BILL ANALYSIS
AB 71
Page 1
ASSEMBLY THIRD READING
AB 71 (Wright)
As Amended April 17, 1997
2/3 vote. Urgency
HIGHER EDUCATION 8-5 APPROPRIATIONS 11-5
Ayes: Lempert, Caldera, Cardoza, Ayes: Migden, Baca, Kuehl,
Martinez,
Havice, Keeley, Knox, Kuehl, Papan, Perata, Shelley,
Scott Sweeney, Thomson,
Villaraigosa,
Washington
Nays: Firestone, Ackerman, Ashburn, Nays:Poochigian, Ackerman,
Brewer,
Baldwin, Cunneen Olberg, Thompson
SUMMARY : Extends from June 30, 1997 to January 1, 2003, the
sunset date for the Private Postsecondary and Vocational Education
Reform Act of 1989 (Reform Act) and the Maxine Waters School
Reform & Student Protection Act of 1989 (Waters Act/Article 7),
and makes numerous substantive and technical non-substantive
changes to the Reform Act. Specifically, this bill :
1) Makes substantive changes to the Reform Act that are intended
to bring about greater flexibility and efficiency, while also
reducing paperwork, administrative costs, fees and
administrative requirements. Some of the changes include the
following: a) allows the schools to use a less costly
process to appeal an administrative action to the Council for
Private Postsecondary and Vocational Education (CPPVE) in lieu
of an expensive and lengthy CPPVE administrative hearing; b)
reduces costly and time-consuming administrative reporting
requirements; c) increases the maximum length for approvals of
non-degree schools, and simplifies the process for filing
renewal applications resulting in fee reductions; and d)
provides additional exemptions both from the Reform Act and
from specified sections of the Reform Act.
2) Exempts Intensive English Language Instruction Programs (IEPs)
from Article 7 that meet the following criteria: a) exclusively
enroll international students who are not immigrants, refugees or
permanent residents; b) prepare students for entrance exams at
accredited or approved postsecondary institutions; c) accept no
federal or state financial aid; and d) are not offered to lead to
occupational employment. These programs would continue to be
subject to the less rigorous requirements of the Reform Act.
3) Limits CPPVE regulation and student protections to the type of
program, as opposed to the entire institution, so that schools
offering a variety of programs from certificates through doctoral
degrees are not required to meet the more restrictive CPPVE
vocational program requirements.
4) Requires the California Postsecondary Education Commission
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(CPEC) to review and evaluate the effectiveness of these acts and
report its findings to the Legislature by January 1, 2001 and
every five years thereafter.
5) Revises and specifies the scope and contents of an annual
report that CPPVE is required to submit to the Legislature by
January 1 of each year
to include such items as: a) data on scope and operation of
California private postsecondary and vocational schools; b)
information on consumer complaints received and action
taken; c) number of license appeals; and d) enforcement
action.
6) Changes the composition of the Council to include all public
members, the majority of whom would be appointed by the Governor.
7) Eliminates the renewal application process for schools exempt
from Article 7. Once approved, these exempt schools are approved
continuously unless CPPVE finds, after notice and an opportunity
for hearing, that the institution has violated this chapter and
determines permanent revocation of approval is not appropriate.
Requires the license to be restricted to no more than three years
when a renewal application will be required and a formal
visitation scheduled.
8) Separates license and examination preparation courses into a
new section with a significantly reduced application procedure and
eliminates portions of the renewal applications and reviews.
9) Requires that CPPVE accept the approval of the California
Committee of Bar Examiners for all law programs offering the
baccalaureate, masters, and doctoral degrees.
10) Removes the fifty mile restriction on branches and satellites
from vocational schools subject to Article 7 providing the
institution demonstrates compliance with standards of completion
and placement, and default rates are lower than 25%.
11) Establishes a separate fund called the Student Tuition
Recovery Fund (STRF) for small schools enrolling under 100
students a year or charging less than $1,000 in tuition. The
assessment fee will be set at $1.00 per student as opposed to the
current $2.50 per student with a maximum cap of $300,000 on the
fund. When the cap is reached, only new schools will pay into the
fund. All claims originating from enrollments prior to the
establishment of this new fund will be paid from the current
vocational STRF.
12) Exempts from Article 7 the educational services costing $1,000
or less and that have no part of their total charge paid for from
proceeds of a loan or grant subject to the federal financial aid
programs. This figure of $1,000 will be adjusted every five years
based on the CPI.
13) Exempts from Article 7 those institutions that continuously
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operate for at least five years as a nonprofit public benefit
corporation or as a nonprofit religious corporation that are not
managed or administered by an entity for profit.
14)Makes other minor, technical, non-substantive and conforming
changes.
FISCAL EFFECT : Minor absorbable costs to CPPVE and CPEC. CPPVE
is an independent, special fund agency and it receives no general
fund revenues.
COMMENTS :
1) The Reform Act created the CPPVE and designated it as an
independent state agency to implement and enforce the Reform Act.
2) Some schools argue that projected reductions in fees realized
as a result of this bill may not be significant, and therefore,
their concerns about excessive fees will not be addressed. This
bill proposes that reductions in fees will be realized due to
changes in administrative regulations and reporting requirements.
These changes include: a) once approved, all degree-granting
schools and license and examination schools do not have to be
approved again, as long as they operate within the provisions of
current law, thus they do not pay renewal application fees; b) for
institutions required to go through the renewal process, the
maximum approval period is extended from three to five years, thus
a savings in renewal fees is realized; c) STRF assessment will be
reduced from $2.50 to $1.00 for small schools of 100 students or
less or those charging less than $1,000 in tuition; and d) the
fifty mile restriction on branches and satellites will be removed
for all schools thus eliminating the need for a corporation to
seek separate approvals and to pay separate annual fees.
3) Schools argue that the 100% pro rata refund policy is
unrealistic and that a 60% refund policy is acceptable. They
claim that changing the existing requirement to 60% would bring
California law in compliance with federal law.
The 100% pro rata refund policy encourages the schools to
recruit students who have the ability to complete the program
because the student pays only for the education received. This
policy also encourages schools to set program length by what is
needed for employment and not what will maximize financial aid.
4) Schools argue that the current ratio of 1.25 to one (assets to
liabilities) is too high and should be reduced.
The current ratio of 1.25 to one is good public policy because:
a) the current ratio gauges the ability of a school to meet its
short-term financial obligations such as payment of student
refunds; b) failure to meet the current ratio triggers a
monitoring process and no school has been closed solely for
missing the current ratio standard; c) some standard for
monitoring fiscal stability is required and the current ratio
is defensible; the federal formula requiring one to one does
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not consider prepaid expenses and inventory as assets; and d)
the standard guideline for the current ratio for business in
general is two to one.
5) Some schools prefer the disclosure of completion and placement
data but do not want to meet standards for actual job placement of
students.
Students attend a vocational school to receive realistic skills
for job placement. The standards in current law require a
school to place 39 or 40 students out of every 100 students
starting a program. This is not an unreasonable expectation.
No school in California has been closed due to failure to meet
performance standards, but the standards have encouraged
schools to increase placement activities and modify curricula
to better meet employer needs. California's completion and
placement standards mirror the average completion and placement
rates for proprietary schools nationally. If there are no
performance standards there is little incentive for a school to
be concerned about how many of its students graduate and find
jobs.
6) The number of CPPVE members and the determination of the
appointing authority is currently in negotiations between the
Governor and the author.
Analysis prepared by : Rosa de Anda / ahed / (916) 324-4655
FN
030737