BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 1247
Author: Lieu (D), et al.
Amended: 8/22/14
Vote: 21
SENATE BUSINESS, PROF. & ECONOMIC DEVELOP. COMM. : 8-1, 4/28/14
AYES: Lieu, Berryhill, Block, Corbett, Galgiani, Hernandez,
Hill, Padilla
NOES: Wyland
SENATE EDUCATION COMMITTEE : 8-0, 4/30/14
AYES: Liu, Block, Correa, Galgiani, Hancock, Hueso, Huff,
Monning
NO VOTE RECORDED: Wyland
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/14
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SENATE FLOOR : 33-3, 5/27/14
AYES: Beall, Berryhill, Block, Cannella, Corbett, Correa, De
Le�n, DeSaulnier, Evans, Fuller, Gaines, Galgiani, Hancock,
Hernandez, Hill, Hueso, Huff, Jackson, Knight, Lara, Leno,
Lieu, Mitchell, Monning, Nielsen, Padilla, Pavley, Roth,
Steinberg, Torres, Vidak, Walters, Wolk
NOES: Anderson, Morrell, Wyland
NO VOTE RECORDED: Calderon, Liu, Wright, Yee
SENATE BUSINESS, PROF. & ECON. DEV. COMM. : 9-0, 8/28/14
(Pursuant to Senate Rule 29.10)
AYES: Lieu, Wyland, Berryhill, Block, Corbett, Galgiani,
Hernandez, Hill, Torres
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ASSEMBLY FLOOR : 57-19, 8/27/14 - See last page for vote
SUBJECT : Private postsecondary education: California Private
Postsecondary
Education Act of 2009
SOURCE : Author
DIGEST : This bill extends the sunset date for the Bureau for
Private Postsecondary Education (BPPE), under the California
Private Postsecondary Education Act (Act), from January 1, 2015,
until January 1, 2017; and provides for statutory changes to the
protections provided to students and the requirements placed on
private postsecondary educational institutions (institutions).
Assembly Amendments extend the sunset date for BPPE to January
1, 2017; recast and revise various provisions of the Act; make
appropriations; and codify legislative findings and
declarations.
ANALYSIS :
Existing law:
1.Establishes the California Private Postsecondary Education Act
of 2009.
2.Provides, until January 1, 2015, for student protections and
regulatory oversight of institutions in the state pursuant to
the Act. The Act is enforced by BPPE within the Department of
Consumer Affairs (DCA).
This bill:
1. Reestablishes BPPE until January 1, 2017, and provides for
various clarifying and technical changes throughout the Act.
2. Authorizes a currently operating institution, as specified,
that has had their application to operate denied, as
specified, to continue operating during the appeal process.
Requires the institution to disclose to current and
prospective students that the application was denied and that
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the loss of appeal may result in the institution's closure.
Requires BPPE to make an emergency decision if BPPE
determines that the continued operation of the institution
poses a significant risk of harm to students.
3. Changes exemptions to the Act as follows:
A. Prohibits an institution, beginning January 1, 2016,
from claiming an exemption from the Act if the institution
is approved to participate in federal veterans' financial
aid programs, except that an institution, as specified,
that meets outlined requirements and student performance
standards may continue to claim an exemption.
B. Clarifies that an exempt flight school may not accept
prepayment of more than $2,500.
1. Clarifies that the Director of DCA is responsible for the
implementation of the Act.
2. Requires BPPE to contract with the Office of the Attorney
General to establish training that ensures staff is able to
fully investigate complaints.
3. Requires BPPE to institute training to ensure staff is
equipped to review and verify accuracy of data contained in
consumer disclosures.
4. Requires BPPE to post specified final civil or criminal
cases on the BPPE Web site and requires BPPE to post a list
of all institutions denied an approval to operate, describe
the reasons for the denial, and include a specified
disclosure that the institution is not compliant with law and
that students are discouraged from enrolling in unapproved
institutions.
5. Makes several changes to the BPPE Advisory Committee:
A. Adds the following ex-officio members:
(1) The chair of the Assembly policy committee with
jurisdiction over legislation relating to the bureau, or
designee, appointed by the Speaker of the Assembly; and
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(2) The chair of the Senate policy committee with
jurisdiction over legislation relating to BPPE, or
designee, appointed by the Senate Rules Committee.
A. Prohibits a public member of the Advisory Committee from
having an interest in any institutions regulated by BPPE,
as specified.
B. Expands the Advisory Committee functions to include the
examination of the oversight functions and operational
policies of BPPE, specifically, the fee schedule and the
equity of the schedule relative to the way institutions are
structured, and the licensing provisions of this chapter.
Requires the Advisory Committee to make recommendations
with respect to policies, practices, and regulations
relating to private postsecondary education, and provide
any assistance as may be requested by BPPE.
C. Requires BPPE to seek input from the Advisory Committee
prior to the adoption, amendment, or repeal of its
regulations and take comments into consideration and
provide feedback to Advisory Committee members.
D. Requires the BPPE chief to attend all Advisory Committee
meetings and designate ongoing support staff.
E. Requires the Director of DCA to personally attend, and
testify and answer questions at, each meeting of the
Advisory Committee.
F. Requires the Advisory Committee to have the same access
to records within DCA related to the operation and
administration of the Act as do members of constituent
boards of DCA in regard to records related to their
functions.
G. Requires Advisory Committee meetings to be subject to
the Bagley-Keene Open Meetings Act and for meeting
materials to be posted on the Internet.
H. Requires the Advisory Committee to meet at least
quarterly and to appoint a member of the Committee to
represent the Committee for purposes of communicating with
the Legislature.
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I. Requires DCA to review, and revise if necessary, the
conflicts of interest regulations to ensure that each
Advisory Committee member is required to disclose conflicts
of interest to the public.
1. Requires BPPE to establish a task force to identify
standards for educational and training programs specializing
in innovative subject matter and instructing students in high
demand technology fields and report to the Legislature, by
July 1, 2016, regarding appropriate levels of oversight of
these institutions.
2. Requires an institution seeking an approval to operate and
to offer a degree to either:
A. Be accredited by an accrediting agency recognized by the
United States Department of Education (USDE) to offer the
degree(s); or
B. Have an accreditation plan, approved by BPPE, for the
institution to become fully accredited within five years of
BPPE issuance of a provisional approval to operate. An
institution in this category must comply with specified
student disclosure, visiting committee review and degree
limitation requirements.
1. Requires an unaccredited institution that is approved to
operate and to offer degree programs by BPPE prior to January
1, 2015, to submit an accreditation plan to BPPE, to obtain
pre-accreditation by July 1, 2017, to obtain accreditation by
July 1, 2020, and to comply with various student disclosure
and visiting committee review requirements.
2. Requires BPPE to adopt licensing application processing
goals and timelines, as specified.
3. Removes the requirement that an accredited institution
provide a School Performance Fact Sheet (SPFS) to a
non-California prospective student and removes the
requirement that the SPFS include data regarding
non-California students.
4. Provides that the Student Tuition Recovery Fund (STRF)
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exists to relieve or mitigate economic loss suffered by
students in educational programs at non-exempt institutions
who, at the time of enrollment was a California resident or
was enrolled in a California residency program, prepaid
tuition, and suffered economic loss.
5. Requires BPPE to adopt regulations that ensure specified
students, and any other students deemed appropriate, are
eligible for payment from STRF.
6. Authorizes BPPE to seek repayment to the STRF from an
institution found in violation of the Act for which a STRF
claim was paid. Provides that an institution may not renew
its approval to operate with BPPE if the repayment is not
made as requested.
7. Requires BPPE to define "economic loss" in regulation and
provides BPPE guidance on the definition.
8. Provides that if BPPE has temporarily stopped collecting
STRF assessments because the STRF has approached the $25
million limit, BPPE shall resume collecting assessments when
the STRF falls below $20 million.
9. Provides that an otherwise eligible student who enrolled
during a period when institutions were not required to
collect STRF assessments is eligible for STRF payments
despite not having paid any STRF assessment.
10.Requires BPPE to report to the Legislature by December 31,
2016, regarding how reporting requirements under the Act
should be altered to ensure accurate, useful, and consistent
reporting by private postsecondary institutions to BPPE and
students.
11.Removes authority for BPPE to adjust annual fees for
individual institutions based on cost of providing oversight
of individual institutions.
12.Requires announced and unannounced compliance inspections to
be conducted at least every five years, rather than every two
years, and requires BPPE to adopt regulations that set forth
inspection policies to ensure that student protections are
the highest priority and that inspections are conducted based
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on risk and potential harm to students.
13.Requires BPPE, in consultation with the Advisory Committee,
to establish priorities for enforcement resources and
complaints processing. Provides that institutions and
complaints of specified characteristics should be
prioritized.
14.Provides that if BPPE has reason to believe that an
institution has engaged in a pattern or practice of violating
the provisions of the Act or any other applicable law that
involves multiple students or other claimants, BPPE shall
contract with the Attorney General for investigative and
prosecutorial services, as necessary.
15.Requires the Director of DCA to provide written updates to
the Legislature every six months and participate in oversight
hearings as requested.
16.Requires the Director of DCA to provide the Legislature with
a copy of the independent review of staffing resources within
30 days of the review, along with an overview of how the
Director intends to ensure staffing is sufficient for
purposes of implementing the Act.
Background
This bill is one of six "sunset bills" authored by the Chair of
the Senate Business, Professions and Economic Development
Committee.
In 2014, the Senate Business, Professions and Economic
Development Committee and the Assembly Business, Professions and
Consumer Protection conducted joint oversight hearings to review
nine regulatory entities: Bureau of Automotive Repair; Bureau
of Home Furnishings and Thermal Insulation; BPPE; California
Massage Therapy Certification program; California Board of
Acupuncture; California Tax Preparer program; Dental Hygiene
Committee of California; Professional Fiduciaries Bureau; and
the Structural Pest Control Board.
The Committees began their review of the aforementioned
licensing agencies in March and conducted two days of hearings
and then more recently held a hearing on the BPPE. This bill,
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and the accompanying sunset bills, are intended to implement
legislative changes as recommended in the Committee's Background
Papers prepared for each agency and program reviewed by the
Committees for this year.
Extension of the Sunset Date for BPPE . At a time when
California's public institutions have reduced enrollments due to
major budget cuts, private postsecondary education institutions
are in a position to play a role in providing access and
education for otherwise underserved students. As the number of
students served by private postsecondary institutions has
increased, so has the focus on fraudulent practices and low
academic standards. There have been numerous high-profile
federal investigations into the practices of for-profit
institutions in recent years. Among the most notable are the
United States Government Accountability Office series of
investigations raising concerns regarding the amount of federal
student aid dollars directed to for-profit institutions, the
misleading and deceptive recruitment practices at certain
institutions, and substandard academic performance expectations
in some for-profit programs. The challenge for the Legislature
is to ensure the continuance of an oversight structure that
supports innovative programs while also preventing predatory
practices, which this bill aims to do by extending the operative
date for the Act.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
According to the Assembly Appropriations Committee:
Extension of the Act's sunset by two years will continue
expenditures to implement the Act over this period. BPPE's
operating budget for 2014-15 is $11.1 million for 76
positions. BPPE's operating fund is projected to have a
fiscal year-end balance of $10.8 million. In addition, $2
million is estimated in payments from the STRF, which is
projected to have a balance of $31.4 million as of July 1,
2015.
In addition to the base budget, new requirements of the Act
will require nine permanent and four limited-term positions at
an estimated cost of $1.4 million in 2015-16, $1.2 million in
2016-17, and $800,000 annually thereafter, assuming the new
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sunset date of January 1, 2017, is subsequently extended or
repealed.
These costs will be partially offset to the extent currently
exempt institutions register with BPPE in order to continue
participating in federal veterans educational financial aid
(Title 38) programs.
SUPPORT : (Verified 8/27/14)
California Competes: Higher Education for a Strong Economy
Center for Responsible Lending
Consumer Federation of California
Consumers Union
East Bay Community Law Center
Legal Aid Foundation of Los Angeles
Public Advocates Inc.
Public Law Center
University of San Diego Center for Public Interest Law
University of San Diego Children's Advocacy Institute
University of San Diego Veterans Legal Clinic
Veterans Education Success
Young Invincibles
ARGUMENTS IN SUPPORT : According to the author's office, this
bill is necessary to extend the sunset date of BPPE in order to
ensure continued oversight of private postsecondary institutions
that support quality, innovative programs which are approved in
a timely manner, while also making sure a robust government
structure prevents predatory practices and promotes student
success.
ASSEMBLY FLOOR : 57-19, 8/27/14
AYES: Alejo, Ammiano, Bloom, Bocanegra, Bonilla, Bonta,
Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau,
Chesbro, Cooley, Dababneh, Dahle, Daly, Dickinson, Eggman,
Fong, Fox, Frazier, Garcia, Gomez, Gonzalez, Gordon, Gray,
Hall, Roger Hern�ndez, Holden, Jones-Sawyer, Levine, Linder,
Lowenthal, Medina, Mullin, Muratsuchi, Nazarian, Nestande,
Pan, Perea, John A. P�rez, V. Manuel P�rez, Quirk,
Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner,
Stone, Ting, Weber, Wieckowski, Williams, Yamada, Atkins
NOES: Achadjian, Allen, Bigelow, Ch�vez, Conway, Donnelly, Beth
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Gaines, Gatto, Grove, Hagman, Jones, Logue, Mansoor, Melendez,
Olsen, Patterson, Wagner, Waldron, Wilk
NO VOTE RECORDED: Gorell, Harkey, Maienschein, Vacancy
MW:nk 8/29/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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