SENATE RULES COMMITTEE AB 48
Office of Senate Floor Analyses


THIRD READING

Bill No: AB 48
Author: Portantino (D), et al
Amended: 9/1/09 in Senate
Vote: 21

SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 6-1, 7/6/09
AYES: Negrete McLeod, Wyland, Corbett, Florez, Walters,
Yee
NOES: Aanestad
NO VOTE RECORDED: Correa, Oropeza, Romero

SENATE EDUCATION COMMITTEE : 7-0, 7/15/09
AYES: Romero, Huff, Alquist, Hancock, Padilla, Simitian,
Wyland
NO VOTE RECORDED: Liu, Maldonado

SENATE APPROPRIATIONS COMMITTEE : 12-1, 8/27/09
AYES: Kehoe, Cox, Corbett, Hancock, Leno, Oropeza, Price,
Runner, Walters, Wolk, Wyland, Yee
NOES: Denham

ASSEMBLY FLOOR : 70-4, 6/2/09 - See last page for vote

SUBJECT : California Private Postsecondary Education Act
of 2009

DIGEST : This bill revises and recasts the Private
Postsecondary and Vocational Education Reform Act of 1989
into the California Private Postsecondary Education Act of
2009, provides for the transition to the Bureau for Private
Postsecondary Education, outlines its responsibilities,
provides for the approval, regulation, and enforcement of
private postsecondary educational institutions, establishes
reporting requirements, and repeals the Act on January 1,
2016.

ANALYSIS :

Existing law:

1. Creates 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 to house
specified boards, bureaus and commissions for the
purpose of regulating private businesses and professions
under their jurisdiction to protect the health, safety
and welfare of California's consumers.

3. Expresses legislative intent through other recently
inoperative statute which expired on July 1, 2008, to
protect the interests of students and institutions that
have matters pending under the Reform Act, continued all
of the matters pending before BPPVE an additional year
to July 1, 2008, and allowed limited DCA oversight of
private postsecondary schools until July 1, 2008.

This bill revises and recasts the former Reform Act into
the California Private Postsecondary Education Act of 2009
(Act). Specifically, this bill:

1. Declares legislative intent that the Act ensure minimum
educational quality standards and opportunities for
success for students attending private postsecondary
California schools, meaningful student protections, a
regulatory structure that provides appropriate oversight
and a regulatory governance structure that ensures a
voice for stakeholders and accountability and oversight
by the Legislature, and prevention of deception of the
public resulting from fraudulent or substandard degrees.

Transition Provisions

2. Extends, for an additional three years beyond the
expiration date, any approval to operate granted by the
BPPVE and in place at the time the Reform Act became
inoperative.

3. Grants approval until 2012, or 2013 (depending upon the
date received) to any applications pending action before
the BPPVE at the time the Reform Act became inoperative,
and requires that students enrolling in these
institutions be notified in writing by the institution
that the institution's renewal application was not
reviewed by BPPVE.

4. Requires amendment and repeal of prior regulations and
adoption of emergency regulations conforming to the
transition provisions established by the Act by February
1, 2010, to become permanent through the regular
rulemaking process within one year of the date of
enactment of the Act.

5. Deems that any unresolved matter (including but not
limited to, an appeal, complaint, claim, evaluation,
hearing or investigation) submitted to the BPPVE before
July 1, 2007, remain pending before the BPPE regardless
of any applicable deadlines and, with respect to any
deadline, deems that no time shall have elapsed from
July 1, 2007, to January 1, 2010.

6. Requires that the Student Tuition Recovery Fund (STRF)
be continued, provides for processing of any STRF claims
pending, and provides that a student's right to recover
from STRF be based on the law that was in effect at the
time the student enrolled in the institution and paid a
STRF fee.

7. Provides that any institution that had an application
for an approval to operate pending before BPPVE on July
1, 2007, or that had no application pending but that
began operations on or after July 1, 2007, may continue
to operate but must comply with the Act and submit an
application for approval to operate within six months of
the application becoming available (unless BPPVE
determines that the pending application satisfies the
new requirements), and to notify enrolling students as
specified.

8. Requires that any student claims based upon a violation
of the Reform Act remain pending, that student
complaints received during the time the Reform Act was
inoperative through December 31, 2009, be recorded and
investigated by the BPPE, and, with respect to any
deadlines, deems no time to have elapsed during the time
the Reform Act was inoperative.

9. Provides that final judgments and/or legal remedies
available under the Reform Act be continued for any
claim or cause of action that arose prior to the
inoperative status or repeal of the Reform Act, except
for STRF claims.

Exemptions

10.Exempts all postsecondary education entities that were
exempt from the 1998 Act and BPPVE oversight and
additionally exempts:

A. Institutions that do not award degrees and that
provide solely educational programs for total charges
of $2,500 or less (subject to BPPVE adjustment based
upon the California Consumer Price Index), with no
part of the charges paid by state or federal student
financial aid programs.

B. Institutions accredited by the Council of the
Section of Legal Education and Admissions to the Bar
of the American Bar Association, or a law school or
law study programs subject to approval, regulation,
and oversight of the Committee of Bar Examiners.

C. A nonprofit public benefit corporation that
qualifies under Section 501 (c) (3) of the United
States Internal Revenue Code and is organized
specifically to provide workforce development or
rehabilitation services as well as accredited for
those services by an accrediting organization
recognized by the Department of Rehabilitation.

D. Until January 1, 2016, institutions that are
accredited by a Regional Accrediting Agency.

Bureau Powers and Duties

11.Requires the BPPE to adopt regulations necessary to
implement the Act by January 1, 2011, to develop and
implement an enforcement program and to develop a
program to proactively identify unlicensed institutions
and take all appropriate legal action.

12.Requires the BPPE to establish a website to be updated
at least annually, on or before June 30, 2010, that
includes, specified information.

13.Requires the BPPE to provide the information specified
in (12) to the California Postsecondary Education
Commission (CPEC) and requires the CPEC to include the
information in its internet web site directory of school
performance data.

14.Requires the BPPE to conduct outreach to secondary and
postsecondary school students about how to make informed
decisions when selecting an institution.

15.Requires the BPPE to appoint an 11-member advisory
committee, appointed as specified, comprised of
institutional representatives, student representatives,
consumer advocates and employers who hire students. The
committee shall advise the BPPE on the administration of
the bill, including annually reviewing the fee schedule,
licensing, and enforcement activities. In addition, the
committee shall make appropriate recommendations to the
BPPE in all matters relating to private postsecondary
education in the state, and requires the BPPE actively
seek input from, and consult with, the committee

regarding the development of the regulations needed to
implement this bill.

16.Authorizes the BPPE to conduct workshops to assist
institutions in complying with the Act, and to empanel
visiting committees to assist in evaluating
institutional applications.

Approval to Operate

17.Requires that all private postsecondary institutions
operating in California have BPPE approval, except for
any institutions exempt from the Act, establishes a
process for the BPPE to issue institutional
approvals/renewals to operate, and establishes the term
of these approvals to be for five years.

18.Requires that all institutions granted an approval to
operate by means of accreditation comply with all other
applicable requirements of the Act.

Substantive Changes to Approval to Operate

19.Requires prior authorization from the BPPE for
institutions wishing to make substantive changes, such
as a change in ownership or educational objectives, and
adoption of related regulations by January 1, 2011.

20.Provides that the institution's approval may be
suspended or revoked for failing to obtain BPPVE
authorization prior to a substantive change.

21.Requires an institution granted approval to operate by
means of its accreditation to only make substantive
changes in accordance with accreditation standards and
to notify the BPPE of the changes.

Fair Business Practices

22.Prohibits institutions, among other things, from using
the state seal on a diploma, promising employment,
advertise using inaccurate or misleading information,
compensating or providing gifts to students for
recruitment activities, making untrue or misleading

statements, willfully falsifying or destroying
documents, improperly implying approval or licensure or
failing to completely disclose what approval or
licensure means, directing an individual to violate the
Act or persuading a student not to file a complaint,
compensating an employee by bonus or commission for
recruitment or student assistance except as specified,
and requiring prospective students to provide personal
contact information to access program information via
the institution's internet website.

23.Prohibits institutions from merging classes unless
students receive the same amount of instruction, making
unscheduled suspensions of classes unless caused by
circumstances beyond institutional control, changing the
day or time of the class unless certain other
requirements are met, moving the location of classes
more than 25 miles without meeting certain requirements,
or converting the means of delivery of instruction.

24.Requires that institutions offering educational programs
that require licensure by the state have approval to
conduct that educational program.

25.Authorizes institutions offering courses with a term of
four months or less, to require payment of all tuition
and fees on the first day of instruction.

26.Prohibits an institution, for programs designed to be
four months or longer, from requiring more than one term
of advance payment at a time until 50 percent of
coursework has been completed and provides exemptions
from these requirements for the purposes of federal and
state financial aid payments.

27.Authorizes, under certain conditions, students to choose
to pay all fees and tuition upon enrollment.

28.Requires that institutions providing private
institutional loan funding to a student ensure that a
student is not obligated for indebtedness that exceeds
the total cost of the current period of attendance.

Recordkeeping

29.Requires an institution maintain specified
student/educational program records for at least five
years except for accredited institutions if required to
abide by similar recordkeeping requirements under
accreditation.

Enrollment Agreements and Disclosures

30.Provides that students enroll solely by signing an
enrollment agreement; and outlines the conditions that
must be met for it to be enforceable.

31.Prohibits students from waiving any terms or receipts of
any disclosure.

32.Requires an "ability to benefit student" (defined as a
student without a certificate of graduation from a
school providing secondary education) to take a United
States Department of Education (USDE) prescribed
examination and achieve a USDE specified score showing
the student may benefit from the training offered before
executing an enrollment agreement.

33.Requires institutions offering programs in professions
that require licensure to provide a potential enrollee
with a written copy of the requirements for state
licensure, prohibits execution of an enrollment
agreement with a student known to be ineligible for
licensure unless the student's stated objective is other
than licensure, and establishes limitations and
disclosure requirements if an institution discusses
internships or student job availability during the
enrollment process.

34.Requires an enrollment agreement to be written in easily
understood language, entitles a student to a clear
explanation of the agreement in his/her primary
language, as specified, and requires the agreement and
related disclosures be in the same language used in
recruitment.

35.Prohibits an enrollment agreement from requiring a
student to invoke internal institutional dispute

procedures before enforcing any contractual or other
legal rights or remedies.

36.Requires information or statements required to be
included in the catalog, School Performance Fact Sheet,
or enrollment agreement to be printed in at least the
same size font as the majority of the text in that
document.

37.Requires an institution to provide a school catalog to a
student prior to enrollment that includes, at minimum 15
specified categories of information and disclosures

38.Requires an institution to provide a prospective student
a School Performance Fact Sheet containing completion
rates, placement rates, license examination passage
rates, if applicable, and salary and wage information,
if the school makes any express or implied claims
related to preparing students for a particular career,
occupation, vocation, trade, job or job title.

39.Requires an enrollment agreement to include at minimum,
10 specified categories of information and disclosures.

Consumer Loans to Students

40.Requires an institution extending credit or lending
money for educational costs to notify the student in the
lending documents of specified rights and information,
provides that such a lending note is not enforceable
unless the institution held an approval to operate at
the time of execution, and requires institutional
compliance with the Federal Truth in Lending Act.

Cancellations/Withdrawals/Refunds

41.Requires all institutions, whether they participate in
and comply with federal student aid program regulations
under Title IV of the Higher Education Act of 1965 to
establish a refund policy, to advise students that
cancellation notices must be in writing and that a
withdrawal may also be noticed by a student not
attending courses, to provide a pro rata refund of
nonfederal student financial aid program moneys to
students who completed 60 percent or less of the period
of attendance, and to refund 100 percent of the amount
paid less a reasonable deposit not to exceed $250 if
notice of cancellation is made through attendance at the
first class or the seventh day after enrollment,
whichever is later.

42.Authorizes the BPPE to adopt, via regulation, an
alternate refund calculation method for instruction
delivered by means such as distance education, and
authorizes any institution for which the aforementioned
refund calculations cannot be utilized to petition the
BPPE for alternative methods of calculating tuition
refunds.

43.Prohibits a student from waiving any of these
provisions.

Student Tuition Recovery Fund (STRF)

44.Requires the BPPE to adopt regulations governing the
administration and maintenance of STRF by January 1,
2011, continually appropriates STRF monies to the BPPE,
and prohibits the STRF from exceeding $25 million.

Closures

45.Requires an institution to notify the BPPE in writing at
least 30 days prior to closing, and requires the notice
to include a closure plan that addresses, among other
things, provision of teach-outs or arrangements for
refunds, a provision of information on federal financial
aid programs and institutional closures, if applicable,
and the disposition of student records.

46.Provides that an institution is in default of an
enrollment agreement if it closes prior to a student's
completion of the program and provides for the amount of
the refund to students, as specified.

47.Requires an institution to provide the BPPE with
specified information including student records and
transcripts.

48.Require all institutions, including those otherwise
exempt, to provide student records, or a retention plan
for records and transcripts approved by the
institution's accrediting agency, to the BPPE prior to
closure.

Completion, Placement, Licensure, and Salary Disclosure

49.Defines various terms and calculations used in this
section.

50.Requires an institution to annually report to the BPPE,
(as part of the annual report and the School Performance
Fact Sheet) completion rates for each program,
calculated as specified, and authorizes the substitution
of graduation data as reported to and calculated by
the Integrated Postsecondary Education Data System of
the United States Department of Education; job placement
rates, calculated as specified; the licensing
examination passage rate for the preceding two year; the
total number of graduates employed in the field and
salary and wage information, consisting of the total
number of graduates employed in the field for each of
the preceding five years and the annual wages or
salaries of those graduates stated in increments of
$5,000.

51.Requires the institution to document and maintain the
information used to substantiate job placement and
salary rates and to provide a list of employment
positions determined to be "within the field" for the
calculation of placement rates.

52.Requires BBPE, by January 1, 2011, to establish, by
regulation, a uniform method for institutions to obtain
statistically valid, current and representative data.

Fees

53.Establishes a differentiated fee schedule for
applications to obtain approval to operate, to renew
approvals, and to process authorization of a substantive
change to an approval.

54.Authorizes the bureau to adjust the established fee
schedule, and authorizes the bureau to reduce fees if
its annual costs for providing oversight and review are
less than the established fees.

55.Requires that all fees be used by the BPPE to cover
costs of administering the Act, that the fee schedule
provide adequate resources to implement the Act, that
specified late payment penalties be assessed against
institutions, and that the BPPE publish a publicly
available fee schedule.

Compliance, Enforcement, Process, and Penalties

56.Establishes the BPPE authority to determine an
institution's compliance with the Act, to require
additional filing of reports, to send staff for
institutional site visits, to require documents and
responses from any institution in order to monitor
compliance, to make both announced and unannounced
inspections at least every two years, to investigate
institutions, and to take appropriate action.

57.Requires the BPPE impose penalties, including mandating
a specified timetable for remedying noncompliance,
imposing fines, placing the institution on probation, or
suspending or revoking approval, as deemed appropriate
by the BPPE and depending on the severity of the
violation.

58.Requires an institution to submit an annual report that
includes specified information to the BPPE.

59.Requires BPPE staff to issue a notice to comply for
minor violations detected during inspection, to issue a
citation for noncompliance if such a finding is made as
the result of an investigation, and outlines the
processes to be followed by the institution and the BPPE
as a result.

60.Authorizes the BPPE to place an institution on
probation, or suspend/revoke its approval to operate
upon a finding of fraud or repeated violations of the
Act that have caused harm to students.

61.Authorizes the BPPE to make an emergency decision to
protect students, prevent misrepresentation to the
public, or prevent the loss of public funds or monies
paid by students, as specified.

62.Authorizes the BPPE to bring an action for equitable
relief for violations of the Act to supplement but not
supplant other legal remedies or penalties.

63.Authorizes an institution to request a hearing pursuant
to existing law if an adverse administrative action is
taken by the BPPE.

64.Authorizes individuals to file complaints with the BPPE
against an institution, requires the BPPE to take action
to ascertain facts and verify complaints and to take
appropriate administrative enforcement action, and
requires the BPPVE to order payment of appropriate
refunds/restitution to a student or group of students if
an institution caused them damage or loss through
violation of the Act.

65.Establishes that operation of an institution without
BPPE approval or provision of false information to the
BPPE on an application as infractions and public
offenses.

66.Requires an institution to maintain an agent for service
of process within the state and to provide specified
information to the BPPE which must make this information
publicly available upon request.

67.Caps the fine for operating without BPPE approval at
$50,000.

68.Deems any institution subject to the Act to have
authorized the BPPE or its accrediting agency to provide
the Attorney General, district attorney, or city
attorney copies of all institutional documents and other
materials.

69.Provides that nothing in the Act precludes the
enforcement of rights or remedies under any other law,
or limits or precludes the Attorney General, a district
attorney, or a city attorney from taking any other
legally authorized action.

Reporting

70.Requires the BPPE to provide annual progress updates to
the Legislature, as specified, in the form of oversight
hearings by appropriate policy and fiscal committees.

Termination

71.Repeals the Act on January 1, 2016.

72.Requires the Legislative Analyst's Office, by October 1,
2013, report to the Legislature and the Governor on the
appropriateness of the exemptions provided by the bill.

73.Appropriates $580,000 from the Reform Act to the BPPE to
fund five education administrator positions, to be
included in the annual budget for the BPPE.

74.Requires the BBPE to contract with the Bureau of State
Audits (BSA), by August 1, 2013, to conduct a
performance audit to evaluate the effectiveness and
efficiency of the BPPE operations. The BSA is required
to report the results of the audit to the Legislature
and the Governor. Appropriates $270,000 from the
Private Postsecondary Education Administration Fund to
the BSA for the costs of the audit.

Background

The Reform Act established the BPPVE in the DCA for the
purpose of approving and regulating private postsecondary
and vocational educational institutions in California. The
provisions governing the operation and administration of
the BPPVE and the approval and regulation of the private
postsecondary and vocational institutions became
inoperative on July 1, 2007, and were repealed as of
January 1, 2008. AB 1525 (Cook), Chapter 67, Statutes of
2007, declared legislative intent to protect students,
allowed for the continuation of matters pending before
BPPVE, and provided for minimal oversight of institutions
by DCA until February 1, 2008. SB 45 (Perata), Chapter
635, Statutes of 2007, extended limited DCA oversight of
private postsecondary schools from February 1, 2008, to
July 1, 2008. No state law currently regulates the private
postsecondary sector in California.
In 2006, there were over 1,500 BPPVE-approved institutions
operating in California. The BPPVE reported that these
institutions served over 400,000 students (consisting of
approximately 300,000 students at non-degree-granting
institutions and approximately 100,000 students at
degree-granting institutions).

FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes

According to the Senate Appropriations Committee:

Fiscal Impact (in thousands)

Major Provisions 2009-10 2010-11 2011-12 Fund

Re-establish regulatory
Special*
bureau operations $5,385 $8,411 $8,411
- fee revenue** ($5,038)
($10,076)($10,076)

Appropriation $580
Special*

Reporting requirements
$220-$270 Special*

* Private Postsecondary and Education Administration Fund
**The BPPE shall establish a reasonable fee to reimburse
the BPPE's costs associated with implementation of the
Act. Costs and revenues based on DCA projections.

ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Beall, Tom Berryhill,
Blakeslee, Blumenfield, Brownley, Buchanan, Caballero,
Charles Calderon, Carter, Chesbro, Conway, Cook, Coto,
Davis, De La Torre, De Leon, DeVore, Emmerson, Eng,
Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Furutani,
Galgiani, Gilmore, Hagman, Hall, Hayashi, Hernandez,
Hill, Huber, Huffman, Jones, Krekorian, Lieu, Logue,
Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nava,
Nestande, Niello, John A. Perez, V. Manuel Perez,
Portantino, Price, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, Bass
NOES: Anderson, Gaines, Knight, Nielsen
NO VOTE RECORDED: Bill Berryhill, Block, Duvall, Garrick,
Harkey, Jeffries

JJA:mw 9/1/09 Senate Floor Analyses

SUPPORT/OPPOSITION: NONE RECEIVED

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