Committee on December 7, 2005, outlined a
"twenty-year record of repeatedly identified,
fundamental problems in every one of the BPPVE '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 law and BPPVE were
allowed to Sunset on January 1, 2008.
After numerous legislative attempts to remedy the laws
and structure governing regulation of private
postsecondary institutions, Assembly Bill 48
(Portantino, Chapter 310, Statutes of 2009) was
enacted to establish the California Private
Postsecondary Education Act (Act) of 2009, which took
effect January 1, 2010. The Act establishes the
current regulatory structure for oversight of private
postsecondary educational institutions operating with
a physical presence in California.
The Act requires all unaccredited colleges in
California to be approved by the Bureau for Private
Postsecondary Education (BPPE), 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 while providing BPPE with enforcement powers
necessary to protect consumers.
3) The sector . According to the BPPE, as of June 30,
2013, it had approved 1,960 institutional locations
throughout California, including 1107 main campus
locations, 340 branch locations, and 513 satellite
locations. Based upon self-reported data from 2011
annual reports, these institutions serve a combined
total of almost 316,000 students, with the vast
majority (over 255,000) enrolled in diploma and/or
certificate programs. The range of offerings includes
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programs in cosmetology, vocational nursing, truck
driving and computer training. In 2011, three percent
of students were enrolled in bachelor' programs and a
combined three percent were enrolled in graduate level
degree programs. According to the information reported
to the BPPE, 324 of these institutions participated in
federal Title IV financial aid programs, 318
participated in federal veteran's financial aid
programs, and 66 participated in California aid
programs.
4) Report results . Among other things, the Act included
two reporting requirements. The recommendations from
each of these reports appear to be somewhat
inconsistent.
a) Legislative Analyst Report (LAO) . The LAO
was required to report to the Legislature and the
Governor on the appropriateness of the exemptions
provided in this chapter, with particular
attention to the exemptions provided by Article 4
(commencing with Section 94874) that are based on
accreditation. In its December 2013 report,
Oversight of Private Colleges in California , the
LAO recommended that the BPPE consumer protection
activity focus on the highest risk institutions
and that regionally accredited colleges continue
to be exempt from vast majority of Bureau
oversight, and that nationally accredited
institutions undergo reduced period inspection
for low-risk colleges. The LAO also recommended
that the Legislature require online colleges to
be state-approved and provide statutory authority
for the BPPE to grant reciprocal approval to
institutions licensed in other states.
b) Bureau of State Audits Report (BSA) . The
overriding finding of the BSA was that the BPPE
has consistently failed to meet its
responsibility to protect the public's interests,
as summarized below:
i) The BPPE has not met its statutory
responsibility to regulate and oversee
private postsecondary educational
institutions.
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ii) As of June 30, 2013, it had more
than 1,100 licensing applications
outstanding, some for more than three years.
iii) During fiscal years 2009-10
through 2012-13, it took an average of 185
days to process 3,200 licensing applications
that it had received and closed.
iv) It failed to identify proactively
and sanction effectively unlicensed
institutions.
v) It conducted only a fraction of
the inspections of institutions required by
law and failed to identify violations during
these inspections.
vi) The BPPE has not protected
students' interests as state law requires.
vii) It failed to respond appropriately
to complaints against institutions, even
when students' safety was allegedly at risk.
viii) It did not ensure that
institutions provided students with accurate
disclosures about their operations.
ix) It can improve its management of
the Student Tuition Recovery Fund (STRF).
5) Joint Oversight Hearing . On April 21 2014, the BPED
Committee convened a joint hearing that included the
relevant committees in both houses (Senate Education,
Assembly Committees on Higher Education and Business,
Professions and Consumer Protection). The background
paper for the hearing identified 26 different issues
for consideration at the hearing, including
administrative, budget, licensing and exemption,
enforcement, and accountability issues.
Recommendations for consideration relevant to this
committee's purview include the following:
a) Grant the BPPE additional spending authority
to improve operations, ability to hire
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appropriate staff, conduct trainings, purchase an
enhanced data tracking system, and other tools
necessary to meet its consumer protection
mandate.
b) Require institutions that offer a degree to
be accredited in order to obtain approval to
operate.
c) Examine reciprocity agreements for distance
learning regulation and establish standards to
require that basic protections be in place prior
to entering into any agreement.
d) Maintain a single system for regulation,
maintain the ability of an exempt institution to
voluntarily come under jurisdiction, and further
examine those efforts and consider potential
challenge prior to any further relaxing of
regulation.
e) Require an update on efforts related to
third-party payers and the STRF.
f) Authorize the use of Integrated
Postsecondary Education Data System (IPEDS) for
reporting, and require a memorandum of
understanding (MOU) with the Employment
Development Department to gain access to wage
data.
g) Authorize a law school to satisfy
Performance Fact Sheet disclosure requirements
with alternate reporting requirements.
h) Reconstitute the BPPE as an independent
board comprised of specified stakeholders.
6) Related legislation .
a) SB 1069 (Torres) requires the BPPE to adopt
regulations to make students who utilize a Cal
Grant, a Pell Grant, or both, eligible to apply
for payment from the STRF. SB 1069 was heard and
passed by this committee on consent on April 24,
2014, with an understanding that amendments would
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be adopted to ensure that payment of a STRF claim
for a student who was a Cal Grant recipient was
paid to the California Student Aid Commission.
SB 1069 is currently awaiting action in the
Assembly Appropriations Committee.
b) AB 330 (Chau) requires postsecondary
educational institutions to provide their net
price calculators and average student debt per
graduate to the California Student Aid Commission
(CSAC) as a condition of eligibility for the Cal
Grant Program, requires CSAC to provide this
information on its website in a searchable
database, and requires a for-profit institution
to include this information in its School
Performance Fact Sheet. AB 330 is awaiting
action in the in this committee.
c) AB 634 (Gomez) requires the BPPE to clarify
the definition of "avocational education" through
regulations. AB 634 is awaiting action in the
Senate Business Professions and Economic
Development Committee.
d) AB 834 (Williams) authorizes a law school
accredited by the American Bar Association, and
owned by an institution operating under BPPE to
satisfy the current disclosure requirements of
the School Performance Fact Sheet by complying
with ABA disclosure requirements, reporting to
the National Association for Law Placement, and
making completion, Bar passage, placement, and
salary and wage data available to prospective
students prior to enrollment through the
application process administered by the Law
School Admission Council. AB 834 is also on the
committee's agenda today.
7) Prior Legislation .
a) AB 2296 (Block, Chapter 585, Statutes of
2012) expanded the disclosure requirements for
institutions under the Bureau related to
unaccredited programs; expanded disclosure
requirements for all regulated institutions,
established more stringent criteria for
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determining gainful employment and calculating
job placement rates and increased institutional
documentation and reporting requirements around
completion rates, job placement/license exam
passage rates, and salary/wage information for
graduates.
b) SB 498 (Liu, 2011) would have abolished the
Bureau and transferred the Bureau's powers and
duties under the Act to the California
Postsecondary Education Commission. SB 498 was
held by the Senate Committee on Business,
Professions and Economic Development.)
c) SB 619 (Fuller, Chapter 309, Statutes of
2011) exempted flight instructors or flight
schools that do not require the upfront payment
of tuition or fees, and that do not require
students to enter into a contract of indebtedness
in order to receive training, from Bureau
regulation.
d) SB 675 (Wright, 2011 ) would have required
that private postsecondary institutions subject
to the Act administer a test of English language
proficiency to a nonnative speaker of English, as
defined, prior to enrolling the student. SB 675
failed passage in the Senate Committee on
Business, Professions and Economic Development by
a vote of 3-3.
e) AB 611 (Gordon, Chapter 103, Statutes of
2011) set forth certain disclosure requirements
pertaining to accreditation status, licensure,
and related limitations for unaccredited doctoral
programs.
f) AB 773 (Block, 2011) would have allowed the
Bureau to revoke an exemption of an institution
which was exempt based on accreditation but still
required to comply with the Student Tuition
Recovery Fund requirements, if it determined that
the institution had not in fact complied with
those requirements. AB 773 was referred to the
Assembly Higher Education Committee but the
hearing was cancelled at the request of the
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author.
g) AB 797 (Conway, 2011) would have exempted
schools of cosmetology, as defined, from the Act.
AB 797 was held in Assembly Committee on Higher
Education.
h) AB 1013 (Assembly Committee on Higher
Education, Chapter 167, Statutes of 2011 ) made
clarifying changes to the Act and related Bureau
oversight.
SUPPORT
None received.
OPPOSITION
None received.